Foresco Co., Ltd. v. Oh
696 F. App'x 550
| 2d Cir. | 2017Background
- Foresco Co., Ltd. sued Albert Oh seeking declaratory relief, specific performance, or breach of contract based on a two-sentence document titled “Promissory to Settle Balance” (PSB).
- The PSB (drafted by Foresco, translated from Korean) states Oh personally guaranties $1,254,499.90 owed to Foresco by Flash Ventures, Inc., and contains a second, awkward sentence about finishing payment discussions and promising to implement.
- The district court granted summary judgment for Oh, dismissing Foresco’s claims; Foresco appealed.
- The Second Circuit reviewed contract interpretation and guaranty/Statute of Frauds principles under New York law, including that a guaranty requires a writing identifying parties, subject matter, and essential terms, and that a guaranty must be supported by consideration.
- The panel held the PSB unambiguously contains a guaranty as to identity, subject, and amount, but found ambiguity whether the PSB reflects consideration (i.e., creditor forbearance), requiring remand for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PSB is a valid guaranty under NY law | PSB is a personal guaranty by Oh for $1,254,499.90; writing satisfies Statute of Frauds | PSB is not a valid guaranty (impliedly contesting terms/consideration) | PSB unambiguously designates parties, subject, and amount — it is a guaranty |
| Whether PSB is supported by consideration | The second sentence implies Foresco agreed to forbear enforcement until payment method agreed (thus consideration) | The sentence is ambiguous and does not clearly show creditor forbearance or other consideration | Ambiguous on consideration; extrinsic evidence admissible; remand for trial |
| Whether extrinsic evidence may be considered | Permit extrinsic evidence to show parties’ intent and existence of consideration | Opposed if contract is unambiguous | Because the PSB is ambiguous as to consideration, extrinsic evidence may be considered at trial |
| Appropriateness of summary judgment | Foresco contends factual dispute on consideration precludes summary judgment | Oh argues writing alone disposes of claims | Summary judgment vacated and remanded due to material factual dispute about consideration |
Key Cases Cited
- Marvel Characters, Inc. v. Kirby, 726 F.3d 119 (2d Cir. 2013) (standard of review for summary judgment)
- Compagnie Financiere de CIC et de L’Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 188 F.3d 31 (2d Cir. 1999) (contract interpretation principles under New York law)
- DeRosis v. Kaufman, 641 N.Y.S.2d 831 (N.Y. App. Div. 1996) (requirements for a writing to satisfy New York Statute of Frauds for guaranties)
- Law Debenture Tr. Co. of N.Y. v. Maverick Tube Corp., 595 F.3d 458 (2d Cir. 2010) (read integrated contract as a whole; extrinsic evidence only if ambiguous)
- Strong v. Sheffield, 144 N.Y. 392 (N.Y. 1895) (forbearance by creditor is valid consideration for guaranty)
- Hauswald v. Katz, 214 N.Y.S. 705 (N.Y. App. Div. 1926) (guaranty requires consideration)