Quasem Group, Ltd. v. W.D. Mask Cotton Co.
| Decision Date | 11 June 1997 |
| Docket Number | No. 96-3020-M1/V.,96-3020-M1/V. |
| Citation | 967 F.Supp. 288 |
| Parties | QUASEM GROUP, LIMITED, Plaintiff, v. W.D. MASK COTTON COMPANY, Defendant. |
| Court | U.S. District Court — Western District of Tennessee |
This matter is before the Court on defendant's motion to dismiss and/or for summary judgment, filed January 6, 1997. Because the parties have submitted and the Court has considered materials outside the pleadings, the Court will treat defendant's motion as a motion for summary judgment. Fed. R.Civ.P. 12(b), 56. For the reasons set forth below, defendant's motion is GRANTED.
The dispute in this case arises out of a series of contracts to supply cotton entered into by the parties. Plaintiff, Quasem Group, Ltd. ("Quasem"), located in Bangladesh, agreed to purchase cotton from defendant, W.D. Mask Cotton Company ("Mask"), a Tennessee corporation engaged in the business of exporting American raw cotton.
On December 1, 1991, Quasem Cotton Mills, Ltd., an alleged affiliate of plaintiff Quasem, entered into a contract to purchase approximately 10,000 bales of raw cotton from defendant Mask. This contract was assigned serial number T1119. Compl. at Exh. A. On or about December 19, 1991, Quasem entered into a second contract with Mask for the purchase of approximately 10,000 bales of raw cotton to be shipped in equal amounts from March 1992 through July 1992. This contract was assigned serial number T1121. Compl. at Exh. B. On July 7, 1992, Quasem Rotor Spinning Mills, Ltd., an affiliate of Quasem, entered into a contract with Mask to purchase approximately 6000 bales of raw cotton for shipment in equal amounts in August 1992 and September 1992. This contract was assigned serial number T1156. Def.'s Mem. in Supp. of Mot. to Dismiss at Exh. 1.
Each of the contracts between Mask and Quasem, or its affiliates, provides as follows:
If amicable settlement of quality difference is impossible, arbitration for quality to be governed by Liverpool Cotton Association, Ltd., Liverpool.
Any irreconcilable differences concerning contract terms, validity or alleged default to be referred to technical arbitration by Liverpool Cotton Association, Ltd., Liverpool.
The Liverpool Cotton Association, Ltd. ("LCA"), is an international association composed of cotton merchants, textile mills, and other businesses affiliated with the cotton industry with members in approximately 58 countries. The LCA has promulgated comprehensive trade rules governing international commercial transactions in cotton and governing the arbitration of disputes which may arise out of such transactions. At all times relevant to this proceeding, Mask was a member of the LCA.
By-law 6 of the LCA provides:
(1) Every contract which shall be made subject to the by-laws and/or Rules of Association, or subject to Liverpool or Arbitration, or contains words to a similar effect, shall be deemed to provide as one of the terms thereof that any differences arising between the parties thereto, touching or arising out of such contracts shall be referred to arbitration in accordance with the by-laws and Rules, and that the holding of such an arbitration and the obtaining of an award thereunder shall be a condition precedent to the right of any party to such contract to commence legal proceedings against the other party in respect of any such difference as aforesaid, and that neither party under such contract shall have any right of action against the other touching or arising out of such contract, except to enforce the award in any such arbitration.
Rule 212 of the LCA provides:
Unless otherwise mutually agreed to by the buyer and seller, or an extension has been granted in accordance with the provisions of Rule 214 on cotton shipped to: . . .
(b) Any place other than the United Kingdom, application for Arbitration on Quality shall be made within fifty days and samples must be dispatched or consigned for dispatch within seventy days from the Date of Arrival and the Arbitration shall commence within eight months of Date of Arrival.
Rule 103 of the LCA provides:
(1) Sampling shall, unless otherwise agreed between the buyer and the seller, take place within forty days of the Date of Arrival at the agreed point of delivery, in the presence and under the control of their representatives. The name of the seller's representative for this purpose shall be given to the buyer on or before the tendering of an invoice.
(2) Samples for arbitration shall be jointly sealed.
(3) In exceptional circumstances, application may be made to Standing Committee A, in accordance with by-law 110A, for an extension of the time limit stated in this rule.
Apparently, the relationship between the parties deteriorated, and, on July 30, 1993, Quasem filed a civil action in this Court, Civ. No. 93-2668-M1/A, seeking to recover damages from Mask for breach of contract and breach of an alleged settlement arising out of Mask's shipment of cotton alleged by Quasem to be of an inferior quality than that required under the contracts. The complaint alleged various legal theories, including fraud, misrepresentation, breach of contract, and fraud in the inducement.
In response to Quasem's complaint, Mask filed a motion to dismiss, asserting lack of subject matter jurisdiction and failure to state a claim. In essence, Mask asserted that Quasem's sole remedy under the contract was arbitration before the LCA and that Quasem had permitted the time limits for instituting arbitration to expire.
On October 31, 1994, this Court entered an order granting Mask's motion to dismiss for lack of subject matter jurisdiction. The Court found that the contract contained an arbitration clause that was enforceable pursuant to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitrable Awards, 9 U.S.C. §§ 201-208 (1970).1 Specifically, the Court found that the claims raised by Quasem were arbitrable under the contract and that Quasem had failed to plead sufficient facts to demonstrate fraud in the inducement. The Court concluded that it lacked subject matter jurisdiction and referred the parties to arbitration. In addition, the Court specifically declined to address the issue of whether any arbitration claim was barred as a result of Quasem's non-compliance with LCA Rules, finding that such a claim would more properly be brought before the LCA.
On August 8, 1995, Quasem filed an application with Standing Committee A of the LCA for an extension of time for the holding of a quality arbitration along with its Points of Claim. The LCA invited Mask to respond to Quasem's request that it be allowed to assert a quality arbitration over three years after the time for instituting an arbitration claim had expired under the terms of the contract. Mask filed an objection.
On November 7, 1995, Standing Committee A of the LCA denied Quasem's request for an extension of time to hold a quality arbitration because the Committee was "unable to find that unavoidable delay arising from special circumstances had occurred. which prevented the buyers (Quasem) from complying with the time limits stipulated." Compl. at Exh. 8. In short, the LCA determined that Quasem's claim was barred by its Rules due to Quasem's failure to timely initiate a quality arbitration proceeding.
On September 18, 1996, Quasem filed the instant action, seeking to recover damages arising out of Mask's shipment of cotton under the same contracts that formed the basis of the first action and for breach of an alleged settlement agreement as set forth in the first action. Once again, Quasem alleges various legal theories, including breach of contract, intentional misrepresentation, promissory fraud, and fraud in the inducement to recover damages arising out of the alleged shipment of inferior cotton under the contracts. Quasem also seeks specific performance of the alleged settlement between the parties. On November 5, 1996, defendant filed a motion to dismiss for failure to state a claim. On December 23, 1996, plaintiff filed an amended complaint. On January 6, 1997, defendant filed a motion to dismiss and/or for summary judgment with respect to the amended complaint. On February 7, 1997, plaintiff filed a response, in the form of a response to an Order to Show Cause. Finally, on March 14, 1997, defendant filed a supplemental response.
Under Rule 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Pursuant to Rule 56(e), when confronted with a properly supported motion for summary judgment, the nonmoving party "may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." A genuine issue of material fact exists "if the evidence [presented by the nonmoving party] is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In essence, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S.Ct. at 2512. In considering a motion for summary judgment, however, "the evidence as well as all inferences drawn therefrom must be read in a light most favorable to the party opposing the motion." Kochins v. Linden-Alimak, Inc., 799 F.2d 1128, 1133 (6th Cir.1986).
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