## Facts

- Hesham Zaghloul Eldesouky and Abbas Elsayed Abbas, along with their companies (Tasneem Company and Al‑Yasmin Company), arranged to purchase 2,000 metric tons of flaxseed at $420 per metric ton through a contract involving Hatem Abdel Aziz and General Trade Corporation, Inc.
- The parties allocated the purchase cost as follows: Eldesouky would pay 10%, Abbas 75%, and Aziz 15%.
- After quality/specifications were confirmed, plaintiffs paid Aziz $721,590 in installments over several months to fund the purchase.
- Plaintiffs later discovered that Aziz (acting through Pyramid for Trade and Shipping Services) had separately contracted with Richardson International Ltd. to buy 4,000 metric tons of flaxseed at $660 per metric ton, and that Aziz paid Richardson $443,750 using part of plaintiffs’ money.
- To obtain product and preserve the value of the funds already paid to Richardson, plaintiffs entered their own contract with Richardson for 4,000 metric tons at the same $660-per-ton terms; Richardson agreed to credit the $443,750 it had received from Aziz toward plaintiffs’ new contract.
- Aziz was supposed to transfer the remaining $278,360 of plaintiffs’ funds to Richardson for plaintiffs’ benefit, but he neither transferred the money to Richardson nor returned it to plaintiffs.
- Plaintiffs never received flaxseed under the original 2,000-metric-ton deal with General Trade/Aziz. Under the Richardson contract, plaintiffs ultimately received and paid for only 1,981 of the 4,000 metric tons.
- During shipment, Richardson assessed storage-related charges to plaintiffs, and plaintiffs claimed losses on resale of the flaxseed they received due to poor quality.
- Procedurally, the court had already found Aziz liable for breach of contract (and had resolved claims involving other defendants). The April 8, 2015 decision addressed the amount of damages, prejudgment interest, and attorneys’ fees to be included in the judgment against Aziz.

## Issues

1. What monetary damages were recoverable against Aziz for breach of the flaxseed purchase arrangement under New York contract law following summary judgment on liability?
2. Were plaintiffs entitled to consequential damages such as storage charges and resale losses, and were those items proven with reasonable certainty rather than speculation?
3. At what statutory rate, and from what accrual dates, should prejudgment interest be awarded on the different components of plaintiffs’ contract damages?
4. Were plaintiffs entitled to recover attorneys’ fees from Aziz, and if so, what fee amount was reasonable?
5. Could plaintiffs obtain separate damages on a fraud theory beyond the contract damages already awarded for the same conduct?

## Decision

- The court directed entry of judgment for plaintiffs and against Aziz for $1,237,301.36 in damages.
- The court awarded prejudgment interest at 9% per annum, running from the specified accrual dates for the various loss components until entry of judgment.
- The court awarded plaintiffs $8,310.13 in attorneys’ fees.
- The court declined to award separate, additional fraud-based damages where the fraud theory did not yield damages beyond the contract recovery.
- In light of prior rulings as to the other defendants, the court directed entry of final judgment and indicated the case could be closed after judgment was entered.

## Legal Principles

- Under New York law, contract damages are intended to place the non-breaching party in the position it would have occupied had the contract been performed.
- A plaintiff may recover direct damages for funds paid in connection with a contract that the breaching party wrongfully withheld, failed to apply for the agreed purpose, or failed to return.
- Consequential and incidental damages may be awarded when they were within the parties’ contemplation at the time of contracting and are proven with reasonable certainty; conjectural amounts are not recoverable.
- Prejudgment interest is generally available as of right on contract damages under New York law at the statutory 9% rate, and accrual may be tied to the date each item of loss was incurred or the date money was wrongfully retained.
- Attorneys’ fees are recoverable only when authorized by contract or statute, and the party seeking fees must show the requested amount is reasonable in light of the work performed and the rates charged.
- A plaintiff may not obtain duplicative damages by recasting a contract injury as fraud when the requested relief does not exceed the contract-based recovery.

## Conclusion

In this damages decision following summary judgment on liability, the court awarded Eldesouky and Abbas $1,237,301.36 against Aziz for breach of the flaxseed purchase arrangement, added 9% prejudgment interest from item-specific accrual dates, and granted $8,310.13 in attorneys’ fees, while declining to award separate fraud damages beyond the contract recovery.


Eldesouky v. Aziz, 2015 WL 1573319 (2015)