Benjamin Office Supply & Servs. v. 2 Crystals Inc.

BENJAMIN OFFICE SUPPLY & SERVICES. INC., Plaintiff, v. 2 CRYSTALS INC., Defendant.

2 CRYSTALS INC., Third-Party Plaintiff, v. HERITAGE PARTNERS GROUP LLC, and SAFE HOUZE LLC, Third-Party Defendants.

No. 20-CV-3693 (JS) (ST)

United States District Court, E.D. New York

August 10, 2021

REPORT AND RECOMMENDATION

Steven L. Tiscione, United States Magistrate Judge Eastern District of New York

Before this court is a breach of contract action arising out of a sales agreement between Benjamin Office Supply &amp Services, Inc. (“Plaintiff”) and 2 Crystals, Inc (“Defendant”). See Am. Compl., ECF No 24. Plaintiff now moves for summary judgment against Defendant, pursuant to Rule 56 of the Federal Rules of Civil Procedure. See Pl.'s Mot. Summ. J., ECF No. 28. Additionally, Defendant now moves for a default judgment against Heritage Partners Group LLC (“Heritage”) and Safe Houze LLC (“Safe Houze”) (together “Third-Party Defendants”). See Def.'s Mot. Default J., ECF No. 32. The Honorable Joanna Seybert referred both motions to this Court to issue a Report and Recommendation. See Orders Ref. Mots., May 7 2021. For the reasons set forth below, I respectfully recommend that Plaintiff's Motion for Summary Judgment be GRANTED, and Defendant's Motion for Default Judgment be GRANTED IN PART.

I. FACUAL BACKGROUND

A. Contract Between Plaintiff and Defendant.

The facts, as described in the Parties' Rule 56.1 statements, are as follows.^[1] Plaintiff is a Maryland corporation that operates a commercial office products business in Rockville Maryland. See Pl.'s Rule 56.1 Statement of Facts (“Pl. 56.1”) ¶ 1, ECF No. 28-2. Defendant is a New York corporation that operates from offices located at 15 Cuttermill Road, Great Neck, New York 11021. Id. ¶ 2. Plaintiff sent Defendant a purchase order in the amount of $149, 800, dated July 7, 2020, for the purchase of 10, 000 boxes of nitrile gloves (“the gloves”). Id. ¶ 8. On July 8, 2020, Defendant agreed to sell, and Plaintiff agreed to buy the gloves for $149, 800. Id. ¶ 9. That same day, Defendant emailed Plaintiff an invoice that lists July 9, 2020 as the “Ship Date, ” and the “Date Needed by” as “ASAP.” Id. ¶ 10. However, there is also an invoice with a ship date of July 29, 2020. See Def.'s Rule 56.1 Counter-Statement of Facts (“Def. 56.1”) ¶ 10, ECF No. 30-16; Decl. of Douglas M. Lieberman (“Lieberman Decl.) at Ex. D, ECF No. 30-6.^[2]The purchase order sent by Plaintiff left the “Date Required” column blank. Def. 56.1 ¶ 10; Decl. of Stuart A. Berman (“Berman Decl.”) at Ex. 9, ECF No. 28-12. Plaintiff paid for the gloves by company check, which Defendant received and deposited. Pl. 56.1 ¶ 12.

On July 9, 2020, Plaintiff issued an invoice to resell the gloves to the Government of Montgomery County, Maryland for $192, 500.00. Id. ¶ 13. Defendant disputes these allegations, stating that the September 11, 2020 email sent from Sunil Pandya, not a party to this suit, indicates that the Montgomery County Government placed an order to purchase the gloves from Plaintiff at $14.98 per box, for a total value of $149, 800. Def. 56.1 ¶ 13; Berman Decl. at Ex. 14, ECF No. 28-18.

B. Contract between Defendant and Third-Party Defendants

The facts below are taken from Defendant's Third-Party Complaint, and are deemed admitted by virtue of Third-Party Defendants' default. Heritage is a limited liability company that is organized and existing in the state of Virginia. Third-Party Compl. ¶ 2, ECF No. 7. Safe Houze is a limited liability company that is organized and existing in the state of Georgia. Id. ¶ 4. At all times relevant hereto, Safe Houze was acting as a sales representative for Heritage. Id. ¶ 14. Both Safe Houze and Heritage transact business in the state of New York. Id. ¶¶ 3, 5.

In order to fulfill its shipment to Plaintiff, Defendant contracted with Heritage to purchase the gloves on or about July 8, 2020. See id. ¶¶ 10-20. At the time Defendant purchased the gloves, Heritage advised Defendant that the gloves would be shipped to Plaintiff directly within the week. Id. ¶ 21. On or about July 10, 2020, Defendant wired $123, 500 to Heritage as full payment for the gloves. Id. ¶ 22. Beginning on or about July 23, 2020, Defendant contacted both Safe Houze and Heritage to confirm when the gloves were being shipped. Id. ¶ 23. During such communications, Heritage advised Defendant of expected delivery dates. Id. ¶ 24. Defendant advised Plaintiff on the shipment and expected delivery dates of the gloves based on information it received from Heritage. Id. ¶ 25. Heritage advised Defendant that the Gloves were shipped to Plaintiff as of July 29, 2020. Id. ¶ 26. On July 29, 2020, Heritage forwarded a bill of lading to Defendant which indicated that the gloves had been shipped. Id. ¶ 27. On that same day, Heritage forwarded Defendant an updated bill of lading for the gloves. Id. ¶ 28.

However, Heritage never shipped the gloves to Plaintiff. Id. ¶¶ 29-30. Heritage did not have the gloves despite representations that it did. Id. ¶ 31.

C. Subsequent Communications between Plaintiff and Defendant.

Plaintiff and Defendant engaged in a series of emails from July 14, 2020 to July 27, 2020. See Pl. 56.1 ¶¶ 16-32, 34-42.^[3] On July 16, 2020, Jay Kristal, Defendant's officer and director, sent an email to Plaintiff with the subject line “GLOVES TRUCKED.” Id. ¶ 19. In that email, Defendant told Plaintiff that “[y]our gloves were shipped on Tuesday night in an 18 wheeler with other drops. They were shipping from Texas and due in your faculty [sic] within 5 days - so should be at [Plaintiff] by Monday 7/20 / Tuesday 7/21 next week.” Id. At 8:50 PM, David F. Golden, acting as a broker between Plaintiff and Defendant, sent Defendant an email with the subject line, “Urgent you need to tell [Plaintiff] what is going on. Tonight.” Id. ¶ 20. At 10:20 PM, Defendant sent another email stating “your order shipped Tuesday [July 14, 2020] and you will receive it by Monday/Tuesday next week” and that he was being “harassed by you calling and calling and calling me.” Id. ¶ 21 (brackets in original). On July 20, 2020, Plaintiff asked for an update on the gloves. Id. ¶ 23. On July 21, 2020, having never received the gloves, Plaintiff sent an email to Defendant requesting that Defendant refund its money because Plaintiff's customer wanted to cancel its order. Id. ¶ 24. On July 22, 2020, Plaintiff sent another email stating “[p]lease call me back. I need to get these gloves from another vendor.” Id. ¶ 25.

On July 23, 2020, Defendant sent four emails to Plaintiff. Id. ¶¶ 27-30. At 11:56 AM, Defendant told Plaintiff that “by Noon tomorrow you will have 14 pallets with 750 cases to a Pallet delivered to your facility”. Id. ¶ 28.^[4] At 5:32 PM, Defendant followed up with an email containing the subject line “Trucking vendor just called me and truck is loaded leaving tonight”. Id. ¶ 29. However, the gloves were never delivered to Plaintiff. Id. ¶ 31. The Parties agree that Defendant breached its agreement to deliver the gloves to Plaintiff in July 2020. Id. ¶ 32. Plaintiff claims that, due to the non-delivery of the gloves, Defendant verbally agreed to refund the purchase price to Plaintiff. Id. ¶ 33. However, Defendant claims that Defendant verbally agreed to refund the purchase price only after it received money back from Third-Party Defendants. Def. 56.1 ¶ 33.

At 3:10 PM on July 24, 2020, Plaintiff emailed Defendant stating, “I think we should cancel this order. [Plaintiff] gets it money back . . . [c]an't keep the customer waiting. Pl. 56.1 ¶

35. At 5:12 PM, Plaintiff sent an email to Defendant stating in pertinent part:

This email is to confirm that you have agreed to cancel order PO-24462 made payable to 2 crystals on 7/7/2020 for $149, 800.00 guaranteeing my money to be refunded. $149, 800.00 is to be wired back to Benjamin Office Supply's account within the next 24 hours from 7/24/2020. You have assured me that all my funds will be returned to me. Please contact me when you have send my money.

Id. ¶ 36. Plaintiff alleges that, on July 25, 2020, Defendant confirmed that it would refund the purchase price to Plaintiff. Id. ¶ 37. Defendant states that it confirmed it would refund Plaintiff's money after Defendant received its own money back from Heritage. Def. 56.1 ¶ 37.

The email Defendant sent states in pertinent part, “I don't have to ask you where I should wire your $ until I receive it back” and “I told you yesterday that you would receive your money”. See Def. 56.1 ¶ 37; Berman Decl. at Ex. 3, ECF No. 28-6. However, Defendant did not pay Plaintiff any funds on or after July 24, 2020. See Pl. 56.1 ¶ 38.

On July 27, 2020 Plaintiff emailed Defendant, once again requesting a refund. See Id. ¶ 39. At 3:24 PM, Defendant replied to Plaintiff, stating “[n]ow you will wait till I receive the $ back from the vendor as you are right about that; HE HAS IT and I do Not.” Id. At 6:53 PM, Defendant sent another email stating “Sandy will get the gloves in 48 hours or the $ if it does not show (which it will)” and “I am NOT absconding with any $ as in either way I will make due with the Gloves or $ in Full ~ Returned.” Id. ¶ 41. Defendant sent one final email at 6:58 PM stating that “[Plaintiff] will have gloves in 48 hours or money will be returned in full if they do not show up.” Id. ¶ 42.

From July 23, 2020 to August and September 2020, Defendant exchanged text messages and had oral conversations with the principal of Heritage regarding the gloves. Id. ¶ 43; Def. 56.1 ¶ 43; Berman Decl. at Ex. 40, ECF No. 28-44; Kristal Decl. at ¶ 7. On or about September 4, 2020, Heritage refunded $10, 000 of the $123, 500 Defendant paid to Heritage for the gloves. Pl. 56.1 ¶ 44. To date, Defendant has accepted $149, 800 from Plaintiff and paid a net sum...