A federal judge has ordered a Chicago company to pay nearly $17.6 million to a Mount Vernon importer for failing to deliver four million Covid-19 test kits.
U.S. District Judge Vincent L. Briccetti ruled on Dec. 9 that Rejuveneda Medical Group Inc. breached a contract with M&K Imports LLC.
“It is undisputed,” the judge found, that M&K “would have realized profits … from the resale of the test kits, had Rejuveneda not breached the contract.”
M&K Imports was established in late 2020 by Keith Del Valle and was based in an apartment in the Fleetwood section of Mount Vernon.
In January 2022, the City of New York agreed to pay M&K nearly $35 million to quickly supply four million Covid-19 test kits. M&K agreed to pay Rejuveneda $23.6 million for the kits, and Rejuveneda arranged to buy them from a Chinese company for $17 million.
The kits were supposed to be delivered in two batches within ten days, according to court records. M&K made an initial down payment of $7,080,000, from which $6.2 million was paid to the Chinese supplier.
But when the Chinese shipments did not arrive on time, M&K and Rejuveneda amended their deal. The delivery date was extended by two days and M&K made an additional down payment of $11.8 million.
The kits were not delivered by the new deadline, “or any time thereafter,” according to the judge’s findings.
The City of New York cancelled the contract.
M&K got back $880,000 from the original down payment, and all of the second, $11.8 million down payment.
In one month, M&K had become $6.2 million poorer.
M&K sued Rejuveneda in White Plains federal court for breach of contract.
Rejuveneda argued that it became impossible to deliver the test kits because of an unforeseen government takeover of the Chinese supplier.
An impossibility defense, judge Briccetti said, must show that a defendant took virtually every action within its power to perform its contractual duties, and that despite those efforts, performance was objectively impossible.
But this failure was far from excusable. “It is undisputed Rejuveneda made no attempts to source the test kits from another supplier,” Bricetti stated, “and thus it cannot show it ‘took virtually every action within its power to perform its duties.'”
The judge awarded M&K $6.2 million for the portion of the down payments that was not returned, and nearly $11.4 million for profits that would have been realized if the kits had been delivered.
