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Yagoozon, Inc. v. Uncle Milton Industries Inc.

Superior Court of Rhode Island

December 18, 2017

YAGOOZON, INC., Plaintiff,
v.
UNCLE MILTON INDUSTRIES, INC. Defendant. UNCLE MILTON INDUSTRIES, INC. Plaintiff-in-Counterclaim,
v.
YAGOOZON, INC., JUSTIN LIGERI (a/k/a JUSTIN NICOLA), and KANGAROO MANUFACTURING, INC. Defendants-in-Counterclaim/ Third-Party Defendants.

         Providence County Superior Court

          For Plaintiff: Jillian N. Jagling, Esq. Jeffrey L. Levy, Esq.

          For Defendant: Christopher R. Blazejewski, Esq.

          DECISION

          SILVERSTEIN, J.

         Before the Court are several motions filed by both Plaintiff and Defendant-in-Counterclaim Yagoozon, Inc. (Yagoozon) and Defendant and Plaintiff-in-Counterclaim Uncle Milton Industries, Inc. (Uncle Milton). Uncle Milton has submitted a motion for partial summary judgment on its contract claims pursuant to Super. R. Civ. P. 56, as well as a motion to strike exhibits attached to Yagoozon's opposition to Uncle Milton's motion for partial summary judgment. In turn, Defendants-in-Counterclaim Yagoozon, Justin Ligeri (Ligeri), and Kangaroo Manufacturing, Inc. (Kangaroo) (collectively, Third-Party Defendants) have submitted a motion for partial summary judgment with regard to Uncle Milton's alter ego and successor liability counterclaims, and Yagoozon has filed a motion to strike the affidavit of Elizabeth France (France) submitted by Uncle Milton in conjunction with its motion for partial summary judgment. This Court exercises jurisdiction pursuant to G.L. 1956 § 8-2-14 and Super. R. Civ. P. 56.

         I

         Facts and Travel

         Uncle Milton is a toy company based in Agoura Hills, California. At all times relevant to this proceeding, Frank Adler (Adler) was the President of Uncle Milton.[1] Yagoozon, a company founded in Rhode Island, is an internet retailer that would purchase goods wholesale and sell them online through Amazon.com under the Fulfilled by Amazon program, in which goods are held in warehouses and shipped directly to consumers through Amazon. The President and Owner of Yagoozon is Ligeri.

         Prior to 2013, Yagoozon was one of Uncle Milton's smaller customers. In November and December of 2013, Yagoozon placed an order for more than $700, 000 worth of Uncle Milton products. This order was subject to extensive negotiations between Adler and Ligeri and extends across a number of purchase orders. The purchase orders pertaining to the December 2013 order contained additional terms departing from the standard purchase orders present in earlier Yagoozon orders. As part of these negotiations, Yagoozon and Ligeri allege that Adler referred to specific arrangements regarding price and exclusivity.

         All of the products ordered by Yagoozon were delivered by Uncle Milton per the aforementioned purchase orders. Following delivery, Yagoozon had the opportunity to inspect the delivered products and returned a number of products that were determined to be defective. Additionally, in preparing one of the invoiced orders, Uncle Milton erroneously charged Yagoozon a higher price for a specific ordered product. As a result of the pricing error and return of defective products, Uncle Milton issued a credit memo reimbursing Yagoozon.

         Soon after Yagoozon received the ordered goods from Uncle Milton, Ligeri learned that other online retailers were selling the same products purchased by Yagoozon in violation of an allegedly negotiated exclusivity agreement. As a result, beginning in early 2014, Ligeri and Yagoozon contacted Uncle Milton in order to arrange the return of the purchased goods. Ligeri testified during his deposition that Adler had authorized the return of the goods; Adler maintains that he does not recall authorizing a return. Due to the purported negotiations concerning the return of these goods, Yagoozon attempted to ship a large quantity of the items to Uncle Milton. The return shipment, however, was rejected upon arrival at the Uncle Milton warehouse.

         Yagoozon filed its initial Complaint in June of 2014 and subsequently amended the Complaint that August. Uncle Milton answered the Amended Complaint and filed a Counterclaim in February of 2015. Through a series of amended counterclaims, Uncle Milton additionally brought claims against Ligeri and Kangaroo under theories of alter ego and successor liability. On February 7, 2017, Uncle Milton filed a motion for partial summary judgment: (1) on the entirety of Yagoozon's First Amended Complaint; (2) on Uncle Milton's claims for breach of contract, declaratory relief, and goods sold and delivered; and (3) on Yagoozon's indebtedness to Uncle Milton in the amount of $1, 084, 944.08, plus interest of $353.58 per day from February 6, 2017.[2] Yagoozon, in turn, submitted a motion for partial summary judgement on June 29, 2017, with respect to Uncle Milton's claims under the theories of alter ego and successor liability. Additionally, Yagoozon also filed a motion to strike the affidavit of France, Uncle Milton's Controller. On July 13, 2017, Uncle Milton further moved to strike the deposition testimony of Ligeri and Adler attached to Yagoozon's June 29, 2017 opposition to Uncle Milton's motion for partial summary judgment. The parties further submitted numerous memoranda in support of their respective positions.

         II

         Standard of Review

         "It is a fundamental principle that '[s]ummary judgment is a drastic remedy, and a motion for summary judgment should be dealt with cautiously.'" Takian v. Rafaelian, 53 A.3d 964, 970 (R.I. 2012) (alteration in original) (quoting Emp'rs Mut. Cas. Co. v. Arbella Prot. Ins. Co., 24 A.3d 544, 553 (R.I. 2011)). With that in mind, in ruling on a motion for summary judgment, the Court is instructed to "review[] the evidence and draw[] all reasonable inferences in the light most favorable to the nonmoving party, " id. (citation omitted) (internal quotation marks omitted), and to "'look for factual issues, not determine them.'" Steinhof v. Murphy, 991 A.2d 1028, 1032-33 (R.I. 2010) (quoting Steinberg v. State, 427 A.2d 338, 340 (R.I. 1981)). However, summary judgment is appropriate "'if there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.'" Takian, 53 A.3d at 970 (quoting Classic Entm't & Sports, Inc. v. Pemberton, 988 A.2d 847, 849 (R.I. 2010) (internal citation omitted)); see Super. R. Civ. P. 56(c).

         III

         Discussion

         In its motion for summary judgment, Uncle Milton asserts that there are no genuine issues of material fact with respect to (1) the delivery of goods; (2) Yagoozon's acceptance of the delivered goods; and (3) any material terms of the agreement entered into by both parties. Accordingly, Uncle Milton moves for summary judgment with regard to its claims for breach of contract, declaratory relief, and goods sold and delivered. Uncle Milton in turn requests that Yagoozon's indebtedness, as detailed above, be satisfied. Additionally, Uncle Milton requests summary judgment on Yagoozon's First Amended Complaint, in its entirety. Further, Uncle Milton has moved to strike the deposition testimony of Ligeri as inadmissible under G.L. 1956 § 6A-2-202 and the deposition testimony of Adler as irrelevant. Yagoozon, however, contends that there is a genuine issue of material fact with regard to whether or not an exclusivity provision was negotiated as part of the contract. Yagoozon also objects to Uncle Milton's motions to strike the deposition testimony of Ligeri, arguing that Uncle Milton has misapplied the parol evidence rule and that there is no evidence indicating that the purchase orders were intended to represent a complete and final agreement between the parties.[3]

         The Third-Party Defendants also move for summary judgment with respect to the alter ego and successor liability claims submitted by Uncle Milton. They argue that Uncle Milton's motion is an inappropriate attempt to pierce the corporate veil and that the undisputed facts in this matter do not support this proposition. Moreover, Yagoozon has also moved to strike the affidavit of France, in whole or in part, because she lacks personal knowledge of the negotiations entered into by the two parties and she has not properly authenticated the documents attached to her affidavit. Uncle Milton maintains that there is ample evidence to establish a claim for alter ego and successor liability in this matter. Furthermore, Uncle Milton asserts that France, as Controller for Uncle Milton at all relevant times, ...


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