Minnie Rose LLC v. Yu

Background

Minnie Rose, LLC brought claims for fraudulent misrepresentation and unjust enrichment against Anna Yu, Elva Green Clothing Company Ltd., and unnamed defendants. Elva Green and Yu counterclaimed against Minnie Rose and filed a third-party complaint against Lisa Shaller Goldberg, Minnie Rose’s chief executive officer, asserting unjust enrichment and fraud, among other claims.

Minnie Rose alleged that Elva Green, which acted as its overseas sourcing agent, sent invoices that overstated Chinese factories’ charges and thereby increased both the amounts Minnie Rose paid and Defendants’ commissions. Minnie Rose also alleged that Defendants redirected payment on some invoices to an account they controlled and falsely claimed to have made advance payments to a factory. Minnie Rose alleged at least $2.2 million in damages.

Defendants denied creating fraudulent invoices or keeping money they were not entitled to receive. They alleged that Minnie Rose and Shaller Goldberg failed to pay the full amounts owed for orders and contacted Chinese factories directly to avoid paying Elva Green’s commissions. Defendants sought approximately $1.7 million in damages on their counterclaims, including a claim for goods sold and delivered.

Motions and rulings

The court addressed Plaintiffs’ renewed motion for sanctions under Federal Rule of Civil Procedure 37(e), Plaintiffs’ request to prevent Defendants from deposing Shaller Goldberg, and Defendants’ motion for summary judgment and dismissal.

Sanctions denied. Plaintiffs argued that Defendants failed to preserve and willfully destroyed bank documents responsive to discovery requests. The court held that Plaintiffs could renew their sanctions motion because the earlier sanctions ruling had allowed a later motion under appropriate circumstances. But the court found that Plaintiffs had not offered new evidence or another sufficient basis to change the earlier result. The court also stated that the additional allegations concerning destroyed business records and incomplete production did not establish a pattern of willful destruction, bad faith, or contempt of discovery obligations. The renewed sanctions motion was therefore denied.

Late deposition precluded. The court granted Plaintiffs’ request to prevent Defendants from deposing Shaller Goldberg. Defendants did not move to reopen discovery or to compel a post-deadline deposition, and they gave the court no reason showing the required good cause. The court found that Defendants had ample time and repeated warnings to complete discovery, but waited until the close of discovery to notice the deposition and did not try to take it before the deadline. The court concluded that Defendants could not take the deposition months after the close of eight years of discovery.

Summary judgment denied. Defendants sought partial summary judgment on their claim that Minnie Rose owed payment for goods sold and delivered. Summary judgment is a decision without a trial when the moving party shows that no important factual dispute requires a trial. The court denied the motion, stating that Defendants had not filed the required statement of material facts under the court’s local rules. The court also found that Defendants raised important arguments for the first time in their reply papers and had not submitted enough admissible evidence to show that the elements of their claim were undisputed.

The court identified the elements of a goods-sold-and-delivered claim as a contract with the buyer, the buyer’s failure to pay, and the buyer’s acceptance of the goods. Defendants submitted a spreadsheet summarizing invoices rather than the invoices themselves, and did not submit evidence establishing the payments made, if any, or proving that Minnie Rose accepted the goods. Plaintiffs also presented evidence supporting their allegation that Defendants’ invoices were artificially inflated, creating factual disputes for a fact-finder. The court stated that Defendants’ summary-judgment motion was denied without prejudice.

Dismissal denied. Defendants sought dismissal of Minnie Rose’s fraud case, sanctions motion, and case as a whole, including an argument that the action was brought in bad faith. The court treated the request as one under Rule 12(b)(6), which tests whether a complaint alleges enough facts to state a legally sufficient claim. The court denied the request because it repeated arguments already rejected in the court’s earlier decision, came years after discovery had occurred, and was not adequately supported in the moving papers. The court also held that arguments raised only in reply were improper and that Defendants’ reliance on a case concerning sanctions did not support dismissal. The court did not dismiss the complaint or Minnie Rose’s fraudulent-misrepresentation claim.

Disposition

Judge Edgardo Ramos concluded that Plaintiffs’ motion was granted in part and denied in part: the request to preclude Shaller Goldberg’s deposition was granted, while the sanctions request was denied. Defendants’ motion was denied; specifically, the court denied their requests for dismissal and summary judgment, with the summary-judgment ruling stated as denied without prejudice. The court directed the parties to appear for a conference on December 7, 2023, and directed the clerk to terminate the two motions.