Folex Golf Indus., Inc. v. China Shipbuilding Indus., Corp.
| Decision Date | 09 May 2013 |
| Docket Number | CASE NO. CV09-2248-R |
| Court | U.S. District Court — Central District of California |
| Parties | FOLEX GOLF INDUSTRIES, INC., Plaintiff, v. CHINA SHIPBUILDING INDUSTRY, CORPORATION, et al., Defendants. |
FINDINGS OF FACT &
Defendant's Motion for Summary Judgment was heard by the Court on March 18, 2013. The Court found in favor of Defendant O-Ta Precision Industries Co., Ltd. ("O-Ta" or "Defendant") and granted Defendant's Motion. Defendant was ordered to prepare proposed findings of fact and conclusions of law, which Defendant provided to the Court on April 19, 2013. The Court has considered the proposed findings as well as the objections of Plaintiff Folex Golf Industries, Inc., ("Folex" or "Plaintiff"). In view of those objections, and in consideration of the evidence submitted by the parties on summary judgment, the Court issues the following findings of fact and conclusions of law.
1. Plaintiff initiated this action against Defendant on March 31, 2009. (Docket No. 1.) The operative First Amended Complaint ("FAC") was filed on June 26, 2009. (Docket No. 5.).
2. In addition to O-Ta two other parties were named as defendants in the First Amended Complaint: Luoyang Ship Material Research Institute ("LMSRI") and China Shipbuilding Industry
Corporation ("China Shipbuilding"). Plaintiff alleges LMSRI is a subsidiary of China Shipbuilding. (FAC ¶ 5.)
3. Defendant moved for summary judgment on all of Plaintiff's claims on August 16, 2010. (Docket No. 53.) The Court granted Defendant's motion on October 4, 2010. (Docket No. 86.)
4. Plaintiff appealed the Court's ruling on summary judgment to the Ninth Circuit Court of Appeals. (Docket No. 90.) The appeal was limited to five of Plaintiff's twelve claims. (Id.)
5. The Ninth Circuit reversed this Court's ruling that the five claims were barred as a matter of law by the statute of limitations. (Docket No. 119.)
6. Following remand from the Ninth Circuit, Defendant again moved for summary judgment on grounds not previously been considered. (Docket No. 143.)
7. Defendant and Plaintiff fully briefed the relevant issues, and the Court heard oral argument on Defendant's motion for summary judgment on March 18, 2013. (Docket Nos. 143, 188, 200, 202.)
8. After full consideration of the evidence submitted by and argument of the parties, the Court granted Defendant's motion for summary judgment. (Docket No. 202.)
1. On November 23, 1996, SST Company of the United States ("SST") entered into an agency agreement with LSMRI ("1996 SST Agreement"). (Kesselman Decl., Exh. D.) Defendant O-Ta was not a party or signatory to the 1996 SST Agreement.
2. The 1996 SST Agreement provided that LSMRI agreed to pay SST a 6% - 10% commission on all sales made directly by LSMRI to customers introduced by SST. (Id.) LSMRI agreed to make payments to SST in a form designated by SST within five business days after LSMRI received payment from a customer. (Id.)
3. In addition to the 1996 SST Agreement, Folex Golf Industries, Inc., an assignee of SST, entered into another agency agreement with LSMRI ("1996 Folex Agreement"). (Kesselman Decl., Exh. F.) Defendant O-Ta was not a party or signatory to the 1996 Folex Agreement. (Id.)
4. The 1996 Folex Agreement provided that LSMRI agreed to pay Folex a 6% - 10% commission on all sales made directly by LSMRI to customers introduced by Folex. (Id.) LSMRI agreed that customers introduced by Folex would remit payment directly to Folex, which would then deduct itscommission and remit the remaining balance to LSMRI. (Id.)
5. In February of 2000, Folex and LSMRI entered into an addendum to agency agreement ("2000 Addendum Agreement"). (Kesselman Deel., Exh. F.) Defendant O-Ta was not a party or signatory to the 2000 Addendum Agreement. (Id.)
6. Under the 2000 Addendum Agreement, O-TA could make purchases from suppliers other than LSMRI if, among other things, LSMRI's pricing was not competitive. (Id.)
7. Pursuant to paragraph 8 of the 2000 Addendum Agreement, Folex and LSMRI expressly agreed that either party "will have the right to pursue legal litigation in the United States or China against the party in breach of this agreement." (Id.)
8. On October 20, 2000, O-TA entered into a Cooperation Agreement with LSMRI (hereinafter the "2000 Cooperation Agreement"). (Kesselman Decl., Exh. H.) Pursuant to the 2000 Cooperation Agreement, O-TA and LSMRI agreed that the "parties should resolve problems they encounter with a spirit of amicable consultation and consent to request the third party, [Folex], to act as the mediator." (See id.) The 2000 Cooperation Agreement was signed by O-TA, LSMRI and Folex. Folex signed the 2000 Cooperation Agreement in its capacity as the agreed upon "Mediator" between O-TA and LSMRI. (See id.)
9. O-TA was a customer of LSMRI and purchased certain titanium casting products from LSMRI. In 1998, O-TA was instructed to remit payment directly to Folex. The record reflects that Folex would then take its commission and forward the remainder to LSMRI. Those instructions remained unchanged for approximately six years until March or April 2005, when O-TA began remitting payment directly to LSMRI. (Declaration of Lin, Chon Chen ("Lin Decl.") ¶ 2.)
10. In October 2005, LSMRI filed a Statement of Claim against SST Company and Folex in the Peoples Republic of China ("PRC"). (Declaration of Wang Chun, (Docket Nos. 26 and 28)).
11. The Statement of Claim sought dissolution of the 1996 SST Agreement, the 1996 Folex Agreement, and the 2000 Addendum Agreement. Id.
12. The Statement of Claim also sought to have Folex return all commissions paid by LSMRI since December 2002. Id.
13. On October 31, 2005, the PRC Court accepted the case. Id. 14. Folex officer, Chris Fu, testified that he was aware of the PRC lawsuit by at least December 2008. (Kesselman Decl., Exh. G, (Deposition of Chris Fu, Vol. I, August 31, 2010, 69:17-25)). The record also reveals that Folex wrote a letter to the Central Commission for Discipline of the Communist Party of China ("CPC Central Commission") expressly admitting it knew of the PRC lawsuit in 2005. (Supp. Jun Wang Decl., Ex. B at 8.)
15. The record demonstrates that there were several attempts at personal service on Folex and its officers. LSMRI was unable to successfully effectuate personal service via hand delivery. After those several attempts at personal service, on March 21, 2009, LSMRI published a notice of the lawsuit against Folex in the People's Court News, a PRC newspaper. (April 19, 2010 Wang Decl., Exh. J (Docket No. 26).)
16. On March 10, 2010, the Intermediate People's Court of China entered a civil judgment dissolving the 2000 Addendum Agreement and finding that "pursuant to Article 97 of the 'Contract Law of the People's Republic of China,' the Plaintiff [LSMRI] is not compelled to pay any commission [to Folex/SST Company] after March 2005" and further ordered the commission agreement "dissolved" as of that date (the "Chinese judgment").
17. In a seven page, single-spaced decision, the PRC court ruled that Folex breached its obligations under the 2000 Addendum Agreement. (Id.)
18. The PRC court took note of Chris Fu's statement in 2002 that Folex would no longer cooperate in providing any price quotes or confirmations as required by the contract. (Id.)
19. The PRC Court denied LMSRI's request to return $2.1 million in commissions paid to Folex between December 2002 and February 2005. (Id.)
20. Folex admits that it received a full copy of the PRC judgment on July 12, 2010. (Kesselman Decl., Exh. G at 68:19-25-69:1).
1. Summary judgment should be granted where "there is no genuine issue as to any material fact and . . . the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). When the record could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trialand summary judgment should be granted. See Matsushita Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 487, 106 S. Ct. 1348, 1356 (1986).
2. The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 1-6 S. Ct. 2548, 2552-53 (1986). A court evaluates the evidence to determine whether there is a genuine need for trial. If "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is 'no genuine issue for trial'" and summary judgment should be granted. Matsushita, 475 U.S. at 587, 106 S. Ct. at 1356. Summary judgment is appropriate when the evidence is so one-sided that a party must prevail as a matter of law. It is also appropriate when a party fails to offer sufficient evidence to support any essential element of a claim. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S. Ct. 2505, 2511 (1986); Celotex, 477 U.S. at 322-23; 106 S. Ct. at 2552-53.
3. In opposing a motion for summary judgment, a party "may not rely merely on allegations or denials in its own pleadings; rather, its response must . . . set out specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e)(2). It must introduce credible evidence demonstrating a genuine dispute exists as to specific material facts. Matsushita, 475 U.S. at 586 n.11, 106 S. Ct. At 1355 n.11. This requires more than a "metaphysical doubt . . . Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Id. at 586-587, 106 S. Ct. at 1356 (citation omitted).
4. Reasonable inferences are drawn in favor of the opposing party. However, to be reasonable, an inference must be based on credible evidence. Bald assertions based on a mere scintilla of evidence will not preclude summary judgment. Richards v. Neilsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal. 1985)...
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