On February 22, 2024, the First Department issued a decision in EPAC Tech., Inc. v. John Wiley & Sons, Inc., 2024 NY Slip Op. 00933, holding that a plaintiff’s breach of contract failed because the plaintiff had repudiated the contract, explaining:
A repudiation can be either a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach or a voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach. Put another way, a party repudiates a contract where that party, before the time of performance arrives, puts it out of his power to keep his contract. Besides giving the nonrepudiating party an immediate right to sue for damages for total breach, a repudiation discharges the nonrepudiating party’s obligations to render performance in the future. Thus, if there were a repudiation, the rest of the case falls away, and Wiley would be entitled to summary judgment dismissing the complaint.
Resolution of this issue centers on section 2(e) of the MSA, which provides:
“Primary production shall be performed on the EPAC2 automated printing system (“EPAC2″) that is located in Edison, New Jersey. The parties acknowledge that EPAC is committing a substantial portion of the EPAC2 system’s capacity to [Wiley], and EPAC and [Wiley] must work together to coordinate the EPAC2 system capacity with [Wiley’s] demands as they both evolve, to optimize performance. In addition, EPAC contemplates upgrades to and expansion of the EPAC2 system in the future, which may require temporary downtime at the Edison facility. EPAC will use commercially reasonable efforts to provide [Wiley] with not less than 30 days notice of any planned downtime at the Edison facility. Nevertheless, EPAC reserves the right to fulfill its obligations to deliver acceptable Work Product hereunder using other facility as necessary from time to time. Should EPAC produce the Work Product from a facility other than the Edison facility without the written consent of [Wiley], EPAC shall bear any increased freight cost of delivering the Work Product to [Wiley’s] warehouse in New Jersey. The minimums set forth in Section 2(d) above shall be reduced pro rata for any period of time in which EPAC is unable to fulfill its obligations to produce the work product from any of its facilities”.
EPAC and Wiley disagree as to the meaning of “primary production . . . as necessary from time to time.” EPAC argues that the sale of the Edison Facility is not a repudiation because section 2(e) permits EPAC to fulfill Wiley’s print orders at its other facilities “as necessary from time to time.” Conversely, Wiley asserts that EPAC’s sale of the EPAC2 Assets prevents EPAC from engaging in the “primary production” of Wiley’s print needs at that facility. The principle is well settled that a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms. The mere assertion by a party however that contract language means something other than what is clear when read in conjunction with the whole contract is not enough to create an ambiguity sufficient to raise a triable issue of fact.
EPAC contends that section 2(e) was designed to protect it from being unable to sufficiently utilize its EPAC2 technology at the Edison Facility, rather than obligate it to have primary production there. It posits that Wiley’s printing needs under the MSA would be met at EPAC’s California and Mexico facilities using EPAC1 technology. Relying primarily on Computer Possibilities (301 AD2d 70), EPAC is essentially arguing that because it maintained an element of discretion by its ability to print out of its other facilities as necessary from time to time, it did not place the totality of its performance beyond its own capabilities and thus, there has not been a repudiation. In other words, because EPAC could still print out of its other facilities, a factual issue exists as to whether it repudiated the contract.
EPAC’s reliance on Computer Possibilities is misplaced. The Computer Possibilities Court did not hold that if the repudiating party could find a way to fulfill a contractual obligation other than the one set out in the contract, there would be no repudiation. Instead, we held that where a party contracts with a nonparty to satisfy that party’s contractual obligations, that party has repudiated the contract regardless of the fact that the nonparty performs all of the party’s contractual obligations because that party put it out of its power to fulfill the contract. That situation is indistinguishable from the one in this appeal. Here, EPAC’s sale of the EPAC2 Assets to LSI clearly put it out of power to perform its contractual obligations under the MSA. The fact that LSI may be able to perform under the MSA is immaterial. Indeed, the MSA clearly specified that EPAC was to primarily perform the printing services using the EPAC2 technology at the Edison Facility and permitted EPAC to print, as necessary from time to time, at its other facilities only as a mere accommodation by Wiley to EPAC for it to have a temporary shutdown of the Edison Facility to perform upgrades on the EPAC2 technology. The as necessary from time to time language limits EPAC’s right to perform its printing obligations from its other facilities. Further, the sale of the EPAC2 Assets precludes EPAC from meeting its primary production obligation to use the EPAC2 technology at the Edison Facility by transforming the as necessary from time to time temporary measure to a permanent one. In other words, the sale simply meant that EPAC could no longer print any of Wiley’s orders at the Edison Facility using the EPAC2 technology as contractually required by the MSA. EPAC sold the very assets it was required to use for primary production. In fact, under the exclusive licensing agreement with LSI, EPAC could no longer utilize the EPAC2 technology at all even though it was available at its Ohio facility. Thus, EPAC’s reading of section 2(e) is fundamentally flawed because it would render meaningless its primary production utilizing the EPAC2 technology at the Edison Facility. Courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing.
(Internal quotations and citations omitted).