Upon the following papers numbered 1-27 read on this motion for summary judgment ; Notice of Motion and supporting papers 1-22 ; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers 23-26 ; Replying Affidavits and supporting papers 27 ; it is,

ORDERED that this motion by the defendants for summary judgment dismissing the complaint and for summary judgment in their favor on the counterclaims is granted; and it is [*2]further

ORDERED that the defendant Kabco Pharmaceuticals, Inc., is awarded damages in the amount of $3,192.60 with interest from April 1, 2008; and it is further

ORDERED that the defendant Futurebiotics, LLC, is awarded damages in the amount of $27,800.00 with interest from October 16, 2008.

The plaintiff is in the business of developing, marketing, and selling dietary and nutritional supplements. The defendants are in the business of manufacturing vitamins as well as dietary and nutritional supplements. On or about February 6, 2008, the plaintiff sent a purchase order to the defendant Kabco Pharmaceuticals, Inc. ("Kabco") for the manufacture and packaging

of various nutritional supplements ("Purchase Order 64" or "PO 64). Purchase Order 64 was revised several times between February 6 and June 4, 2008, when it was finalized. The final version provided that Kabco was to manufacture 13,000 bottles of Armageddon and 4,000 bottles of Evolution, two of the plaintiff's products, for $190,120.00. The payment terms were "30 days." Kabco ordered the raw materials and bottles from third-party vendors, but did not commence manufacturing or deliver any products to the plaintiff. On August 28, 2008, Kabco sent the following letter to the plaintiff regarding PO 64:

The above stated Purchase Order valued at $190,120.00 was received by us more than 2 months back. As you know the bottles that are to be used for filling out your PO are customized bottles and had to be special ordered for Starchem. Apart from ordering the bottles, we also had to order the raw material for filling out your order. The bottles and the raw material are not returnable to the vendors as such Kabco has already invested a huge amount of money for this transaction.

The payment term set by Kabco for Starchem is net 30 days, while your credit limit is for $25,000. This order far exceeds your credit limit.

Your payment history for the previous orders was also not satisfactory as they were delayed. We have also been informed that Starchem has failed to live up to its payment obligations by not paying our sister Company (Futurebiotics) in spite of several written and verbal promises made to several Managers of Futurebiotics including a promise to Saiful Kibra who visited your facility in the not too distant past.

In view of the above, please be informed that your orders will be [*3]processed as soon as we receive a payment (bank certified check) for $165,120 towards the above referenced PO. The balance amount of $25,000 will be net 30 as per our agreed payment terms. We also would like you to pay the outstanding balance due to Futurebiotics.

Both Kabco and Futurebiotics are owned by Abu Kabir and Saiful Kibra. The record reveals that the plaintiff owed Kabco $3,192.60 for another purchase order (PO 63), which remained unpaid. The record also reveals that the plaintiff ordered products from Futurebiotics valued at $25,140.00 and $22,800.00, respectively, $27,880.00 of which remained unpaid.

On September 4, 2008, Kabco e-mailed the plaintiff that it would begin manufacturing if the plaintiff agreed to accept Kabco's $25,000 credit limit. On September 5, 2008, Kabco e-mailed the plaintiff that it would begin producing the plaintiff's products on Monday, September 8, 2008, and asked if the plaintiff wanted to be present when production began or if it wanted Kabco to send it a sample for tasting. The plaintiff responded by asking Kabco to extend it credit in the amount of $60,000 to $90,000. In its final e-mail to the plaintiff on September 5, 2008, Kabco stated, "We understand that you have not paid Futurebiotics for the outstanding invoice as of today. We also understand that Futurebiotics has been in touch with you asking for payment. Please confirm that you will be present at our facility at 8:30AM Monday morning for sampling the first blend of Armageddon." The plaintiff did not respond and subsequently commenced this action against Kabco and Futurebiotics.

The complaint contains three causes of action against Kabco for breach of contract, fraudulent inducement, and estoppel. The plaintiff alleges that Kabco breached their agreement by unilaterally changing the terms of PO 64, by creating a credit limit in the amount of $25,000, and by demanding that the plaintiff make payments to Futurebiotics. The plaintiff also alleges that Kabco fraudulently induced it to enter into PO 64 by misrepresenting the terms of their agreement, which Kabco had no intention of honoring. The plaintiff further alleges that it relied on Kabco's misrepresentations and that Kabco is estopped from changing the terms of PO 64. The complaint contains two causes of action against Futurebiotics for tortious interference with PO 64 and for breach of a separate nondisclosure agreement. The defendants' answer contains counterclaims by Futurebiotics and Kabco in the amounts of $27,800.00 and $3,192.60, respectively. The defendants move for summary judgment dismissing the complaint and for summary judgment in their favor on the counterclaims.

The court finds that the conduct of the plaintiff and Kabco is sufficient to establish that Purchase Order 64 was an enforceable contract for the sale of goods under the Uniform Commercial Code (see, UCC 2-204 [1] UCC 2-207 [3] Hornell Brewing Co. v Spry, 174 Misc 2d 451, 455). UCC 2-609 (1) imposes on each party an obligation that the other's expectation of receiving due performance will not be impaired. If either the willingness or the ability of one party to perform declines materially between the time of contracting and the time of performance, the other party is threatened with the loss of a substantial part of what he has [*4]bargained for. A seller needs protection not merely against having to deliver on credit to a shaky buyer, but also against having to procure and manufacture the goods, perhaps turning down other customers. Once the seller has been given reason believe that the buyer's performance has become uncertain, it is an undue hardship to force the seller to continue his own performance (UCC 2-609, Official Comment 1, McKinney's Cons Laws of NY, Book 62 ½ , at 122). Thus, UCC 2-609 (1) authorizes a party, upon reasonable grounds for insecurity, to demand adequate assurances of due performance and, if commercially reasonable, to suspend any performance for which he has not already received the agreed return until he receives such assurances (Hornell Brewing Co. v Spry, supra at 456). Whether a seller has reasonable grounds for insecurity depends on various factors, including the buyer's exact words or actions, the course of dealing or performance between the parties, and the nature of the sales contract and the industry (Id. at 457). Reasonable grounds for insecurity can arise from the sole fact that the buyer has fallen behind in his account with the seller, even when the items involved have to do with separate and legally distinct contracts, because it impairs the seller's expectation of due performance (Id.).

The court finds that the plaintiff's poor payment history with both Kabco and Futurebiotics constituted reasonable grounds for insecurity (Id. at 458). Thus, Kabco had the right demand adequate assurances, which it did by letter dated August 28, 2008 (see, UCC 2-609, Official Comment 1, McKinney's Cons Laws of NY, Book 62 ½ , at 123, citing Corn Products Refining Co. v Fasola, 94 NYLJ 181[seller demanded cash before shipment]). If a party demands and receives specific assurances then, absent a further change of circumstances, the assurances demanded and received are adequate, and the party who has demanded the assurances is bound to proceed (Hornell Brewing Co. v Spry, supra at 458). On the other hand, a failure to respond constitutes a repudiation of the parties' agreement, which entitles the party who demanded the assurances to suspend performance and terminate the agreement (Id.). Here, the plaintiff failed to offer any assurances to Kabco and responded merely by making a request for more credit. Accordingly, the court finds that Kabco properly suspended its performance under PO 64.

UCC 2-702 (1) is also applicable to the facts of this case. It provides, "Where the seller discovers the buyer to be insolvent, he may refuse delivery except for cash including payment for all goods theretofore delivered under the contract...." A person is insolvent when he has either ceased to pay his debts in the ordinary course of business or cannot pay his debts as they come due (see, UCC 1-201 [23]). The court finds that the plaintiff was insolvent within the meaning of the Uniform Commercial Code and that Kabco could have properly demanded that the full amount due under PO 64 be paid in cash. Instead, it extended credit to the plaintiff in the amount of $25,000 and demanded payment of only the remaining balance by certified bank check, which is a cash equivalent. When payment was not forthcoming, Kabco properly declined to deliver any products to the plaintiff under PO 64.

In view of the foregoing, the court finds that, contrary to the plaintiff's contentions, Kabco did not breach the agreement evinced by Purchase Order 64, but properly exercised its rights under the Uniform Commercial Code. Accordingly, Kabco is entitled to [*5]summary judgment dismissing the first cause of action for breach of contract.

The plaintiff's fourth cause of action for fraudulent inducement is premised on the allegation that Kabco never intended to honor the terms of PO 64. A cause of action to recover damages for fraud does not lie when the only fraud claimed relates to an alleged breach of contract (Stangel v Zhi Dan Chen, 74 AD3d 1050, 1052). A general allegation that a party entered into a contract without the intent to perform is insufficient to state a cause of action to recover damages for fraud (Id.). Accordingly, Kabco is entitled to summary judgment dismissing the fourth cause of action for fraudulent inducement.

Likewise, equitable estoppel does not apply when, as here, the misrepresentation or act of concealment underlying the estoppel claim is the same act that forms the basis of the underlying substantive cause of action (see, Transport Workers Union of Am. Local 100 AFL-CIO v Schwartz, 32 AD3d 710, 714; see also, Susman v Commerzbank Capital Markets Corp., 95 AD3d 589, 590 [promissory-estoppel claim cannot stand when there is a contract between the parties]). Accordingly, Kabco is entitled to summary judgment dismissing the fifth cause of action for estoppel.

The plaintiff's second cause of action for tortious interference with contract is based on Futurbiotics' alleged interference with PO 64. Tortious interference with contract requires the existence of a valid contract between the plaintiff and a third-party, the defendant's knowledge of that contract, the defendant's intentional procurement of the third party's breach of the contract without justification, actual breach of the contract, and damages resulting therefrom (Beecher v Feldstein, 8 AD3d 597, 598, citing Lama Holding Co. v Smith Barney, 88 NY2d 413, 424). In the absence of a breach of the agreement evinced by PO 64, the plaintiff does not have a cause of action against Futurebiotics for tortious interference with contract (see, NBT Bancorp v Fleet/Norstar Fin. Group, 87 NY2d 614, 620-621). Accordingly, Futurebiotics is entitled to summary judgment dismissing the second cause of action.

The plaintiff's third cause of action for breach of contract is based on a separate nondisclosure agreement between the plaintiff and Futurebiotics. The plaintiff alleges that Futurebiotics violated that agreement by offering to sell one of its proprietary ingredients to competitors. However, the record does not reflect that there was an actual sale or other disclosure by Futurebiotics, and the plaintiff's principal testified that he was not aware of any other purported disclosure of the plaintiff's trade secrets or formulas. The plaintiff also contends that Futurebiotics disclosed its financial information, specifically its payment history, to Kabco. The nondisclosure agreement defines "confidential information" as "any information, data, or know-how, dislcosed by one party hereto to the other party including, without limitation, the information, data, or know-how." The court finds that the plaintiff's payment history is not information that was disclosed to Futurebiotics by the plaintiff, but information compiled by Futurebiotics. Accordingly, the court finds that Futurebiotics is entitled to summary judgment dismissing the third cause of action for breach of contract. [*6]

The defendants have established, prima facie, their entitlement to judgment as a matter of law on their counterclaims for breach of contract, goods sold and delivered, and accounts stated. The plaintiff has failed to produce any evidence in opposition to Kabco's prima facie case. Moreover, the plaintiff's conclusory assertion that the products delivered by Futurebiotics did not meet the plaintiff's specifications is insufficient to demonstrate existence of a factual issue requiring a trial (see, Morgan v New York Telephone, 220 AD2d 728, 728) and is belied by the record. The plaintiff's principal testified that the plaintiff kept the products delivered by Futurebiotics and, in fact, resold them to its customers. Accordingly, the defendants are entitled to summary judgment on their counterclaims.

In reaching its determination, the court has not considered the plaintiff's exhibit B, which is not evidence in admissible form.

Dated:April 15, 2014

J.S.C.