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Kenneth Gross D/B/A Gp Sales Corp v. Best Plastics

December 17, 2010


The opinion of the court was delivered by: Dickinson R. Debevoise, U.S.S.D.J.



This matter comes before the Court on a motion submitted by Plaintiff, Kenneth Gross, requesting summary judgment pursuant to Federal Rule of Civil Procedure 56(a) on his claims against Defendant Best Plastics, LLC ("Best Plastics"). Additionally, Plaintiff asks that the Court strike the affirmative defenses asserted by Best Plastics in its Answer pursuant to Federal Rule of Civil Procedure 12(f). Finally, Plaintiff contends that the Court should dismiss the nine counterclaims asserted against him by Best Plastics pursuant to Federal Rule of Civil Procedure 12(b)(6) because those counterclaims are not pled with the requisite particularity.

In a second pending Motion, Third-Party Defendant James Dion requests that the Court dismiss the third-party claims asserted against him by Defendant pursuant to Federal Rule of Civil Procedure 12(b)(6).

For the reasons set forth below, Plaintiff‟s Motion for Summary Judgment will be granted in part and denied in part. Defendant executed a contract in which it admitted liability of at least $6 million to Plaintiff. While Defendant‟s liability, if any, in excess of that amount remains a matter of dispute, the terms of the contract between the parties require that Plaintiff be granted partial summary judgment in the amount of $6 million, minus overpayments made by Defendant after the date that contract was executed.

Similarly, Plaintiff‟s request that the Court strike Defendant‟s affirmative defenses will be granted. Defendant waived all affirmative defenses in the same contract in which Defendant admitted that it was liable to Plaintiff for $6 million. Therefore, Defendant‟s affirmative defenses will be stricken.

Defendant‟s counterclaims are not pled with the requisite particularity. Moreover, Defendant contractually waived all counterclaims based on activity that occurred prior to September 17, 2009. Therefore, Plaintiff‟s Motion to Dismiss Defendant‟s counterclaims will be granted. Defendant may amend and resubmit its counterclaims within 30 days of this ruling, but in doing so must limit its allegations to activity that took place after September 17, 2009.

Finally, Defendant‟s claims against Third-Party Defendant James Dion will be dismissed without prejudice. Those claims are not pled with the requisite particularity. Defendant may submit an Amended Answer within 30 days curing, if it is able to do so, the deficiencies in its third-party claims against Mr. Dion.


Plaintiff is a seller of polypropylene resin, a product used in the production of molded plastics.*fn1 Defendant is a producer of plastic storage bins that are sold on the retail market. In making those bins, it uses the type of resin sold by Plaintiff through a process called "injection molding," in which the resin is heated and then pumped into molds where it cools and hardens into the desired shape.

From January 29, 2008 to May 22, 2009, Plaintiff sent several shipments of resin to Defendant. Each shipment was accompanied by an invoice stating the price of the resin and requiring that, if Defendant accepted the product, it was required to render payment for the amount shown on the invoice within 60 days after receiving the resin.

Defendant failed to pay the amount specified on the invoices sent from January 29, 2008 to May 22, 2009. On August 20, 2009, Plaintiff‟s counsel sent a letter to Defendant threatening to file suit if it did not pay outstanding balance within 10 days.

Following that letter, the parties engaged in negotiations that resulted in a Forbearance Agreement. Under that contract, which was executed by Defendant‟s owner, Michel Buchbut, on September 17, 2009, Plaintiff agreed to temporarily refrain until March 31, 2010 from instituting legal proceedings to recover the balance owed by Defendant. (Pl.‟s Br. Supp. Mot. Summ. J., Ex. 5 at 3, ¶ 3.) In exchange for that promise, Defendant agreed among other obligations to make payments of $10,000 each week starting immediately and continuing until the outstanding balance was paid. (Id. at 3, ¶ 3(a).) Additionally, Defendant granted Plaintiff a security interest in its assets and agreed to execute a "Security Agreement" setting forth the terms of that interest. (Id. at 3, ¶ 3(c)); see also (Pl.‟s Br. Supp. Mot. Summ. J., Ex. 6.) (granting Plaintiff a security interest in all accounts, equipment, and other miscellaneous property held by Defendant as collateral for the debts discussed in the Forbearance Agreement.)

The Forbearance Agreement included a series of factual recitals memorializing the parties‟ understanding of the circumstances that underlie this suit. The portions of those recitals relevant to this ruling stated that:

(1) Plaintiff delivered resin to Defendant "on a continuing basis" since January 29, 2009;

(2) Defendant agreed to pay for that resin as specified on the invoice attached to each shipment;

(3) Plaintiff duly included the required invoice with each shipment; and

(4) Defendant "failed to pay all amounts due and outstanding pursuant to the [i]nvoices . (the "Payment Default‟)." (Id. at 1.)

In addition to the recitals set forth above, the Forbearance Agreement included a series of "acknowledgements" by Defendant. Specifically, Defendant admitted that (1) it "has no claim, defense or offset with respect to the quality, merchantability or suitability of any of the [resin it] received," and (2) Plaintiff "has the right to enforce all rights and remedies, at law or in equity, available to [Plaintiff] with respect to the amount due" for the resin sales. (Id. at 2, ¶ 2(b), (d).) Most importantly, Defendant acknowledged that, as of the date of the Forbearance Agreement, it was "indebted to the [Plaintiff] in the amount of the Initial Outstanding Amount, subject to adjustment as per the Determination Procedure." (Id. at 2, ¶ 2(a).)

Thus, the Forbearance Agreement -- in both its recitals and acknowledgements -- explicitly stated that Defendant failed to pay for at least some of the resin delivered by Plaintiff. The recitals did not, however, specify the exact amount of Defendant‟s liability. Rather, they stated that:

[Defendant] . owes [Plaintiff] an amount believed to be in excess of Six Million Dollars ($6,000,000.00) (the "Initial Outstanding Amount") plus any adjustments to such amount as determined at the conclusion of the "Determination Procedure" (as defined below) set forth . hereunder. (Id. at 1.)

The "Determination Procedure" was set forth in a later section of the Forbearance Agreement, which stated that:

Commencing immediately, the parties shall engage in a determination procedure . whereby the parties will mutually review all invoices and undertake a mutual accounting of all open invoices (the "Open Invoices"), copies of which shall be provided by [Plaintiff], together with supporting and corresponding (i) bills of lading and (ii) proof of delivery. [Plaintiff] shall further provide a summary sheet listing each Open Invoice and the corresponding amounts due thereunder and/or payments received with respect thereto. [Defendant] agrees to pay for all [resin] for which delivery is confirmed. (Id. at 4, ¶ 4.)

In other words, the parties agreed that Defendant was liable for at least $6 million, but deferred the task of ascertaining the amount, if any, of Defendant‟s liability in excess of that sum.

By executing the Forbearance Agreement, Defendant also agreed to a broad waiver of any claims it might have asserted against Plaintiff. That waiver stated:

In consideration of the forbearance granted by [Plaintiff] pursuant to this Forbearance Agreement, [Defendant] hereby release[s] [Plaintiff], its successors and assigns, attorneys, agents, officers, directors and employees (collectively, the "Released Parties"), from any and all claims, damages or causes of action it has, had or may claim to have, at any time, against the Released Parties at any time from the beginning of time through the actual date of execution of this Forbearance Agreement.. The Released Parties shall not be liable or ...

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