Manidhari Gums & Chemicals v. Caremoli USA, Inc.

Reply Memorandum in Support of 29 MOTION for Summary Judgment

S.D. IowaSeptember 14, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA CENTRAL DIVISION MANIDHARI GUMS & CHEMICALS ) CIVIL CASE NO. 4:16-cv-112 Plaintiff, ) ) SENIOR JUDGE VS. ) RONALD E. LONGSTAFF ) CAREMOLI USA, INC. ) MAGISTRATE JUDGE Defendant ) HELEN C. ADAMS REPLY MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT NOW INTO COURT, through undersigned counsel, comes Plaintiff, Manidhari Gums & Chemicals (“Manidhari”), and, pursuant to F.R.C.P. Rule 56, files its Reply Memorandum in Support of its Motion for Summary Judgment to Caremoli’s Response as follows: The case at bar remains simple--Caremoli did not pay the full purchase price. Manidhari’s discovery responses1 have clarified the uncontested outstanding amount owed is $564,000.63. I. Factual Background: In an attempt to create the impression that Iowa law should apply to this matter, Caremoli goes into great detail regarding a multitude of facts which are unrelated to the two contracts at issue. For this motion and the two contracts at issue, the following facts apply: It is undisputed that Caremoli issued P.O. # 5402A and P.O. # 5405H to Manidhari. These purchase orders totaled $582,000.63. In turn, Manidhari completed the contract by issuing the related commercial invoices and bills of lading. 1 Exhibit “8”-answer to interrogatory No. 5, Append. 11. 1 Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 1 of 12 Under these contracts, the product was shipped to Houston where Caremoli took delivery. Once the product was delivered to Houston, the contracts had been fully performed. Caremoli admits that it did not make full payments under the purchase orders. Since the filing of this motion, Manidhari has discovered that it received six payments which total $18,000.00.2 After applying these payments, the balance owed for both purchase orders is $564,000.63. This amount is uncontested. As part of these transactions, Manidhari had to borrow funds from State Bank of Bikaner and Jaipur3 interest at a rate of 12%.4 These facts are uncontested. II. Law and Argument: Manidhari respectfully submits that the uncontested material facts will clearly show that Caremoli breached its contracts with Manidhari and owes $564,000.63 for the contractual damages, along with prejudgment interest, attorney fees and related incidental damages. A. Standard for Summary Judgment: A “(s)ummary judgment is properly granted when the record, viewed in the light most favorable to the nonmoving party and giving that party the benefit of all reasonable inferences, shows that there is no genuine issue of material fact, and the moving party is entitled to a judgment as a matter of law.” Hunt v. Cromartie, 526 U.S. 541, 549, 143 l. Ed. 2d 731, 119 S. Ct. 1545 (1999). 2 Exhibit “8", answer to interrogatory No. 5, Append. 11. 3 Exhibit “9”- Exhibit 19 from deposition of Manidhari, Append. 12. 4 Exhibit “9” and “10"- excerpt of Mr. Chhajer deposition, Append. 12 & 13. -2- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 2 of 12 B. Caremoli Breached the Contracts: This lawsuit involves Caremoli’s purchase of guar gum powder from Manidhari under two (2) contracts, the delivery of the product and Caremoli’s refusal to pay the full purchase price. In response to the facts set forth in this motion, Caremoli recites additional facts which have nothing to do with the transactions/contracts at issue. 1. Texas v. Iowa Law Which Law Applies to the Breach of Contract Claims: Both the Texas and Iowa “agreed price” statutes are identical and, as such, there is no “true conflict”. In turn, the laws of Iowa apply to this claim. Dethmers Mfg. Co. v. Automatic Equip. Mfg. Co., 23 F. Supp 2d 974, 1001-1002(ND Iowa 1998) 2. Under Iowa Law, Caremoli Breached the Contracts: a) Breach of Contract Damages: Under Iowa law, the policy is to put the aggrieved party “in as good a position as if the other party had fully performed.” Purina Mills L.L.C. v. Less, 295 F. Supp. 2d 1017,1032 (N.D. Iowa 2003). It is uncontested, Manidhari manufactured and delivered the guar gum. Caremoli accepted the guar gum and the tendered price. And, Caremoli did not pay the full purchase price. In its petition and original memorandum to this motion Manidhari alleged that Caremoli had made four(4) payments of $3,000.00 for a total of $12,000.00. Subsequent investigation has revealed that Caremoli made six payments of $3,000 each for a total of $18,000.5 Caremoli has refused to pay the balance owed. The balance owed is $564,000.63.6 This amount is uncontested. 5 Exhibit “8”- answer to interrogatory No. 5, Append. 11. 6 Exhibit “8”, Append. 11. -3- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 3 of 12 Accordingly, Manidhari has demonstrated that it is entitled to recover the unpaid balance of the purchase price of $564,000.63. Iowa Code 554.2709(1)(a) and Purina, Id. b) Incidental Damages: Manidhari is entitled to recover incidental damages. Iowa Code 554. 2710. In this case, Manidhari has incurred bank interest charges at a rate or 12% on the balance due.7 In its response, Caremoli alleges that Manidhari has failed to “provide any evidence whatsoever demonstrating that it had to borrow funds for these transactions...”.8 Despite this argument, Caremoli acknowledges that Mr. Chhajer’s affidavit does state that Manidhari had to borrow funds and the loan required a payment of interest of 12%.9 Caremoli’s response also fails to acknowledge that it was provided the applicable bank documents at Manidhari’s deposition10 and Caremoli’s counsel questioned Mr. Chhajer regarding these interest charges. After this deposition, it remains uncontested that Manidhari incurred bank interest charges regarding this transaction and that Caremoli has offered no countervailing evidence. The crux of Caremoli’s response is that these interest payments are not “incidental’ damages because they are “consequential damages.”11 In support of this argument, Caremoli cites two cases from the other circuits which are not controlling. 7Exhibit “2", Append. 5. 8Caremoli’s response at p. 9. 9Caremoli response at p. 8. 10Exhibit “9”- Exhibit 19 from Manidhari’s deposition, Append. 12. 11Caremoli response at p. 9. -4- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 4 of 12 Iowa Code 554.2710 defines “incidental damages” to “include any commercially reasonable charges..”. (emphasis added). Moreover, the stated purpose of Iowa’s commercial code is to put the aggrieved party in as good a position as if fully performed. Purina Mills, Supra. at 1032. While Manidhari has not been able to locate a case under Iowa law, the Second Circuit has held that bank interest was an “incidental damage” which could be awarded. Bulk Oil (U.S.A.), Inc. v. Sun Oil Trading Co., 697 F.2d 481, 485 (2nd Cir. 1983). Manidhari respectfully submits that it has suffered incidental damages as the result of Caremoli’s breaches of the contracts. As discussed below, Manidhari is entitled to statutory prejudgment interest at a rate of 5% and, as such, incidental damages are accruing at a rate of 7%.12 Alternatively, should the Court not award the prejudgment interest discussed below, Manidhari requests an award of incidental damages at the 12% rate. c) Prejudgment Interest: In its response, Caremoli alleges that Iowa Code 535.3 and 668.13 limit the amount of Manidhari’s claim for prejudgment interest. Caremoli’s argument does not address the fact that these statutes concern post-judgment interest, not prejudgment interest. Ameri-Seiki Corp. v. Cincinnati Ins. Co., 721 F.3d 582(8th Cir. 2013) Iowa law allows for the recovery of prejudgment interest of 5%. Iowa Code 535.2(1)(b). Ezzone v. Riccardi, 525 NW2d 388, 400-401 (Iowa 1994), cert. den. 514 U.S. 1108, 115 S. Ct. 1958, 131 L.Ed.2d 345 (US 1995). 12Manidhari seeks to recover the difference between the bank rate of 12% and the statutory rate of 5% which is 7%. -5- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 5 of 12 C. Manidhari is Entitled to Recover Attorney Fees & Costs: 1. Texas v. Iowa Which Law Applies to the Attorney Fees/Costs Claims: a) A True Conflict Exists: For the recovery of attorney fees and costs, a “true conflict”does exist for this issue; all of which requires a more in depth choice of law analysis Dethmers, Supra. b) Iowa’s Choice of Law Standard: In a contract dispute, the court’s analysis is under the “most significant relationship” test under Res. (2nd) Conflict of Law Sec. 188 and Husseman v. Husseman, 847 NW 2d 219, 225 (Iowa 2014). Under Res. 2nd Sec. 188(1), the law of the state that has the “most significant relationship to the transaction and the parties will be applied.” Dumont Tel Co. v. Power & Tel. Supply Co., 962 F. Supp. 2d 1064, 1072, (ND Iowa 2013). The relationship “to the transaction” is of particular importance in the case at bar. Here, Caremoli’s response expends a great deal of effort reciting facts related to the “commercial relationship” of the parties and other transactions or facts which are not at issue in this case. No doubt Caremoli seeks to muddy the waters regarding the number of contacts with Iowa by going well beyond the “transactions” at issue. Caremoli cites no to cases to support this broader argument. The reason is simple—there are none. c) Applying the Choice of Law Factors: The transactions at issue involve the breach of two contracts arising from P.O. # 5402A & 5405H, the related commercial invoices and bills of lading. These transactions involve the purchase of product from India and its delivery to the Port of Houston, Texas. -6- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 6 of 12 (1) Place of Contracting: In its response, Caremoli proclaims its commercial relationship, a meeting unrelated to the contracts at issue and “communications” were centered in Iowa and, therefore, “(t)hus Iowa---where the Parties relationship began—was the place of contracting and negotiations in this case.”13 In making this proclamation, Caremoli does not cite any evidence nor case citation in support. The reason for this lack of citation is relatively simple– the most significant relationship analysis concerns the “transactions” at issue, not where the relationship began. Dumont, Id. For the transactions at issue here, the place of contracting was India with incidental contact with Florida. It is uncontested that the price negotiation for the purchase orders were “primarily” conducted by personnel affiliated with Caremoli India, a sister company of Caremoli; and Manidhari in India.14 After the purchase orders were offered, Manidhari accepted the terms in India by issuance of the related. commercial invoices and bills of lading. The place of contracting is where the last act necessary to form a contract took place. Weitz Co., LLC v. Lexington Ins. Co., 982 F. Supp 2nd 975, 991 ( SD Iowa 2013). Here, Caremoli issued its “offer” via the purchase orders which was “accepted” by Manidhari in India by its issuance of the commercial invoices and bills of lading. These facts are uncontested. Contrary to Caremoli’s response, Iowa had no relationship to the place of contracting. 13 Caremoli’s response p. 11-12 14 Exhibit “2'- Affidavit of Manish Chhajer, Append. 5. -7- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 7 of 12 (2) Place of Negotiating Contract: Caremoli’s response argues that the place of negotiating the contracts was Iowa, where the “relationship” began. Again, for the “transactions” at issue, the place where the relationship began is not relevant nor the legal standard. Dumont, Id. Here, the place of negotiating the contracts was India and Florida. The negotiations for the price of the product for both purchase orders primarily took place in India. Mr. Caremoli had ultimate authority and approval of price and quantity and he is a resident of Florida. Mr. Chhajer did negotiate the terms with Mr. Caremoli or Caremoli’s India representative, Mr. Vohra.15 These facts are uncontested. Contrary to Caremoli’s response, Iowa had no relationship to the place of negotiating. (3) Place of Performance: Caremoli’s response proclaims that, since one Purchase Order, No. 5402A, purportedly required Manidhari to ship product to Iowa and, as such, this Purchase Order was to be performed in Iowa. The Court should note that Caremoli does not cite any evidence to support this argument. The reason is, once again, simple–while P.O. 5402A may have shown Iowa as the ultimate delivery point, but all of the contract documents, including commercial invoices and bills of ladings16 show that the Port of Houston was the final delivery point. Once the product was delivered to Houston, Manidhari had no further contractual obligations regarding delivery.17After Caremoli took delivery, 15 Exhibit “10” excerpt of Manidhari deposition at p. 19-20, 31-33 Append. 13. 16 Exhibit “3", “4", “5" & “6", Append 6, 7, 8 & 9. 17 Exhibit “10” excerpt of Manidhari deposition at p. 41-43, Append. 13. -8- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 8 of 12 the subsequent transshipment of the product to Caremoli’s facilities in Houston and Ames was within Caremoli’s sole control. The place of performance was India and Texas. The product was manufactured in India and, delivered to Caremoli in Houston, Texas. Upon delivery, the contracts had been fully performed. These facts are uncontested. Contrary to Caremoli’s response, Iowa had no relationship to the place of performance. (4) Location of Subject Matter of Contract: In its response, Caremoli argues that, since one of the Purchase Order’s product was going to be shipped by Caremoli to Iowa, the location of the “subject matter of the contract” was Iowa. Again, Caremoli does not cite any evidence to support this argument. Again, Caremoli’s decision to make its’ own arrangements for delivery to Caremoli’s Houston and Ames facilities should be of no consequence to the Court’s choice of law analysis. Here, the contracts ended when, under the terms of the commercial invoices and bills of lading, Manidhari delivered the product to the Port of Houston.18 Based on the agreed terms of the contracts, Manidhari’s delivery obligation was fulfilled when the product arrived in Texas. Hence, the location of the subject matter of the contract at its termination was Houston, Texas. Contrary to Caremoli’s response, Iowa had no relationship to the location of the subject matter of the contracts. 18 Exhibit “3", “4", “5" & “6", Append 6, 7, 8 & 9. -9- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 9 of 12 (5) Domicile, Residence, Nationality, Place of Incorporation and Place of Business: For these multiple factors, there are multiple locations India, Iowa, Florida and Texas. Manidhari is a Indian company.19 For Manidhari, India applies to all of these factors. Caremoli is an Iowa corporation with corporate headquarters in Florida. Caremoli’s owner is a resident of Florida. Caremoli’s facilities are located in Houston, Texas and Ames Iowa. This matter involves international transactions which has multiple points of contact. Under the uncontested facts of this matter for these contracts, the place with the most contacts is India.; place of contracting, place of negotiations, place of performance and location of subject matter. The next place with the most contacts is Texas and then Florida and then Iowa. Texas has five points of contact: 1) the order for P.O. # 5402H was initially placed by Mr. Morales, who at the time of the order was employed at Caremoli’s Houston facility; 2) the product under P.O. # 5402H was shipped to Houston, Texas; 3) the product under P.O. # 5402A was shipped to Houston; 4) the product under P.O. # 5402A was taken by Caremoli for processing at its Houston facility; 5) the product under both purchase orders had to clear customs in Houston, Texas. Under these facts and contracts, the final point of delivery was Texas.20 In fact, Iowa has only two points of contact: 1) Caremoli is an Iowa corporation and 2) one of the purchase orders, P.O. #5402H, was for product to be sent by Caremoli to Ames, Iowa after 19 Exhibit “2", Append. 5. 20In its response, Caremoli suggests that the granting of the motion to transfer from the Southern District of Texas to this Court should be considered in its analysis of the choice of law issue. Putting aside for the moment that Manidhari was not able to file its intended opposition in time, Caremoli is, in reality, making a law of the case argument but, under this doctrine, there is no identity of issues. Caremoli cannot cite a single case that a ruling on a transfer motion controls a choice of law analysis. -10- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 10 of 12 it was delivered in Houston, Texas. Neither of these points of contacts had any direct impact on the two contracts at issue. Accordingly, Manidhari respectfully requests that, should the Court determine that Texas law applies to both award fees and costs, the amount of fees and costs should be referred to the Magistrate Judge for determination in a subsequent hearing.21 WHEREFORE, Plaintiff, Manidhari Gums & Chemicals, respect fully prays that, after due proceedings be had, its motion for summary judgment be granted and for further relief as equity and justice require. Respectfully submitted this 13th day of September, 2016. s/ Paul C. Miniclier PAUL C. MINICLIER, The Law Office of Paul C. Miniclier 1305 Dublin Street New Orleans, LA 70118 Telephone: (504) 864-1276 Facsimile: (504) 864-1278 E-mail: pcm@minilaw.net; job@minilaw.net Attorney for plaintiff, Manidhari Gums & Chemicals 21Manidhari is continuing to accrue attorney fees and costs. As such, until the Court makes a determination of whether or not such an award is warranted, manidhari cannot calculate its final request for fees and costs. -11- Case 4:16-cv-00112-RGE-SBJ Document 43 Filed 09/14/16 Page 11 of 12 CERTIFICATE OF SERVICE I hereby certify that on September 13, 2016, I electronically filed the foregoing with the Clerk of Court using the electronic filing system which will send notification of such filing to the following: Gary R. Fischer, Esq. SIMPSON, JENSEN, ABELS, FISCHER & BOUSLOG, P.C. Attorneys and Counselors at Law 400 Locust Street, Suite 400 Des Moines, IA 50309-2352 Kevin P. Shea, Esq. NIXON PEABODY, LLP 70 West Madison, Suite 3500 Chicago, IL 60602-4224 Joan M. Fletcher, Esq. DICKINSON, MACKAMAN, TYLER & HAGEN, P.C. 699 Walnut Street, Suite 1600 Des Moines, IA 50309-3986 I further certify that I mailed the foregoing document and the notice of electronic filing by first-class mail to the following non-CM/ECF participants: None. /s/Paul C. 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