In an action, inter alia, to recover damages for breach of contract, (1) the plaintiff and the third-party defendant appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Kitzes, J.), dated June 7, 2013, as denied that branch of their motion which was pursuant to CPLR 3211 (a) (1) and (7) to dismiss the defendant/third-party plaintiff's counterclaims and the third-party complaint, and (2) the plaintiff appeals from an order of the same court dated October 8, 2013, which denied that branch of its motion which was for summary judgment on the complaint.
Ordered that the order dated June 7, 2013, is reversed insofar as appealed from, on the law, and that branch of the motion of the plaintiff and the third-party defendant which was pursuant to CPLR 3211 (a) (1) and (7) to dismiss the defendant/third-party plaintiff's counterclaims and the third-party complaint is granted; and it is further,
Ordered that the order dated October 8, 2013, is modified, on the law, by deleting the provision thereof denying that branch of the plaintiff's motion which was for summary judgment on the issue of liability, and substituting therefor a provision granting that branch of the motion; as so modified, the order dated October 8, 2013, is affirmed; and it is further,
Ordered that one bill of costs is awarded to the plaintiff and the third-party defendant.
The plaintiff, Tuscan/Lehigh Dairies, Inc. (hereinafter Tuscan), sold its New York wholesale milk and dairy product distribution business to the defendant/third-party plaintiff, Beyer Farms, Inc. (hereinafter Beyer). In connection with this transaction, Tuscan and Beyer entered into a distribution agreement (hereinafter the distribution agreement), wherein Tuscan agreed to supply Beyer with milk and milk products for resale, and to license Beyer to sell those products using Tuscan's trademarks. In exchange, Beyer executed a promissory note, agreed to pay Tuscan a monthly fee, and agreed to pay for the milk and the milk products that it purchased from Tuscan. Beyer also granted Tuscan a security interest in its personal property, including its accounts, inventory, equipment, and fixtures.
Tuscan commenced this action against Beyer to recover damages for breach of contract and to recover chattels subject to a security interest. Beyer asserted two counterclaims against Tuscan to recover damages for breach of contract and breach of the implied duty of good faith and fair dealing, alleging that Tuscan had improperly terminated the distribution agreement and refused to release holds on Beyer's accounts receivable. Beyer also commenced a third-party action against Dean, alleging that Dean had tortiously interfered with Beyer's contracts with its customers by, inter alia, attempting to secure another distributor for them. Tuscan moved for summary judgment on the complaint, and Tuscan and Dean moved pursuant to CPLR 3211 (a) (1) and (7) to dismiss the counterclaims asserted against Tuscan and the third-party complaint asserted against Dean. The Supreme Court denied the motions, and Tuscan and Dean appeal.
The parties agree that, in accordance with a choice of law provision in the distribution agreement, Delaware law governs "all claims and controversies arising" out of the agreement, "including claims for breach of contract and related causes of action."
The Supreme Court should have granted that branch of Tuscan's and Dean's motion which was to dismiss Beyer's counterclaim to recover damages for breach of contract. "A judicial interpretation of a contract presents a question of law" (Alta Berkeley VI C.V. v Omneon, Inc., 41 A.3d 381, 385 [Del]).
The Supreme Court also should have granted that branch of Tuscan's and Dean's motion which was to dismiss Beyer's counterclaim to recover damages for breach of the duty of good faith and fair dealing. The implied covenant of good faith and fair dealing "`requires a party in a contractual relationship to refrain from arbitrary or unreasonable conduct which has the effect of preventing the other party to the contract from receiving
The Supreme Court should have granted that branch of Tuscan's and Dean's motion which was to dismiss the third-party claim alleging that Dean tortiously interfered with Beyer's contracts with its customers. Under New York law, which we apply because the tortious interference claim does not arise out of the agreement, "`[t]ortious interference with contract requires the existence of a valid contract between the plaintiff and a third party, defendant's knowledge of that
The Supreme Court should have granted that branch of Tuscan's motion which was for summary judgment on the issue of liability on Tuscan's claims for breach of contract and recovery of chattels. Under Delaware law, to establish a claim for breach of contract, a plaintiff must provide evidence demonstrating: (1) a contractual obligation; (2) a breach of that obligation by the defendant; and (3) a resulting damage to the plaintiff (see VLIW Tech. LLC v Hewlett-Packard Co., 840 A.2d 606, 612 [Del 2003]; H-M Wexford LLC v Encorp, Inc., 832 A.2d 129, 140 [Del Ch 2003]). Tuscan established its prima facie entitlement to judgment as a matter of law on the issue of liability on its breach of contract cause of action by submitting the distribution agreement, the promissory note, and evidence of Beyer's payment defaults (see Newport Disc, Inc. v Newport Elecs., Inc., 2013 WL 5797350, *3, 2013 Del Super LEXIS 436, *10 [Oct. 7, 2013, No. N12C-10-228 (MMJ/CCLD)]).
Tuscan also established its prima facie entitlement to judgment as a matter of law on the issue of liability on its cause of action for recovery of chattels subject to a security interest. Tuscan submitted evidence demonstrating that it had a perfected security interest in, inter alia, Beyer's accounts, inventory, equipment, and fixtures, and upon Beyer's payment default, Tuscan was entitled to reduce its claim to judgment foreclosing on that collateral (see Del Code Ann, tit 6, § 9-601 [a] [1]).
In opposition, Beyer failed to raise a triable issue of fact as to whether it was in default on its payment obligations under the terms of the distribution agreement or on the promissory note, and as to whether Tuscan had a perfected security interest in Beyer's personal property.
Beyer also failed to raise a triable issue of fact on its affirmative defense of waiver. Under Delaware law, contractual requirements and conditions may be waived, but the standards for proving waiver are "quite exacting" (see Amirsaleh v Board of Trade of City of N.Y., Inc., 27 A.3d 522, 529 [Del 2011]; AeroGlobal Capital Mgt., LLC v Cirrus Indus., Inc., 871 A.2d 428, 445 [Del 2005]). Waiver is an intentional relinquishment of a known right, that "implies knowledge of all material facts and an intent to waive, together with a willingness to refrain from enforcing those contractual rights" (AeroGlobal Capital Mgt., LLC v Cirrus Indus., Inc., 871 A2d at 444). Contrary to Beyer's contention, Tuscan did not waive its right under the distribution agreement to timely payment from Beyer. The distribution agreement provides, in relevant part, that "[n]o delay or omission by either party hereto in exercising any right or power hereunder will impair such right or power or be construed to be a waiver thereof. A waiver by either party hereto of any of the covenants to be performed by the other or any breach thereof will not be construed to be a waiver of any succeeding breach thereof or of any other covenant herein contained." Moreover, Tuscan explicitly reserved its right to pursue all legal and equitable remedies under the distribution agreement in each payment default notice that it sent to Beyer. Accordingly, Beyer failed to raise a triable issue of fact as to whether Tuscan intended to waive its right to timely payment under the distribution agreement (see Phunware, Inc. v Excelmind Group Ltd., 2015 WL 4606668, *7-8, 2015 US Dist LEXIS 99993, *18-22; Pegasus Dev. Corp. v Hane, 2007 WL 2844878, *4-6, 2007 US Dist LEXIS 72535, *13-19 [ED Pa,
Contrary to Beyer's contention, it waived the defense of election of remedies by failing to raise it as an affirmative defense in its amended answer (see CPLR 3018 [b]; Ross v Ross Metals Corp., 111 A.D.3d 695, 696-697 [2013]; Love v Rockwell's Intl. Enters., LLC, 83 A.D.3d 914, 915 [2011]; Jordan v Villetto, 38 A.D.3d 716, 717 [2007]; Becker v Shore Drugs, 296 A.D.2d 515, 516 [2002]).
Beyer's remaining contentions regarding the branch of the motion which was for summary judgment are without merit.
Accordingly, the Supreme Court erred in denying that branch of Tuscan's motion which was for summary judgment on the issue of liability.