It is not unusual for understandings to change or evolve in real-time after an agreement is made and before performance is completed. Sometimes the change is implemented in writing. And, as a recent case illustrates, where the verbal “amendment” is not memorialized, the Court (or a jury) may have to sort out the differing and competing recollections.
J Events Company hired chef Andrew Maturana and his catering company Rapt LLC for a large corporate party. Events were dissatisfied with Rapt’s work (and billing) on the party and sued for breach of contract, deceptive practices, and fraud. Manturana and Rapt counterclaimed for breach of contract, promissory estoppel, and defamation.
Events is a production company that hosts a variety of events, including celebrity parties. Rapt is a catering company that offers tailored menus for these events. Maturana owns Rapt.
Events initially contacted Maturana for work on a celebrity event scheduled for December 19, 2017. The parties negotiated the number of chefs, menu specifics, and final pricing. A November 5, 2017 email from Maturana to Events laid out the culinary dishes that would be provided and how many of their chefs would attend. Maturana sent Events an initial pricing estimate of $46,141. Negotiations continued, and the parties eventually agreed on a price of $42,921.
Events contended that those emails and the accompanying invoice—dated November 5 and accepted on November 10—included edible balloons as part of the menu. Maturana stated that Events reached out to him on November 18 to add the balloons to the menu. To provide edible balloons for the event, Rapt contracted with Mike Bagale, a chef who specialized in that type of arrangement. In an email sent to Events on November 18, 2017, Maturana indicated—based on Bagale’s estimate—that the 400 edible balloons requested would cost them another $10,000, totaling $13,500. Rapt sent Events an additional invoice reflecting those changes. And alleged that Events accepted the increased budget at an in-person walkthrough on November 26.
On December 11, Events texted Maturana that the client “isn’t going to go for $13,500. I clearly looked at the wrong number. . . as I just saw the additional cost this morning . . . I thought it was going to be $1350.” Events decided that $13,500 for edible balloons was too expensive and told Rapt to cancel the balloon deal. With only one week before the event, Maturana informed Events that payment had already made payments to Bagale toward the balloons and that it was too late to cancel the order.
On December 18, the night before the event, Events sent Maturana an email expressing the desire to continue with the preparations minus the balloons. Later that same night, Maturana reached out to Events’ client and received a text message stating, “Good to go on the balloons.” At the event, Rapt displayed the balloons.
Events also expressed dissatisfaction with how the event was put on. According to Events, Rapt hired inexperienced non-chef staffers, who disrupted a pre-arranged activities schedule and frustrated interactive dishes; offered guests substandard food prepared by fast-food chains; promoted, advertised, and took credit for the event, both with Events’ client and on social media, contravening the parties’ arrangement; and intentionally interfered with Events’ relationship with its client.
Based on its displeasure with Rapt’s conduct, Events asserted six claims: (1) breach of contract, for performance-related issues stemming from the outsourcing of the catered food and mismanagement of the event; (2) breach of contractual warranties, for serving low-quality food not suitable for the event; (3) fraudulent inducement, for misrepresenting the services offered to secure the contract; (4) intentional misrepresentation, for indicating that Rapt would serve the specifically-prepared food itself and for the statements Rapt would not advertise itself at the event; (5) economic duress, for wrongfully threatening to withdraw from the event in order to secure the additional money for the balloons; and (6) deceptive trade practices, for many of the above allegations.
Rapt answered and counterclaimed for $23,200, based on alternative breach of contract and promissory estoppel theories. And sought $10,000 for the balloons and $13,200 for two alleged late payments for services of $6,600 each.
A party asserting a claim for breach of contract must establish the existence of a contract, the party’s own performance; the other party’s breach; and resulting damages.
Rapt counterclaimed for $10,000 in charges for the edible balloons. Events argued that the First Invoice constituted an enforceable contract that encompassed the edible balloons. Since all of the charges assessed under the First Invoice were indisputably paid, Events could not be liable Rapt for breach of contract.
Rapt provided evidence, however, that the First Invoice did not incorporate the edible-balloon terms and that only the Final Invoice fully encompasses the parties’ agreement. Maturana’s stated that Events first brought the edible-balloon issue to his attention on November 18—more than a week after the First Invoice was accepted by the parties. He also stated that Events agreed to the additional price at an in-person walkthrough the following week. And Rapt submitted emails sent on November 18 and November 20 reflecting the total price for the event that appeared in the Final (not First) Invoice; and text messages from Events recognizing that the balloons represented an additional expense. That evidence sufficed to create a genuine factual dispute over whether the First Invoice included the cost of the edible balloons or whether Events owed Rapt an additional $10,000 for the balloons as reflected in the Final Invoice.
A genuine dispute of fact also remained as to whether Events’ payments for the event were late so as to incur an additional $13,200 in late fees, as claimed by Rapt. Events argued that, although the First Invoice had language providing for a payment schedule and imposing late fees, these “boilerplate statements were not agreed to, not signed and never enforced in past dealings.” Yet the First Invoice prominently features these terms, and Events eventually made payments based on that invoice. Additionally, Events’ argument that those provisions were unenforceable because they were unsigned contradicted the earlier contention that the First Invoice and related emails constituted a valid contract even though the invoice was not signed.
Given those clear factual disputes about whether Events met its obligations under the parties’ contract, summary judgment on Rapt’s breach-of-contract counterclaim was denied.
Events sought summary judgment on its claim that Rapt breached the contract by failing to provide the “bargained-for . . . artisanal culinary products and services.”
Event’s asserted that the parties bargained for Maturana’s artisanal dishes. And contended that the contract called for Rapt to “actually source, prepare, create, and provide the goods by its own skilled artisanal chefs.” So Rapt breached those terms by hiring non-chefs as event staffers, by using third-party vendors, as opposed to Rapt’s own culinary chefs, to supply some of the food stations; and by removing some of the menu’s dishes from the event.
Rapt contended that the contractual terms included only specific dishes listed on the agreed-upon menu and the number of chefs. Maturana stated that he never made any representations about the sourcing of his chefs, how food would be served, or the quality artisanal foods. And maintained that Events did not point to any specific promise, either in email exchanges or in the invoices, to substantiate a contrary view—and, instead, Events based its legal theory on language taken from the Rapt website.
And Rapt disputed Events contention that poor quality food was served. Indeed, an email from Events’ client thanked Maturana for the excellent event. The email also contained several hundred photos from the event, which Rapt argued showed that the client was pleased with the quality of the food and how well the event was run.
Those factual disputes precluded the grant of summary judgment on Events’ breach of contract claim.
Events alternatively argued that it was entitled to summary judgment on its breach of contract claim under the Uniform Commercial Code perfect tender and breach of implied warranty of fitness provisions governing the sale of goods But the Court concluded that a factual dispute existed about whether the parties were contracting merely for goods in the form of food, or were instead contracting for a mix of goods and services with the services component predominating.
The UCC applied to contracts “involving the sale of goods.” If a contract involves both the performance of services and the sale of goods, a court must decide which type of contract predominates. The UCC applies only to contracts in which the sale of goods predominates.
The question was whether Rapt was contracted merely to provide food dishes (albeit “artisanal” ones) or whether that food preparation and provision was merely an aspect of a broader contract for services. And the Court concluded that a reasonable jury could conclude that the parties’ agreement was for services, not merely for the sale of goods in the form of food.
The menu was based around interactive food stations in which guests could pick and choose unique items created in front of them by the chefs. At one such station, a specially hired chef offered guests festive balloons that could be consumed—at a charge to Events that (according to Maturana) was alone 20% of the total cost of the event.
Rapt supplied on-site chefs and was responsible for those chefs’ performances in front of the guests (including in the production of novelty items like edible balloons). And that raised a factual dispute about whether Rapt was merely a caterer responsible for providing food or was instead predominantly serving as part of the evening’s entertainment.
A material dispute of fact existed about whether the UCC would even apply to the contract—much less about whether Rapt breached its obligations under those provisions if the UCC did apply, so the Court denied Events’ motion for summary judgment based on the UCC.
Events’ economic-duress and fraudulent inducement/misrepresentation claims were based on the edible balloons transaction. Events relied on arguments similar to ones it made in seeking dismissal of the balloon aspect of Rapt’s counterclaims. So Events was not entitled to summary judgment.
As to economic duress, Events asserted that Maturana’s threats to withdraw from the event unless it received an additional $10,000 for the balloons constituted economic duress. But those threats could constitute improper duress only if Rapt was not entitled to the additional money. If, as Maturana asserted, Events agreed to the modification and promised to pay, the threatened withdrawal would instead have been a legitimate attempt to obtain the agreed performance. Thus, because factual issues remained about whether Rapt had a right to the $10,000, Events was not entitled to summary judgment on its economic duress claim.
As to fraudulent inducement and intentional misrepresentation, Events asserted that Maturana knowingly made various false statements regarding Rapt’s capacity to put on the event and whether the edible balloons were included in the First Invoice. And contended that Rapt did not intend on servicing the event with its own culinary foods, as called for in the contract; misrepresented the cost of hiring Bagale as a chef, and improperly tried to shift costs of the edible balloons. But those contentions, too, were all factually contested and required a jury’s determination.
Events also sought summary judgment on its deceptive practices claims under the General Business Law. But did not show an entitlement to judgment as a matter of law. On the contrary, on searching the record, the Court granted summary judgment dismissing the GBL claim.
A party asserting a GBL claim must prove that the challenged acts or practices were consumer-oriented, materially misleading, and harmful to the plaintiff. The record established as a matter of law that the allegedly deceptive practices were not consumer-oriented conduct for GBL purposes. Rather, the practices all related to a “single-shot transaction” between the parties relating to the production of one event with specific and individualized requirements. The alleged deceptive conduct thus lacked “a broad impact on consumers at large.”
But Events argued that, because Rapt’s business practices were a routine bait and switch for which other similarly situated consumers have and could be affected in the future, the conduct should be regarded as consumer-oriented. The Court disagreed. It was unclear that an event-production company like Events even qualified as a consumer for GBL purposes at all. In any event, the possibility that Rapt would engage in repeated transactions with similar clients (or the same client) did not alter the fact that those transactions by their nature would involve Maturana tailoring his “unique and bespoke culinary creations” to the particular needs of a given client. Such individualized business dealings were quite different from the kind of standardized transactions involving form documents that have been found to be consumer-oriented.
The Court concluded that Events had not established—and could not establish—an entitlement to relief on the GBL claim. Rapt was entitled to summary judgment dismissing that claim.
P.S. Rapt’s promissory estoppel counterclaim relating to the edible balloon charges was based on the same facts and sought the same damages as the edible balloon aspect of the breach of contract counterclaim. And Rapt did not allege any duty independent of the contract. The promissory-estoppel counterclaim was dismissed as duplicative.