09-3899, 09-3900
Diesel Props 09
           09-3899, 09-3900
              S.r.l.
           Diesel Props S.r.l. v. Greystone Business Credit II LLC
v. Greystone Business 3900
          09-3899, 09
Credit II LLC
          Diesel Props S.r.l.
          v. Greystone Business
          Credit II LLC


      1                          UNITED STATES COURT OF APPEALS
      2                              FOR THE SECOND CIRCUIT
      3

      4                                 August Term, 2009
      5   (Argued:     April 14, 2010                      Decided: January 6, 2011)
      6                         Docket Nos. 09-3899-cv, -3900-cv
      7

      8   DIESEL PROPS S.R.L., DIESEL KID S.R.L.,
      9                               Plaintiffs-Counterclaim-
     10                               Defendants-Appellants,
     11                               - v. -
     12   GREYS TONE BUSINESS       CREDIT     II   LLC,    GLOBAL     BRAND
     13   MARKETING INC.,
     14                               Defendants-Counterclaimants-
     15                               Appellees.
     16
     17   Before:     KEARSE, SACK, and LIVINGSTON, Circuit Judges.
     18              Appeal from a judgment of the United States District Court
     19   for the Southern District of New York, Harold Baer, Jr., Judge,
     20   entered after a bench trial, dismissing plaintiffs· claims against
     21   defendants    and     ordering   plaintiff     Diesel   Props   S.r.l.    to   pay
     22   defendant    Greystone    Business    Credit     II   LLC   $677,381.93   on   its
     23   counterclaim for unjust enrichment.            See 2009 WL 2514033.
    24               Affirmed in part, reversed in part.
    25                    IRA    S. SACKS, New York, New York (Jennifer
    26                           Daddio, Law Offices of Ira S. Sacks, New
    27                           York, New York, Mark S. Lafayette, Melanie
 1                               Sacks, Olshan Grundman Frome Rosenzweig &
 2                               Wolosky, New York, New York, on the brief),
 3                               for Plaintiffs-Counterclaim-Defendants-
 4                               Appellants.
 5                      OLIVER J. ARMAS, New York, New York (Chadbourne
 6                           & Parke, New York, New York, on the brief) ,
 7                           for Defendant-Counterclaimant-Appellee
 8                           Greystone Business Credit II LLC.
 9                      MICHAEL J. TIFFANY, New York, New York (Leader &
10                           Berkon, New York, New York), submitted a
11                           letter in support of affirmance on behalf
12                           of Defendant-Counterclaimant-Appellee
13                           Global Brand Marketing Inc.



14   KEARSE, Circuit Judge:
15              Plaintiffs Diesel Props S. r .1.              (If Props If)    and Diesel Kid
16   S.r.l.     ("Kid")         (collectively     "Diesel")    appeal         from a   judgment
17   entered    in     the      United   States   District     Court      for    the   Southern
18   District of New York following a bench trial before Harold Baer,
19   Jr. ,    Judge,      (a)     dismissing      their    claims       against     defendants
20   Greystone Business Credit II LLC                   ("Greystone")         and Global Brand
21   Marketing Inc.          ("GBMI"), and (b)       ordering Props to pay Greystone
22   $677,381.93       in damages,       including interest        I   on its counterclaim
23   for unj ust       enrichment.        On appeal,      Diesel       contends principally
24   that the district court abused its discretion in rejecting, after
25   trial, Diesel's claims against Greystone for breach of contract,
26   unjust enrichment, and account stated, and in holding Props liable
27   to Greystone for unjust enrichment.                  For the reasons that follow,
28   we reverse the judgment against Props for unjust enrichment, and
29   we affirm the judgment in all other respects.


                                                - 2 -
 1                                            I.    BACKGROUND


 2              Most    of   the       background            facts    of    this    controversy       are
 3   undisputed and were stipulated by the parties prior to trial.


 4   A.   The Relationships Among the Parties
 5              Props    and       Kid       are    Italian      companies,         subsidiaries       of
 6   nonparty    Diesel      S.p.A.           (IiSpA II ),    which    owns    the     trademarks      on
 7   Diesel-brand merchandise.                     Props and Kid are licensed by SpA to
 8   produce adult       shoes and children's shoes,                        respectively,         bearing
 9   Diesel     trademarks.                  In    2005,      Props    and     Kid     entered       into

10   distribution agreements with GBMI,                        a California corporation (the
11   IIDistribution Agreements ll ) , pursuant to which GBMI would purchase
12   Diesel-brand shoes designed and manufactured by Diesel and sell
13   them to retailers in the United States.                               In the summer of 2006,
14   GBMI was experiencing severe financial difficulties and owed SpA
15   and Kid more than $7 million in back royalties and advertising
16   commitments.       By December 31, 2006, those amounts had increased to
17   more than $11.5 million.
18             Greystone          is     a    Delaware        company       that    makes    loans     to
19   financially distressed companies and takes security interests in
20   their    assets.        In    December          2006,      Greystone,         GBMI,    and   Diesel
21   entered into agreements pursuant                         to which Greystone would make
22   funds available to GBMI and would make payments from those funds
23   directly to Diesel.               On December 2, SpA and Kid sent a letter to
24   GBMI,    with a copy to Greystone,                      stating that Props and Kid were

                                                     - 3 -
 1   each willing to sign a three-way agreement with Greystone and GBMI

 2   with respect to such financing.                          On December 4, Greystone and GBMI

 3   executed a loan and security agreement                               ("LSA"), pursuant to which

 4   Greystone established a $25 million revolving credit account for

 5   GBMI     (the     "revolver")          in        exchange         for     a    security          interest       in

 6   substantially            all    of    GBMI   I   S    present       and       after-acquired assets,

 7   including         "all    of     [GBMI' s1           books and records                relating                  to

 8   [GBMI 's]       business."            On     the       same       day,    two       letter        agreements,

 9   identical in substance, were executed- one by GBMI, Greystone, and

10   Props,      the    other by GBMI,                    Greystone,         and     Kid    (the       "tripartite

11   agreements"         or         "TPAs")--with            reference             to    the      LSA        and    the

12   Distribution Agreements.                     The TPAs contained payment provisions

13   requiring,        inter alia,           that          GBMI    not    place         an order under              the

14   Distribution         Agreements            unless            it    had        received       a     bona       fide

15   purchase order for Diesel products from a                                      retailer          (a "Customer

16   Purchase       Order")         and that GBMI provide copies of such customer

17   orders    to      Diesel       and Greystone i               that    Diesel,          before delivering

18   such products to GBMI,                 send Greystone copies of Diesel invoices

19   for    those      products           ("Diesel          Invoices") i           and     that       GBMI     supply

20   Diesel and Greystone with copies of invoices that GBMI sent to its

21   customers         ("Customer Invoices").                      In those circumstances, GBMI's

22   delivery of such Customer Invoices to Greystone would constitute

23   an    irrevocable request              that Greystone automatically pay Diesel,

24   from GBMI I s       revolving credit account,                           the amounts          shown on the

25   corresponding            Diesel      Invoices.               With    respect          to GBMI       debts      on

26   orders not placed according to the terms of the TPAs--including


                                                           - 4 -
 1   debts     to    its    suppliers    other    than    Diesel--Greystone           was   not
 2   authorized to make payments from GBMI's credit account except as
 3   expressly instructed by GBMI.               Diesel was aware that the credit
 4   account    could be used       to pay other GBMI               creditors.        The TPAs
 5   provided that Diesel had the right,                 at any time before shipping
 6   shoes to GBMI,         to request and receive information from Greystone
 7   as to,    inter alia,      whether GBMI was in noncompliance or default
 8   with respect to any requirements imposed by the LSA (the "notice
 9   provisions") .
10             Despite the December 2006 arrangements,                   GBMI's financial
11   difficulties continued.            At various times- -beginning in December
12   2006 and January 2007--GBMI was in default of revenue covenants
13   and other terms of the LSA.                In addition, during the next eight
14   months,    Diesel shipped to GBMI several lots of shoes for which
15   Diesel was never paid.              On September 4,         2007,    Diesel      notified
16   Greystone that Greystone was in default of the TPAs for,                            inter
17   alia, failing to make payments, and notified GBMI that GBMI was in
18   default of the Distribution Agreements; Diesel informed each that
19   unless    its    defaults    were    cured       within   30    days,     Diesel    would
20   consider its agreements terminated                (the nconditional termination
21   letters").       On October 17, 2007, after neither Greystone nor GBMI
22   had cured its defaults, Diesel notified them that their respective
23   contracts       were   terminated     as    of    October      4.       Diesel    shortly
24   thereafter commenced the present action.
25             At the time of termination, GBMI had received orders from
26   retailers for 520,202 pairs of Diesel shoes for the 2008 spring-

                                            - 5 -
 1   summer     season       ("SS08 11 )        and       had       incurred      significant     expenses

 2   associated with collecting those orders.                                    After terminating the

 3   Distribution Agreements with GBMI,                              Diesel      designated Diesel USA

 4   (IID-USAII),    a wholly owned subsidiary of SpA, as its United States

 5   distributor.           D- USA had operated Diesel-brand retail stores but

 6   had no experience in selling shoes to retailers, and                                       had little

 7   information about other retailers' orders for the SS08 season.                                        In

 8   November,       D- USA hired a             former GBMI            employee,        who gave D- USA a

 9   complete    list       of GBMI' s          open orders            (the      "Order Book").         Props

10   personnel       referred      to          the    Order         Book    as    the    GBMI   employee's

11   "dowry"     and    wrote      n   [i] t     looks         like    Christmas        came    early    this

12   year."     D-USA had net sales for the SS08 season of more than $14

13   million,    selling 369,266 pairs of Diesel-brand shoes to retailers

14   who included those identified from the GBMI Order Book.



15   B.   The District Court's Rulings After Trial

16              In    the    present action,                Diesel         asserted numerous             ims,

17   several of which were dismissed prior to trial.                                       To the extent

18   pertinent to this appeal, Diesel's third amended complaint                                         leged

19   principally that          Greystone             had failed            to give Diesel notice of

20   many defaults by GBMI under the LSA and had thereby breached the

21   TPA notice provisions; that the failures of GBMI and Greystone to

22   pay Diesel              shoes       shipped to GBMI                   breached the Distribution

23   Agreements       and    the   TPA payment provisions i                       and that Diesel was

24   enti tIed to recover from each defendant for breach of contract,

25   unjust enrichment, or account stated.                             Diesel sought approximately


                                                      -    6    -
 1   $20 million in damages,            plus interest.                Greystone,      in connection
 2   with     Props's     acquisition        of        the     GBMI    Order    Book,     in       which
 3   Greystone       claimed a       security      interest,          asserted a       counterclaim
 4   seeking more than $30 million for unjust enrichment.
 5                 The district      court held a three-day bench trial on the
 6   above claims.        In a posttrial Opinion and Order reported at 2009
 7   WL 2514033, No. 07 Civ. 9580                 (S.D.N.Y. Aug. 18, 2009)              ("Diesel"),
 8   annotated with citations to pertinent documents and to testimony
 9   and other sworn statements by officials of Greystone, GBMI, SpA,
10   Kid,    and Props, the district court ruled against Diesel on all of
11   its     claims     and    ruled    in    favor          of     Greystone    on     its    unjust

12   enrichment        counterclaim      against             Props.      The    court     dismissed
13   Diesel's claims against GBMI on the ground that GBMI's obligations
14   to     make    payments    to   Diesel       arose        only under       the   Distribution
15   Agreements, and those agreements contained forum-selection clauses

16   requiring all claims thereunder to be litigated in Milan,                                 Italy.

17   See Diesel, 2009 WL 2514033, at *6, *11.
18                 As to Diesel's claim against Greystone for breach of the
19   payment provisions of the TPAs,                    the court concluded that Diesel
20   was not entitled to recover, principally because it had not shown

21   that     a    condition    precedent         to    Greystone's       obligation          to   make

22   payments had been performed.                  The court found that the TPAs and
23   the LSA,       executed "on the same day,                 II   "made express reference to
24   one another," and that            "the terms of each w [ere]                  conditioned on
25   the performance and fulfillment of conditions of the other."                                    Id.
26   at *2.

                                                  - 7 -
 1    [T] he LSA authorized Greystone to wire GBMI I S funds
 2   directly to Diesel II pursuant to the terms of the
 3    [TPAs] . II            Likewise, Greystone I s payment
 4   obligations under the TPA w[ere] expressly II [s]ubject
 5   to the terms and conditions of the [LSA]."
 6   Thus,       the standing instructions from GBMI to
 7   Greystone to advance revolver proceeds directly to
 8   Diesel applied only if the TPA applied to the
 9   particular orders for which payment was requested and
10   all conditions under the TPA were met. . . .       That
11   is, if the terms of the TPA did not apply to a
12   particular order for which payment was requested
13    (i.e., the order was "outside" the structure set
14   forth in the TPA)! Greystone had no authority under
15   the LSA to wire GBMI's revolver proceeds directly to
16   Diesel; rather, GBMI, as the borrower under the LSA,
17   would be required to send Greystone a separate
18   instruction to disburse loan proceeds to Diesel as a
19   third-party. .
20        The TPA contained three primary independent
21   provisions.    First, GBMI was required to obtain a
22   purchase order from a bona fide customer ("Customer
23   Purchase Order") before placing an order for shoes
24   with Diesel. .        A copy of the Customer Purchase
25   Order was to be delivered to both Diesel and
26   Greystone.          Second, the TPA provided that at
27   any time before shipping the shoes, Diesel had the
28   right to request written notice from Greystone as to
29   whether at the time of such request there were (a)
30   sufficient funds to permit payment in the amount
31   requested in the Diesel Invoice, (b) if not, GBMI
32   would be prevented from requesting a loan under the
33   LSA, or (c) if GBMI was not in compliance with any of
34   the covenants and/or warranties under the LSA, or is
35   in default under the LSA, irrespective of whether
36   that non-compliance or default has been waived by
37   Greystone []        (the "Notice Provision").  Third,
38   pursuant to the TPA, GBMI was required to deliver to
39   Diesel and Greystone a copy of any invoices to
40   customers ("Customer Invoice"), which were deemed an
41   irrevocable request for disbursement of a revolving
42   loan in the amount of the corresponding Diesel
43   Invoice []         (the "Payment Provision").      In
44   accordance with the terms and conditions of the LSA,
45   within two days of its receipt of a Customer Invoice,
46   Greystone was required to wire the proceeds of the
47   new loan in the amount of the corresponding Diesel
48   Invoice. . . .   The only express conditions prior to
49   payment w [ere] a receipt of a Customer Invoice and
50   availability of funds under the LSA. . . .

                           - 8 -
 1   Diesel, 2009 WL 2514033, at *2            (citations to the record omitted;
 2   emphases added).       The court noted that Diesel's
 3              December 2 Letter expressly stated that "the [TPA]
 4              should only be applied to orders placed by GBMI upon
 5              receipt of a purchase order for product from a bona
 6              fide   customer of Diesel Products."
 7              Although Greystone did not sign the December 2
 8              Letter, it is undisputed that it would not have
 9              closed on the LSA if Diesel had not signed the
10              December 2 Letter, and that Greystone agreed to the
11              terms of the December 2 Letter by accepting the TPA
12              and closing on the LSA.  [Joint Pretrial Order] ~ 16.
13   Diesel,    2009   WL 2514033,     at *3       (other citations to the record
14   omitted;    emphasis    ours)      Although noting         that   rejection of a
15   contract    claim on     the    basis    of     nonperformance    of   a   condition
16   precedent "is generally disfavored," the district court found that
17              in this case the words and actions of the parties
18              demonstrate that all interested parties intended that
19              the December 2 Letter make the Customer Purchase
20              Order requirement a condition precedent to the
21              operation of the TPA.
22   Diesel,    2009   WL   2514033,    at *13.         It   found   that   when   Diesel
23   shipped shoes to GBMI that were not supported by Customer Purchase
24   Orders" the TPA simply did not                apply to    these   shipments,"    id.
25   at *7:
26              The effective date of the TPA was December 4,
27              2006.         At that time, there were 110,000 pairs
28              of shoes being held at SNATT, Diesel's consolidator
29              warehouse in Hong Kong, waiting to be shipped to the
30              United States.           Although the procedure set
31              forth under TPA was supposed to cover all orders
32              after its execution, GBMI paid for these shoes by
33              letter of credit because it wanted fast delivery, and
34              the formali ties required to implement the TPA were
35              not yet in place on GBMI' s end.         While Diesel
36              contends "all parties" understood the rest of the
37              shipments for the SS07 season would be paid for under
38              the TPA, that does not appear to be what happened.
39              Beginning in January 2007, Diesel began accepting
40              orders from GBMI that were not supported by Customer
                                             - 9 -
 1               Purchase Orders, understanding that the terms of the
 2               TPA would not apply to those shipments.         Diesel
 3               opted to take the risk of accepting those orders
 4               because it was anxious to have its shoes distributed
 5               into the United States in time for the Fall/Winter
 6               2007 (IIFW0711) season. . . . Diesel continued to ship
 7               to GBMI without requiring Customer Purchase Orders
 8               throughout the life of the TPA knowing full well
 9               that, based on the structure of the TPA and as made
10               explicit in the December 2 Letter, those orders were
11               not covered by the TPA. . . .

12                    Because the TPA simply did not apply to these
13               shipmentsI  GreYstone lacked any authority to lend
14               funds to a third-party (such as Diesel) without the
15               direct authorization of GBMI as its borrower under
16               the LSA. . . .   GBMI and Greystone' s actions under
17               the LSA were consistent with this understanding--on
18               18 occasions, GBMI requested that Greystone wire
19               revolver funds directly to Diesel       in specified
20               amountsi Greystone honored each instruction.

21   Diesel/     2009 WL 2514033/    at *6-*7       (footnote and citations to the
22   record omitted; emphases added)        i   see also id. at *13.
23               As to Diesel's claim against Greystone for breach of the
24   TPA notice provisions/        the district court found that there were
25   indeed numerous occasions on which Greystone failed to give notice
26   of GBMI' s noncompl iance wi th the LSA.             But it found that Diesel
27   had failed to carry its burden of showing that losses it suffered
28   from nonpayment for shoes it shipped to GBMI were caused by those
29   failures.       GBMI's    Greystone    credit     account   was    available    for
30   payments not only to Diesel but to other GBMI creditors as well/

31   and   the    court   found    that    Diesel/     with   awareness    of   GBMI's
32   financial     problems,    shipped     shoes    to   GBMI   even    when   it   had
33   received notice of GBMI defaults or of the current lack of funds
34   in the credit account sufficient to pay for shoes being shipped by
35   Diesel.      See/~,       id. at *5-*7/ *12.

                                           - 10 -
 1            There is no dispute that Diesel was well aware of
 2            GBMI's dire financial situation, and that it chose to
 3            take the business risk associated with continuing to
 4            ship shoes to GBMI, because it wanted to ensure a
 5            market for its footwear in the United States. . . .
 6            One example is the occasion on January 16, 2007, when
 7            Diesel sent a Notice Letter requesting a response
 8            under the Notice Provision of the TPA, but failed to
 9            wait the requisite two business days for a response
10            from Greystone, and shipped over three-quarters of a
11            million dollars worth of shoes that same day.      To
12            make the cheese more binding, the testimony revealed
13            that on the two occasions when Diesel was notified of
14            GBMI's   defaults under the LSA,        rather than
15            discontinue its relationship with GBMI, it continued
16            to ship goods.     In February, over the four days
17            following the first default notice, Diesel shipped
18            $1.7 million worth of shoes. Thereafter, even though
19            it knew GBMI was in financial difficulty and in
20            default under the LSA, and that it had not been paid
21            for its shipments, in the three months following the
22            first notice of default, Diesel proceeded to ship
23            over $13 million dollars worth of shoes to GBMI.
24            After it received the second notice of GBMI's default
25            on July 18, 2007, undeterred by GBMI's financial
26            state, Diesel continued to ship shoes, shipping over
27            $1 million worth of shoes in the ensuing two weeks.
28            Diesel continued to ship shoes up until the day
29            before it sent its notices to Greystone and GBMI of
30            its intent to terminate the TPA and Distribution
31            Agreements, almost two months after it received the
32            second notice of default.
33   Id.   at *12.     The court noted testimony by Diesel witnesses who

34   testified that "had they received notice of any of the additional
35   instances    of   covenant   breaches   or   lack        of   availability        (in

36   addition to the two notices of default actually received),                       they
37   would not have continued to ship shoes to GBMI."                   Id.   i   see also
38   id. at *5.      But the court found that "this testimony [wa]s belied
39   by the events as      they actually unfolded,       II        at   *5,       and that
40   Diesel's "own actions and business decisions to continue to ship

41   shoes irrespective of GBMI's financial condition" constituted "an
42   intervening cause of [Diesel']s losses,      II   id. at *12.
                                      - 11 -
 1              Addressing Diesel's alternative claims against Greystone,
 2   the district court dismissed the claim for account stated, finding
 3   that    the    e-mails    on   which   Diesel     relied     for     that    claim were
 4   statements of accounts owed not by Greystone,                      but by GBMI.
 5   id.    at *15.       As to the claim for unj ust enrichment,                  which was
 6   premised on Greystone's receipt from GBMI of proceeds of sales of
 7   shoes for which payment was not made to Diesel,                      the court found
 8   that Greystone had not been enriched unjustly:
 9              The evidence in this case reveals the only benefit
10              Greystone retained was to the extent it was, or could
11              have been, repaid for loan funds disbursed to GBMI
12              under the L8A.   However, GBMI was obligated to repay
13              Greystone for those loans.          Equity and good
14              conscience do not require a party to give up what it
15              rightfully obtained, or is entitled to, under a
16              contract.         ([B]argained-for benefits cannot be
17              deemed to unjustly enrich a contracting party.)
18   Diesel,       2009   WL   2514033,     at   *14        (internal     quotation    marks
19   omitted) .
20              The district court found merit,                however,    in Greystone's
21   counterclaim for unjust enrichment against Props for lithe value
22   that      Props      unjustly    obtained         by    purloining          Greystone's
23   collateral," i.e., GBMI's 8808 Order Book.                  Id. at *16.       The court
24   rejected      Props's     contention    that      the    Distribution        Agreements
25   entitled Props to the Order Book at the end of the 8808 sales
26   campaign.      Having found that the 8808 sales campaign "had ended as
27   of the termination of the Distribution Agreement [s] ," id. at * 9,
28   the court found that
29              the facts show that Props purposely timed its notice
30              of default so that the end of the 30-day cure period
31              would coincide with the end of the sales
32              campaign. . . .  The Distribution Agreement nowhere
                                            - 12 -
 1              states that Props is entitled to the Order Book if
 2              the Agreement is terminated; Props timed its notice
 3              of default and termination to correspond exactly with
 4              the end of the sales period.       The Court is not
 5              persuaded by Props's arguments that GBMI was required
 6              to provide it with the Order Book,
 7   id.     at *16.      The    court       ordered      Props    to pay Greystone          unj ust
 8   enrichment damages in the amount of $572,616.75 plus $104,765.18
 9   in interest, for a total of $677,381.93.
10              This appeal followed.


11                                          II.    DISCUSSION


12              On appeal,        Diesel contends that                 the judgment dismissing
13   its claims against Greystone and holding it liable to Greystone
14   for unjust enrichment should be reversed--and that judgment should

15   be entered in its favor for some $17.3 to $19.3 million- -on the
16   grounds     that    the     district         court    "abuse [d]       its   discretion"    in,
17   inter     alia,     finding       that       there    was    an    unperformed      condition

18   precedent to Greystone's obligation to make payments, finding that
19   Greystone' s       failures       to   give     Diesel      notice      of   many of    GBMI   IS


20   defaults were not the proximate cause of Diesel's losses, finding
21   that Props benefited from D-USA's use of GBMI' s Order Book,                                and

22   failing to find that Props was contractually entitled to the Order

23   Book.     (~,       Diesel brief on appeal at 2-3.)                     Applying the normal
24   standard     of     review,       we    conclude      that       the   judgment    should      be
25   affirmed insofar as it dismissed the claims of Diesel but reversed
26   insofar      as     it     held    Props       liable       to     Greystone      for   unjust
27   enrichment.
                                                  - 13 -
 1   A.   Standard of Review
 2                   On an appeal from a judgment entered after a bench trial,
 3   we review the district court's conclusions of law de novo.                                                See,
 4   ~,Giordano                v. Thomson, 564 F.3d 163, 168 (2d Cir. 2009)                              i   Henry
 5   v. Champlain Enterprises, Inc., 445 F.3d 610, 617-18, 623 (2d Cir.
 6   2006)   i       FDIC v.    Providence College,             115 F.3d 136,                   140     (2d Cir.
 7   1997) .          Under New York law,              which the TPAs provided would be
 8   applicable,            the initial matter of whether a written contract is
 9   ambiguous is a question of law.                         See,                  ,Law Debenture Trust
10   Co. of New York v. Maverick Tube Corp., 595 F.3d 458, 465 (2d Cir.
11   2010)   i       JA Apparel Corp.        v.      Abboud,    568 F.3d 390,                   396     (2d Cir.
12   2009)       i    International          Multifoods         Corp.              v.     Commercial         Union
13   Insurance Co., 309 F.3d 76, 83 (2d Cir. 2002).                                       The meaning of an
14   unambiguous contract               is   likewise a matter of                        law.      See,~,

15   Revson v. Cinque & Cinque. P.C., 221 F.3d 59, 66                                       (2d Cir. 2000);
16   K. Bell & Associates,              Inc. v. Lloyd's Underwriters,                            97 F.3d 632,
17   637 (2d Cir. 1996)           i   Seiden Associates, Inc. v. ANC Holdings, Inc.,
18   959 F.2d 425, 429 (2d Cir. 1992).
19                   When the district court as factfinder is confronted with a
20   contract          provision      that      is    not     unambiguous,                it    may     properly
21   consider evidence extrinsic to the contract,                                       including testimony
22   offered by             the parties.                    ~,           id.   i        Amusement       Business
23   Underwriters v. American International Group, Inc., 66 N.Y.2d 878,
24   880-81,          498    N.Y.S.2d    760,        763    (1985)   i     67       Wall       Street    Co.    v.
25   Franklin National Bank, 37 N.Y.2d 245, 248, 371 N.Y.S.2d 915, 918

                                                     - 14 -
 1   (1975)        (evidence of "surrounding facts and circumstances" to show

 2   the parties'              intent).           The meaning of an ambiguous provision,                                 in

 3   light of such evidence,                      is a question of fact for the factfinder.

 4   See,~,               Revson v.             Cinque     &    Cinque,      P.C.,       221     F.3d at          66;    In

 5   Time Products,                 Ltd.   v.     Toy Biz,         Inc.,   38 F.3d 660,               665     (2d Cir.

 6   1994);    Cons arc Corp.                v.    Marine Midland Bank,                  N.A.,    996 F.2d 568,

 7   573    (2d Cir. 1993).

 8                 After        a     bench       trial,       the    court's        "[f] indings            of    fact,

 9   whether based on oral                        or other evidence,               must       not be set aside

10   unless        [they are]             clearly erroneous."                Fed.    R.    Civ.       P.    52 (a) (6);

11   see,~,             Anderson v. Bessemer City, 470 U.S. 564, 573-74                                           (1985);

12   Banker v.          Nighswander,              Martin       &    Mitchell,       37    F.3d 866,           870       (2d

13   Cir.   1994)             The" clearly erroneous" standard applies whether the

14   findings           are     based        on     witness          testimony,          or    on      documentary

15   evidence, or on inferences from other facts.                                     See,~,                Anderson,

16   470 U.S. at 574; Petereit v. S.B. Thomas, Inc., 63 F.3d 1169, 1176

17   (2d Cir. 1995).

18                 In     deciding               whether           factual      findings              are     clearly

19   erroneous,           we        are    required        to      "give     due     regard       to        the    trial

20   court's opportunity to judge the witnesses' credibility."                                                Fed. R.

21   Civ. P. 52 (a) (6).                  It is within the province of the district court

22   as the trier of fact to decide whose testimony should be credited.

23   See,~,             Anderson, 470 U.S. at 574.                         The court is also entitled,

24   just     as    a     jury        would       be,     see,       ~,       Robinson           v.    Cattaraugus

25   County,        147       F. 3d       153,    160      (2d     Cir.    1998);         Fiacco       v.     City       of

26   Rensselaer,          783        F.2d 319,          325     (2d Cir.      1986),       cert.       denied,          480


                                                           - 15 -
 1   U.S. 922     (1987), to believe some parts and disbelieve other parts
 2   of the testimony of any given witness.                    We are not allowed to
 3   second-guess        the        court1s   credibility   assessments.
 4   Anderson, 470 U.S. at 573-74.
 5              Further,       II   [w] here there are two permissible views of the
 6   evidence,    the factfinder's choice between them cannot be clearly
 7   erroneous.   II    rd. at 574; see United States v. Yellow Cab Co., 338
 8   U.S. 338, 342 (1949).              The fact that there may have been evidence
 9   to support an inference contrary to that drawn by the trial court
10   does not mean that the findings made are clearly erroneous.                     See,
11   ~,Palazzo           v. Corio, 232 F.3d 38, 44 (2d Cir. 2000)           i   Healey v.
12   Chelsea Resources, Ltd., 947 F.2d 611, 618-19 (2d Cir. 1991).
13            [W] hen the district court is sitting as trier of
14           fact, it has no obligation to draw a given inference
15           merely because it is supportable; nor has it any
16           obligation, in its capacity as trier of fact, to view
17           the evidence in the light most favorable to [a
18           particular party].   The obligations of the court as
19           the trier of fact are to determine which of the
20           witnesses it finds credible, which of the permissible
21           competing inferences it will draw, and whether the
22           party having the burden of proof has persuaded it as
23           factfinder that the requisite facts are proven.
24   Cifra v. General Electric Co., 252 F.3d 205, 215 (2d Cir. 2001).
25           Given the standards governing our review of the district
26   court1s rulings after the bench trial, we have little difficulty
27   in concluding        that        the   rej ection of Diesel r s   claims should be
28   affirmed.         We reach the opposi te conclusion wi th respect to the
29   ruling that Greystone was entitled to unj ust enrichment damages
30   from Props.



                                                - 16 -
 1   B.    The Dismissal of Diesel's Contract Claims against Greystone
 2               In       order        to   recover       from     a    defendant          for    breach     of
 3   contract,        a     plaintiff         must       prove,    by     a    preponderance           of   the
 4   evidence,        ( 1) the existence of a contract between itself and that
 5   defendant i          (2)    performance of the plaintiff's obligations under
 6   the contract i             (3)    breach of the contract by that defendant; and
 7   (4)   damages to the plaintiff caused by that defendant's breach.
 8   See,~,               Eternity Global Master Fund Ltd.                          v.    Morgan Guaranty
 9   Trust Co. of New York,                   375 F. 3d 168,           177    (2d Cir. 2004)       i   Harsco
10   Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996).                                     "Causation is an
11   essential element of damages in a breach of contract action; and,
12   as    in   tort,       a    plaintiff must            prove       that    a     defendant's breach
13   directly and proximately caused his or her damages."                                          National
14   Market Share v. Sterling National Bank, 392 F.3d 520, 525 (2d Cir.
15   2004)      (emphasis             in original);        see,    ~,          Wakeman v.         Wheeler     &

16   Wilson Manufacturing                   Co.,   101 N.Y.        205,       209,       4 N.E.    264,     266
17   (1886) .     Recovery is not allowed if the claimed losses are "the
18   result of other intervening causes."                               Id.;       see,    ~,      National
19   Market Share v. Sterling National Bank, 392 F.3d at 526; Kenford
20   Co. v. County of Erie, 67 N.Y.2d 257, 261,                                502 N.Y.S.2d 131, 132
21   (1986) .
22               The dist              ct court concluded that Diesel's claim against
23   Greystone        for       breach       of    the    TPA     notice       provisions         should    be
24   dismissed for lack of sufficient proof that the failures to give
25   Diesel notice of many of GBMI's defaults caused Diesel's losses.
26   Although Diesel argues that this was error because its witnesses

                                                     - 17 -
 1   testified that Diesel would have ceased shipping shoes to GBMI if
 2   Greystone    had notified Diesel              of   each of GBMI          I   S   defaults,      the
 3   court's refusal to credit that testimony was entirely permissible.
 4   The court found, inter alia, that in January 2007, Diesel faxed a
 5   request     to   Greystone      for    GBMI    default      information            within       two
 6   business days but did not              bother to await a            response,           instead
 7   shipping more than three-quarters of a million dollars worth of
 8   shoes to GBMI on the day of the inquiry; that in February 2007, in
 9   the four days       following its receipt of a notice from Greystone
10   that GBMI was       in default,        Diesel      shipped to GBMI                $1.7 million
11   worth of     shoes;     that    in the three months           following that                  first
12   notice of default, Diesel sent GBMI more than $13 million dollars
13   worth of     shoes i    that    in July 2007,        in the two weeks after it
14   received notice of another GBMI default, Diesel shipped GBMI more
15   than $1 million worth of shoes; and that Diesel was still shipping
16   shoes to GBMI on September 3,             2007,     one day before sending GBMI
17   the    conditional      notice    of     termination.          These             findings       are
18   supported by documentary evidence, and the court as factfinder was
19   entitled to find that the testimony of Diesel I s witnesses--that
20   Diesel would have stopped shipping had it received any additional
21   notices of default--was not              credible,     as    that        testimony       I!   [wa] s
22   belied by the events as they actually unfolded,                     I!       Diesel, 2009 WL
23   2514033, at *5.         The court correctly applied the legal principles
24   as    to   causation,     and    its    findings      of    fact         are      not   clearly
25   erroneous.       There is thus no basis for overturning its ruling that



                                             - 18 -
 1   Diesel failed to prove the causation element of its claim against
 2   Greystone for breach of the TPA notice provisions.
 3              The     district         court         concluded       that     Diesel           failed    to
 4   establish        its     claim      that     Greystone         breached         the     TPA    payment
 5   provisions because,              inter alia,            Greystone had not              received the
 6   relevant copies of Customer Purchase Orders, receipt of which the
 7   court found was a condition precedent to Greystone's duty to pay.
 8   A contract imposes a condition precedent when it provides that "an
 9   act or event, other than a lapse of time," unless excused,                                        "must
10   occur before a duty to perform a promise in the agreement arises."
11   Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685,
12   690,     636     N.Y.S.2d        734,      737     (1995)       (internal       quotation        marks
13   omitted)         "'Since an express condition [precedent]                                     . depends
14   for its validity on the manifested intention of the parties,                                          it
15   has    the same sanctity as                the promise itself.'"                      Id.   at 690-91
16   (quoting 5 Williston, Contracts                     §    669, at 154 (3d ed. 1961))                   In
17   this case, the December 2 Letter provided that the TPA would "only
18   be applied to orders placed by GBMI upon receipt of a purchase
19   order for product from a bona fide customer of Diesel Products."
20   And in the TPAs, GBMI agreed that it would not order shoes from
21   Diesel before receiving such a Customer Purchase Order and agreed
22   to     provide    copies       of   such purchase              orders     to    both Diesel          and
23   Greystonei Diesel "agree[d]                 to provide [Greystone] with a copy of
24   any     invoice        for    its   products            delivered    to        [GBMI]       (a 'Diesel
25   Invoice')"        and        "agree[d]      that        each    Diesel     Invoice           shall   be
26   delivered prior to the delivery of the products ordered by the

                                                      - 19 -
 1   applicable Diesel Customer to [GBMI]"                       (emphasis in original).                    The
 2   TPAs provided that Greystone would be obligated to make payment to

 3   Diesel   after   GBMI       furnished       Greystone           with       a    copy      of    a     GBMI
 4   invoice to a Diesel customer "in the amount of the corresponding
 5   Diesel Invoice.     1I



 6            The district court /              having determined that the contract
 7   documents    were        somewhat    ambiguous             as   to    whether        the       Customer
 8   Purchase     Order        requirement            was        a   condition            precedent          to

 9   Greystone's duty to pay Diesel/ admitted extrinsic evidence as to
10   the parties'     intent.       The court found that the parties intended
11   the   Customer      Purchase        Order        requirement              to    be    a    condition
12   precedent/    based on/        inter alia/             a    March 2007           e-mail        sent     by
13   Diesel to GBMI stating that                "under the current agreements," any
14   "GBM! orders to Diesel submitted prior to confinnation of GBM!
15   customers    orders                 are    not    sub; ect           to   the    tripartite            and
16   should be    assisted by a            letter of             credit"        (first      emphasis         in
17   originali second emphasis added)/                  and evidence that in fact when
18   Diesel was paid for shoes it shipped pursuant to a GBMI order that
19   was not preceded by a Customer Purchase Order,                                  Diesel was paid
20   through a different mechanism, not through the TPAs.
21            We see no error in the district court's determination that
22   the   contract   documents          were   ambiguous            in    this regardi             and/     in
23   light of the evidence, we see no clear error in its finding that
24   the parties intended that satisfaction of the Customer Purchase
25   Order requirement be a condition precedent to Greystone's duty to
26   make payments from GBMI's credit account to Diesel.                                    As there is

                                                - 20 -
 1   no dispute that that condition was not fulfilled, Diesel's claim
 2   against    Greystone           for   failure         to make         payments to Diesel with
 3   respect to those shipments was properly dismissed.


 4   C.     The Dismissal of Diesel's Other Claims
 5              Diesel's           challenges        to     the    district          court's     posttrial
 6   dismissal of its other claims do not require extended discussion.
 7   In light of the agreements among the parties, the district court
 8   properly dismissed Diesel's claims that it was entitled to recover
 9   from     Greystone           for   unjust       enrichment           as   a     result     of   GBMI's
10   receiving Diesel shoes for which Diesel was not paid.                                     "The theory
11   of unjust enrichment lies as a quasi-contract claim.                                        It is an
12   obligation       the     law creates            in     the    absence         of   any    agreement.   II



13   Goldman v. Metropolitan Life Insurance Co., 5 N.Y.3d 561, 572, 807
14   N.Y.S.2d 583, 587 (2005)             i   see,    ~,          In re First Central Financial
15   Corp.,    377 F.3d 209, 213              (2d Cir. 2004)          i    Clark-Fitzpatrick, Inc.
16   v. Long Island R.R. Co., 70 N.Y.2d 382, 388, 521 N.Y.S.2d 653, 656
17   (1987)    (liThe existence of a valid and enforceable written contract
18   governing        a     particular         subject            matter       ordinarily       precludes
19   recovery in quasi              contract     for        events arising out of                the same
20   subject matter.").
21              The court also properly dismissed Diesel's claims against
22   Greystone    for       account       stated.           The viability of              such a        claim
23   depends     on       lithe     existence        of     some     indebtedness             between     the
24   parties,    or an express agreement                      to treat         the      statement as an
25   account stated.              It cannot be used to create liability where none

                                                     - 21
 1   otherwise          exists.   II       M.     Paladino,     Inc.        v.     J.    Lucchese     &    Son
 2   Contracting Corp., 247 A.D.2d SIS, 516, 669 N.Y.S.2d 318, 319 (2d
 3   Dep't 1998).            The district court found that the e-mails on which
 4   Diesel relied for this claim were statements of amounts owed to
 5   Diesel by GBMI,           not by Greystone, a finding that is not clearly
 6   erroneous.           Further ,        given that Diesel has failed to establ ish
 7   Greystone' s liability under the TPAs for the unpaid amounts,                                         an
 8   account-stated claim against Greystone is untenable.
 9                Finally, we note Diesel's contention that if the dismissal
10   of its claims against Greystone is upheld on the basis that GBMI
11   failed to perform a condition precedent to Greystone I s                                       duty to
12   pay, GBMI should be held liable for breach of the TPAs.                                       Diesel's
13   one-paragraph presentation of                      this    argument           contains neither a
14   citation to the record nor a citation of law and provides us with
15   no basis for reversal.                      In any event,         the district court found
16   that    although        GBMI' s       delivery        of   Customer          Purchase        Orders   to
17   Diesel       and    Greystone         was     a   condition precedent                to Greystone' s
18   obligation to pay, GBMI's failure to provide such purchase orders
19   did    not     constitute         a        material    breach.              See    Diesel,     2009   WL
20   2514033, at *14 n.13.                  The finding of lack of materiality insofar
21   as    Diesel       is   concerned            is   supported       by        the    very   fact   that,
22   despite GBMI's failure to supply those documents, Diesel persisted
23   in making many millions of dollars worth of shipments to GBMI.




                                                        22 -
 1   D.     The Award of Unjust Enrichment Damages to Greystone

 2                  In    order           to       succeed       on     a    claim         for   unjust        enrichment

 3   under New York law,                       a    plaintiff must                prove that            "(1)    defendant

 4   was enriched,             (2) at plaintiff's expense, and (3)                                  equity and good

 5   conscience          militate against permitting defendant                                       to retain what

 6   plaintiff       is        seeking             to    recover.      II     Briarpatch Ltd.                  v.    Phoenix

 7   Pictures,       Inc.,          373       F.3d 296,          306        (2d Cir.        2004),       cert.       denied,

 8   544 U.8. 949 (2005)                  i   see,       ~,      Nordwind v. Rowland, 584 F.3d 420,

 9   434     (2d Cir. 2009)           i       Kaye v.         Grossman,           202 F.3d 611,           616       (2d Cir.

10   2000).        In the present case,                        the district court ruled that Props

11   was unjustly enriched by its receipt of the GBMI Order Book for

12   8808    upon        the       termination of                the agreements with Greystone and

13   GBMI,    reasoning that Greystone had taken a                                          security interest in

14   all of GBMI's assets,                         including the Order Book,                       and stating that

15   the Distribution Agreement did not give Props the right to receive

16   the GBMI Order Book upon the Distribution Agreement's termination,

17   see Diesel,          2009 WL 2514033,                     at *16.            We disagree because Diesel

18   had a     contractual                right          to   receive        the 8808 Order Book at                       the

19   relevant time, and that right was superior to Greystone's security

20   interest.

21                 In general,                when the question is the IIpriority between a

22   secured creditor and                      [a person] whose interests in the collateral

23   preceded       it,        a    first           in    time,       first           in   right     rule       applies.     II



24   8eptembertide Publishing, B.V. v. Stein & Day, Inc.,                                                884 F.2d 675,

25   682     (2d    Cir.           1989)           (IISeptembertide ll        )   i    Fallon      v.     Wall        8treet

26   Clearing Co.,             182        A.D.2d          245,    249,       586       N.Y.S.2d         953,        956   (1st


                                                              - 23 -
 1   Dep't 1992)          ("Fallon").             "It has always been the law in New York
 2   that an assignee stands in the shoes of its assignor and takes
 3   subject     to       those           liabilities       of     its      assignor             that       were     in
 4   existence       prior           to     the    assignment";          and,        thus,       "in       taking     a
 5   security     interest                in   its    assignor's         property,           [the          assignee]
 6   cannot claim rights in the property that were not the assignor's
 7   to give."        Septembertide, 884 F.2d at 682.
 8              A later-in-time assignee can have priority over a claimant
 9   whose right was created earlier only if the later assignee was a
10   "bona fide purchaser."                       Fallon,     182 A.D.2d at 249,                   586 N.Y.S.2d
11   at 956.     But "that status cannot be attained where the transferee
12   takes    with knowledge of                    an adverse         claim"     i    and    "[a] n         'adverse
13   claim' is not limited strictly to an adverse ownership interest,
14   but    rather     could          include,        in    this      context,        any transfer with
15   knowledge       of    violation of               an    agreement."              Id.         Thus,       when a
16   creditor takes a security interest in collateral to which                                                    knows
17   a third party has even an unperfected contract right,                                                 it takes
18   that     securi ty             interest          "subj ect        to       [those]           pre existing
19   liabilities," and the "acquired interest [ils secured only to the
20   extent     that       [the           assignor]     had      an    unencumbered,               transferable
21   interest."            .   i    see,    ~,        Septembertide, 884 F. 2d at 677, 681-82
22   (creditor       who           acquired       a   security        interest         in        "all ll     of     the
23   debtor's     "contract                rights     and     accounts"         was        not     entitled          to
24   proceeds that an earlier contract had assigned to a third party) .
25              In the present case, the pertinent Distribution Agreement
26   was entered into in 2005.                         Defining Props as the "Company" and

                                                       - 24 -
 1   GBMI as the "Distributor," that agreement provided that "within 15
 2   (fifteen) days from the end of each Sales campaign the Distributor
 3   shall communicate to the Company the list of the Sales Outlets and
 4   the relevant orders collected," i.e., the GBMI Order Book for that
 5   sell ing season.            The district court                     found that the SSO 8 "sales
 6   campaign     had       ended      as    of    the          termination        of    the    Distribution
 7   Agreement[s].11             Diesel,          2009          WL    2514033,      at    *9.      Greystone
 8   acquired its security interest in GBMI                              I   S   assets when it entered
 9   into the LSA in 2006,                   and it is undisputed that Greystone had
10   knowledge of the Distribution Agreements at that time.                                            The LSA
11   made   express         reference         to   the          TPA    among      Greystone,      GBMI,     and

12   Props; and the TPA made express reference to the 2005 Distribution

13   Agreement.             As   the        preexisting              Props       Distribution      Agreement
14   entitled Props to receive GBMI's records of customers and orders

15   for Props products at the end of each sales campaign, Greystone's

16   later-acquired security interest in GBMI's assets was subordinate
17   to Diesel's right to receive the Order Book at the close of each

18   such campaign.
19              The        district     court        instead           described         Props    as     having

20   "purloin [ed]    II     Greystone's           collateral,                     at    *16,    noting     the

21   apparent    glee        reflected        by     Props e-mails                referring      to    Props's

22   receipt of the Order Book as                        II f   Christmas'" coming '" early, '" and

23   noting     testimonial            and     documentary              evidence         that    Props    made
24   efforts to conceal its possession of the Order Book.                                        Id. at *10.

25   The court suggested that Props had no right to the SS08 Order Book

26   because it had timed its termination of the Distribution Agreement

                                                    - 25 -
 1   to coincide with the end of the sales campaign,                         see id. at *16.
 2   But the district court did not find--nor does Greystone contend,
 3   and nothing in the record suggests--that Props did not have the
 4   right to terminate the Distribution Agreement when it did.                            And as
 5   the provision in that agreement giving Props the right to receive
 6   GBMI's      customer       and    order    records    at   the    end    of    each     sales
 7   campaign      was       unambiguous,      extrinsic    evidence,        such   as    Props's
 8   reaction to receiving the Order Book following the Distribution
 9   Agreement's         termination,        was   inadmissible        to    vary   the      plain
10   meaning of the contract provision.
11               In sum, because         (a)   the Distribution Agreement gave Props
12   the   right,       at    the   end of     the 8808    sales      campaign,     to    receive
13   GBMI I s    list    of    sales   outlets     and orders      for      Props   shoes,     (b)
14   termination of the Distribution Agreement coincided with the end
15   of that sales campaign,             (c) Diesel's contract right existed prior
16   to the creation of Greystone's security interest in GBMI assets,
17   and   (d)   Greystone was aware of the existence of the Distribution
18   Agreement when it entered into the L8A, Props did not receive the
19   Order Book at Greystone's expense, and equity and good conscience
20   did not militate against allowing Props to enjoy the benefit of
21   its bargained-for contract right.                   The district court should have
22   dismissed Greystone's counterclaim.




                                                - 26 -
1                               CONCLUSION



2           We have considered all of the parties' contentions on this

3   appeal and, for the reasons stated above, have found merit only in

4   Greystone's arguments supporting the dismissal of Diesel's claims
5   and in Props's challenge to the award of unjust enrichment damages

6   to Greystone.   We reverse so much of the judgment of the district

7   court as awarded damages to Greystone.   In all other respects, the

8   judgment is affirmed.

9           Each side shall bear its own costs of this appeal.




                                  - 27 -
