Palm Bay International, Inc. v. Marchesi Di Barolo S.P.A.
2011 U.S. Dist. LEXIS 74111
| E.D.N.Y | 2011Background
- Palm Bay International, Inc. and the Taubs sue Marchesi Di Barolo S.P.A. under Agency and Importation Agreements granting Palm Bay exclusive US import rights and payment terms of 100 days from bill of lading.
- Palm Bay ordered Moscato d'Asti for Olive Garden; Marchesi began delivering Lot 291 and Lot 310 in 2007, with defects reported by Olive Garden beginning January 2008.
- Defective Moscato led to a January–February 2008 recall of Lot 291; Olive Garden cancelled the program on February 21, 2008, causing additional damages to Palm Bay including a $1.1 million payment to Olive Garden.
- Palm Bay paid Marchesi for Moscato; Palm Bay set off against other payments in January 2008; in January 2009 Marchesi terminated both the Importation and Agency Agreements.
- At trial, the jury found breach of the Implied Warranty of Merchantability by Marchesi but also a valid cure defense, and awarded damages to Marchesi on related set-off claims totaling $519,552.68.
- The Court granted in part and denied in part the post-trial motions: it dismissed the sixth counterclaim (fiduciary duty by Taubs) as a matter of law, while denying judgment as a matter of law or new trial on the warranty and dispute-resolution issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the cure under UCC 2-508 was legally effective | Palm Bay argues cure failed to place it in the pre-breach position and did not tender damages. | Marchesi contends cure was proper and timely and supported by multiple replacement options. | No reversible error; cure upheld; issues of damages and waiver addressed. |
| Whether the dispute-resolution provision is an exclusive remedy | Palm Bay contends it is not exclusive and set-off violated the provision. | Marchesi argues it is a condition precedent and enforceable; not merely an unenforceable agreement to agree. | Provision enforceable as a valid dispute mechanism; not an exclusive remedy; denial of JMOL on this claim. |
| Whether the Taubs owed fiduciary duties in instructing the set-off | Taubs acted in their capacity as Palm Bay owners, not Marchesi agents, thus no fiduciary breach. | Taubs owed loyalty and good faith as agents within the Agency Agreement; set-off breached duties. | Taubs not acting as fiduciaries under the Agency Agreement; sixth counterclaim dismissed as a matter of law. |
Key Cases Cited
- This Is Me, Inc. v. Elizabeth Taylor, 157 F.3d 139 (2d Cir.1998) (clarifies standards for post-trial Rule 50 motions and weight of evidence)
- Lambert v. Genesee Hospital, 10 F.3d 46 (2d Cir.1993) (strict specificity required for Rule 50; waivers considerations)
- Samuels v. Air Transport Local 504, 992 F.2d 12 (2d Cir.1993) (limits on expanding grounds for judgment as a matter of law)
- Cruz v. Local Union No. 3 of International Brotherhood of Electrical Workers, 34 F.3d 1148 (2d Cir.1994) (standard for JMOL and weight of evidence analysis)
- Tolbert v. Queens College, 242 F.3d 58 (2d Cir.2001) (one element insufficiency cannot support JMOL for other elements)
- Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.133 (Supreme Court 2000) (credibility and weighing of evidence are jury functions; JMOL strictness)
- Piesco v. Koch, 12 F.3d 332 (2d Cir.1993) (standard for granting JMOL after trial)
- DLC Management Corp. v. Town of Hyde Park, 163 F.3d 124 (2d Cir.1998) (new trial standards compare to JMOL; evidentiary weight considerations)