Rocheux Int’l Of N.J. v. U.S. Merchants Fin. Grou

741 F.Supp.2d 651 (2010)

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Nature of the Case

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Facts

D ordered raw PVC and APET plastic from P in 2005 and 2006. P delivered some of the plastic products related to the 2005-2006 purchase orders between January 2006, and June 2006 and D did not pay for most if not all of the 2006 deliveries and that Ds no longer possess the goods from the 2006 deliveries. (The outstanding balance for the 2006 deliveries is $2,116,571.76. P sent an email to D's President and CEO Jeffrie Green requesting the delinquent payments for the 2006 deliveries and the warehouse goods by September 29, 2009, and notifying Ds that their failure to pay would result in P selling the warehouse goods and seeking any deficiency from Ds pursuant to UCC § 2-706. P incurred $18,562.36 in freight charges and $56,622.67 in additional warehouse charges in attempting to re-sell the warehouse goods, and P eventually sold the warehouse goods to third parties for $1,194,582.68, resulting in a deficiency of $387,699.70 compared to the original purchase price for the warehouse goods. D contends that the 2006 deliveries contained substantial amounts of unusable and/or nonconforming materials and that P breached its contracts with D when it resold the warehoused goods without Ds' consent. Ds contend that they either rejected or revoked acceptance of the goods within a reasonable time after discovering latent defects in the plastic. D contends that the 2006 deliveries contained substantial amounts of unusable and/or nonconforming materials and that P breached its contracts with D when it resold the warehoused goods without Ds' consent. Ds contend that they either rejected or revoked acceptance of the goods within a reasonable time after discovering latent defects in the plastic. Flaws would manifest themselves in D's thermoformed products as discoloration, flow marks, waviness, pitting, and scratches. Other latent flaws, such as products' sealing capabilities, could not be discovered until later in the manufacturing process. D informed P of the problems and set aside the defective plastic for a brief period before disposal so that P could inspect the product, but P typically did not come for inspection. P claims that it was not notified of problems with the 2006 deliveries until its president received an email from Ds' president on September 6, 2006. P's sales representative Michael Flood contends that, with the exception of a handful of instances where P issued credits for 'minor discrepancies in the quantity or weight of goods delivered, Ds never complained about the quality of goods delivered. After the September 6 email, P replied asserting 'We stand behind our product and will send a team to investigate any problems you may be having with our material. Any defective materials should be returned for a full credit.' D never responded to her request for inspection or return of defective goods. Ds concede that 'the vast majority' of the 2006 deliveries had been discarded as scrap when they received the September 7, 2006 email. P sued D and now moves for summary judgment on its claims for the 2006 deliveries and warehouse goods, seeking $4,635,761.18 in damages, interest, attorneys' fees, and costs. P argues that Ds are liable for the deficiency between the original purchase price and the subsequent resale value of the warehouse goods, as well as the costs P incurred by storing and reselling the same. Ds claim that P improperly repudiated its contracts under 2-609 without demanding adequate assurance and despite receiving such assurance from Ds. The Court considers whether P demanded adequate assurance and whether Ds provided such assurance.