Samad v. Goldberg
1:12-cv-05459
S.D.N.Y.Nov 14, 2016Background
- Samad (Bangladesh) owned Savar and Supasox, which supplied apparel goods to R&J (a New York corporation owned by Goldberg and Breslow); Samad had a 15% equity stake in R&J and extended supplier credit.
- Rite Aid issued Purchase Order No. 4756256 in early 2010; R&J secured the Rite Aid order and issued R&J P.O. 700312 to Savar; shipping documents and a master contract (STL/R&J-001/2010) referenced R&J P.O. 700312.
- Savar shipped 1,486 cases of men’s socks (May 7, 2010) as the first tranche of a 1,945-case obligation; Rite Aid wired $102,712.32 to R&J for that shipment but R&J did not pay Savar $87,662.11 owed for the first tranche.
- Plaintiffs sued Goldberg and Breslow (individually) and R&J, alleging among other things veil-piercing, fraudulent transfer, breach of fiduciary duty, conversion, and unjust enrichment; bankruptcy proceedings resulted in a trustee settlement that released most claims against the principals.
- The bankruptcy court held that virtually all creditor claims (fraudulent conveyance, veil piercing, fiduciary breach, conversion) were barred by the trustee’s settlement, but allowed an unjust enrichment claim (Count Four) to proceed as unique to the plaintiffs; this bench trial concerns that remaining claim.
- The district court found that R&J (not Goldberg or Breslow individually) received the Rite Aid payment, that a valid contract governed the Savar–R&J transaction, and that plaintiffs failed to show individual liability or unjust enrichment against Goldberg and Breslow.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Goldberg/Breslow can be held individually liable (not via veil piercing) | Samad: principals should be personally liable because they retained funds R&J received and thus were unjustly enriched | Goldberg/Breslow: plaintiffs barred from veil-piercing; no tort (conversion) shown to impose personal liability | Denied — no evidence of individual tortious conversion; veil-piercing and related claims barred by trustee settlement |
| Whether unjust enrichment claim can proceed despite written contract | Samad: asserts Savar contracted with Rite Aid (via Exim Bank bill) and R&J unjustly kept payment owed to Savar | Defendants: transaction was governed by contract between Savar and R&J; Rite Aid’s contract was with R&J; funds went to R&J account | Denied — valid enforceable contract between Savar and R&J precludes quasi-contract recovery; funds went to R&J, not defendants individually |
| Whether evidence shows direct benefit to Goldberg/Breslow from the disputed funds | Samad: defendants indirectly benefitted by retaining money and continuing to draw salary/expenses | Defendants: funds deposited to R&J general account and used for corporate expenses; no direct enrichment to principals shown | Denied — plaintiffs failed to show defendants personally benefitted unjustly |
| Whether Savar had a contract with Rite Aid (supporting direct claim against Rite Aid or against defendants) | Samad: Exim Bank bill and consignee listing support inference of Savar–Rite Aid contract | Defendants: no communications, documents, or course of dealing showing Savar contracted with Rite Aid; all Rite Aid/R&J docs show Rite Aid contracted with R&J | Denied — no contract between Savar and Rite Aid; course of dealings and documents show Savar’s contract was with R&J |
Key Cases Cited
- Beth Israel Med. Ctr. v. Horizon Blue Cross and Blue Shield of N.J., 448 F.3d 573 (2d Cir. 2006) (quasi-contract/unjust enrichment is a restitutionary remedy and is precluded where an enforceable contract governs the subject matter)
- LoPresti v. Terwilliger, 126 F.3d 34 (2d Cir. 1997) (conversion of money requires obligation to return or treat specific funds in a particular way)
- Nordwind v. Rowland, 584 F.3d 420 (2d Cir. 2009) (elements of unjust enrichment under New York law)
- New Moon Shipping Co., Ltd. v. MAN B&W Diesel AG, 121 F.3d 24 (2d Cir. 1997) (course of dealing may imply contractual terms)
- Perry v. Sindermann, 408 U.S. 593 (U.S. 1972) (not every contractual term must be reduced to writing; conduct and course of dealings may create contractual obligations)
Outcome: Judgment for defendants Goldberg and Breslow; unjust enrichment claim denied; case closed.