Rienzi & Sons, Inc. v. N. Puglisi & F. Industria Paste Alimentari S.P.A. , 638 F. App'x 87 ( 2016 )


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  • 15-791-cv
    Rienzi & Sons, Inc. v. N. Puglisi & F. Industria Paste Alimentari S.p.A.
    UNITED STATES COURT OF APPEALS
    FOR THE SECOND CIRCUIT
    SUMMARY ORDER
    RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
    SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
    FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
    WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
    CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
    “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
    ANY PARTY NOT REPRESENTED BY COUNSEL.
    At a stated term of the United States Court of Appeals for the Second Circuit, held at
    the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
    York, on the 10th day of February, two thousand sixteen.
    PRESENT: REENA RAGGI,
    DENNY CHIN,
    CHRISTOPHER F. DRONEY,
    Circuit Judges.
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    RIENZI & SONS, INC.,
    Plaintiff-Counter-Defendant-Appellant,
    v.                                                             No. 15-791-cv
    N. PUGLISI & F. INDUSTRIA PASTE ALIMENTARI
    S.p.A. and FRANCESO PULEJO,
    Defendants-Counter-Claimants-Appellees.
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    APPEARING FOR APPELLANT:                                  MICHAEL J. SHEPPEARD, Ballon Stoll
    Bader & Nadler, P.C., New York,
    New York.
    APPEARING FOR APPELLEES:                                                       EVAN MANDEL (Rishi Bhandari, on
    the brief), Mandel Bhandari LLP, New
    York, New York.
    1
    Appeal from a judgment of the United States District Court for the Eastern District
    of New York (Dora L. Irizarry, Judge).
    UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
    AND DECREED that the judgment entered on February 17, 2015, is AFFIRMED.
    Plaintiff Rienzi & Sons, Inc. (“Rienzi”), an importer and distributor of Italian foods,
    appeals from an award of summary judgment in favor of pasta manufacturer, N. Puglisi &
    F. Industria Paste Alimentari S.p.A., and its president, Franceso Pulejo, (collectively,
    “Puglisi”) on two claims for breach of contract,1 as well as claims for breaches of fiduciary
    duty and joint venture, and on Puglisi’s contract counterclaim. Rienzi submits that the
    district court erred in (1) applying New York law, rather than the Convention on the
    International Sale of Goods (“CISG”), to the parties’ contract claims; (2) concluding that
    Rienzi failed to raise a triable issue of fact as to (a) fiduciary relationship or (b) joint
    venture; (3) denying its motions for (a) leave to amend and (b) reconsideration; and
    (4) using the May 16, 2013 conversion rate in calculating damages.
    We review an award of summary judgment de novo and will affirm only if the
    record, viewed in favor of the non-moving party, shows no genuine issues of material fact
    and the moving party’s entitlement to judgment as a matter of law. See Jackson v. Federal
    Express, 
    766 F.3d 189
    , 193−94 (2d Cir. 2014). We review denials of reconsideration and
    1
    The district court subsequently entered judgment in favor of Rienzi on its third breach of
    contract claim. See Rienzi v. N. Puglisi & F. Industria Paste Alimentari S.p.A., No.
    08-cv-2540 (DLI) (RLM), 
    2015 WL 687691
    (E.D.N.Y. Feb. 18, 2015). But that
    judgment is not at issue on this appeal.
    2
    leave to amend for abuse of discretion, see Smith v. Hogan, 
    794 F.3d 249
    , 253 (2d Cir.
    2015); Anderson News, L.L.C. v. American Media, Inc., 
    680 F.3d 162
    , 185 (2d Cir. 2012),
    except where the denial is based on an interpretation of law, which we review de novo, see
    TechnoMarine SA v. Giftports, Inc., 
    758 F.3d 493
    , 505 (2d Cir. 2014). In applying these
    principles here, we assume the parties’ familiarity with the facts and record of prior
    proceedings, which we reference only as necessary to explain our decision to affirm.
    1.     Application of New York Law
    In challenging summary judgment on the contract claims, Rienzi does not argue that
    the district court misapplied New York law or erred in granting summary judgment under
    it. Rather, Rienzi contends that the CISG, not New York law, controls these claims, and
    that Puglisi is not entitled to summary judgment thereunder.2
    The district court here recognized that the CISG is mandatory unless the parties
    expressly opt out. It concluded from “the history of this litigation” that Rienzi had opted
    out of the CISG by “consent[ing] to the application of New York law.” Rienzi v. N.
    Puglisi & F. Industria Paste Alimentari S.p.A., No. 08-cv-2540 (DLI) (JMA), 
    2013 WL 2
      We reject Rienzi’s contention that the CISG is “incorporated into” or “a part of” New
    York law. “[T]he CISG [is] a self-executing agreement between the United States and
    other signatories, including Italy,” Delchi Carrier SpA v. Rotorex Corp., 
    71 F.3d 1024
    ,
    1027 (2d Cir. 1995). As such, the CISG is “incorporated federal law,” which applies “so
    long as the parties have not elected to exclude its application.” BP Oil Int’l Ltd. v.
    Empresa Estatal Petroleos de Ecuador, 
    332 F.3d 333
    , 337 (5th Cir. 2003); see Chateau des
    Charmes Wines Ltd. v. Sabata USA Inc., 
    328 F.3d 528
    , 530 (9th Cir. 2003) (“[T]here is no
    doubt that the [CISG] is valid and binding federal law.”). Thus, it is as federal law that the
    CISG preempts local contract law unless the parties agree otherwise.
    3
    2154157, at *7 (E.D.N.Y. May 16, 2013) (finding further that delayed invocation of CISG,
    more than three years after filing suit, would prejudice Puglisi).3 Whether we review this
    determination de novo as Rienzi urges, or for abuse of discretion, see Rationis Enters. Inc.
    of Pan. v. Hyundai Mipo Dockyard Co., 
    426 F.3d 580
    , 585 (2d Cir. 2005) (reviewing for
    abuse of discretion decision that defendant failed to give reasonable notice under Fed. R.
    Civ. P. 44.1 as to applicability of foreign law), the argument fails in light of the parties’
    litigation history.
    First, Rienzi made no mention of the CISG when it initiated this action in New York
    state court in March 2008. Nor did it reference the CISG in its August 2008 answer to
    Puglisi’s counterclaim, or in its September 2008 amended complaint.             While such
    omissions do not, by themselves, indicate that a party has opted-out of the CISG, a second
    factor supports the conclusion: Rienzi asserted a statute of frauds defense inconsistent
    with application of the CISG but cognizable under New York law. Third, in the years of
    ensuing pretrial proceedings, Rienzi repeatedly framed arguments under New York law
    without ever raising or mentioning the CISG.         Fourth, in a July 15, 2011 pretrial
    conference, Rienzi’s counsel expressly stated that “rather than have confusion, we would
    apply New York law, I’m comfortable with New York law applying.” J.A. 1462. Rienzi
    argues that the statement cannot support CISG opt-out because its counsel later stated that
    it wished to look further into whether the parties’ Settlement Agreement should be
    3
    See Saks v. Franklin Covey Co., 
    316 F.3d 337
    , 349 (2d Cir. 2003) (holding that
    preemption issue affecting only choice of law “may be waived if not timely raised”).
    4
    interpreted under Italian law. See 
    id. at 1473−74.
    But neither in this statement nor
    elsewhere did Rienzi assert that the CISG controlled the parties’ contract claims until
    August 26, 2011, when it filed its opposition to Puglisi’s motion for summary judgment.
    On this record, the district court did not err, much less abuse its discretion, in
    finding that Rienzi had consented to application of New York law to the contract claims at
    issue before its untimely 2011 invocation of the CISG. See Krumme v. WestPoint
    Stevens, Inc., 
    238 F.3d 133
    , 138 (2d Cir. 2000) (“‘[I]mplied consent . . . is sufficient to
    establish choice of law.’” (quoting Tehran-Berkeley Civil & Env’t Eng’rs v.
    Tippetts-Abbett-McCarthy-Stratton, 
    888 F.2d 239
    , 242 (2d Cir. 1989))); Cargill, Inc. v.
    Charles Kowsky Res., Inc., 
    949 F.2d 51
    , 55 (2d Cir. 1991) (“[E]ven when the parties
    include a choice-of-law clause in their contract, their conduct during litigation may
    indicate assent to the application of another state’s law.”).4
    4
    The parties dispute the CISG’s application to Rienzi’s contract claims, one of which
    alleges breach of a legal fees agreement and the other breach of a long-term distribution
    agreement. See Convention on the International Sale of Goods, art. 1(1) (“This
    Convention applies to contracts of sale of goods between parties whose places of business
    are in different States.” (emphasis added)). Because we uphold the district court’s
    determination that Rienzi consented to New York law controlling the parties’ contract
    claims, we need not resolve this dispute. Nor need we decide whether, even if the CISG
    did apply to individual sales pursuant to the distribution agreement, Rienzi can state a
    claim for breach of contract regarding unshipped orders. See 
    id. art. 18(3)
    (“[I]f, by virtue
    of the offer or as a result of practices which the parties have established between
    themselves or of usage, the offeree may indicate assent by performing an act, such as one
    relating to the dispatch of the goods, . . . the acceptance is effective at the moment the act is
    performed”); 
    id. art. 23
    (“A contract is concluded at the moment when an acceptance of an
    offer becomes effective in accordance with the provisions of this Convention.”); J.A. 806–
    5
    2.     Breach of Fiduciary Duty
    Rienzi argues that its purchase of pasta exclusively from Puglisi (and therefore its
    economic dependence on Puglisi’s production) raised a material issue of fact regarding the
    parties’ fiduciary relationship. We are not persuaded. In this context, under New York
    law, the “two essential elements of a fiduciary relation are . . . de facto control and
    dominance.” Marmelstein v. Kehillat New Hempstead, 
    11 N.Y.3d 15
    , 21, 
    862 N.Y.S.2d 311
    , 314 (2008) (internal quotation marks omitted) (alteration in original). While a
    fiduciary relationship can exist between a manufacturer and a distributor, see, e.g., North
    Shore Bottling Co. v. C. Schmidt & Sons, Inc., 
    22 N.Y.2d 171
    , 179, 
    292 N.Y.S.2d 86
    ,
    92−93 (1968), the inherent dominance stemming from a distributor’s reliance on a
    manufacturer is not itself sufficient “to establish a confidential relationship.” Legend
    Autorama Ltd. v. Audi of Am., Inc., 
    100 A.D.3d 714
    , 717, 
    954 N.Y.S.2d 141
    , 144−45 (2d
    Dep’t 2012); see Furniture Consultants v. Acme Steel Door Corp., 
    240 A.D.2d 180
    , 180,
    
    658 N.Y.S.2d 284
    , 285 (1st Dep’t 1997) (upholding summary judgment for manufacturer
    where distributor failed to adduce facts showing parties’ relationship was other than
    arms-length).
    Upon de novo review, we conclude that Rienzi failed to adduce evidence of either
    Puglisi’s de facto control or dominance over Rienzi. To the contrary, Michael Rienzi, the
    07 (testimony of Michael Rienzi acknowledging that individual pasta sales became binding
    only upon shipment of first container or order).
    6
    founder, President, and owner of Rienzi, testified that Puglisi did not control Rienzi “in any
    way,” J.A. 804, 13975; that the parties were simply “dependent” upon one another, J.A.
    1398; and that Rienzi was not obligated to disclose company information to Puglisi,
    although it voluntarily did so on occasion, see J.A. 804−05. Cf. A.S. Rampell, Inc. v.
    Hyster Co., 
    3 N.Y.2d 369
    , 376−77, 
    165 N.Y.S.2d 475
    , 481−82 (1957) (noting that while
    distributor’s dependence upon manufacturer is likely insufficient to establish confidential
    relationship, confidential relationship could be shown through evidence that distributor
    was required to provide business information to manufacturer). Moreover, Rienzi’s
    claims of financial dependence on Puglisi are belied by the record, which shows that Rienzi
    both represented to the United States Department of Commerce that it “could locate a new
    pasta supplier and continue selling pasta with little or no disruption to its business,” J.A.
    956, and actually secured a replacement manufacturer less than two weeks after
    terminating its relationship with Puglisi, see J.A. 818, 825. Accordingly, summary
    judgment was properly granted to Puglisi on the fiduciary duty claim.
    3.     Breach of Joint Venture
    Rienzi argues that a genuine issue as to the existence of a joint venture was raised by
    evidence that Rienzi and Puglisi became joint clients of a law firm in connection with a
    Department of Commerce investigation and, in so doing, intended to share information and
    resources as well as collateral profits and losses resulting therefrom (i.e “lowered duty
    5
    Rienzi represented that it was actually Rienzi that exercised dominance over Puglisi.
    See J.A 781, 1396−97.
    7
    fees” if there was a positive resolution or the “loss of the expended legal fees and higher
    duty fees” if the result was unfavorable). Appellant’s Br. 25.
    After an independent review of the record, we conclude, for substantially the
    reasons stated by the district court, that this argument fails on its merits. See Rienzi v. N.
    Puglisi & F. Industria Paste Alimentari S.p.A., 
    2013 WL 2
    154157, at *14−16. Rienzi
    cannot simultaneously claim that it entered a joint venture with Puglisi whereby they
    agreed to share profits and losses and that Puglisi breached that joint venture by failing to
    reimburse Rienzi for 100% of legal fees. See Clarke v. Sky Exp., Inc., 
    118 A.D.3d 935
    ,
    935, 
    989 N.Y.S.2d 87
    , 88 (2d Dep’t 2014) (observing that plaintiff claiming joint venture
    must show, among other things, “mutual contributions to the joint undertaking” and
    “mechanism for the sharing of profits and losses”). If, as Rienzi contends, its fronting of
    legal fees was a contractual loan given with the understanding that Puglisi would
    ultimately be responsible for all legal fees associated with the venture, the nature of the
    relationship was “that of lender and borrower, with the former at no risk of suffering any
    losses,” which is not sufficient to establish a joint venture. Kaufman v. Torkan, 
    51 A.D.3d 977
    , 979, 
    859 N.Y.S.2d 253
    , 255 (2d Dep’t 2008). Further, the record reflects
    Rienzi’s ultimate responsibility for customs duties, and Michael Rienzi admitted that such
    duties are typically paid by importers and that there was no agreement between the parties
    to share these costs. See J.A. 829. Thus, Rienzi’s responsibility for the duties does not
    support a joint venture.
    8
    Rienzi offers no other competent evidence demonstrating that, by jointly retaining a
    law firm, the parties intended to form a joint venture giving rise to a fiduciary relationship,
    see Weisman v. Awnair Corp. of Am., 
    3 N.Y.2d 444
    , 448, 
    165 N.Y.S.2d 745
    , 749 (1957),
    much less that Rienzi and Puglisi exercised joint control over any resulting venture.
    Accordingly, summary judgment was properly granted to Puglisi on this claim.
    4.     Motion To Amend Pleading
    Rienzi argues that then-Magistrate Judge Azrack abused her discretion in denying
    its November 2008 motion to amend its pleading. We decline to consider the merits of
    this claim because Rienzi failed to object in the district court. See Fed. R. Civ. P. 72(a);
    Caidor v. Onondaga Cty., 
    517 F.3d 601
    , 603−05 (2d Cir. 2008) (holding that even pro se
    plaintiff “who fails to object timely to a magistrate’s order on a non-dispositive matter
    waives the right to appellate review of that order”).
    5.     Motion for Reconsideration
    We also identify no abuse of discretion in the district court’s denial of
    reconsideration. Rienzi simply reiterated its earlier arguments regarding application of
    the CISG, and presented new theories to oppose summary judgment for Puglisi. See
    Analytical Surveys, Inc. v. Tonga Partners, L.P., 
    684 F.3d 36
    , 52 (2d Cir. 2012) (stating
    that motion for reconsideration is not vehicle “for relitigating old issues, presenting the
    case under new theories, securing a rehearing on the merits, or otherwise taking a second
    bite at the apple” (internal quotation marks omitted)).
    9
    6.     Judgment-Day Rule
    Rienzi challenges the calculation of damages by reference to the conversion rate in
    effect on May 16, 2013, the date of the district court’s summary judgment decision, rather
    than the rate in effect on February 17, 2015, the date judgment was entered.
    When a court converts a foreign obligation into American currency, it must
    determine “the proper date for conversion of the foreign currency into our own.” Shaw,
    Savill, Albion & Co. v. The Fredericksburg, 
    189 F.2d 952
    , 955 (2d Cir. 1951). In this
    diversity action, New York law determines the applicable currency-conversion rate. See
    Vishipco Line v. Chase Manhattan Bank, N.A., 
    660 F.2d 854
    , 865−66 (2d Cir. 1981).
    N.Y. Judiciary Law § 27(b) states that:
    In any case in which the cause of action is based upon an obligation
    denominated in a currency other than currency of the United States, a court
    shall render or enter a judgment or decree in the foreign currency of the
    underlying obligation. Such judgment or decree shall be converted into
    currency of the United States at the rate of exchange prevailing on the date of
    entry of the judgment or decree.
    N.Y. Judiciary Law § 27(b). While the New York Court of Appeals has not specifically
    construed the phrase “judgment or decree” in § 27(b), New York law elsewhere defines
    “judgment” as “the determination of the rights of the parties in an action or special
    proceeding” that “may be either interlocutory or final.” N.Y. C.P.L.R. § 5011; see also
    N.Y. Surrogate Court Procedure Act § 601 (defining decree as “[t]he determination of the
    rights of the parties to a special proceeding,” and noting that decrees have “the same effect
    and may be enforced in like manner as a similar judgment . . . made by the supreme court in
    10
    an action”); Black’s Law Dictionary 497 (10th ed. 2014) (defining “decree” as
    “1. Traditionally, a judicial decision in a court of equity, admiralty, divorce, or probate –
    similar to a judgment of a court of law . . . 2. A court’s final judgment . . . 3. Any court
    order, but esp[ecially] one in a matrimonial case”). The clarity of § 5011’s text allows us
    confidently to predict that New York’s highest court would not construe § 27(b) to require
    use of the conversion rate in effect on the date of final judgment where, as here, there was
    an earlier “determination of the rights of the parties.” N.Y. C.P.L.R. § 5011; cf. McGrath
    v. Toys “R” Us, Inc., 
    356 F.3d 246
    , 250 (2d Cir. 2004) (explaining that certification of state
    law question to state’s highest court is warranted where “statute’s plain language does not
    indicate the answer” to issue in dispute (internal quotation marks omitted)). Because the
    district court determined on May 16, 2013, that Puglisi was entitled to summary judgment
    on its €898,410.06 counterclaim, see Rienzi v. N. Puglisi & F. Industria Paste Alimentari
    S.p.A., 
    2013 WL 2
    154157, at *16−17, the court properly used the conversion rate in effect
    on that date to convert the damages due Puglisi from euros to dollars.
    7.     Conclusion
    We have considered Rienzi’s remaining arguments and conclude that they are
    without merit. We therefore AFFIRM the judgment of the district court.
    FOR THE COURT:
    CATHERINE O’HAGAN WOLFE, Clerk of Court
    11