D.S. America (East), Inc. v. Chromagrafx Imaging Systems, Inc.

873 F. Supp. 786, 1995 U.S. Dist. LEXIS 859, 1995 WL 25265
CourtDistrict Court, E.D. New York
DecidedJanuary 19, 1995
DocketCV 93-4913
StatusPublished
Cited by26 cases

This text of 873 F. Supp. 786 (D.S. America (East), Inc. v. Chromagrafx Imaging Systems, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
D.S. America (East), Inc. v. Chromagrafx Imaging Systems, Inc., 873 F. Supp. 786, 1995 U.S. Dist. LEXIS 859, 1995 WL 25265 (E.D.N.Y. 1995).

Opinion

MEMORANDUM AND ORDER

WEXLER, District Judge.

Plaintiff D.S. America (East), Inc. (“Screen East”) brings this diversity action against defendant Chromagrafx Imaging Systems, Inc. (“Chromagrafx”) alleging claims for breach of contract. In response to the complaint Chromagrafx asserts eight affirmative defenses and three counterclaims — breach of contract, fraud and antitrust violations. Presently before the Court is Screen East’s motion to dismiss Chromagrafx’s amended counterclaims pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure and to strike the affirmative defenses pursuant to Rule 12(f) thereof. 1

I. BACKGROUND

Screen East alleges in the complaint that it entered into an agreement on or about October 23, 1992 with Chromagrafx, pursuant to *790 which Chromagrafe agreed to purchase an ISC-2010 Color Input Scanner and related equipment and accessories (the “Scanner”) from Screen East (the “Equipment Purchase Agreement”). Complaint ¶ 5. Screen East alleges that it delivered the Scanner to Chromagrafe and completed installation of the Scanner on or about November 20, 1992, but Chromagrafe has not paid for it despite repeated demands for payment. Id. ¶¶ 6-9. Screen East asserts claims for breach of contract and goods sold and delivered. In addition, Screen East claims Chromagrafe granted it a security interest in the Scanner, and seeks to enforce its security interest by recovering possession of the Scanner.

Chromagrafe asserts counterclaims for breach of contract, fraud, and violation of § 2(e) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(e). As for its breach of contract counterclaim, Chromagrafe alleges that it entered into an agreement in September 1991, and issued a purchase order, to purchase the Scanner from a corporation previously doing business as “Screen USA,” a predecessor of Screen East or a corporation of which Screen East is a part, see Amended Counterclaim ¶ 26, for delivery no later than October 30, 1991. Id. ¶ 28; see id. ¶58. 2 Mike Daly (“Daly”) of Screen USA had promised Chromagrafe: this delivery date prior to the agreement. Id. ¶ 35; see id. ¶ 58. Chromagrafe intended, as Screen USA knew, to use the Scanner to develop a software program specifically and exclusively to run with the Scanner. Id. ¶¶ 29-30. Indeed, at the “Seybold Computer Conference” in California in September 1991, Screen USA permitted Chromagrafe to show the software program on a machine in Screen USA’s sales booth as Screen USA advertised the software program and Scanner to the public. Id. ¶31. In reliance on the promised delivery date and with Screen USA’s knowledge, Chromagrafe expended enormous amounts of time and money to develop and market the software program. Id. ¶ 33. Nevertheless, based on conversations between Douglas Wyman (‘Wyman”) of Chromagrafe and Daly and Kennard Cloud of Screen USA, Screen USA put off the October 1991 delivery with excuses, but assured Chromagrafe that it would deliver the Scanner in 1991. Id. ¶ 36. Sometime in November 1991, Daly told Chromagrafe that the Scanner was aboard the boat “Hyundi Commander,” which would be docking in Los Angeles, California, in 10 days. Id. ¶37. After investigating this information, Chromagrafe learned that no such boat existed. Id. ¶ 38. In or about January 1992, Screen USA advised Chromagrafe that it could not promise any delivery of the Scanner. Id. ¶39. By that time, Chromagrafe had invested heavily in developing and marketing the software program. Id. ¶40. Despite approximately 60 responses from the Seybold Computer Conference of persons interested in purchasing the software program, Chromagrafe was forced to tell customers that it could not deliver the program at that time because it could not get a Scanner, causing Chromagrafe to lose credibility and goodwill in the industry. Id. ¶¶ 40-42.

By April 1992, Screen USA still had not delivered the Scanner to Chromagrafe. Sometime that month, according to Chromagrafe, Screen USA was restructured, with the result that Screen East is “either a part of or a successor in part to” Screen USA. Id. ¶ 26. In May 1992, Screen East “specifically assumed the obligation to fulfill the terms of Chromagrafe [sic] initial purchase order with Screen USA and promised to deliver the Scanner at Chromagrafe’s ‘earliest convenience.’ ” Id. ¶ 43. In the summer of 1992, Screen East advised Chromagrafe that it would not provide the Scanner unless Chromagrafe became an “authorized reseller” (the “Authorized Dealer Agreement”). Id. ¶ 44. To become an authorized reseller, also referred to as a “value added reseller,” Chromagrafe had to “purchase a [SJcanner: train sales people; develop a marketing plan to both parties’ approval, and market the [Scanner].” Id. ¶45. In return, Screen East agreed to “provide Chromagrafe with sales and marketing support; assist in clos *791 ing sales; have monthly and quarterly meetings with Chromagrafx to plan sales strategies and review sales; provide Chromagrafx with leads from Screen’s trade shows and reader response cards; and keep Chromagrafx informed of product availability and pricing and product changes.” Id. ¶ 46. Screen East finally delivered the Scanner at the end of October 1992. Id. ¶ 47.

In the first counterclaim, Chromagrafx alleges breaches by Screen East based on delay in delivery of the Scanner; defects in the Scanner; and refusal to install appropriate upgrades on the Scanner. Id. ¶¶ 50-52. The Scanner is allegedly defective in that it “drops off line in the computer system sporadically.” Id. ¶51. Chromagrafx also alleges breach of the Authorized Dealer Agreement in that, prior to delivery of the Scanner, Screen East failed to provide access to technical issues; while after delivery, Screen East failed to provide adequate technical assistance, never met to plan sales strategies, and never provided sales and marketing support, sales leads or sales assistance, as it “did to other resellers located in the area.” Id. ¶ 49. As a result of the delay in delivery and the Scanners’ defects, Chromagrafx “lost the market for the program and suffered great damage.” Id. ¶ 53. As a result of the breach of the Authorized Dealer Agreement, Chromagrafx “lost the ability to make sales of the [S]canner.” Id. ¶ 54.

In its fraud counterclaim, Chromagrafx further alleges that in or about September 1991 Daly “falsely and fraudulently represented to Chromagrafx that the Scanner would be delivered prior to October 30, 1991,” resulting in Chromagrafx issuing the purchase order to Screen USA for the Scanner. Id. ¶ 58.

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Bluebook (online)
873 F. Supp. 786, 1995 U.S. Dist. LEXIS 859, 1995 WL 25265, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ds-america-east-inc-v-chromagrafx-imaging-systems-inc-nyed-1995.