Upon the following papers read on Plaintiffs motion seeking leave to amend the complaint:

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1 INDEX NO SUPREME COURT - STATE OF NEW YORK IAS TERM, PART 28 NASSAU COUNTY PRESENT: HONORABLE LEONARD B. AUSTIN Justi& NATURES BEST GROUP, INC., et al., Plaintiffs, - against - X Motion R/D: Submission Date: Motion Sequence No.: 012/MOT D PLAINTIFF S ATTORNEY Solomon, Zanderer, Ellenhorn, Frischer & Sharp 45 Rockefeller Plaza New York, New York BEST FOODS, INC., twa CPC INTERNATIONAL INC., et al., Defendants. X DEFENDANT S ATTORNEY Kasowitz, Benson, Torres & Friedman, LLP 1301 Avenue of the Americas New York, New York Upon the following papers read on Plaintiffs motion seeking leave to amend the complaint: Plaintiff s Notice of Motion; Affidavit of Dean T. Cho, Esq. and supporting papers; Affirmation of James J. Stricker, Esq. in Opposition and supporting papers; Defendant s Memorandum of Law in Opposition; Affirmation of Dean T. Cho, Esq. Plaintiffs Reply Memorandum of Law. Plaintiffs Nature s Best Group, Inc., George Riccoboni, Raymond Belanger, Mark Vitale, Manorville Corp., Mark Lorusso, Mark Silverman, Silvy Dee Distributors, Vincent Liscio, V.S.M. Distribution Corp., Robert Glew and R&L Distributors, Inc. seek an order 1

2 pursuant to CPLR 3025 granting them leave to amend their complaint to add a cause of action for anticipatory breach of contract is denied. The instant action arises out of the termination of six of its exclusive wholesale distribution agreements with other Plaintiffs by the Defendants, Best Foods, Inc. and its various subsidiaries. ( Best Foods ) In addition, Best Foods sent a letter dated June 18, 1998, to each of the moving Plaintiffs, which, in essence, set forth its position that, while it had no intention to do so at that time, they could terminate their contractual wholesale distribution arrangements with the moving Plaintiffs, if their business judgment so indicated. The provision of the agreements in question provides that: So long as the Bakery shall continue in business, it shall not terminate or cancel this agreement, provided the wholesaler faithfully carries out the terms hereof. This agreement shall continue in full force and effect until canceled by the Bakery for just cause or until terminated by the wholesaler with or without just cause. The complaint alleges ten causes of action seeking a declaration of the parties rights with respect to termination as well as alleging breaches of the implied obligations of good faith and fair dealing with respect to resale pricing, competing with its own wholesalers in violation of the exclusivity provisions of the agreements, failing to fill wholesalers orders, conspiring to degrade and acquire Plaintiffs businesses for less 2

3 than fair value, failing to accept returns of consigned goods and breach of fiduciary duty. On October 2, 1998, this Court (DeMaro J.) entered an order granting the Plaintiffs partial summary judgment. Justice DeMaro essentially held that Defendants could terminate the distribution agreements it had with its distributors in one of two instances only. They were (1) they went out of business, or (2) the distributor in question failed to perform. Neither of these conditions was alleged by Defendants. Instead, Defendants argued that the above quoted language permitted a termination for just cause which could include a sound economic business reason such as an overall business plan which included reacquiring certain of the distributor s territories. The court disagreed and granted partial summary judgment on the issue of the breach by the Defendants~as to the terminated Plaintiffs. In addition, the court held that a permanent injunction was inappropriate because there was an adequate remedy at law but that a temporary injunction should issue until the damages trial. The court s decision as to these issues was affirmed by the Second Department on February 28, 2000, sub nom Nature s Best Group v. CPC Intl., 269 A.D. 2d 578, 703 N.Y.S. 2d 756 (2nd Dept. 2000). The trial court in its decision stated: As to those Plaintiffs not targeted for immediate termination their action is really one for anticipatory breach. These Plaintiffs may well fear being singled out one by one for action by the much larger entity which is the Defendant 3

4 Best Foods. Any demand for dismissal here is denied as certainly a declaration of their rights under the contract is not inappropriate; they are also parties to the other causes in the complaint. On October 4, 2000, Plaint+ moved to add a cause of action alleging an anticipatory repudiation of the agreement by Defendants and the destruction of the value of their exclusive wholesale distribution agreements for which they paid valuable consideration. CPLR 3025(b) provides that leave to amend a complaint shall be freely given. The party opposing the motion has the burden of overcoming the presumption of validity in favor of the moving party. See, Drummond v. Petit0 CPA, 271 A.D. 2d 208, 705 N.Y.S. 2d 363 (lst Dept. 2000); and Otis Elevator Co. v Avenue of Americas Condominium, 166 A.D. 2d 307,564 N.Y.S. 2d 119 (lst Dept. 1990). Lateness alone does not preclude a motion to amend but it must be coupled with a demonstration of prejudice. See, Abdelnabi v. New York Citv Transit Authoritv, - A.D. 2d -, 709 N.Y.S. 2d 548 (lst Dept. 2000). While the determination as to whether to grant such leave is within the sound discretion of the trial court, when there has been substantial delay in bringing the motion it is incumbent upon the moving party to explain such delay. See, Capstone v. Countv of Westchester, - A.D. 2d -, 708 N.Y.S. 2d 418 (2nd Dept. 2000); and Pettenqill v. Jack J. Sissman P.C., 267 A.D. 2d 767,701 N.Y.S. 2d 138 (3rd Dept. 1999). See also, Romeo v. Arriao, 254 A.D. 2d 270, -,678 N.Y.S. 2d 115, -, (2 d

5 Dept. 1998) which held: In exercising its discretion, the court should consider how long the amending party was aware of the facts upon.which the motion was predicated, whether the amendment is meritorious, and whether a reasonable excuse for the delay was offered. The court is required to satisfy itself that the cause of action which the Plaintiff proposes to add has merit. See, CFJ Associates of New York, Inc. v. Hanson Industries, 260 A.D. 2d 917, 688 N.Y.S. 2d 836 (3rd Dept. 1999); and NAB Construction Corp. v. MTA, 167 A.D. 2d 301, 562 N.Y.S. 2d 44 (lst Dept. 1990). It has been held that it is not an abuse of discretion to deny leave to amend where years have elapsed since the commencement of the action during which discovery has proceeded or been completed. See, Napoli v. Canada Drv Bottlinq Co. of N.Y., 166 A.D. 2d 696, 561 N.Y.S. 2d 282 (2nd Dept. 1990); Linares v. Spencer-Cameron Leasinq Corp., 121 A.D. 2d 606, 503 N.Y.S. 2d 639 (2 d Dept. 1986). Applying the above principles to the case at bar, the court concludes that a lapse of nearly three and one half years from April, 1997, when the action was commenced to October, 2000, when the motion was made is unreasonable and not satisfactorily explained. This is especially true where the possibility of a cause of action sounding in anticipatory breach was first raised by the court more than two years ago. In addition, the court finds, upon close analysis, that a cause of action in anticipatory breach of

6 contract does not lie under the facts of this case for several reasons. As noted by the court in Inter-Power of New York Inc. v. Niaaara Mohawk Power Corp., 259A.D. 2d 932,686 N.Y.S. 2d 91, Iv. app. den. 93 N.Y. 2d 812,695 N.Y.S. 2d 540 (1999): It is well settled that when one party breaches an executory contract, the adverse party has a choice--to treat the entire contract as broken and sue immediately for the breach or reject the proposed breach and continue to treat the contract as valid (see, 22A NY Jur 2d, Contracts, , at ). The adverse party must, however, make an election and cannot at the same time treat the contract as broken and as subsisting. One course of action excludes the other (Sfrasbourger v. Leer-burger, 233 NY 55, 59). j An election to keep the contract in force negates the option of suing for the anticipatory breach. See, 22A N.Y. Jur. 2d Contracts 449; Rachmani Corp. v. 9 E 96 h Street Apartment Corp., 21 I A.D. 2d 262,629 N.Y.S. 2d 382 (lst Dept. 1995). This is so because the purpose of the doctrine of anticipatory breach is to relieve the nonbreaching party of the obligation to perform in the future. See, 22A NY Jur. 2d Contracts Furthermore, the party claiming breach must show an absolute repudiation by language or act making it futile for the party to proceed. Id. In the absence of an absolute and unequivocal refusal to perform or a clear indication of the inability to do so, a Defendant cannot be said to have repudiated the contract or committed an anticipatory breach. See, Express Industries & Terminal Corp. v. New York State Dept. of Transportation, 252 A.D. 2d 376,676 N.Y.S. 2d 62 (lst Dept. 1998); 6

7 revd. ofhergrds., 93 N.Y. 2d 584, 693 N.Y.S. 2d 857 (1999). In the case at bar, the Best Foods letter did not indicate a refusal to perform. Rather, after informing the nonterminated Defendants that certain other distribution agreements were being terminated, the letter went on to say: We view your organization as an important part of our plan and are looking forward to working with you to build the business. It is important for you to know the company has no intention at this time to exercise its right to purchase the territory that is currently owned by you. (Emphasis added). Under these circumstances, the court concludes that a cause of action for anticipatory breach does not lie and would be without merit. As noted by the court s 1998 decision, Plaintiffs have their declaration that the contract terms do not permit a termination by Defendants for purely business reasons unrelated to a failure to perform on the part of the Plaintiffs who are already parties to the causes of action related to harm caused to the value of all the wholesalers businesses by the Defendants other alleged conduct. Plaintiffs have argued that the court is barred from so ruling with respect to the merit of the proposed amendment on the grounds that the prior court s reference to anticipatory breach is now the law of the case. This court disagrees. The doctrine of law of the case applies only to matters necessary to the determination of the issue at

8 hand and not to dictum. See, People v. Palumbo 79 A.D. 2d 518,433 N.Y.S. 2d 770 (lst Dept. 1980), atxi 53 N.Y. 2d 894,440 N.Y.S. 2d 633 (1981). Statements made by the court on legal issues which are merely gratuitous are not binding. See, Matter of Local 345 of Retail Stores Emplovees. Union (Heinrich Motors), 96 A.D. 2d 182, 468 N.Y.S. 2d 240 (4 Dept. 1983), revd. ofhergrds., 63 N.Y. 2d 985,483 N.Y.S. 2d 997 (1984). A close reading of the prior court s decision reveals that it was never asked to rule on the question of an anticipatory breach and that issue was not briefed at that time. Neither were the court s comments necessary to the matters decided at that time. The court decided that the contract language did not permit a termination by Defendants for economic or business reasons and that the terminated Plaintiffs were entitled to partial summary judgment on the issue of a breach of contract as to them. It further decided that a permanent injunction was inappropriate as the Plaintiffs had a remedy at law but that a temporary injunction would issue to keep the terminated Plaintiffs viable until the damage phase of the proceedings were complete. It did not need to examine or decide whether the elements of a claim for anticipatory breach had been satisfied as to the non-terminated Plaintiffs. The true gravamen of the court s determination was that the contract language at issue prohibited the termination of the non-terminated Plaintiffs as well and that the Defendants motion to dismiss the action as to those Plaintiffs would not be granted because of their claims for damages as set 8

9 forth in the other causes of action in the complaint. Therefore, it is, ORDERED, that the motion of the non-terminated Plaintiffs to amend the complaint to add an eleventh cause of action for anticipatory breach of contract is denied.. This constitutes the decision and Order of the Court. Dated: Mineola, NY &&:. ( : December 5,200O Hon. LEONAR6 B. AUSTIN, J.S.C.. 9