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J & D Textile, Inc. v Gabo Industries, LLC

Case No. A-0682-12 (NJ Superior Ct. App. Div., Dec. 24, 2013)

Defendants Gabo Industries, LLC (Gabo), LMT Global, LLC (LMT), and Hak Y. Lim, also known as James H. Lim, (collectively referred to as defendants) appeal the August 24, 2012 grant of summary judgment awarding $180,790.07, together with costs of $224 and pre-judgment interest in the amount of $16,295.86, to plaintiff J & D Textile, Inc. (J & D), doing business as M.S. Textile Company, Ltd. (M.S.). Defendants also appeal the dismissal with prejudice of their counterclaims. We affirm.

J & D filed this lawsuit to collect balances they alleged were due for fabric delivered to defendants, who used the goods in manufacturing clothing. J & D is a New York corporation owned by Yeong Shim, who also owns M.S., an enterprise headquartered in Korea in the business of selling fabric. Lim owns Gabo, while Martin Terzian owns LMT. LMT and Gabo operate as a business partnership.

On May 21, 2009, Lim issued two fabric purchase orders from Gabo to J & D. The delivery date section stated: "[s]tart [shipping?]-on or before 6/13/09 & balance 7/13/09. Will advise detail of what needs to be shipped by 6/13/09 with Mr. Shim in NYC. Cancel date-7/13/09/." The parties agreed that J & D would ship the material to K.R. Intercorp (KR), a factory located in Vietnam, for the production of finished garments. The garments would then be shipped to LMT's warehouse in California for the fulfillment of a contract with K-Mart. J & D accepted Gabo's order on May 28, 2009, by issuing two invoices. Shim issued the invoices from M.S. because he was in Korea at the time. The total invoiced amount was $316,989.98.


Judge(s): Per Curiam
Jurisdiction: New Jersey Superior Court, Appellate Division
Related Categories: Damages
Court of Appeals Judge(s)
Carmen Alvarez
Susan Reisner

Appellant Lawyer(s) Appellant Law Firm(s)
Vano Haroutunian Ballon Stoll Bader & Nadler PC

Appellee Lawyer(s) Appellee Law Firm(s)
Paul Perkins Hadley Perkins PC



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affirmed. id. at 158. they never produced documentation supporting the contention, including the initial order defendants-appellants. situation, it would be unable to recover its investment. id. at 178. moreover, both parties additionally, lim claimed that m.s. shipped less fabric than was initially ordered, and by june 12, 2009, two days prior to the first scheduled delivery of fabric, gabo had not required the mortgage as security for a previously unsecured loan. id. at 160. the trial n.j. 193, 199 (2011); brill v. guardian life ins. co. of am., 142 n.j. 520, 539-40 standard which governs the trial court under rule 4:46-2(c). perrelli v. pastorelle, 206 furthermore, the trial court found that lim had not established, pursuant to relevant korea in the business of selling fabric. lim owns gabo, while martin terzian owns evidence pointing to questions of fact because no payment had been advanced towards the purchase of the fabric. therefore 2 we are unable to reconcile the figures, although ultimately inconsequential. gabo and payment multiple times before shim's june 12 request, through the terms of the invoice thus shim's request of a personal guarantee was not improper, and he gave valid should be reversed because there are that claim is only partially corroborated. while one of the invoices lists the expected point ii sums due, and he knew that gabo had been created only a month before placement of that shipped merchandise that did not conform to the initial weight and colorfastness additionally defendants did not produce an affidavit from lim in opposition to the j & d and m.s., owned by one individual, are virtually the same entity but in (quoting puder v. buechel, 183 n.j. 428, 440 (2005)). our function is to decide whether a includes a "reconciliation" spreadsheet prepared by lim dated july 2010, including the allegations of coercion are undermined by other documentary evidence in the record. and pre-judgment interest in the amount of $16,295.86, to plaintiff j & d textile, inc. (j personal guarantee. he reached that conclusion because lim was unable to show he was which it paid another $40,000, the discussions were not over defendants' complaints, but information process solutions, the lower court's order granting point i "where there is adequacy of consideration, there is generally no duress. . . . merely order. delivery date for one small portion of the order as "6/11" or june 11, 2009, the same mart, and delivered fewer units than originally ordered. leaderman stated the delay was valley bank, 343 n.j. super. 73, 87 (app. div. 2001) (quoting u.s. pipe & foundry co. affirmed. perkins, of counsel and on the brief). should be reversed because it fulfillment of a contract with k-mart. j & d accepted gabo's order on may 28, 2009, by finished goods on behalf of lmt as "commercially acceptable." contract #: msngb001/plus/$227,687.14 that because the goods had been accepted and were found by leaderman and k-mart to we apply the same standard as the trial court in respect of the same motion contract #: msngb001/missy/$89,302.84 spreadsheet was inaccurate; it did not reflect additional trucking and freight costs clearly to the j & d contracts. shim engaged in the negotiations resulting in the issuance lmt were invoiced $330,421.66 by j & d, and deducting the initial $100,000 payment, a submitted on that motion. pressler & verniero, current n.j. court rules, comment 3 on here, it is undisputed that shim requested lim sign a personal guarantee to secure agree. of duress. id. at 179. from the record supplied to the court, appears to have accepted the clothing. throughout is not clear that j & d is the proper party to enforce lim's personal guarantee. we do not their company." ibid. know lmt, and only knew lim casually, none of which was enough for him to "trust reasonable time after he discovers or should have discovered a breach, notify the seller or however, who was independently associated with another defendant, the atlantic pacific lmt global, llc, atlantic the discussions between the parties, after the fabric was produced, defendants appear to arrangement was confirmed in a february 25, 2010 email from lim to j & d. the record lmt. lmt and gabo operate as a business partnership. said he ordinarily required a letter of credit for these types of transactions, but that he had one delivery option of two. the other option was june 14, 2009, two days after lim a document corroborating her testimony. she could not recall when she was notified of particular deference. manalapan realty l.p. v. twp. comm. of manalapan, 140 n.j. 366, be barred from any remedy. n.j.s.a. 12a:2-607(3)(a). the burden is on the buyer to coercion." ibid. payments were structured as follows: a ten percent deposit prior to shipment with lim testified that at the time he signed the personal guarantee, he had already been due. when gabo thereafter met with shim to negotiate a payment plan, as a result of the personal guarantee was freely and willingly signed by lim. shim explained that he executed and signed a personal guarantee to m.s. on his letterhead. the personal goods, they were accepted, and when invoiced, gabo paid $100,000 toward the balance before judges reisner and alvarez. defendants also alleged that as a result of the late delivery by j & d on a portion the "decisive factor" is the wrongfulness of the pressure. id. at 177. such acts or threats hak y. lim, a/k/a were made, one from gabo and three from lmt. personal guarantee on june 12, he "never thought that this order [was] going to go bad," shipped an additional 900 yards of fabric on august 2, 2009. invoices were generated as court held that the mortgage was void because it was given under duress, and we matter of law." r. 4:46-2(c); henry v. dep't of human servs., 204 n.j. 320, 329-30 establish the breach with respect to goods which are accepted. n.j.s.a. 12a:2-607(4); september 2010, at which time a new payment schedule would be agreed upon. this defendants, who used the goods in manufacturing clothing. j & d is a new york j & d textile, inc. d/b/a time. the total invoiced amount was $316,989.98. issues of fact as to appellant lim's claims finally, defendants allege that k-mart imposed a chargeback totaling $245,435.19, as a superior court of new jersey had refused that condition and instead offered payment within ten days of shipment to k- had given him anything towards the cost of the goods, not even the required deposit. lim delivery of the fabrics to the garment result of production issues, a possibility leaderman had explained to j & d. lim took the issued the personal guarantee with regard to money owed to j & d. hence lim made plaintiff-respondent, delays. to ensure timely production and delivery of the garments, increased shipping issuing two invoices. shim issued the invoices from m.s. because he was in korea at the the fabric was delivered, totaling $330,421.66. defendants gabo industries, llc (gabo), lmt global, llc (lmt), and hak y. lim, that defendants failed to establish a causal connection between any damages and j & d's 12, delivery on certain orders was already late. according to the invoices certain paid the ten percent deposit. that day, shim visited lim at lim's office, and lim pursuant to the uniform commercial code, the buyer's acceptance of goods lastly, defendants assert that summary judgment against lim must be reversed because it fact challenged and . . . that the moving party is entitled to a judgment or order as a timeliness of delivery or the quality of goods. as a result, even viewing the facts in the problems with payment. the original specifications, which resulted in a delay. leaderman also stated that while k- mart accepted delivery of the finished goods, pursuant to standard industry practice, it guarantee referenced the following contracts: of the orders, approximately $1,050,000 to $1,500,000 in sales was lost. yet k-mart, unclear, as although leaderman said she believed it was $200,000 or $250,000, in their an appellate court must consider the correctness of the decision below on the basis of the 7/13/09. will advise detail of what needs to be shipped by 6/13/09 with mr. shim in defendants' partial payments were made to j & d. even lim acknowledged that he show that he has been the victim of a wrongful or unlawful act or threat, and the act or respondent is the proper party to enforce financial difficulty must allege that it was contributed to or caused by the one accused of genuine issue of material fact exists based solely on the record, not to decide the precedent, the necessary elements for economic duress such as would invalidate his in its decision, the trial court noted that despite defendants' assertion that the colorfastness, and weight of the fabrics did not become an issue between seller and buyer imposed a chargeback1 shim also claimed he had asked lim for a letter of credit, but was refused. shim 24, 2012 grant of summary judgment awarding $180,790.07, together with costs of $224 although lim's guarantee named m.s. as the beneficiary, the references were case only as it had unfolded to the point of the motion, and the evidential material llc, pacific worldwide, inc., (vano i. haroutunian, on the brief). different countries. as shim explained, the only reason the invoices were generated by and self-serving assertions' in certifications without explanatory or supporting facts[.]" 378 (1995). "'bare conclusions in the pleadings, without factual support in tendered affidavits, all in the issuance of a judgment to that effect. goods which were accepted. see n.j.s.a. 12a:2-709(1)(a). the court ultimately reasoned court found, reasonably feared that because of the mortgagor's unstable financial accordingly, defendants' claim of economic duress is unpersuasive and lacks in reviewing the grant or denial of summary judgment, we apply the same the trial court's order granting balance remains of $230,421.66. when the $40,000 gabo and lmt paid is deducted will not defeat a meritorious application for summary judgment[,]'" triffin v. somerset coercive because it was made only two days before the first shipment was due for lastly, as to the legal sufficiency of defendants' counterclaims, the trial court concluded appellate division be commercially acceptable, there was no disputed issue of material fact as to the execution of the personal guaranty. the delivery date section stated: "[s]tart [shipping?]-on or before 6/13/09 & balance garments. the garments would then be shipped to lmt's warehouse in california for the due to a shortage of fabric. llc to ms textile co., ltd for above mentioned cont[r]acts, i (james h lim) will [be] lmt and gabo alleged, in defense of the claim, that in addition to the delay in delivery, and that if he knew that the "order would go bad, [he] [would] never give him a personal mart order on time because some of the fabric was either delivered late, or did not meet not informed lim or lmt that one was necessary before he accepted the orders. letter of credit and that though lmt could, he did not want shim to use it. shim did not hadley perkins, p.c., attorneys for respondent (paul i. december 24, 2013 in this case, it is clear that defendants' alleged concerns regarding delivery dates, contract. in this case the sellers, gabo/lmt, were late in delivering the garments to k- cumberland cty. improvement auth. v. gsp recycling co., inc., 358 n.j. super. 484, portion of the order. a) after a reasonable opportunity to inspect the goods[,] costs were paid. lim claimed the cost of air freight alone came to $37,000. defendants repeatedly assert that the request for a personal guarantee was nyc. cancel date-7/13/09/." the parties agreed that j & d would ship the material to per curiam docket no. a-0682-12 v. am. arbit. ass'n, 67 n.j. super. 384, 399-400 (app. div. 1961)), nor will "'conclusory position, simply stated, that he did not pay j & d because he did not get paid by k-mart. indicate that the earliest deliveries were scheduled for june 14, 2009, two days after lim on may 21, 2009, lim issued two fabric purchase orders from gabo to j & d. gabo industries, llc, pacific j & d filed this lawsuit to collect balances they alleged were due for fabric delivered to shipments were to be delivered on june 11, a date which had already passed. however, duress was not established. acknowledge the amounts that were due to j & d, including but not limited on the such acceptance does not occur until the buyer has had a summary judgment against appellant lim contractual obligations. thus defendants' counterclaims were dismissed as well. spreadsheet indicates the balance due was $165,788.39. no deduction appears on the invoice also gives an alternate delivery date of "6/14" or june 14, 2009, for the same james h. lim, an individual, contract rate. in fact, where the goods have been accepted, the buyer must within a r. 2:10-2(3) (2013); lombardi v. masso, 207 n.j. 517, 542 (2011). requested the guarantee because there had been no payments towards the outstanding m.s. textile co., ltd., pacific group, llc, and the chargeback, or even the specific reasons given for it. by july 2, 2009, j & d had shipped 187,658.07 yards of fabric to k.r. in vietnam. j & d payment of the fabric. shim sought the personal guarantee because neither gabo or lmt of that guarantee, and he owns both corporations. the reconciliation sheet named j & d need not be "wrongful" in the legal sense, "but in a moral or equitable sense." ibid. himself personally responsible for payment to j & d. in our view, there was no error at although leaderman testified that j & d was informed at the very beginning that mr. lim's personal guaranty. insofar as lim's claim of economic coercion, a party alleging economic duress must four $10,000 installments by gabo and lmt. the starting column on the spreadsheet from that amount, the balance due should have been $190,421.66, yet the july 2010 because he did not want to default on his commitment to lmt. shim, however, claimed existed. plaintiff's motion for summary judgment was granted. shipment dates were specified in print, but shim accelerated some to june 14 by the proofs regarding the chargeback came solely from leaderman, who never produced personally responsible and will personally take care [of] the payments." motion. and in any event, j & d's demand for a personal guarantee was not onerous the portion for which j & d was responsible. even the amount of the chargeback is occurs when: surplus ins. corp. v. nowell amoroso, p.a., 189 n.j. 436, 445-46 (2007)). summary granted. international alliance, inc., regarding the timeliness of respondent's incurred by gabo and lmt as a result of j & d's alleged delay in shipping the goods. on october 7, 2009, gabo paid $100,000 on account of the billed total of $330,421.66. in material issues of fact whether on july 7, 2010, lim emailed j & d to the effect that he would make two payments of factual support. no affidavit from lim asserted wrongful coercion. if anything, lim's reasonable opportunity to inspect them. alleged defalcations. in fact, the court found to the contrary, that j & d fully met its submitted october 29, 2013 – decided goods failed to meet fabric weight, quality specifications, and the contract delivery date, (2010); brill, supra, 142 n.j. at 540. rulings on questions of law are not entitled to & d), doing business as m.s. textile company, ltd. (m.s.). defendants also appeal the threat must be one which deprives the victim of his unfettered will. cont'l bank of pa. v. conformity; or b) fails to make an effective rejection [] but 1 a chargeback appears to be a deduction in price from the buyer to the seller because of in barclay, the bank brought an action to foreclose on a mortgage. id. at 158. it had days of issuance, or within ten days of shipment of the finished garments to k-mart. february 2010, lim, shim, and terzian met and agreed that gabo and lmt would make consideration for it by commencing delivery. his request was reasonable in the face of the fabric did not pass inspection either as to weight or colorfastness. leaderman, the lower court's order granting signed the personal guarantee. summary judgment should be reversed contract, which lim refused to provide. instead he agreed to pay the invoices within ten indicates $165,788.39 is due to j & d.2 defendants provided actual notice to plaintiff. in fact, the only proofs which can be specifications. this nonconformity resulted in testing and examination, causing added gabo and lmt's persistent refusal to advance any payment, or to reassure j & d of their also known as james h. lim, (collectively referred to as defendants) appeal the august the victim of any wrongful or unlawful act which deprived him of his unfettered will. summary judgment against appellant lim record. see murray v. plainfield rescue squad, 210 n.j. 512, 524 (2012). consequently, m.s. was because, coincidentally, he was in korea when the deal was negotiated. delivery. however, they had been made aware of j & d's need for some assurance of bank was itself not the cause of the company's financial woes. id. at 177. the bank, the she know with certainty if the chargeback in this case was related solely to this order or if first order. when deposed, leaderman nonetheless stated that there were problems fulfilling the k- anticipated a benefit from the agreement, and the subsequent financial distress of the ballon stoll bader & nadler, p.c., attorneys for appellants barclay riding acad., 93 n.j. 153, 176 (1983). in determining whether duress existed, mortgagor should not have transformed voluntarily-agreed-upon conditions into evidence lim insisted during his deposition that the figure shown on the reconciliation point iii [n.j.s.a. 12a:2-606(1)(a-b).] k.r. intercorp (kr), a factory located in vietnam, for the production of finished loss. as there were no material issues in dispute, summary judgment was properly the fabrics did not meet the specifications nor delivery dates, when pressed, she because it overlooked the record in agreement at the time it was made. even lim stated that at the time he signed the $12,500 each. those sums were never paid either. as a result, j & d has received a total taking advantage of another's financial difficulty is not duress. rather, the person alleging until long after the goods had been accepted. moreover, it does not appear that any of the credited, even giving defendants all favorable inferences, are that j & d delivered the of economic duress relating to his 503 (app. div.), certif. denied, 177 n.j. 222 (2003). the supreme court reversed because it found that the bank had not acted wrongfully in when deposed, lim claimed he felt pressured into issuing the personal guarantee the designation "t/t 60 days," meaning payment by wire transfer within sixty days. the on appeal, defendants raise the following points: lim alleged that he felt pressured to sign the personal guarantee because on june on appeal from the superior court of new jersey, law handwritten amendment. j & d also requested a letter of credit as a condition for the reconciliation sheet. additionally, defendants did not substantiate their own claims of manufacturer. and then through j & d's demand for a letter of credit. for the delay and the ensuing loss of sales. garments delivered to k-mart, that some of the orders were late. the invoices, however, mart. shim asked for a letter of credit, but lim responded that he "couldn't open" the ability to pay through a letter of credit. both parties anticipated a benefit from the where goods are accepted, the buyer is obliged to pay the purchase price at the $10,000 monthly payments towards the balance commencing march 2010 through and shim met. only one entry indicated a delivery date of june 11, 2009, but did so as advised by norma leaderman, the employee responsible for quality control of the it included prior orders on which one of terzian's other companies may have been late. guarantee." hoffman v. asseenontv.com, inc., 404 n.j. super. 415, 425-26 (app. div. 2009) corporation owned by yeong shim, who also owns m.s., an enterprise headquartered in a buyer fails to pay the price as agreed upon, the seller may recover the full price of the signifies to the seller that the goods are conforming[,] or as the entity to whom payments were made. spreadsheet for freight or trucking costs. a problem occurring at the seller's end which results in imperfect performance of the sales v. demanding that mortgage: first, there was valid consideration for it, and secondly, the of only $140,000. judgment is granted where the record demonstrates "no genuine issue as to any material light most favorable to defendants, the court ruled, no genuine issue of material fact acknowledged that she had not personally informed anyone of the problems. neither did dismissal with prejudice of their counterclaims. we affirm. ibid. ultimately, only four payments of $10,000 counterclaim, defendants alleged gabo lost $600,000 as a result of problems with this (1995); chance v. mccann, 405 n.j. super. 547, 563 (app. div. 2009) (citing liberty the guarantee stated, "in case any default payment or payments from gabo industries, overlooked and disregarded material group, eventually issued revised instructions and specifications, and accepted all the division, bergen county, docket no. l-1988-11. from k-mart. the court also noted that pursuant to the uniform commercial code, when plausibility of either side's position. brill, supra, 142 n.j. at 540. that he will take or retain them in spite of their non- the chargeback, however, was against the entire contract for $1.2 million, not just

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