Alamria v. Telcor Intern., Inc., Civil Action No. CCB-95-1551.
| Decision Date | 03 April 1996 |
| Docket Number | Civil Action No. CCB-95-1551. |
| Citation | 920 F. Supp. 658 |
| Parties | ALAMRIA v. TELCOR INTERNATIONAL, INC., et al. |
| Court | U.S. District Court — District of Maryland |
Samuel Rosenthal, Washington, DC, for Plaintiff.
Jeffrey M. Schwaber, Rockville, MD, for Defendants.
On August 11, 1995, the plaintiff, Alamria, filed a six count complaint against corporate defendants Telcor International ("Telcor"), Operator Communications, d/b/a Oncor Communications ("Oncor"), and individual defendants Ronald J. Haan, and Joseph F. Switzer. The complaint alleges a variety of claims sounding in breach of contract and commercial torts.
At the center of this case is a contract containing a broad arbitration clause. The contract is signed by representatives of Alamria and Telcor. However, Alamria also seeks to hold Oncor liable on the contract under two theories. First, Alamria contends that Oncor and Telcor had a principal/agent relationship for the ultimate benefit of Haan. Second, Alamria urges this court to pierce Telcor's corporate veil in order to hold Oncor liable for Telcor's alleged breach of the contract. Oncor insists that it should not be required to defend this lawsuit because of the absence of contractual privity with the plaintiff and because it is a separate and distinct entity from Telcor.
This matter is before the court on Telcor's and Oncor's motions to dismiss the complaint, Oncor's motion for a protective order, and Alamria's motion for summary judgment and provisional relief. For the reasons set forth below, Telcor's motion to dismiss will be deemed a motion to compel arbitration and will be granted, Oncor's motion to dismiss will be denied, Alamria's opposition to Oncor's motion to dismiss will be deemed a motion to compel arbitration and will be reserved pending an evidentiary hearing, Alamria's motion for summary judgment as to Telcor will be denied, Oncor's motion for a protective order is denied, and Alamria's motion for provisional relief will be denied.
Alamria is a corporation principally located in Jedda, Saudi Arabia, and organized under the laws of that country. Oncor and Telcor are Delaware corporations; the principal place of business for both corporations is Bethesda, Maryland.
Oncor was incorporated in June 1992. Telcor was incorporated in June 1993. At some time either before or around the time of Telcor's incorporation, Oncor and Telcor entered into a "Sales, Accounting, and Management Services Agreement."1 The agreement was signed for Oncor by L. Craig Thompson, treasurer for both corporations, and for Telcor by Kenneth E. Millard, president of both corporations. During the term of this agreement, Telcor would not 2
In April and June of 1994, Telcor and Oncor respectively filed "Personal Property Return" forms with the Maryland State Department of Assessments and Taxation. On each of those forms, the two defendant corporations listed the same officers3 and Haan was listed as the sole director of both corporations. Pursuant to Local Rule 103.3 (D.Md.1995), Telcor and Oncor have disclosed that Haan is the sole owner of both companies. On or about July 13, 1993, Oncor recorded a security interest in, among other things, Telcor's right, title and interest in and to all accounts, chattel paper, deposit accounts, general intangibles, inventory, receivables, records, and all proceeds and products of any of these assets. On or about December 13, 1993, Haan recorded a financing statement securing the same Telcor assets.
The relationship between Alamria and the defendants began in late 1993. Alamria alleges that, at that time, the defendant Switzer (an officer and employee of both Oncor and Telcor) met with a representative of Alamria for the purpose of exploring a sales and marketing arrangement between Alamria and Telcor. Specifically, Alamria alleges that, in or around November 1993, Switzer met with an Alamria representative in London and discussed the possibility that Alamria would market prepaid calling cards and other telecommunications products for Oncor and Telcor. This arrangement was in connection with a planned expansion of the business of Oncor and Telcor into Europe and the Middle East.
On or about September 25, 1994, Alamria and Telcor entered into a three-year "Exclusive Marketing Consultancy Contract" ("the Contract") under which Alamria was to serve as the exclusive distributor of Telcor's prepaid telephone calling cards and other telecommunications products in several countries throughout the Middle East and Northern Africa.
Alamria contends that, around the time of the negotiation of the Contract, Switzer represented that Telcor was one of the leading telecommunications companies in the United States and was equipped with substantial personnel, equipment, facilities, expertise, products, and services. Furthermore, Amr H. Enany, President and Chief Executive Officer of Alamria, attests that, prior to executing the Contract, Switzer "led Enany to believe that he was acting on behalf of Telcor and Oncor, and that Telcor was in fact a part of Oncor." Enany also testified that Switzer led him to believe that he had the authority to bind both Telcor and Oncor to the Contract. See Enany Aff. ¶ 4. He further attests that Switzer and Telcor provided him with literature and business proposals which represented that Telcor was a division of Oncor. Id. ¶¶ 6, 7, 9, 10.
Switzer affirms that, at no time leading up to the formation of the Contract, (1) did he ever made any statements to the effect that Oncor or anyone other than Telcor would be bound under the Contract; (2) did he ever represent to anyone associated with Alamria that Telcor was an agent for Oncor, (3) did he ever make representations to anyone associated with Alamria regarding Telcor's facilities, equipment and other resources, (4) was he acting on behalf of Oncor, (5) was he authorized by Oncor to make such representations, (6) did he ever represent that Telcor was a subsidiary of Oncor, and (7) did Enany review or have any knowledge of the contents of the marketing materials with which he would later be provided. Switzer Aff. pp. 1-3. Switzer's affidavit does not address Enany's allegations regarding Switzer's alleged representations and materials directed to Enany after the formation of the Contract.
On or about December 7, 1994, less than three months after entering into the agreement, Switzer notified Alamria that Telcor was ceasing operations and that Telcor would no longer accept new applications, activate new accounts, or provide customer or marketing support. Alamria contends that this act breached the three-year Contract between the parties.
Alamria then instituted the current action alleging a variety of counts of breach of contract against the two corporate defendants and the individual defendant Haan. In addition, Alamria alleges claims of fraudulent misrepresentation, or in the alternative, negligent or innocent misrepresentation, against all of the defendants. Finally, the complaint alleges claims of aiding and abetting the breach of the Contract and tortious interference with contract against Oncor and Haan.
As noted above, a contract containing an arbitration clause is at the center of this dispute. Citing the arbitration clause in the Contract, the defendant Telcor has moved to dismiss the complaint against it.4 Oncor has moved to dismiss the complaint against it because, it maintains, there is no privity of contract between itself and Alamria, and because "Oncor had nothing to do with the Telcor/Alamria Contract."
The enforceability of arbitration agreements in contracts is governed by the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. Section 2, the centerpiece of the FAA, provides that a written arbitration agreement "in any maritime transaction or a contract evidencing a transaction involving commerce ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Chapter two of the FAA, 9 U.S.C. § 201 et seq., implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("Convention"). Chapter two of the FAA and the Convention govern the duty to arbitrate in the context of international commercial transactions. See 9 U.S.C. § 202. The Convention provides:
Convention, art II, ¶¶ 1, 3. Unlike cases governed by chapter one of the FAA, cases subject to chapter two are deemed to "arise under" the laws of the United States, and district courts have original subject-matter jurisdiction of the cause regardless of the amount in controversy. 9 U.S.C. § 203. Once a court is satisfied that it has jurisdiction over the case, it "may direct that arbitration be held in accordance with the agreement at any place therein provided for, whether that place is within or without the United States." 9 U.S.C. § 206.5
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