FILED: NEW YORK COUNTY CLERK 06/14/2013 INDEX NO. 650910/2013 NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 06/14/2013 EXHIBIT H
FILED: WESTCHESTER COUNTY CLERK 05/14/2013 INDEX NO. 54031/2013 NYSCEF DOC. NO. 20 RECEIVED NYSCEF: 05/14/2013 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER CASTLE OIL CORPORATION, BMW GROUP LLC, - against- Plaintiff, Defendant. Index No. 54031/2013 DEFENDANT'S MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND IN SUPPORT OF DEFENDANT'S CROSS-MOTION TO STAY Defendant BMW Group LLC ("BMW") respectfully submits this memorandum of law in opposition to Plaintiff Castle Oil Corporation's ("Castle") motion for summary judgment and in support of BMW's cross-motion to stay proceedings. As set forth below, Castle is the defendant in a previously-filed putative class action filed by BMW and other plaintiffs, which is currently pending in New York Supreme Court. That suit alleges, among other things, fraud, deceptive trade practices, breach of contract, and breach of warranty-and involves precisely those transactions at issue in this lawsuit. Rather than bring its claims for payment as counterclaims in that action, Castle has launched this lawsuit, along with a dozen others against related entities, in a vexatious effort to perform an end-run around the litigation pending in Manhattan. Because there are myriad factual and legal issues raised by the dispute between these parties (which are already being adjudicated in the Supreme Court of another county) and because Castle's waste of judicial resources by bringing this action should not be condoned, Castle's motion for summary judgment should be denied and BMW's cross-motion to stay should be granted.
BACKGROUND BMW purchased heating oil from Castle for use in an apartment building located at 615 West 183rd Street, New York, New York 10033. (Exhibit A, Class Action Complaint, if 5). 1 On March 14, 2013, shortly after federal and state authorities raided several heating oil businesses in the New York City metro area in connection with ongoing criminal investigations, 2 BMW and other Castle customers (the "Class Action Plaintiffs") commenced a putative class action (BMW Group LLC v Castle Oil Corporation, Index No. 650910/2013), which is presently pending in the Supreme Court, New York County (the "Class Action"). 3 The Class Action Complaint alleges that Castle defrauded its customers by representing and warranting that the product sold and delivered to them was fuel oil suitable for purposes of heating their buildings when in fact Castle sold and delivered an entirely different petroleum product: fuel oil that had been adulterated in substantial part with waste oil (e.g., used oil, such as motor oil and other industrial oils). (Exhibit A, Class Action Complaint). One of the two deliveries that form the basis of Castle's complaint is specifically described in the Class Action Complaint (Exhibit A, Class Action Complaint, iii! 24 et seq.), and both deliveries are a part of the wrongful conduct alleged therein against Castle. On March 13, 2013, the day before the Class Action was filed, attorneys for BMW in the Class Action served notice and demand upon Castle by hand delivering a letter to Castle's principal office located in Westchester County addressed to Michael M. Meadvin, Esq., Castle's Senior Vice-President and General Counsel. Mr. Meadvin is personally representing Castle in 1 Letter exhibits referenced herein are annexed to the accompanying Affirmation of Adam Richards. 2 William Rashbaum, Heating Oil Companies Face Inquiry on Purity of Fuel, N.Y. TIMES (Mar. 20, 2013), available at: http://v,:"'w.nytimes.com/2013/03/~l/n}'re_gion/state-arid-federa,l-_inquiry-ilskswhether-heating-oi I-companies-cheated-customers. htm 1 3 This Court may take judicial notice of a record in the same court either of the pending action or of another action. Allen v Strough, 301 AD2d 11, 18-19 (2d Dept 2002) (citing cases). 2
this lawsuit. 4 (Exhibit C, 3/13113, Warranty Notice). That same day, Class Action attorneys for BMW further notified Mr. Meadvin by e-mail and facsimile that the Class Action Plaintiffs would be seeking emergency temporary relief and presenting an Order to Show Cause the next day. (Exhibit D, 3/13/13, TRO Notice). 5 Despite the extensive and ongoing litigation in New York County-and despite Castle's unequivocal awareness that its nonpayment allegations, arising out of the very transactions challenged by BMW in that action, are more appropriately raised there-castle instead commenced this action in Supreme Court, Westchester County, to recover the full price on contracts that Castle would have no right to enforce if the Class Action Plaintiffs succeed on their claims. (See, e.g., Exhibit A, Class Action Complaint, i-f 61 (plaintiffs and class members would not have purchased the adulterated oil if they had known the truth about Castle's practice of mixing in waste]). The instant suit was not filed until March 22, 2013, after the Class Action was commenced, after Castle was served with process in the Class Action, and after a hearing on the Class Action Plaintiffs' application for a TRO was heard in New York County. 6 4 Castle is separately represented in the Class Action by the law firm of Holland & Knight, LLP. 5 Upon the Class Action Plaintiffs' application, the Court entered a TRO, but recently declined to enter a preliminary injunction, finding that the Class Action Plaintiffs had an adequate remedy in the form of monetary damages. 6 Castle has commenced 13 separate lawsuits in Westchester County purporting to recover for nonpayment of "heating oil" products sold and delivered to buildings commonly managed by Genesis Realty, including other members of the putative class. Castle Oil Corp. v BMW Group LLC (Index No. 54031/2013); Castle Oil Corp. v 1394 BPR Realty Corp. (54846/2013); Castle Oil Corp. v 2295 GC Realty Corp. (Index No. 54845/2013); Castle Oil Corp. v HEO Holding Corp. (Index No. 54969/2013); Castle Oil Corp. v Skivjani Realty Corp. (Index No. 54968/2013); Castle Oil Corp. v 1001 Home Street Realty Corp. (Index No. 55109/2013); Castle Oil Corp. v 2055 Cruger LLC (Index No. 55106/2013); Castle Oil Corp. v 2086 Vyse Realty Corp. (Index No. 55034/2013); Castle Oil Corp. v 830 Elton LLC (Index No. 55033/2013); Castle Oil Corp. v 1347 Prospect Realty Corp. (Index No. 55188/2013); Castle Oil Corp. v 1351 Prospect Realty Corp. (Index No. 55235/2013); Castle Oil Corp. v 2238 Valentine Corp. (Index No. 55193/2013); Castle Oil Corp. v Vyse Holding Corp. (Index No. 55239/2013). Perhaps ashamed of its actions, despite being actively engaged with litigation against BMW, Castle did not alert BMW's counsel in the Class Action that it was bringing this suit, but instead simply served BMW 3
On April 29, 2013, BMW filed an Answer, reiterating its substantive claims in the Class Action as affirmative defenses. (Exhibit 3, 7 Def 's Verified Answer). Nevertheless, mere days after being served with the Answer, and knowing full well the gravity and scope of the legal and factual dispute between the parties, Castle moved for summary judgment here, choosing to omit any reference to the pending Class Action, and misrepresenting this case to this Court as a straightforward suit for goods sold and delivered. In reality, the allegations in the pending Class Action-of which Castle and Mr. Meadvin were and remain indisputably aware-raise material fact issues clearly precluding the summary relief sought by this motion, and expose Castle's attempt to misuse this proceeding as a means of collaterally attacking the earlier-filed Class Action. Therefore, as more fully set forth below, the Court should: (1) deny Castle's motion for summary judgment because there are material issues of fact going to Castle's entitlement to relief; and (2) grant BMW's cross-motion to stay this action, so that BMW can move in New York County to consolidate this action with the pending Class Action due to overlapping questions of law and fact, and for which Castle will not be prejudiced. ARGUMENT To obtain summary judgment under CPLR 3212, the movant's burden is to establish its claim or defense sufficiently to warrant judgment in its favor as a matter of law. Alvarez v Prospect Hospital, 68 NY2d 320, 326 (1986). The burden then shifts to the opposing party to prove the existence of material fact questions warranting trial. Zuckerman v City of New York, 49 NY2d 557, 562 (1980). Summary judgment is a drastic remedy, and should not be granted where through the Secretary of State. Nor did Castle alert the undersigned that any of the 12 others were about to be commenced. 7 Numerical exhibits referenced herein are attached to the Affidavit of Paul Conley in Support of Plaintiff's Motion for Summary Judgment. 4
there is any doubt as to the existence of a triable issue of fact. Rotuba Extruders v Ceppos, 46 NY2d 223, 231 (1978). I. CASTLE IS NOT ENTITLED TO SUMMARY JUDGMENT Where the "defendant buyers have a viable action for damages for alleged breach of the underlying contract of sale, the plaintiff seller is not entitled to summary judgment on its goods sold and delivered theory." Be/font Sales Corp. v Gruen Indus., Inc., 112 AD2d 96, 99 (1st Dept 1985) (citing Created Gemstones v Union Carbide Corp., 47 NY2d 250, 254-55 [1979] [breach of warranty may be pleaded as a defense where vendor sues for purchase price or for replevin of goods]). Mirroring its earlier-filed Class Action claims, BMW's Verified Answer more than adequately pleads valid defenses for, inter alia, Castle's breach of express warranties by falsely identifying the goods sold and delivered as No. 4 fuel oil, precluding summary judgment. A. Castle Falsely Claims to Have Delivered Goods without Objection By claiming, amazingly, that BMW "simply failed to pay" and that it raised no objection in respect of delivery or reasonable value of the goods at issue, Castle more than overstates its legal position. (See Pl.'s Br. at 3 [stating that BMW fails to object to the invoiced transactions, and that "[ d]efendant has simply failed to pay the balance owed. The case is open and shut."]). Apparently unconcerned that the affidavit of its Senior Vice President and Chief Financial Officer, Paul Conley, was sworn to under penalty of perjury, Castle relies on Mr. Conley's affidavit for the demonstrably false proposition that BMW failed to object to the sale and delivery of adulterated oil. (Id.) But that claim is demonstrably false, as is shown by BMW's claims in the pending Class Action lawsuit (Exhibit A, Class Action Complaint), the breach of warranty notices provided prior thereto by attorneys for Class Action Plaintiffs on BMW's behalf (Exhibit C, 3/13/13, Warranty Notice to Meadvin), and the Temporary Restraining Order 5
issued against Castle ilixhibit B, 3/14/13, Castle TRO)---all documenting BMW's formal objections to Castle's adulterated product before Castle commenced this action. Indeed, all three of Castle's affiants on this motion, Mr. Conley, Mr. Rosado, and Mr. Carey, have personally submitted sworn affidavits in the Class Action and are therefore well aware of BMW's letter notice of objections and commencement of legal action based in part on Castle's breach of warranty and delivery of nonconforming goods. 8 Castle goes on to feign ignorance about the substance of BMW's defenses, arguing that BMW "appears to claim that Castle did not in fact deliver no. 4 fuel oil as indicated on the invoices." (Pl.'s Br. at 2 [emphasis added]). Castle and its affiants know very well what BMW's defenses are, because they were served with the 20-page Class Action Complaint, appeared in court repeatedly, and engaged in extensive motion practice. Castle is therefore well aware of BMW's claims and valid objections to payment based, inter alia, on breach of express warranties forming the basis of the parties' bargain (see Exhibit 3, Verified Answer, p. 2), among other grounds. Separately, Castle argues that it is entitled to summary judgment because: (1) it is a "fuel oil vendor," (2) it has submitted invoices of the transactions, and (3) this Court has previously awarded summary judgment based on a "customer's failure to object" (Pl. 's Br. at 3). Obviously, the mere fact that a "fuel oil vendor" attaches invoices to its complaint does not entitle it to summary judgment. Castle cites, without meaningful application, to cases where courts granted summary judgment to a vendor because the customer failed to object to goods 8 Castle's objections based on BMW's purported failure to submit affidavits by persons with personal knowledge are disingenuous at best, as Castle ignores every such paper filed in the Class Action (see, e.g., Exhibit E, Affidavit of Jae Zadrima). Furthermore, contrary to Castle's suggestion, BMW's Verification is adequate. CPLR 3020(d)(3) plainly permits the attorney to verify the pleading if the party "is not in the county where the attorney has his office." 6
sold and delivered. (Id.) (citing, e.g., Scheider Fuel Oil Inc. v DeGennaro, 238 AD2d 495 [2d Dept 1997]). This wholly fails to address this case, where the customer has objected and pied numerous, valid defenses. Therefore, BMW's Answer and defenses asserted therein-reiterating the substance of the Class Action claims pending in New York County for breach of warranty, breach of contract, fraud, deceptive business practices, etc.-preclude Castle's motion for summary judgment. Any attempt by Castle to gloss over these factual disputes and to have these issues decided by misleading the Court must not be condoned. The Court should deny Castle's motion for summary judgment. B. Castle Is Not Entitled to Summary Judgment under CPLR 3016(t) Castle further claims entitlement to summary judgment because BMW's answer sets forth denials and affirmative defenses addressed to the entirety of the parties' dealings that are the subject of Castle's complaint, as opposed to specific denials addressed separately to each of the two deliveries disputed in the complaint. "To meet the requirements of CPLR 3016(f), a complaint must contain a listing of the goods or services provided, with enough detail that it 'may readily be examined and its correctness tested entry by entry."' Summit Sec. Servs., Inc. v Main Street Lofts Yonkers, LLC, 73 AD3d 906, 907 (2d Dept 2010) (emphasis added). Although Castle attempts to satisfy its pleading obligation by belatedly submitting affidavits on this motion purporting to verify that No. 4 fuel oil was in fact delivered, not only were these affidavits not part of Castle's initial complaint (rendering the pleading insufficiently descriptive to bring it within the requirements of 3016[f]), Castle's submission of multiple fact affidavits actually emphasizes the existence of material fact issues precluding summary judgment. 7
Even assuming Castle properly invokes CPLR 3016(f), Castle's motion still fails because BMW's Answer adequately disputes Castle's right to payment without the need for a line-item accounting of invoice dates and contract prices. Because BMW challenges the entirety of the parties' dealings, it is not required to specifically itemize denials and affirmative defenses that apply to the whole of the parties' dealings: [Defendant's] failure to specifically dispute the individual items alleged to comprise the plaintiffs' respective accounts stated is of no import to the Supreme Court's determination, inasmuch as [defendant] disputes the entirety of the parties' alleged dealings rather than the individual contents of the accounts stated. Harbor Seafood, Inc. v Quality Fish Co., Inc., 194 AD2d 713, 713 (2d Dept 1993); accord Green v Harris Beach & Wilcox, 202 AD2d 993, 994 (4th Dept 1994) (plaintiff was not required to provide an item-by-item reply where "a party's defense goes to the entirety of the parties' dealings rather than to the individual contents of the account, specific denials addressed to the account's items are not required"). For these reasons, Castle's deceptive and presumptuous summary judgment motion is without merit and must be denied. II. THE COURT SHOULD STAY TIDS PROCEEDING PENDING RESOLUTION OF A MOTION TO CONSOLIDATE IN NEW YORK COUNTY CPLR 2201 provides that "[e]xcept where otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just." The decision to grant a stay is addressed to the Court's sound discretion. See, e.g., Peluso v Red Rose Restaurant, Inc., 78 AD3d 802, 803 (2d Dept 2010). In the interests of judicial economy and avoidance of inequitable and conflicting results, and as set forth above, the Court should stay this proceeding for 60 days to permit BMW to move in New York County to consolidate this and certain other appropriate cases (see n.6, supra) with the Class Action. 8
First, this case presents legal and factual issues that are entirely duplicative of those already being litigated actively in the Class Action. This is not a new dispute involving the same parties; the two lawsuits concern the very same transactions at issue in the earlier-filed New York County action. Theatre Confections, Inc. v Cate Enterprises, 87 Misc 2d 155, 159 (Just Ct, Orange County 1976) (party entitled to post-answer stay of proceedings where earlier-filed action between the same parties was pending within the meaning ofcplr 321 l[a][4]). Second, the Court properly exercises its discretion where, as here, the record establishes that the issues and relief sought in this action and in the Class Action "are sufficiently similar such that the goals of preserving judicial resources and preventing an inequitable result are properly served." Finger Lakes Racing Ass'n v New York Racing Ass'n, 28 AD3d 1208, 1209 (4th Dept 2006). While Castle may deem its litigiousness strategically useful, for purposes of using our public court system to resolve genuine disputes, this case is, in a word, pointless. Castle's gamesmanship of launching new lawsuits, rather than raising counterclaims in the case already pending, should not be condoned. It is a waste of judicial resources, an ill-advised effort to drain BMW's resources (while Castle preserves its own by having its General Counsel represent it in this action), and a recipe for duplicative and inconsistent adjudication. 9
CONCLUSION For the foregoing reasons, Defendant BMW Group LLC respectfully requests that the Court deny Plaintiff Castle Oil Corporation's motion for summary judgment in its entirety and grant BMW's cross-motion to stay these proceedings pending a motion to consolidate in the Class Action presently pending in New York County. Dated: New York, New York May 14, 2013 Adam Richards ADAM RICHARDS LLC 90 Broad Street, 25th Floor New York, New York 10004 (212) 233-4400 Attorney for Defendant BMW Group LLC 10