Anhui Joyful Manufacturing & Trading Co., Ltd v. M.I.S.S. Sportwear, Inc.

Background

Anhui Joyful Manufacturing & Trading Co., Ltd. and Anhui Import and Export Co., Ltd. (collectively, “Anhui”) brought claims against M.I.S.S. Sportswear, Inc. and The Miss Group (collectively, “MISS”) concerning unpaid garment orders. Between May 2022 and March 2023, MISS submitted 247 purchase orders to Anhui. Anhui sent 16 shipments between September 2022 and July 2023.

MISS initially paid some amounts but stopped payments in August 2023. MISS later contended that some garments had defects, including incorrect sizing, poor dyeing, color bleeding, missing pockets, stains, and texture problems. MISS also asserted a counterclaim seeking damages for defective products, customer deductions, chargebacks, markdowns, lost profits and sales, and overhead expenses. No party moved for summary judgment on that counterclaim.

Anhui asserted claims for breach of contract, account stated, and goods sold and delivered. Anhui Joyful sought $701,670.20, and Anhui Import sought $1,706,760.18. Anhui moved for summary judgment on its claims.

Applicable law

The purchase orders did not contain a choice-of-law provision. MISS argued that the United Nations Convention on Contracts for the International Sale of Goods applied. The court held that MISS waived reliance on that Convention and consented to New York law because it did not invoke the Convention in its pleadings or earlier filings, relied on New York’s parol-evidence rule, and raised the Convention only at the summary-judgment stage.

The court also ruled that it could not consider June 2023 text messages submitted by MISS in opposition to summary judgment. Anhui asserted that MISS had not disclosed the messages during discovery and first produced them nearly two months after discovery closed. MISS did not respond to that assertion. The court therefore excluded the messages under the federal discovery-disclosure rules.

Breach of contract

Under New York’s version of the Uniform Commercial Code, a buyer accepts goods after having a reasonable opportunity to inspect them if the buyer does not make an effective rejection. Rejection must occur within a reasonable time after delivery, and the buyer must seasonably notify the seller.

The court held that MISS had a reasonable opportunity to inspect Anhui’s shipments. MISS’s own evidence stated that it inspected shipments to verify quantity, colors, and style. Other evidence showed that MISS later pulled samples from its warehouse and identified defects in shipments delivered months earlier. The court found that MISS chose not to inspect all shipments because the samples conformed and Anhui had a good track record, not because inspection was impossible.

The court also held that MISS accepted the goods by reselling them to retailers. Under the applicable law, resale is an act inconsistent with the seller’s ownership and therefore demonstrates acceptance. The court concluded that no reasonable factfinder could determine that MISS had not accepted Anhui’s shipments.

MISS’s complaints about the goods did not amount to an unequivocal rejection. The court found that a June 28, 2023 email describing problems and providing a “heads up” did not clearly reject the goods. As to Purchase Order #M20152, the court stated that a July 13, 2023 email could be viewed as an unequivocal rejection, but it was sent nearly three months after the April 14 delivery and therefore was not timely.

Because MISS did not identify evidence that would allow a reasonable factfinder to rule in its favor, the court granted Anhui’s motion for summary judgment on the breach-of-contract claim.

Duplicative claims

The court dismissed Anhui’s account-stated claim because it sought payment for the same shipments, based on the same nonpayment allegations and evidence, as the breach-of-contract claim. An account stated is an agreement about the correctness of an account and the balance due, which may sometimes be implied from retaining bills without objection or making partial payment.

The court also dismissed the goods-sold-and-delivered claim because it involved the same elements, evidence, and alleged nonpayment as the breach-of-contract claim. The court characterized that claim as a type of breach-of-contract claim and therefore duplicative here.

Damages and disposition

The court found that Anhui submitted invoices and payment records establishing the amounts owed. MISS disputed liability but did not dispute Anhui’s damages calculations. The court concluded that Anhui Joyful was entitled to $701,670.20 and Anhui Import was entitled to $1,706,760.18.

The court’s conclusion states that Plaintiffs’ motion for summary judgment was granted as to the breach-of-contract claim. The claims for account stated and goods sold and delivered were dismissed as duplicative. The counterclaim concerning allegedly defective products remained pending.