Abdullah Sayid Rajab al-Rifai v. Mcdonnell Douglas, 4:97CV1567-DJS.

• Decision Date: 10 December 1997
• Docket Number: No. 4:97CV1567-DJS.,4:97CV1567-DJS.
• Citation: 988 F.Supp. 1285
• Court: U.S. District Court — Eastern District of Missouri
• Parties: ABDULLAH SAYID RAJAB AL-RIFAI & SONS W.L.L., Plaintiff, v. McDONNELL DOUGLAS FOREIGN SALES CORPORATION, Defendant.

988 F.Supp. 1285

ABDULLAH SAYID RAJAB AL-RIFAI & SONS W.L.L., Plaintiff, v. McDONNELL DOUGLAS FOREIGN SALES CORPORATION, Defendant.

No. 4:97CV1567-DJS.

United States District Court, E.D. Missouri, Eastern Division.

December 10, 1997.

Timothy F. Noelker, Michael T. Marrah, Thompson Coburn, St. Louis, MO, Stephen Truitt, Charles H. Carpenter, Pepper Hamilton LLP, Washington, DC, for Plaintiff.

Kevin M. Abel, Jeanette D. Valentine, Bryan Cave, L.L.P., St. Louis, MO, for Defendant.

ORDER

STOHR, District Judge.

I. Introduction

On July 28, 1997, plaintiff filed its one-count complaint seeking money due for commissions earned under a representation agreement with defendant. The Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. On September 18, 1997, defendant filed a motion to dismiss or, in the alternative, to stay the case based on the existence of a pending case in Kuwait which defendant contends addresses the identical issues raised in the present case. Additionally, defendant filed a motion for limited stay of discovery pending the Court's disposition of its motion to dismiss. In an Order dated September 30, 1997, the Court stayed discovery in the case until December 12, 1997. This matter is now before the Court on defendant's motion to dismiss or, in the alternative, to stay the case and plaintiff's opposition thereto.

II. Facts

Plaintiff Abdullah Sayid Rajab Al-Rifai & Sons W.L.L. ("ASRR") is a trading and contracting company organized under Kuwaiti law, with its principal place of business in Kuwait. See Pltf's Complaint, ¶ 1. Defendant McDonnell Douglas Foreign Sales Corporation ("MDFSC") is a wholly owned subsidiary of McDonnell Douglas Corporation ("MDC") organized under the laws of the Virgin Islands which transacts substantial business in Missouri. Id. at ¶ 2. Beginning in 1974, plaintiff, through its now deceased principal, Colonel Abdullah Sayid Rajab Al-Rifai ("Colonel Al-Rifai"), entered into a series of representation agreements with MDC and two of its wholly-owned subsidiaries, McDonnell Douglas International Sales Corporation ("MDISCO") and defendant MDFSC. See Deft's Mtn. to Dismiss, 2-3. Pursuant to these agreements, plaintiff was appointed as MDC's sales representative to "solicit and promote, but not to consummate, sales and leases" of MDC goods and services. See Pltf's Complaint, Exh. 1, at 2, ¶ 1.1. In exchange for its services, plaintiff was to receive prescribed commissions under the representation agreements. See Deft's Mtn. to Dismiss, 2.

A. History of the Contractual Relationship

Through it's principal, Colonel Al-Rifai, plaintiff and MDC entered into a representation agreement in 1974 which continued until 1983. Id. On June 6, 1983, plaintiff entered into a new representation agreement with MDISCO, MDC's wholly owned subsidiary ("the 1983 agreement"). See Pltf's Opp., 2. Pursuant to the 1983 agreement, in exchange for its services, plaintiff was entitled to three percent of MDISCO or MDC's net receipts from sales arising out of the defined territory. See Deft's Mtn. to Dismiss, Al-Humaidan Aff., Exh. 2, exh. A. The 1983 agreement was amended by the parties on four occasions and was to expire on April 30, 1985. See id. at Exhs. 3-7. Administrative delays prevented timely extension of the 1983 agreement, but in a telex dated May 6, 1985, MDISCO extended the contract until further notice. Id. at Exh. 7.

On August 19, 1985, defendant informed plaintiff that defendant, and not MDISCO, would be the contracting party to the new representation agreement. Id. at Exh. 9. Defendant alleges that for tax purposes, MDC chose to use its two subsidiaries at different times during its business relationship with plaintiff. See Deft's Mtn. to Dismiss, 3. On November 21, 1985, plaintiff and defendant entered into a representation agreement which by its terms expired on October 31, 1987 ("the 1985 agreement"). Id. at Exhs. 10-11. According to the 1985 agreement, plaintiff's compensation for services included varying commissions depending upon the particular product and whether that product was leased or sold. Id. at Exh. 10, exhs. A-E. The 1985 agreement contains the following provision:

3.3 Termination or Expiration — In the event this Agreement is discontinued by termination or by expiration Representative's right to receive commission payments, if any, which are agreed to by the parties as set forth in the Exhibit(s) hereto in connection with sales or leases of the Products pursuant to orders accepted by MDFSC or suppliers of Products within six (6) months after notice of termination is given, as provided in Articles 7 and 9, or within six (6) months after expiration shall not be affected ...

Deft's Mtn. to Dismiss, Al-Humaidan Aff., Exh. 10, ¶ 3.3. On March 16, 1988, defendant sent plaintiff a telex which stated "[d]ue to administrative delays, extension of this agreement has not yet been completed. Therefore, by this message, subject agreement is hereby extended until definitization of an extension or a new agreement or formal notice that an agreement will not be extended has taken place whichever occurs first." Deft's Mtn to Dismiss, Exh. 11.

In March of 1988, the Kuwaiti Air Force was considering whether to purchase McDonnell Douglas F-18 aircraft. See Pltf's Opp., 3. In April of 1988, a delegation from the Kuwaiti Air Force visited the United States and test flew the F-18. Id. On June 6, 1988, Kuwait requested authorization from the United States to purchase forty F-18s. Id. at 4. Subsequently, on July 7, 1988, the President notified Congress of the sale. Id., citing, Notice of Proposed Issuance of Letter of Offer Pursuant to Section 36(b)(1) of the Arms Control Export Act, reprinted in 134 Cong.Rec. E 2775 (1988). Kuwait formally agreed to purchase the aircraft on August 27, 1988. See Pltf's Complaint, ¶ 17. Effective that same date, the U.S. Navy entered into a contract with MDC for the purchase of forty F-18s, spare parts and assorted related products. See Pltf's Opp., 4. Products that are governed by the Arms Control Export Act, 22 U.S.C. § 2776, are usually purchased from the supplier by a governmental agency who in turn resells the product to the foreign government. See id. Following a delay caused by the Persian Gulf War, the aircraft were delivered to Kuwait in January of 1993. Id. Plaintiff is unaware of how much money MDC received as a result of the sale and therefore, the amount of any commission plaintiff is entitled to is uncertain. Id.

On April 13, 1988, plaintiff received notification from MDISCO, another wholly-owned subsidiary of MDC, that MDFSC's representation agreement with defendant would not be renewed. See Deft's Mtn to Dismiss, Al-Humaidan Aff., Exh. 13. Instead, MDISCO notified plaintiff that MDISCO, and not defendant, would be the contracting party for a new representation agreement ("the 1988 agreement"). Id. This new agreement provided for a reduction in the commission percentage rate for initial sales of F-18 aircraft from one percent to one-quarter percent. See id. at Exh. 14, exh. B. The 1988 agreement was to run from November 1, 1987 until October 31, 1989. See id. at Exh. 14.

To date, plaintiff alleges that it has received a total of $2,101,402.97 in commissions from the sale of the forty F-18s and that it is due at least $16,000,000.00 under the 1985 agreement. See Pltf's Complaint, ¶¶ 20, 23.

B. The Kuwaiti Action

Plaintiff instituted a suit against MDISCO on December 3, 1994 before the Court of First Instance in the Commercial Circuit of the State of Kuwait ("the Kuwaiti Action"). Deft's Mtn. to Dismiss, Al-Humaidan Aff., ¶ 2. In the Kuwaiti Action, plaintiff seeks statutory damages for non-renewal of the representation agreements and payment of all commissions then due. See Pltf's Opp., 6-7. Defendant moved to dismiss the Kuwaiti action arguing that the representation agreements had not been properly registered with the government, that plaintiff's claims for statutory damages were time-barred, and that no commission was due under Kuwaiti law because the sales at issue took place outside of Kuwait. Id.

On March 13, 1996, the Court of First Instance issued a partial judgment finding that (1) the action would not be dismissed for non-registration; (2) plaintiff's claim for statutory damages was time-barred; and (3) the commission rate in the 1983 agreement did not apply to the sale of the F-18 aircraft. Id. at 7. Accordingly, the Court of First Instance reserved judgment on plaintiff's claims for commissions arising out of the aircraft sale and referred the matter to the Experts Department of the Kuwaiti Ministry of Justice ("the Experts Department") for an accounting of the commissions due to plaintiff. Id. In late October of 1997, the Experts Department found for plaintiff in the amount of $637,588 for commissions relating to the aircraft sale. Subsequent to the Experts Department's recommendation, the matter was referred back to the Court of First Instance for a final determination. Deft's Reply, 7.

On November 3, 1997, after defendant filed its motion to dismiss plaintiff's complaint herein based on the pending action in Kuwait, plaintiff moved the Court of First Instance to dismiss its claims for commissions arising under the representation agreements. Id. at 2. The Court of First Instance took plaintiff's motion under advisement. Id. at 2 n. 1. The parties dispute whether a ruling on plaintiff's motion to dismiss can be expected shortly.

C. The Instant Action

In the present case, plaintiff alleges that defendant has not fully paid plaintiff's commissions under the 1985 agreement for the sale of the F-18 aircraft to Kuwait. See Pltf's Complaint, ¶ 23. Plaintiff argues that the sale of these aircraft occurred during the effective period of the commission obligation in the agreement and therefore, the sale is subject to the 1985 agreement's one percent commission. Id. at ¶ 22. Neither MDC nor MDISCO has been named as a...