Creative Tile Marketing v. SICIS Intern., SrL

• Decision Date: 03 April 1996
• Docket Number: No. 95-492-CIV.,95-492-CIV.
• Parties: CREATIVE TILE MARKETING, INC., a Florida corporation, Plaintiff, v. SICIS INTERNATIONAL, S.r.L., a foreign corporation, Defendant.
• Court: U.S. District Court — Southern District of Florida

922 F. Supp. 1534

CREATIVE TILE MARKETING, INC., a Florida corporation, Plaintiff, v. SICIS INTERNATIONAL, S.r.L., a foreign corporation, Defendant.

No. 95-492-CIV.

United States District Court, S.D. Florida, Miami Division.

April 3, 1996.

Stephen J. Kolski, Jr., Catlin, Saxon, Tuttle and Evans, P.A., Miami, FL, for Plaintiff.

Richard J. Ovelmen, Mary K. Weidmeier, Baker & McKenzie, P.A., Miami, FL, for Defendant.

OMNIBUS ORDER

MOORE, District Judge.

THIS CAUSE came before the Court upon (1) Plaintiff's Motion for Default Judgment on the Issue of Liability and for Reservation of Jurisdiction to Determine Damages (DE #4); (2) Defendant's Motion to Compel Arbitration and Stay Proceedings (DE #5); and (3) Defendant's Motion for Reconsideration of State Court Order, and Renewed Motion to Compel Arbitration, and to Stay Proceedings (DE #12).

THE COURT has considered the Motions, responses, and the pertinent portions of the record, and being otherwise fully advised in the premises, it enters the following Order.

PROCEDURAL BACKGROUND

On September 15, 1993, Plaintiff Creative Tile Marketing, Inc. ("Creative Tile") commenced an action in the Circuit Court for the Eleventh Judicial Circuit in Dade County against Defendant SICIS International, S.r.L. ("SICIS") for breach of contract and for an accounting. On or about November 10, 1993, Defendant filed a motion to dismiss the complaint for lack of personal and subject matter jurisdiction and to quash service of process and motion for extension of time to file supporting affidavit. By Order dated April 20, 1994, Judge Norman S. Gerstein entered an agreed partial order denying Defendant's motion to quash service of process, motion to dismiss for lack of long arm jurisdiction, and motion to dismiss for insufficient minimum contacts with the state of Florida. On December 13, 1994, Judge Gerstein entered an order denying the remainder of the issues raised in Defendant's November 10, 1993 motion to dismiss, and directed Defendant to file and serve an answer to Plaintiff's complaint within twenty (20) days of the date of the Order. Defendant did not file an answer, but filed a motion for extension of time on December 30, 1994. On January 12, 1995, Defendant filed a notice of interlocutory appeal.

On March 10, 1995, Defendant filed a notice of removal of this action, and this action was removed to this Court. At the time Defendant filed its notice of removal, Defendant's motion for an extension of time to answer the complaint was still pending. On March 24, 1995, Plaintiff filed a motion for default judgment in this Court. Upon receiving the motion for default, Defendant filed a motion to compel arbitration and stay proceedings. Defendant filed a second motion to compel shortly thereafter.

FACTUAL BACKGROUND

Plaintiff Creative Tile Marketing, Inc. ("CTM") is a Florida marketing corporation. Defendant SICIS International, S.r.L. ("SICIS") is an Italian corporation in the business of manufacturing mosaic tiles. In December 1990, the parties entered into an agency agreement, whereby SICIS appointed CTM the exclusive agent in several countries, including the United States, Canada, Caribbean Islands, Japan, Singapore, Australia, Taiwan, and Hong Kong, to sell SICIS' tile products. Pursuant to the agency agreement, SICIS was entitled to accept and execute orders received directly from customers in CTM's exclusive territory. If SICIS accepted and executed these orders, SICIS was obligated to pay CTM a commission for all sales within CTM's territory. In December 1991, the parties entered into an amended agency agreement, which amended the exclusive agency territory to the United States, Puerto Rico, Canada, and South America.

CTM alleges that, in November 1990, SICIS wrongfully terminated the agency agreement as it applied to Japan. Further, CTM alleges that, on June 2, 1992, SICIS wrongfully gave notice of its intent to terminate the agency agreement in its entirety. In its four-count complaint, CTM alleges that, as a result of SICIS' breaches of the agency agreement, CTM is entitled to commissions for sales consummated by SICIS in CTM's exclusive territory.

DISCUSSION

I. Plaintiff's Motion for Default Judgment

Two weeks after Defendant SICIS removed the instant matter to this Court, Plaintiff CTM filed a motion for default judgment pursuant to Rule 55 of the Federal Rules of Civil Procedure. It is the general rule that default judgments are ordinarily disfavored because cases should be decided upon their merits whenever reasonably possible. However, the entry of a default judgment is committed to the discretion of the district court. Hamm v. DeKalb County, 774 F.2d 1567, 1576 (11th Cir.1985), cert. denied, 475 U.S. 1096, 106 S.Ct. 1492, 89 L.Ed.2d 894 (1986). In determining whether a default judgment is appropriate, a court may consider several factors including: (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) (citing 6 Moore's Federal Practice, ¶ 55-052, at 24-26).

Plaintiff argues that it is entitled to entry of default judgment for three reasons: (1) Defendant ignored Judge Gerstein's order that Defendant file and serve an answer to Plaintiff's complaint; (2) Defendant failed to comply with Rule 55 which requires a defendant to answer or otherwise defend a complaint; and (3) Defendant failed to comply with Rule 81, which requires a Defendant to answer or present other defenses or objections within five (5) days after filing a petition for removal.

Defendant acknowledges that it failed to timely answer the complaint or raise objections after removing this case to this Court but argues that the Court should excuse Defendant's dilatory conduct. The Court agrees with Defendant and concludes that Defendant's default constitutes excusable neglect. Defendant has not been totally non-responsive in this case; in state court, Defendant acted in a timely fashion and zealously litigated this case. Further, Defendant's default does not appear to be willful. Defendant alleges that it believed its motion for an enlargement of time to answer Plaintiff's complaint, which was still pending when the case was removed, was operative in this Court. Further, upon receiving Plaintiff's motion for default, Defendant immediately acted by filing a motion to compel arbitration.¹ Defendant also has meritorious defenses to Plaintiff's claims and adjudication on the merits is warranted in light of the damages, believed to be in excess of $300,000.00, sought by Plaintiff. Finally, Plaintiff has not been prejudiced by Defendant's two week delay. Accordingly, the Court denies Plaintiff's motion for default.²

II. Defendant's motion to compel arbitration; Defendant's motion for reconsideration of the state court order and renewed motion to compel arbitration

Defendant has filed a motion for reconsideration of the state court's order to the extent that it denied Defendant's motion to compel arbitration.³ Reconsideration is proper since, upon removal, a district court may dissolve or modify injunctions, orders, and all other proceedings which took place in state court. See Maseda v. Honda Motor Co., Ltd., 861 F.2d 1248, 1252 (11th Cir.1988) (citing Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers Local No. 70 of Alameda County, 415 U.S. 423, 437, 94 S.Ct. 1113, 1123, 39 L.Ed.2d 435 (1974); Ex parte Fisk, 113 U.S. 713, 5 S.Ct. 724, 28 L.Ed. 1117 (1885); 28 U.S.C. § 1450).

A. Characterization of the Parties' Dispute

Before this Court discusses whether arbitration is appropriate, the Court must address two preliminary issues which will determine the applicable contractual provisions in the instant matter. First, this Court must ascertain whether, as Plaintiff contends, the parties' dispute is merely a "commission dispute." If the instant action is merely a "commissions dispute," then Article 3(3) of the parties' agency agreement is applicable; otherwise, Article 12 is applicable. A review of Plaintiff's complaint reveals that, despite Plaintiff's characterization, this case is more than a commissions dispute. This is an action for wrongful termination of the agency agreement, and Plaintiff seeks a determination of the parties' rights and obligations under the agreement. Accordingly, Article 12 of the agency agreement is the applicable provision in the instant matter.

B. Forum Selection Clause

Based on the above characterization, the Court must determine whether this action should be dismissed for improper venue. Although the parties have not briefed this issue, the Court notes that Article 12 of the agency agreement, provides, in pertinent part, that "all disputes arising from or connected with this Agreement, except those referred to Article 3, sub 3, shall fall within the jurisdiction of the competent judge of 47023 Ronta Cesena, Italy." Article 12 is a forum selection clause.

In M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 2, 92 S.Ct. 1907, 1909, 32 L.Ed.2d 513 (1972), the Supreme Court held that a mandatory forum selection clause is prima facie valid. However, unlike the forum selection clause in M/S Bremen, the forum selection clause in the instant action is not mandatory. It is permissive. See, e.g., Caldas & Sons, Inc. v. Willingham, 17 F.3d 123, 127-128 (5th Cir.1994); Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 77-78 (the Cir.1987). The Court's conclusion is based on the finding that, unlike forum selection clauses which have been held to be mandatory, the clause in the instant action does not provide that the Italian court shall have ...