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KARPAS v. TRIMARK SPORTSWEAR GROUP

June 13, 2005.

ALAN KARPAS, Plaintiff,
v.
TRIMARK SPORTSWEAR GROUP (U.S.) LTD., Defendants.



The opinion of the court was delivered by: DICKINSON DEBEVOISE, Senior District Judge

OPINION

The Defendant, Trimark Sportswear Group (U.S.) Ltd., ("Trimark") filed suit in the United States District Court in Minnesota against Plaintiff, Alan Karpas ("Karpas") seeking a declaratory judgment that Trimark did not owe Karpas accelerated payments under an option agreement between the parties. The Minnesota District Court dismissed Trimark's suit without prejudice when Karpas filed this suit in the Superior Court of New Jersey. Trimark then removed to this Court. Karpas' suit has two counts. Count I claims breach of contract and damages in the amount of payments and interest Trimark owes Karpas on the option agreement as of March 1, 2005, and Count II seeks acceleration of all prospective payments. Karpas now moves for partial summary judgment on Count I of his suit, for certification that the award of partial summary judgment is a final judgment, and for a post-judgment interest rate of 7.5%. For the reasons stated below, this Court will grant Karpas' partial motion for summary judgment, will certify the award of partial summary judgment as a final judgment, and will apply the contractual interest rate of 7.5% post-judgment.

  I. BACKGROUND FACTS

  On July 31, 2000, Karpas and two other stockholders, Richard Feinstein ("Feinstein") and Arthur Berke ("Berke"), of Rivers End Trading Company, Incorporated ("Rivers End") entered into an Option Agreement ("Option Agreement") with Trimark. (Def.'s Opp'n Br. at 5.) They granted Trimark the option to purchase all of their shares of capital stock in Rivers End. (Id.) Karpas owned 1000 shares in Rivers End. (Pl.'s Br. at 6.) Section 2.2 of the Option Agreement provided that for Karpas's shares, Trimark would pay Karpas $100,000 plus 1.85 % of the sales of Rivers End for each fiscal year from March 1, 2000 to February 29, 2004 divided by 3. (Option Agreement § 2.2). In Section 2.3, Trim ark agreed that on or before March 15 of each fiscal year, beginning on March 15, 2001, it would provide Karpas with a written notice of the sales of Rivers End for the immediately preceding fiscal year, "a promissory note . . . providing for the payment of [the amount owed] payable in thirty-six (36) equal monthly installments commencing the first day of April in the relevant year, together with interest at the rate of seven point five percent (7.5%) per annum," and "a letter of credit securing in full the payment of the principal outstanding under the promissory note." (Option Agreement § 2.3.) Trimark exercised its rights under the Option Agreement to purchase the capital stock in Rivers End owned by Karpas, Feinstein, and Berke. (Karpas Aff. ¶ 6.)

  On March 31, 2003, Karpas, Feinstein, and Berke entered into a new agreement, the "Executives Agreement," which deleted and replaced Sections 2.2-2.8 of the original Option Agreement, the provisions relating to compensation for the shares in Rivers End. (Executives Agreement at 1.) In the Executives Agreement, Trimark agreed that the total price it would now pay for Karpas's shares in Rivers End would include: (1) $100,000 at closing, (2) $9,415.20 principal and $2,000.73 interest payable between March 1, 2002 and July 31, 2002, (3) $90,283.00 plus 7.5% per annum interest, paid according to "Schedule 14," attached to the Executives Agreement, which detailed payments on the first of each month in the amount of $2,507.85 plus 7.5% compounded interest, and (4) monthly installments of $8,333.33 from August 1, 2002 through December 31, 2008, totaling $100,000 per year. (Executives Agreement § 1.) Trimark prepared and attached "Schedule #1," a "[r]ecap of payouts/[d]eductions," to the Executives Agreement. Schedule 1 detailed the payments that had already been made to Karpas. Schedule 1 also laid out a schedule of remaining monthly payments on the $90,383.00 plus interest, from May 2003 to February 2004, the final payment of which was $2,532.52. Trimark agreed in the Executives Agreement that any delinquent payments would accrue 7.5% interest per annum until Trimark paid. (Def.'s Opp'n. Br. at 5.)

  Karpas contends that Trimark failed to pay the February 2004 payment of $2,532.52, and also has failed to pay the $8,333.33 monthly payments since February 1, 2004. (Karpas Aff. ¶ 11.) Karpas's counsel wrote a letter to Trimark in August 2004 requesting full payment of the monies owed to Karpas at that time, (Demand Letter at 1), but Trimark continued to default on its payments, (Karpas Aff. ¶ 12). Karpas thus contends that the total amount Trimark owes him on Count I of his complaint for past-due payments is $124,106.28, which includes $119,190.28 of actual past due payments and $4,916.00 of interest. (Pl.'s Br. at 3.) Karpas now moves for partial summary judgment as to Count I of his complaint, and an order certifying the grant of summary judgment as a final judgment under Rule 54(b) of the Federal Rules of Civil Procedure. (Id. at 3, 9.) Karpas also argues the contractual interest rate of 7.5% should apply post-judgment as well as prejudgment. (Pl.'s Reply Br. at 4.) Trimark filed a brief in opposition, contending that a genuine dispute of material fact remained on Count I because Karpas had failed to establish Trimark's liability for the February 2004 $2,532.52 payment. (Def.'s Opp'n Br. at 7.) Trimark also contended that this Court should not enter a separate and final judgment on Count I in any event, and that even if there were a separate and final judgment, the post-judgment interest rate should not be 7.5% but rather the statutory interest rate pursuant to New Jersey Court Civil Practice Rule 4:42-11(a). (Id. at 8, 10.) Nowhere in Trimark's brief in opposition did Trimark contend that it made the required payments to Karpas, or deny that it had failed to make them. In response to Trimark's brief, Karpas cited the Executives Agreement and Schedule 14 as the basis for Trimark's liability for the $2,532.52. (Pl.'s Reply Br. at 2-3.)

  II. DISCUSSION

  A. Karpas' motion for partial summary judgment

  1. Summary Judgment Standard

  Fed.R.Civ.P. 56(a) allows a claimant to seek summary judgment on "any part" of his claim. Summary judgment will be granted as to any part of the Plaintiff's claim if the record shows "that there is no genuine issue as to any material fact and that the [Plaintiff] is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party has the initial "burden of showing the absence of a genuine issue as to any material fact." Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). In addition, the record "must be viewed in the light most favorable to the opposing party." Adickes, 398 U.S. at 157. After the moving party meets its initial burden, though, the non-moving party "must set forth specific facts showing that there is a genuine issue for trial," or else the court will grant summary judgment. Fed.R.Civ.P. 56(e). However, the "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Indeed, only if a particular factual issue "may be resolved in favor of either party," and is determinative for the outcome of the case is there a genuine issue of material fact such that the court should not grant a motion for summary judgment. Anderson, 477 U.S. at 250.

  2. Past Due Monthly Payments of $8333.33

  Karpas has clearly met his initial burden and shown an absence of a genuine issue of material fact as to Trimark's default on monthly payments of $8333.33 from February 2004 to March 2005 as required by the Executives Agreement's revision of Section 2.2(b)(iii) of the Option Agreement. (Executives Agreement § 1). In response, Trimark has not presented evidence that it is free from liability nor that it paid the money it owes Karpas under the Executives Agreement, and thus it has not met its burden to "set forth specific facts showing that there is a genuine issue for trial," as required by Rule 56(e) to defeat Karpas's motion for summary judgment. Both parties also agree that they contracted for a pre-judgment interest rate of 7.5% on these past-due payments. Therefore, there is no genuine issue of material fact necessitating a trial as to the past due payments required under the Executives Agreement's revision of Section 2.2(b)(iii) of the Option Agreement. These defaulted payments amounted to $116,666.76 as of March 1, 2005, plus interest thereon up to that date of $4,711.12. Interest is accruing to the date of judgment at the rate of $23.97 per day.

  3. February 2004 $2,532.52 Payment

  Trimark contends that there is a genuine issue of material fact as to its liability for the February 2004 payment in the amount of $2,532.52 because Karpas "does not allege any facts to show that he is entitled to payment of $2,532.52 and that Trimark breached its obligation to pay Karpas this amount." (Def.'s Opp'n Br. at 7.) To the contrary, Karpas has produced the Executives Agreement that Trimark voluntarily entered into, as well as Schedules 1 and 14 which Trimark produced. Section 1 of the Executives Agreement, which revises the Option Agreement Section 2.2(b)(ii), entitles Karpas to "$90,283.00 plus interest payable at 7.5% per annum payable in accordance with Schedule 14 attached to the," Executives Agreement. Schedule 14 clearly lays out a monthly payment plan for this money, and shows the money Trimark paid up to March 1, 2002. Schedule 1 further details the payments made up to March 31, 2003 "under 2.2(b)(ii)" and lists a schedule of the remaining payments monthly from May 2003 to February 2004, the last of which is for $2,523.52. Karpas has filed an affidavit stating that Trimark has not paid him the $2,523.52. Again, upon this evidence, it is Trimark's burden to show that there is a genuine issue of material fact about whether it owes the $2,523.52, such that the issue could be reasonably resolved for either party, to defeat summary judgment. Trimark has failed to meet this burden. Trimark does not even attempt to claim that it is not liable for this money ...


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