Kirby v. Coastal Sales Associates, Inc.

199 F.R.D. 111, 2001 U.S. Dist. LEXIS 1537, 2001 WL 135259
CourtDistrict Court, S.D. New York
DecidedFebruary 6, 2001
DocketNo. 98 Civ. 8304(CM)
StatusPublished
Cited by3 cases

This text of 199 F.R.D. 111 (Kirby v. Coastal Sales Associates, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kirby v. Coastal Sales Associates, Inc., 199 F.R.D. 111, 2001 U.S. Dist. LEXIS 1537, 2001 WL 135259 (S.D.N.Y. 2001).

Opinion

MEMORANDUM DECISION AND ORDER GRANTING USSA’S MOTION TO INTERVENE, DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT, AND DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION

McMAHON, District Judge.

Plaintiff Jack Kirby, doing business as USSA Corporation (USSA), brings this ac[113]*113tion against defendants Coastal Sales Association (“Coastal”), International Strategic Alliances, Inc., and Retail Strategic Alliances, Inc. Kirby asserts the following claims: (1) breach of a 1996 written contract between Coastal and USSA; (2) breach of a 1995 oral contract between Coastal and USSA; (3) declaratory judgment that the 1996 contract has not been terminated and remains in effect; and (4) declaratory judgment that the 1995 contract has not been terminated and remains in effect.

Both Kirby and defendants previously cross-moved for summary judgment. On January 31, 2000, I granted defendants’ motion dismissing plaintiffs first and third claims, denied defendants’ motion for summary judgment dismissing plaintiffs second and fourth claims, granted plaintiffs motion for summary judgment dismissing defendants’ first, second, and third counterclaims and claim for punitive damages, and dismissing defendants’ third, fourth, fifth, sixth, seventh and tenth affirmative defenses. Kirby v. Coastal Sales Association, Inc., 82 F.Supp.2d 193 (S.D.N.Y.2000).

The following motions are now before me: (1) plaintiffs motion for reconsideration of the January 31, 2000 opinion and order; (2) defendants’ motion for summary judgment on plaintiffs second and fourth claims; and (3) a motion by USSA to intervene.

FACTUAL AND PROCEDURAL BACKGROUND

1995 and 1996 contracts

This contract dispute arises out of the marketing of a compact folding chair known as the “What-A-Chair” by Kirby and his business associate, Lar Park-Lincoln. The complicated facts of this case are laid out in detail in the January 31, 2000 opinion. While familiarity with that opinion is assumed, I will briefly describe the pertinent facts and portions of my ruling that are now the subject of yet another round of motions by the parties.

In September 1994, Kirby and Park-Lincoln approached defendant Coastal about the prospect of marketing the What-A-Chair on QVC, a home-shopping television network. Coastal would obtain a National Football League (“NFL”) marketing license, put football team logos on the chairs, market the chair on QVC, and pay Kirby and Park-Lincoln a fixed royalty from Coastal. In early 1995, Coastal made an oral offer to pay Kirby and Park-Lincoln $1.40 per chair sold, a price intended to represent 10 percent of Coastal’s wholesale price to QVC of approximately $14. On April 24, 1995, Kirby received a fax from Ed Tesher, Coastal’s Vice President, informing Kirby that Coastal needed confirmation from the manufacturer, Kolon California, that the agreed-upon price for chairs was “$10.50 net, net, landed, per chair.” He went on to note that “We also need to confirm the agreement between Lar and yourself as to build in for pricing.”

The terms of the oral agreement were memorialized in a letter from Park-Lincoln to Tesher dated May 19, 1995, which states that the royalty commissions were “payable to Jack [Kirby] and I,” but goes on to state that the total commission was to be “divided equally between the following two corporations,” which Park-Lincoln identified as USSA and Army Brat, a corporation of which Pak-Lincoln was president. Defendants do not dispute that an oral agreement had been reached by that point; however, neither Tesher nor any other officer of Coastal signed the May 19 letter.

On May 19, 1996, Kirby, as President of USSA, and Levine, as President of Coastal, signed a new royalty agreement (the “ 1996 agreement”), which provided that “First Party [named in the contract as Coastal] markets a product sold under the trade name What A Chair, What An Ottoman, and The Double Chair, as well as any new chairs (First Party’s Product).” Kirby argues that the “any new chairs” language in this provision obligates Coastal to pay him a royalty on sales of all seating products developed by Coastal from the original What-A-Chair design. The contract sets out royalty amounts for each of the products, and provides that the initial term of the agreement as amended would run from March 1, 1996 to December 31, 1996, and was renewable thereafter upon 60 days notice prior to the end of the “Initial Term” or any “renewal term.” The agree[114]*114ment states that it shall be construed under New York law.

On November 11, 1998, defendants gave Kirby written notice that the contract would terminate on January 1, 1999. Kirby denies this notice was effective on the basis that defendants failed to provide the 60 days notice as called for under the contract. He claims defendants breached the agreement in numerous ways, and alleges damages in the amount of $275,000.

January SI, 2000 decision

In granting defendants’ motion for summary judgment on plaintiffs first claim— breach of the 1996 contract — I found that the 1996 contract was voidable under California Revenue and Tax Code § 23304.1(a), because USSA, whose corporate charter had been suspended in California since 1988, lacked capacity to contract in 1996. I rejected plaintiffs argument that it was in fact Kirby, in his individual capacity, who entered into the contract, rather than USSA (with Kirby signing as president). As Coastal had clearly indicated its desire to avoid the contract, both by terminating it and by asserting the defense of lack of capacity in the lawsuit, plaintiffs first claim was dismissed. As a result, the third claim, which sought a declaratory judgment that the 1996 contract remains in full force and effect, was also dismissed.

I also denied plaintiffs last-minute request to abate the action so that Kirby could return USSA to good corporate standing under California law:

Kirby elected to take his chances by commencing an action on a voidable contract when his corporation lacked legal status. He has burdened this court and the Defendants by maintaining this action for nearly a year and a half, subjecting both the Court and Coastal to massive discovery (with concomitant discovery disputes) and extensive motion practice. Now is not the time to put his corporate affairs in order. He should have done so prior to commencing this action — especially since he can hardly claim to be ignorant of his peril

(...)•

Kirby, 82 F.Supp.2d at 198.

With respect to the Second Claim — breach of the 1995 contract — I found there was also an issue of corporate capacity, since any contract made by a suspended corporation, whether it be written or oral, is voidable. However, because of an ambiguous record, there was a disputed issue of fact concerning whether the 1995 contract was made by Kirby or by USSA. “If the latter, then the 1995 agreement is as voidable as the 1996 written one; if with Kirby, then the agreement exists and is enforceable.” Id. As the viability of the Fourth Claim depends on whether Kirby can maintain his second claim, I allowed this claim to proceed to trial as well. As I pointed out, however:

Even if Kirby is able to prove that he, and not his corporation, was the contra-party to the 1995 contract, he may not be able to extend the reach of that agreement to the time period following his new deal made in 1996 and now voided.

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Cite This Page — Counsel Stack

Bluebook (online)
199 F.R.D. 111, 2001 U.S. Dist. LEXIS 1537, 2001 WL 135259, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kirby-v-coastal-sales-associates-inc-nysd-2001.