Ledee v. Ceramiche Ragno

• Decision Date: 16 November 1981
• Docket Number: Civ. No. 81-0780.
• Citation: 528 F. Supp. 243
• Parties: M. Sylvain LEDEE, et al., Plaintiffs, v. CERAMICHE RAGNO, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

528 F. Supp. 243

M. Sylvain LEDEE, et al., Plaintiffs, v. CERAMICHE RAGNO, et al., Defendants.

Civ. No. 81-0780.

United States District Court, D. Puerto Rico.

November 16, 1981.

A. Valentín Adames, Benny Frankie Cerezo, Río Piedras, P. R., for plaintiffs.

Fernando González-Gierbolini, Goldman, Antonetti & Dávila, Santurce, P. R., for defendants.

OPINION AND ORDER

PEREZ-GIMENEZ, District Judge.

This case commenced with the filing of a complaint in the Superior Court of Puerto Rico, San Juan Part, on March 13, 1981. Plaintiffs, Captain Sylvain Ledee, Inc., and Ledee, Inc., corporations organized under the laws of the Commonwealth of Puerto Rico with their principal place of business in San Juan, Puerto Rico, and plaintiff M. Sylvain Ledee, a citizen of the Commonwealth of Puerto Rico, sued Ceramiche Ragno and Ragno Due, S.P.A., Italian corporations, for the alleged illegal termination of a distributorship contract. Defendants filed a petition for removal to this Court based on diversity of jurisdiction, 28 U.S.C. § 1441.

Plaintiffs and defendants entered into a distributorship agreement, dated April 22, 1971, pursuant to which defendants granted plaintiffs the exclusivity of sales and distribution of its products, ceramic tiles, in the Antilles. By letter dated December 1, 1980, plaintiffs were notified by defendants of the termination of the contractual agreement.

On October 23, 1981, defendants filed a Motion Requesting Plaintiffs to Arbitration and Dismissing Action for Lack of Subject Matter Jurisdiction. No opposition has been filed thereto.

Factual Background

The complaint alleges that defendants illegally terminated the distributor relationship with plaintiffs and granted the distribution of its products to plaintiffs' competitors without giving any compensation for plaintiffs' efforts or the goodwill created by them, thus, causing them damages, and, thus, violating Law 75 of June 24, 1964, as amended, 10 L.P.R.A. 278, et seq. The complaint further alleges that plaintiffs have in stock more than $210,000 in products acquired from defendants to be sold under the terms of the contract which have not been compensated for by the defendants, who have affected plaintiffs' capacity to dispose of the products.

Defendants argue that they have an agreement with plaintiffs to arbitrate which falls within the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards (hereinafter referred to as "the Convention"), 1970 3 U.S. T.2517, T.I.A.S. No. 6997 (reprinted following 9 U.S.C.A. § 201, 1981 supp.), and the amendments to the United States Arbitration Act, 9 U.S.C. § 201, et seq., enacted to implement and enforce the Convention. The United States ratified the Convention on September 30, 1970,¹ and Italy ratified the same on January 31, 1969. See, McCreary Tire and Rubber Co. v. C E A T, 501 F.2d 1032, 1036 (3 Cir., 1974).

Article II, Section 1, of the Convention, provides that each contracting state "shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, ... concerning a subject matter capable of settlement by arbitration.". Article II, Section 2, defined an agreement in writing as including "an arbitral clause in a contract or an arbitration agreement, signed by the parties....". The United States has limited the scope of Article II, Section 1, by applying "the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the United States.". See, 9 U.S.C. § 201, Note 29. Thus, 9 U.S.C. § 202 provides that "(a)n arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract or agreement described in section 2 of this title, Arbitration Act falls under the Convention.". 9 U.S.C. § 2 recognizes the validity of "a written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.".

In this case, there is an express agreement to arbitrate. Attached to plaintiffs' complaint as Exhibit A is a copy of the distributorship contract in its original version in the French language. Defendants filed a certified translation of the same in the English language. Paragraph 9 of the contract provides:

"Any dispute related to the interpretation and application of this contract will be submitted to an arbiter selected by the President of the Tribunal of Modena, who will judge as last resort and without procedural formalities."

Therefore, 9 U.S.C. § 202 is satisfied.

The complaint shows on its face that it involves a transaction involving foreign commerce. The dispute, as the one in Siderius v. Compañía de Acero del Pacífico, 453 F.Supp. 22 (S.D.N.Y., 1978), arose out of classical commercial relationship, one involving the purchase and sale of goods by two corporations. See also, Beromun Aktiengesellschaft v. Societa, etc., 471 F.Supp. 1163 (S.D.N.Y., 1979) and Hilti, Inc. v. Oldach, 392 F.2d 368, 371, n.6 (1 Cir., 1968). Whether there has been an illegal termination of the distributorship agreement or whether there has been just cause to terminate the same, are subject matters capable of resolution by arbitration. The arbitration clause included in the contract is broad enough to include a claim based on the allegedly arbitrary and illegal termination of the contract.

9 U.S.C. § 203 provides that an action or proceeding falling under the Convention shall be deemed to arise under the laws and treatises of the United States and that the district courts of the...