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The Knit With v. Knitting Fever

June 27, 2012

THE KNIT WITH, PLAINTIFF,
v.
KNITTING FEVER, INC., DESIGNER YARNS, LTD., FILATURA PETTINATA V.V.G. DI STEFANO VACCARI & C., SION ELALOUF, DIANE ELOUF, JEFFREY J. DENECKE, JR., JAY OPPERMAN, AND DEBBIE BLISS, DEFENDANTS.
THE KNIT WITH, PLAINTIFF,
v.
EISAKU NORO & CO., LTD., KNITTING FEVER, INC., SION ELALOUF, DIANE ELALOUF, AND JAY OPPERMAN, DEFENDANTS.



The opinion of the court was delivered by: Buckwalter, S.J.

MEMORANDUM

Currently pending before the Court are (1) a Motion for Summary Judgment on Counts I and II of Plaintiff's Complaint filed by Defendants Knitting Fever, Inc. ("KFI"), Sion Elalouf, Diane Elalouf, Jeffrey J. Denecke, Jr., and Jay Opperman (collectively, "Defendants" or the "KFI Defendants"); (2) Plaintiff The Knit With's ("TKW") Motion for Summary Judgment on the Undisputed Factual Question of the 2005 Delivery of Cashmerinos; (3) the KFI Defendants' Motion to Strike Exhibit 3 to Plaintiff's Motion for Summary Judgment; and (4) Plaintiff's Motion to Strike Exhibit B to Defendants' Motion for Summary Judgment. For the following reasons, both of Plaintiff's Motions are denied and both of Defendants' Motions are granted.

I. FACTUAL AND PROCEDURAL HISTORY

The factual background of this case is one familiar to both the parties and the Court, and has been reiterated in several of this Court's prior opinions.*fn1 This matter arises between Plaintiff, TKW, a small, family-owned and operated business retailing specialty yarns and accessories to consumers, and Defendants (a) KFI, a New York corporation that imports and distributes specialty yarns; (b) KFI's officers and directors, including Sion Elalouf, Diane Elalouf, Jay Opperman, and Jeffrey J. Denecke, Jr.; and (c) Filatura Pettinata V.V.G. Di Stefano Vaccari & C. ("Filatura"), Debbie Bliss, and Designer Yarns, Inc. ("Designer Yarns"), all of whom are nonU.S. entities that design, manufacture, and/or distribute specialty yarns. At the core of the dispute is Plaintiff's claim that KFI sold designer knitting yarns to TKW, representing that the yarns contained a percentage of cashmere, which the yarns allegedly did not.

Following extensive motion practice by both parties, the Court has dismissed multiple claims and Defendants. The sole claims remaining in this action are: (1) breach of the express warranty of merchantability against Defendants KFI, Sion Elalouf, and Jay Opperman; (2) breach of the implied warranty of merchantability against Defendants KFI, Filatura, Sion Elalouf, and Jay Opperman; (3) injury to business and property pursuant to the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1962 against Defendant Sion Elalouf; (4) conspiracy to cause injury to business and property pursuant to RICO, 18 U.S.C. §1962(d) against Defendants Sion Elalouf and Jay Opperman; and (5) a piercing the corporate veil allegation against Defendants KFI, Sion Elalouf, and Diane Elalouf. In addition, the KFI Defendants have counterclaims for defamation, tortious interference with existing and prospective contracts, and trade libel.

On March 16, 2012, the KFI Defendants filed the current Motion for Summary Judgment on Counts I and II of Plaintiff's Complaint. Plaintiff responded on April 2, 2012 and Defendants filed a Reply on May 21, 2012. On March 30, 2012, Plaintiff filed its current Motion for Summary Judgment on the Undisputed Factual Question of the 2005 Delivery of Cashmerinos, Defendants responded on April 16, 2012, Plaintiff filed a Reply Brief on May 21, 2012, and Defendants submitted a Sur-reply on May 31, 2012.*fn2 In conjunction with both of these Motions, the parties have each filed a Motion to Strike an exhibit to the other party's summary judgment brief. All of these Motions are now ripe for judicial consideration.

II. STANDARD OF REVIEW

Summary judgment is proper "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). A factual dispute is "material" only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For an issue to be "genuine," a reasonable fact-finder must be able to return a verdict in favor of the non-moving party. Id.

On summary judgment, the moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145--46 (3d Cir. 2004). It is not the court's role to weigh the disputed evidence and decide which is more probative, or to make credibility determinations. Boyle v. Cnty. of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998) (citing Petruzzi's IGA Supermkts., Inc. v. Darling-Del. Co. Inc., 998 F.2d 1224, 1230 (3d Cir. 1993)). Rather, the court must consider the evidence, and all reasonable inferences which may be drawn from it, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987). If a conflict arises between the evidence presented by both sides, the court must accept as true the allegations of the non-moving party, and "all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255.

Although the moving party must establish an absence of a genuine issue of material fact, it need not "support its motion with affidavits or other similar materials negating the opponent's claim." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). It can meet its burden by "pointing out . . . that there is an absence of evidence to support the nonmoving party's claims." Id. at 325. Once the movant has carried its initial burden, the opposing party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec., 475 U.S. at 586. "[T]he non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument." Berckeley Inv. Group. Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006). If the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial," summary judgment is appropriate. Celotex, 477 U.S. at 322. Moreover, the mere existence of some evidence in support of the non-movant will not be adequate to support a denial of a motion for summary judgment; there must be enough evidence to enable a jury to reasonably find for the non-movant on that issue. Anderson, 477 U.S. at 249--50.

Notably, "[t]he rule is no different where there are cross-motions for summary judgment." Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008). As stated by the Third Circuit, "[c]ross-motions are no more than a claim by each side that it alone is entitled to summary judgment, and the making of such inherently contradictory claims does not constitute an agreement that if one is rejected the other is necessarily justified or that the losing party waives judicial consideration and determination of whether genuine issues of material fact exist." Id. (quoting Rains v. Cascade Indus., Inc., 401 F.2d 241, 245 (3d Cir. 1968)).

III. DISCUSSION

Defendants' current Motion for Summary Judgment seeks dismissal of Counts I and II of the Complaint claiming that no delivery of any of the yarns in suit occurred within the statute of limitations, and thereby barring any cause of action for breach of warranty. Plaintiff's concurrently-filed Motion for Summary Judgment submits that the record unequivocally supports a finding that a delivery of the yarns in suit occurred in 2005, meaning that Defendants' statute of limitations argument is meritless. In addition, both parties move to strike exhibits to the opposing party's brief. For clarity of discussion, the Court first considers the Motions to Strike filed by each party, and then turns to the substance of the two Motions for Summary Judgment.

A. Defendants' Motion to Strike Exhibit 3 of Plaintiff's Motion for Summary Judgment on the Factual Question of the 2005 Delivery of Cashmerinos

Defendants first move to strike Exhibit 3-the Declaration of Dawn Casale-to Plaintiff's Motion for Summary Judgment on the Factual Question of the 2005 Delivery of Cashmerinos. Specifically, they contend that any statement Ms. Casale made about that delivery was based not on personal knowledge, but rather on inadmissible hearsay, and thus is not properly considered on summary judgment. Upon careful review of the parties' briefs, the Court must agree.

It is well-established that a declarant is not competent to testify to matters beyond his or her personal knowledge. See Fed. R. Evid. 602 ("A witness may testify to a matter only if evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter."). "Thus, the record must establish the personal knowledge of an affiant, or that affiant's declarations may not be considered on summary judgment." Fitzpatrick v. Nat'l Mobile Television, 364 F. Supp. 2d 483, 495 (M.D. Pa. 2005); see also Fed. R. Civ. P. 56(c)(4) (noting that the Court may reject an affidavit that fails to meet the personal knowledge requirement of Federal Rule of Civil Procedure 56(c)(4)).

As a general rule, declaration statements made based on hearsay statements by others should not be considered. Bouriez v. Carnegie Mellon Univ., No. Civ.A.02-2104, 2005 WL 2106582, at *9 (W.D. Pa. Aug. 26, 2005). Only if the hearsay statements fall within one of the established exceptions to the hearsay rule may they be factored into a summary judgment analysis. Id. at *8. Moreover, "hearsay evidence produced in an affidavit opposing summary judgment may be considered if the out-of court declarant could later present that evidence through direct testimony." Williams v. W. Chester, 891 F.2d 458, 466 n.12 (3d Cir. 1989). Notably, however, "[i]f an affiant must have personal knowledge, then certainly a hearsay declaration set forth by the affiant must be based on personal knowledge." Fitzpatrick, 364 F. Supp. 2d at 496. Accordingly, the party seeking to introduce the hearsay statement "must ensure that his evidence sets forth the basis for the affiant's personal knowledge." Id. at 497.

In the present case, Ms. Casale's statements regarding the alleged 2005 delivery of Cashmerino yarn are not admissible on any grounds. Her Declaration avers, "upon personal knowledge," that "[i]n Summer 2005, KFI delivered 10 bags of Cashmerino to TKW; in the ordinary course, the goods were opened and added to inventory. When no invoice was received for the Cashmerinos, inquiry to KFI determined the goods were shipped against TKW's outstanding credit balance and that KFI does not invoice such shipments." (Pl.'s Mot. Part. Summ. J. on Issue of 2005 Delivery ("Pl.'s Mot."), Ex. 5, Decl. of Dawn Casale ("D. Casale Decl.") ¶ 4, Feb. 2, 2011.) Yet, during her October 2011 videotaped deposition, Ms. Casale clearly admitted that she, in fact, had no such personal knowledge of the 2005 delivery:

Q. Ms. Casale, the court report has placed before you what's been marked as D-5. Is this another declaration that you submitted in connection with this litigation?

A. Yes.

Q. And the first paragraph in part states that you make this declaration based upon personal knowledge, correct?

A. Correct. . . .

Q. Please turn to paragraph four. It says, In the summer of 2005, KFI delivered ten bags of Cashmerino to TKW. Do you understand TKW to be an acronym for the Knit With?

A. Correct.

Q. You have no personal knowledge of that delivery, correct?

A. Vaguely.

Q. Well, what knowledge at all do you have?

A. That it was added and opened to our store inventory.

Q. Well, aside from reading in your declaration, what knowledge do you have of this?

A. That that was the Cashmerino in question.

Q. And you didn't open that delivery, did you? . . .

A. Yeah, I think that was Bill, Bill Giampa that had received that shipment.

Q. So not you personally?

A. Correct.

Q. You were not there when the delivery was ...


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