Najran Co. for General Contracting and Trading v. Fleetwood Enterprises, Inc.
| Decision Date | 01 October 1986 |
| Docket Number | No. CV485-12.,CV485-12. |
| Parties | NAJRAN COMPANY FOR GENERAL CONTRACTING AND TRADING, Plaintiff, v. FLEETWOOD ENTERPRISES, INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of Georgia |
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John D. Sours, T. Bart Gary, Wasson, Sours & Harris, Atlanta, Ga., Robert G. Watt, Francis X. McCullough, Veinna, Va., for plaintiff.
Richard K. Hines, V, Atlanta, Ga., Richard Chernick, Steven Eugene Sletten, Los Angeles, Cal., for defendants.
Before the Court is a motion for partial summary judgment, filed by plaintiff Najran Company for General Contracting and Trading (Najran), a Saudi Arabian limited partnership. Najran seeks a ruling with respect to Counts I and II of its amended complaint, which was filed in this Court in April 1985 against defendants Fleetwood Enterprises, Inc. (FE), a Delaware corporation; Fleetwood Homes Georgia, Inc. (FMG), a Georgia corporation; Fleetwood Homes Florida, Inc. (FMF), a Florida corporation; and Fleetwood Homes North Carolina, Inc. (FHNC), a North Carolina corporation. The latter three organizations are wholly owned manufacturing subsidiaries of FE; they produced certain allegedly defective mobile homes, which were sold to plaintiff through another FE subsidiary. Also before the Court is the defendants' motion to dismiss those claims in plaintiff's amended complaint that are brought under the Magnuson-Moss Warranty Act.
Najran requests that this Court resolve issues it deems to be of crucial importance with respect to certain arbitration proceedings now being conducted in California before a panel of the International Chamber of Commerce (ICC). Those proceeding were commenced by Najran in December, 1983 against Fleetwood International, Inc. (FI), the FE subsidiary with which Najran had contracted for the purchase of 600 Fleetwood mobile homes. FI is a California corporation. Another FE subsidiary, GSF Installation, Inc. (GSF), is now a party to the California arbitration, as well. In essence, plaintiff requests that this Court rule defendant FE to be the alter ego of its various subsidiaries, thus rendering FE and the subsidiary defendants in the action before this Court jointly and severally liable for any award that may be assessed in Najran's favor in the California arbitration. Alternatively, plaintiff seeks a ruling that FE guaranteed the performance of its subsidiaries, FI and GSF, with respect to the transactions at issue in the arbitration proceedings. Finally, plaintiff asserts that it is entitled to attorney's fees under Georgia law.
Defendants' motion to dismiss plaintiff's Magnuson-Moss claims is based, inter alia, on the ground that the Act does not provide protection to a volume commercial purchaser of mobile homes. Defendants also contend that plaintiff purchased the homes for purposes of resale, thereby precluding recovery under the Act. Finally, defendants maintain that, even if plaintiff did not purchase the homes with the intention of selling them, several other factors militate in favor of dismissing these claims.
For the reasons given below, the plaintiff's motion for summary judgment is granted in part and denied in part, and defendants' motion to dismiss is denied.
As one of the parties to this action has noted, the facts of this case are indeed "serpentine." Because this Order represents, in substantial part, a summary judgment, there is no requirement that the Court make findings of fact. However, because "in many cases findings are extremely helpful to a reviewing court," Anderson v. Liberty Lobby, ___ U.S. ___, ___ n. 6, 106 S.Ct. 2505, 2511 n. 6, 91 L.Ed.2d 202, 213 n. 6, and because a familiarity with the facts of the case is essential to an understanding of this Court's legal determinations, the facts must be examined in some detail.
In early 1982, Najran entered into leasing, construction, and maintenance contracts with the Kingdom of Saudia Arabia Royal Commission for Jubail and Yanbu, and with Saudi Basic Industries Corporation (SABIC). Among other obligations under these contracts, Najran was to supply 600 "double wide" mobile homes to serve as living quarters for employees of companies affiliated with SABIC, and for these employees' families, in a large industrial complex in Jubail, Saudi Arabia. In March, 1982, Najran approached United Gulf Services (UGS), an export company that had previously arranged for the sale and transport of Fleetwood mobile homes to Saudi Arabia, inquiring about the ability of UGS to supply the 600 homes needed by Najran.
In April 1982, representatives of both UGS and FE responded to Najran's inquiries concerning the possible purchase of mobile homes. Exhs. 13B & 13C. The responses submitted to Najran indicated the contractual terms, including the price, that would apply with respect a sale to Najran of 600 such homes meeting certain buyer specifications. Najran was interested in pursuing the matter further. Accordingly, a meeting between representatives of Najran, UGS and FE took place on May 18 at the corporate headquarters of FE in Riverside, California. At this meeting the parties discussed various aspects of the contemplated project and specifications for the mobile homes. Mr. Potter, an officer of FE, explained to the Najran representatives that FE itself generally does not enter into contracts involving international sales, but instead sells its homes at the port of export to a third party such as UGS who in turn exports the homes and handles all shipping and transport logistics. Habib Dep. 161-62.
On the following day, at a meeting held for purposes of discussing the possible execution of a contract between Najran and UGS, a Najran representative requested that UGS obtain assurances from FE and the carrier (SALEN) that the latter would bear financial responsibility for their respective portions of any such transaction. Habib decl. at ¶ 56; Defendant's Memo in Opposition p. 44.
On May 21, a UGS representative prepared a letter of intent for review and signature by a Najran representative. The addressee of this letter was designated by the UGS representative as FE. The letter granted FE the right "to designate which of its corporate entities, including United Gulf Services, Inc., was to be the contracting party for this project as well as the beneficiary of the ... Letter of Credit...." As signed, the letter of intent conditioned the terms just mentioned on Najran's receipt of "satisfactory evidence of financial responsibility, and/or a financial guarantee of such entity...." Exh. 31. The UGS representative has stated that he cannot recall why the letter of intent was to be directed to FE, or why certain wording was included in the letter. He has admitted to poor draftsmanship, insofar as the document implies that UGS is a subsidiary of FE. Habib Dep. at 151-60. UGS is not a subsidiary of FE.
FE was asked to and did provide assurances to Najran, in a letter from FE representative Nelson W. Potter dated May 26, 1982, to the effect, inter alia, that FE would "assume full financial and legal responsibility for the mobile homes which we will manufacture and which will be covered in your contract with United Gulf Services." Included in Potter's letter were also assurances with respect to the quality and specifications of the homes to be constructed, and with respect to FE's assumption of financial responsibility for the inland transportation of the mobile homes and for any delays in such transportation. A copy of FE's then most recent annual report, and its three then most recent quarterly reports also were forwarded to Najran "so that Najran would be certain of FE's ability to bear any such financial responsibility...." Exh. 32. As will be discussed, infra, the contract ultimately executed by Najran was with FE's subsidiary, FI, and not with UGS. Thus, a hotly contested issue between the parties is whether the above-mentioned assurances were intended to apply to whatever contract Najran might execute for the purchase of the 600 Fleetwood mobile homes, or these assurances were issued only to persuade Najran to contract with UGS.
On June 2, Mr. Potter of FE prepared a draft outlining certain consulting services that FE would provide with respect to the installation and supervision of the project in Saudi Arabia. The consulting services, as described in FE's June 2 draft were then incorporated into a June 3 draft of a purchase agreement to be executed by UGS and Najran. The terms of this draft indicated that UGS would provide consulting services. Mr. Potter, by deposition, has represented that in fact FE planned to provide the services/employees to UGS, which would then directly supply services to Najran. Exhs. 551 & 4A.
Because of Najran's concern over UGS's small size and limited financial resources, further assurances were given to Najran in June and July by UGS, with respect to FE's assumption of responsibility for UGS's performance. Exhs. A & 69. The Riyadh Bank in Saudi Arabia, however, which was to lend Najran the money to purchase the Fleetwood homes through certain letters of credit (LCs), was also concerned about the financial standing of UGS, and made inquiries through Security Pacific National Bank (SP), its corresponding bank in California. A representative of SP spoke with Mr. Potter by telephone, on the basis of which the SP representative telexed certain information to the Riyadh bank on July 7. The telex stated, among other things, that "Fleetwood confirms that they are committed to the transaction ... and they will delivery 600 mobile homes on the terms discussed with United Gulf Services and yourselves...." Mr. Potter received a copy of this telex on or about the same date and, while believing it to be incorrect in part, did not contact SP to inform it that it had made allegedly incorrect statements in its telex to the Riyadh Bank. Potter Dep. 338-45; ...
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