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NEVETS C.M., INC. v. NISSHO IWAI AMERICAN CORP.

September 26, 1989

Re: Nevets C.M., Inc.
v.
Nissho Iwai American Corporation



The opinion of the court was delivered by: LECHNER, JR.

 ALFRED J. LECHNER, JR., UNITED STATES DISTRICT JUDGE.

 This matter is before the court on the motion of defendant Nissho Iwai American Corporation ("NIAC") for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Subject matter jurisdiction exists in this case pursuant to 28 U.S.C. § 1332 (diversity of citizenship). For the reasons which follow, NIAC's motion is granted.

 Background

 Plaintiff in this action, Nevets, C.M., Inc. ("Nevets") is a New Jersey corporation engaged in the rental of video cassette players ("VCPs"). Nevets was incorporated in April 1984 by Steven Marcus ("Marcus") and Melvin Parker ("Parker"). According to Marcus' deposition testimony, Nevets operated as a partnership, "not a formal corporation." Brief in Support of NIAC's Motion for Summary Judgment, dated 9 June 1989 ("Defendant's Brief"), Exhibit A at 39. Parker, who had experience in the television and VCP rental business prior to founding Nevets, is the general sales manager of Nevets. Marcus is president and sole shareholder of Nevets, but Parker holds an irrevocable option to purchase up to fifty percent of the outstanding shares of Nevets. Id., Exhibit A at 10-12.

 Beginning in the Fall of 1984, Nevets began to purchase from NIAC VCPs described as model number VP-1500, manufactured by Funai Electric Co., Ltd. ("Funai"). NIAC is a trading company engaged in the distribution of VCPs manufactured by Funai. NIAC is organized under the laws of New York, with principal offices in New York City.

 On 1 December 1989, Nevets and NIAC entered into an agreement for the warehousing of Funai VCPs. The warehousing agreement was signed by Parker on behalf of Nevets. In addition, Parker executed a guarantee to NIAC ensuring Nevets' performance under the warehousing agreement. Id., Exhibit A.

 Soon after signing the warehousing agreement, Nevets claimed the VCPs sold by NIAC suffered from operational defects which made them unsuitable for rental to Nevets' customers. Representatives of Nevets and NIAC held a meeting on 29 August 1985 to discuss Nevets' complaint and NIAC's demand that it be paid by Nevets for VCPs it purchased from NIAC. At that meeting, Teijiro Kakutani ("Kakutani"), chairman of Harjoy, Inc. ("Harjoy"), *fn1" gave the Nevets representatives a letter, dated 29 August 1985, addressed to Parker from T. Sasaki ("Sasaki"), Vice President of General Merchandise of NIAC. The letter authorized Kakutani to negotiate on behalf of and bind NIAC on any settlement agreement regarding Nevets' claim.

 In a letter agreement, dated 6 September 1985, the parties memorialized the agreement reached at the 29 August meeting (the "6 September 1985 Letter"). The 6 September 1985 Letter, which was prepared by Kakutani and accepted by Parker on behalf of Nevets, stated Nevets owed NIAC $ 189,961.11. It stated there had been problems with the VCPs purchased by Nevets and the payment by Nevets of the money it owed to NIAC would be frozen for ninety days to permit Nevets time to evaluate the performance of refurbished VCPs provided by NIAC. The 6 September 1985 Letter also indicated there would be no litigation by either party and they would settle the matter at a meeting on 29 November 1985. Finally, a handwritten and initialed addition to the 6 September 1985 Letter stated: "it is acknowledged that Nevets maintains that is [sic] has claims against NIAC." Certification of Teijiro Kakutani, dated 3 June 1989 ("Kakutani Certification"), Exhibit C.

 The meeting scheduled for 19 November 1985 did not take place; by mutual agreement the parties moved the meeting to mid-December. Id. at 3, para. 5. On 15 December 1985 a meeting took place in which Parker submitted to NIAC claims of losses sustained by Nevets of $ 569,145.45 as a result of the allegedly defective VCPs. Nevets contends Kakutani represented to Parker and Marcus at this meeting that the problems allegedly existing with "the VCPs had been corrected and the new line of [VCPs] would be excellent for the rental market." Brief of Nevets in Opposition to NIAC's Motion, dated 26 July 1989 ("Plaintiff's Opposition Brief"), at 4.

 In a second letter agreement, dated 24 December 1985 (the "24 December 1985 Letter"), Kakutani prepared for Parker's acceptance on behalf of Nevets an outline of the discussions which took place on 15 December 1985. The 24 December 1985 Letter provided in paragraph three:

 
Nevets, C.M. agreed to withdraw all the claims to NIAC, FUNAI and Harjoy. While NIAC agreed not to make any claim to Nevets C.M., Inc. on this matter.

 Kakutani Certification, Exhibit C. In addition, the 24 December 1985 Letter set forth a payment schedule for Nevets to pay the $ 189,961.11 it owed to NIAC: $ 100,000 was due on 26 December 1985 and the balance was due on 10 February 1986 with interest from 26 December 1985. *fn2" The remaining sections of the letter provided:

 
2) As a compensation for the losses which have been caused to Nevets C.M. Inc. by the malfunction and defects of some of VP-1500 (earlier version), FUNAI will supply Nevets C.M. with 500 New VP-1500 free of charge.
 
* * * *
 
4) Mr. Parker requested that after the completion of the payment by Nevets C.M. Inc., NIAC resume "open credit" to Nevets C.M. Inc.
 
5) Mr. Parker requested that his service Co. (Larry & Sheila T.V. Corp. 1588 York Ave.) be allowed to be "FUNAI AUTHORIZED SERVICE STATION" as long as he wishes. Mr. Taku Miyamoto, on behalf of FUNAI USA which handles "SERVICE" matter, requested that he be given a few days to discuss the matter with FUNAI USA.
 
6) The parties concerned confirmed to continue the business.

 Id.

 The 24 December 1985 Letter was executed by Kakutani on behalf of NIAC and by Parker on behalf of Nevets. Parker, however, testified in his deposition he did not remember whether he signed the letter. Plaintiff's Opposition Brief, Exhibit F, at 134-35. According to his deposition testimony, Parker also did not remember signing blank pieces of paper, although he testified he may have done so. Id. Additionally, referring to the 24 December 1985 Letter, Marcus testified at his deposition: "I never saw this letter signed. I do not know how it could be signed. I mean that sincerely." Defendant's Brief, Exhibit A at 201. In contrast, Kakutani unequivocally established he personally took the letter to Parker's office in New York City where Parker signed the letter in Kakutani's presence. Kakutani Certification at 3, para. 7. At oral argument, counsel to Nevets conceded Nevets did not contest the facts that Parker signed the 24 December 1985 Letter and that Parker was authorized to do so on behalf of Nevets.

 On 26 December 1985, Parker signed and accepted a letter from Kakutani indicating Funai had agreed to keep Parker's company as an authorized service center for Funai VCPs. Plaintiff's Opposition Brief, Exhibit B. In addition, a letter, dated 23 December 1985, from Sasaki to Parker stated NIAC had opened a line of credit for Nevets. Parker confirmed this letter by signing it as well. Defendant's Brief, Exhibit A. At oral argument, counsel to NIAC represented although the letter was dated 23 December 1985, it was delivered to Nevets with or after the 24 December 1985 Letter. Counsel for Nevets did not contest this representation; the delivery date of the 23 December 1985 Letter is not an issue in this case.

 Nevets alleges Marcus and Parker telephoned Kakutani after receiving the 24 December 1985 Letter and objected to various provisions of it. On 27 December 1985, Marcus purportedly sent a letter to Kakutani confirming the telephone conversation (the "27 December 1985 Letter"). *fn3" Plaintiff's Opposition Brief, Exhibit C; Defendant's Brief, Exhibit A, at 201.

 The 27 December 1985 Letter was not confirmed or executed by any NIAC representative. In fact, NIAC claims it never received the 27 December 1985 Letter at all. Supplemental Certification of Teijiro Kakutani, dated 9 August 1989 ("Kakutani Supplemental Certification"), at 2 para. 4. In addition, Kakutani claims he never discussed the matters asserted in the 27 December 1985 Letter with anyone associated with Nevets. *fn5"

 The final piece of correspondence offered by Nevets in opposition to this motion for summary judgment is dated 12 March 1987, from Sasaki to Parker. Plaintiff's Opposition Brief, Exhibit E. The substance of this letter is similar to the letter presented by Kakutani to representatives of Nevets at the initial meeting on 29 August 1985. The second letter states: "Concerning the settlement of the quality claims currently pending regarding Funai VCPs we have sold to you, we will leave all the power to Mr. Kakutani. . . . His decision will bind us." Id. This language is identical to that used in the earlier letter, dated 29 August 1985.

 Finally, Nevets has pointed to internal memoranda written among officers of NIAC, which Nevets claims discuss the Nevets matter as though the "quality claim" matter ...


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