International Customs Associates v. Ford Motor Co.

• Court: U.S. District Court — Southern District of New York
• Citation: International Customs Associates v. Ford Motor Co., 893 F.Supp. 1251 (S.D. N.Y. 1995)
• Decision Date: 08 August 1995
• Docket Number: No. 94 Civ. 7173 (JGK).,94 Civ. 7173 (JGK).
• Parties: INTERNATIONAL CUSTOMS ASSOCIATES, INC. and Leslie L. Boros, Plaintiffs, v. FORD MOTOR COMPANY and Ford Lio Ho Motor Company, Limited (Taiwan), Defendants.

893 F. Supp. 1251

INTERNATIONAL CUSTOMS ASSOCIATES, INC. and Leslie L. Boros, Plaintiffs, v. FORD MOTOR COMPANY and Ford Lio Ho Motor Company, Limited (Taiwan), Defendants.

No. 94 Civ. 7173 (JGK).

United States District Court, S.D. New York.

August 8, 1995.

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Lawrence R. Gelber, Beigel Schy Lasky Rifkind Goldberg Fertik & Gelber, New York City, for plaintiffs.

Steven Wolowitz, James J. McGuire, Nicholas W. Lobenthal, Mayer Brown & Platt, New York City, for defendants.

OPINION AND ORDER

KOELTL, District Judge:

The plaintiffs, International Customs Associates ("ICA") and Leslie Boros ("Boros") have sued the defendants, Ford Motor Company ("Ford") and Ford Lio Ho Motor Co., Limited (Taiwan) ("Lio Ho") for breach of contract and quantum meruit, alleging that the defendants failed to pay for services successfully rendered on their behalf by the plaintiffs and that the defendants refused to permit the plaintiffs to perform fully services pursuant to the written contract between the parties. Jurisdiction is based on diversity of citizenship.

The defendants have moved to dismiss the complaint with respect to Ford on one of two alternative grounds: (1) pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim upon which relief can be granted; or (2) under the doctrine of forum non conveniens. The defendants have moved to dismiss the complaint with respect to Lio Ho on one of three alternative grounds: (1) pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim upon which relief can be granted; (2) pursuant to Federal Rule of Civil Procedure 12(b)(2), for lack of personal jurisdiction; or, (3) under the doctrine of forum non conveniens.

I.

Plaintiff ICA, which has been dissolved by the State of New York for non-payment of taxes, was a New York corporation at all times relevant to this action. (Compl. ¶ 4.) ICA was in the business of offering expertise in assisting multinational corporations to reduce import costs and customs duties. (Id.) Plaintiff Boros was the sole shareholder, officer, director and employee of ICA. (Compl. ¶ 5.) Defendant Ford, which is engaged in the manufacturing, selling and exporting of automobiles and automotive parts, is a Delaware corporation with a principal place of business in Dearborn, Michigan. (Compl. ¶ 6.) Defendant Lio Ho is a Taiwanese corporation headquartered in Taiwan. (Compl. ¶ 7.) Lio Ho is a subsidiary of Ford and is in the business of importing automobiles and other automotive products into Taiwan, manufacturing automobiles in Taiwan and selling automotive products in Asia; Ford owns approximately seventy percent of Lio Ho. (Compl. ¶¶ 6, 7.)

ICA and Lio Ho entered into a written agreement on February 27, 1988 pursuant to which Lio Ho would pay ICA a monthly fee for up to twenty-four consecutive months contingent upon ICA's obtaining certain import duty and tax savings for Lio Ho.¹ The agreement provided that if ICA directly obtained "import duty and tax savings as measured against the Base Amounts" specified in the contract, and if ICA were the "sole cause" of the reductions in such duties or taxes, Lio Ho would pay ICA a contingent fee. (Exh. A to Compl. at ¶ 4(b).) Paragraph 4(b) of the contract provides that ICA's fee would be equal to:

25% of the after-tax import duty and tax savings Lio Ho actually realized for all such importations into the Republic of China within the first twelve months following the month in which each such duty/tax savings becomes effective, and 20% of each such after-tax duty/tax savings within the second twelve months therefrom.

(Id.) The contract states that it became effective as of January 27, 1988. The "Base Amounts" against which any duty and tax savings were to be measured were the amounts that Lio Ho paid in duties and taxes at the time the parties executed the contract. (Exh. A to Compl. at ¶ 4(a).)

The parties do not dispute that ICA dissuaded Taiwan from implementing a ten percent duty increase on Lio Ho imports; they refer to this increase as the "upward valuation." However, while the plaintiffs contend that this entitled them to a fee under the agreement, the defendants claim that it did not. It is the defendants' refusal to pay the plaintiffs a contingency fee for avoiding the upward valuation that the plaintiffs claim constitutes a breach of the contract.

The plaintiffs allege a second breach of contract by the defendants. The plaintiffs claim that because the defendants directed them not to enlist the assistance of the United States government in securing a decrease in customs duties beyond the rates in effect in September, 1988, the defendants prevented them from earning additional fees under the contract. The plaintiffs claim that the parties to the contract understood that in performing its obligations under the contract, ICA could enlist the assistance of the United States government in securing decreased duties for Lio Ho.

Arising out of these same events, the plaintiffs also allege that the defendants are liable under a theory of quantum meruit.

II.

The defendants argue that the complaint should be dismissed with respect to Ford pursuant to Federal Rule of Civil Procedure 12(b)(6). "The court's function on a Rule 12(b)(6) motion is not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient." Festa v. Local 3 Int'l Bhd. of Elec. Workers, 905 F.2d 35, 37 (2d Cir.1990); see also Kopec v. Coughlin, 922 F.2d 152, 155 (2d Cir.1991). Therefore, a motion to dismiss must be denied unless "it appears beyond doubt that the plaintiffs can prove no set of facts in support of their claim which would entitle them to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); accord Staron v. McDonald's Corp., 51 F.3d 353, 355 (2d Cir.1995).² Under this standard, the complaint must be dismissed with respect to Ford for failure to state a claim upon which relief can be granted.

First, with respect to the contract claim, a contract cannot bind a non-party. See, e.g., Abraham Zion Corp. v. Lebow, 761 F.2d 93, 103 (2d Cir.1985) (a non-signatory to a contract was not bound by a contract where the party who signed the contract was not the non-signatory's agent); see also Crabtree v. Tristar Automotive Group, Inc., 776 F.Supp. 155, 166 (S.D.N.Y.1991) (Goettel, J.) ("It is hornbook law that a non-signatory to a contract cannot be named as a defendant in a breach of contract action unless it has thereafter assumed or been assigned the contract."); Beacon Syracuse Assocs. v. City of Syracuse, 560 F.Supp. 188, 201 (N.D.N.Y. 1983) ("Only those who are parties to a contract may be held liable for a breach of that contract.") (citation omitted); Dember Constr. Corp. v. Staten Island Mall, 56 A.D.2d 768, 769, 392 N.Y.S.2d 299, 300 (1st Dep't 1977) ("Since the defendant was not a party to the contract, the complaint against it must be dismissed."). And, Ford clearly is not a signatory to the contract; rather, the contract was entered into by ICA and Lio Ho and signed by both entities' respective presidents. There is no ambiguity in the contract to support any argument to the contrary. The contract explicitly provides that Lio Ho is to pay the contingency fee to ICA. It is indisputable that this is an obligation only of Lio Ho under the contract, and that any failure to make payments under the contract, if payments were owed, was solely a failure of Lio Ho.

Acknowledging that Ford is not a signatory to the contract, the plaintiffs claim that Ford is a proper defendant on their breach of contract claim because the contract gave Ford express rights under the contract and imposed corresponding obligations, making Ford liable for any breach of the contract.³ Paragraph 5(b) of the contract, on which the plaintiffs rely for this theory of liability, provides:

Lio Ho and its parent or affiliated companies may adopt the recommendations of ICA in any country or countries other than the Republic of China without the prior written consent of ICA and shall have no obligation to pay any fees to ICA in connection therewith unless the company adopting the recommendation utilizes in presentations to government authorities confidential documentation prepared by ICA for Lio Ho hereunder, in which case the Company concerned and ICA will negotiate a reasonable fee for the use thereof taking into account the relative efforts of ICA as compared to its efforts under this agreement.

(Exh. A to Compl. at ¶ 5(b).) This provision of the contract notwithstanding, Ford is not a proper defendant for the plaintiffs' breach of contract claim because the complaint does not contain any allegation that Ford used confidential documentation prepared by ICA in any presentations to government authorities. Indeed, there has been no allegation by the plaintiffs, and the complaint does not state any claim, that Ford or Lio Ho breached this provision of the contract.

The plaintiffs also argue that Lio Ho signed the contract as an agent for Ford. While the plaintiffs point to negotiations among Ford, Lio Ho and ICA, to documents and a provision in the contract indicating that Lio Ho was subject to Ford corporate policy and to the facts that Lio Ho is a subsidiary of Ford (and is listed on Ford's balance sheet) and that the contract between ICA and Lio Ho had to be approved by Ford, the complaint nowhere alleges facts that support the plaintiffs' argument that Lio Ho signed the agreement on behalf of Ford as an agent of Ford. See Kashfi v. Phibro-Salomon, Inc., 628 F.Supp. 727, 735 (S.D.N.Y.1986) ("The test for determining whether a corporation is acting as an agent for a related corporation is the same as the test imposed under the doctrine of piercing the corporate veil."). Rather, the contract does not indicate, in any way, that Lio Ho entered into the agreement on behalf...