Cmaco Automotive Systems v. Wanxiang America

• Decision Date: 10 December 2009
• Docket Number: No. 08-1435.,08-1435.
• Citation: 589 F.3d 235
• Parties: CMACO AUTOMOTIVE SYSTEMS, INC., dba CMA Forging Co., a California corporation, Plaintiff-Appellant, v. WANXIANG AMERICA CORP., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

589 F.3d 235

CMACO AUTOMOTIVE SYSTEMS, INC., dba CMA Forging Co., a California corporation, Plaintiff-Appellant, v. WANXIANG AMERICA CORP., Defendant-Appellee.

No. 08-1435.

United States Court of Appeals, Sixth Circuit.

Argued: June 10, 2009.

Decided and Filed: December 10, 2009.

ARGUED: Timothy D. Wittlinger, Clark Hill, Detroit, Michigan, for Appellant. Philip J. Kessler, Butzel Long, Detroit, Michigan, for Appellee. ON BRIEF: James E. Brenner, Cynthia M. Filipovich, Clark Hill, Detroit, Michigan, Mahesh K. Nayak, Clark Hill, Birmingham, Michigan, for Appellant. Philip J. Kessler, Butzel Long, Detroit, Michigan, James F. Gehrke, Michael F. Smith, Butzel Long, Washington, DC, for Appellee.

Before: SILER, COOK, and GRIFFIN, Circuit Judges.

OPINION

GRIFFIN, Circuit Judge.

In this diversity action brought in the Eastern District of Michigan, plaintiff CMACO Automotive Systems, Inc. ("CMA"), a California corporation that supplies parts to automobile manufacturers, alleges that defendant Wanxiang America Corporation ("WAC"), a Kentucky corporation with its principal place of business in Illinois, breached an exclusive partnership agreement to manufacture automotive parts for CMA. CMA's complaint against WAC avers breach of contract, unjust enrichment, unfair competition tortious interference with contract, and promissory estoppel.

WAC moved for summary judgment, arguing in pertinent part that CMA's claims accrued in California and, by application of Michigan's borrowing statute, MICH. COMP. LAWS § 600.5861, were time-barred by the relevant California statutes of limitation. The district court agreed and dismissed CMA's action in its entirety. The court later denied CMA's motion for reconsideration.

CMA now appeals, arguing that the district court erred in granting summary judgment on its breach of contract and related equitable claims for unjust enrichment and promissory estoppel. We conclude, however, that the district court did not err when it invoked Michigan's borrowing statute and held that CMA's causes of action were untimely filed under California law. We therefore affirm the district court's judgment.

I.

CMA is a California corporation that supplies automotive parts to American automakers and their Tier I and Tier II suppliers. Michael Chi is CMA's president and founder. In May 1998, CMA approached Visteon Corporation ("Visteon"), a Detroit-based automotive supplier that was seeking new overseas sources of axle and drive shaft parts. In July 1998, Visteon issued several Requests For Quotations ("RFQs") to CMA for various automotive components, including three different stud yoke drive shaft parts (the "disputed parts"). CMA responded with price quotes for each of the parts. Shortly thereafter, CMA solicited price quotes from one of its strategic partners, Wanxiang Group Company, Ltd., an automotive parts manufacturer based in Xiaoshan, China, for the parts that were the subject of Visteon's RFQ. Visteon ultimately determined that CMA's prices were competitive and began working with CMA to source the disputed parts for production at manufacturing plants in China.

On September 3, 1998, CMA entered into an exclusive partnership agreement (the "Agreement") with Wanxiang Group Company, Ltd. to manufacture and sell automotive parts in the United States market.¹ Pursuant to the Agreement, which expired on July 29, 2003, Wanxiang China agreed, inter alia, to keep drawings and specifications supplied by CMA in "absolute confidentiality," "to sell to only [CMA] all quantity of the products manufactured according to the drawings and specifications provided by [CMA]," and "to go exclusively through [CMA] for the increased volume of the oversea[s] orders" for parts identified by CMA.

For its part, CMA agreed to use its business connections in the United States to develop the overseas market, contract its domestic orders to Wanxiang China, provided that other companies' prices and products were comparable, not disclose Wanxiang China's trade secrets or confidential technology, and provide Wanxiang China with technical support and training.

On November 21, 1998, Wanxiang China notified CMA by faxed letter that it was assigning its responsibilities with respect to business in the United States to defendant WAC, its wholly-owned subsidiary. WAC is incorporated in Kentucky, with its principal place of business in Elgin, Illinois. CMA and WAC both accepted the assignment.

Following execution of the Agreement, CMA, WAC, and Wanxiang China worked collaboratively over an eighteen-month period to ready Wanxiang China's manufacturing processes for production of the stud yoke parts and to meet the quality assurance standards of certain North American automobile manufacturers. In September 1998, in response to the earlier request from CMA for a bid, Wanxiang China furnished quotes for seven different automotive parts, including the disputed parts that were the subject of Visteon's July 1998 RFQ.

During this time period, Visteon awarded a supply contract to CMA for certain parts unrelated to the 1998 RFQ. This supply contract led to the first purchase order between CMA and WAC under the Agreement. The purchase order, dated August 28, 2000, called for WAC to manufacture five different parts beginning in September 2000.

CMA alleges that, sometime in late 2000, WAC approached Visteon regarding WAC's desire to establish a business relationship with Visteon and circumvent CMA. On January 10, 2001, Visteon issued an RFQ directly to WAC for price quotes for four drive train components. CMA claims that three of these components were the disputed parts that Wanxiang China quoted to CMA in 1998; the fourth component was a "three-legged spider part."² Visteon simultaneously sent an identical RFQ to CMA. According to CMA, Visteon requested that it confirm previously quoted prices and production volumes for the disputed parts. On January 15, 2001, and again on January 31, CMA, in turn, asked WAC to revalidate the price quotes for the disputed parts originally provided by Wanxiang China in September 1998. After consulting with Wanxiang China, WAC purportedly refused to do so, claiming that the parts were not the same.

CMA alleges that, as a result of WAC's refusal to revalidate the price quotes for the disputed parts, it was unable to respond to Visteon's January 2001 RFQ by the February 1, 2001, deadline, causing Visteon to purchase the parts elsewhere. In fact, WAC was this other source. On January 25, 2001, WAC provided Visteon with price quotes for the RFQ, and, on March 7, 2001, Visteon awarded WAC the contract to produce the disputed parts and ship them directly to Visteon.³ The first shipment of the disputed parts by WAC to Visteon occurred in December 2001. An invoice reflects a shipping date of December 20, 2001, with a destination of Sterling Heights, Michigan.

In January 2005, Visteon cancelled CMA's program to supply it with parts.

On April 21, 2005, CMA filed suit against WAC in the United States District Court for the Eastern District of Michigan, alleging breach of contract, unjust enrichment, promissory estoppel, tortious interference with contract, and unfair competition. In its second amended complaint, CMA alleged in pertinent part that in January 2001, WAC "refused to revalidate the Parts, falsely claiming that they were not the same parts Wanxiang China had previously quoted[,]" and that "[a]t the same time [WAC] refused to revalidate the Parts for CMA, [WAC] began negotiating directly with Visteon for the sale of the same Parts." WAC then "breached the Partnership Agreement ... by selling parts directly to Visteon ... and other third parties."

Upon the completion of discovery, WAC filed a renewed motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for forum non conveniens and a motion for summary judgment. In the latter motion, which is the subject of this appeal, WAC complained that CMA, a California corporation, was forum shopping and sued WAC, a Kentucky corporation based in Illinois, in Michigan in an effort to avoid California's shorter limitations periods. WAC asserted three grounds for summary judgment: (1) CMA's causes of action accrued in California and, under Michigan's borrowing statute, were time-barred by California's statutes of limitation; (2) WAC was not bound by the Agreement; and (3) the disputed parts were not encompassed by the Agreement.

CMA responded by filing its own motion for partial summary judgment. On September 10, 2007, the district court granted WAC's motion for summary judgment, but denied WAC's motion to dismiss and CMA's motion for partial summary judgment. CMACO Auto. Sys., Inc. v. Wanxiang Am. Corp., No. 05-60087, 2007 WL 2649244 (E.D.Mich. Sept. 10, 2007). The district court held that Michigan's borrowing statute was triggered because CMA's causes of action accrued in another jurisdiction, California, and, therefore, California's shorter statutes of limitation applied and barred CMA's claims.⁴ Specifically, with regard to CMA's breach of contract claim, the court reasoned:

Under Michigan's borrowing statute, "[a]n action based upon a cause of action accruing without this state shall not be commenced after the expiration of the statute of limitations of either this state or the place without this state where the cause of action accrued." MICH. COMP. LAWS ANN. § 600.5861.

Plaintiff CMA contends that the Michigan Court of Appeals has explained that "the borrowing statute applies only if an action accrued without any essential facts giving rise to the cause of action occurring in Michigan." Scherer v. Hellstrom, 270 Mich.App. 458, 462 (2006). Relying on Scherer, Plaintiff claims, "All of the conduct by WA[C] forming the basis of CMA's claims (both in contract and in tort) took place in Michigan (and in this District). It was in Michigan where WA[C] approached Visteon, CMA's customer, and persuaded it to bypass CMA. It was in Michigan where WA[C]...