Soroof Trading Development Co. v. Ge Fuel Cell Systems LLC
842 F. Supp. 2d 502
S.D.N.Y.2012Background
- Soroof is a Saudi Arabian distributor seeking to distribute GEFCS fuel cells in Saudi Arabia under a 2000 contract.
- GEFCS was an LLC owned by GE Microgen and Plug Power; it dissolved in 2006.
- The contract required Soroof to pay a $1,000,000 non-refundable distributor fee and to use best efforts to sell and purchase minimum units, with GEFCS obligation to use reasonable efforts to supply and to accept firm purchase orders.
- The contract included an integration clause and limited liability provisions, and it expired in 2005; GEFCS later could not meet specifications and was dissolved in 2006.
- Soroof initiated arbitration in 2008 alleging breach and misrepresentation; the arbitration panel denied a motion to dismiss without prejudice; the parties then entered a Venue Agreement to litigate in federal court.
- Plaintiff subsequently challenged GEFCS’s ability to respond in court, seeking to pierce the veil and to nullify GEFCS’s certificate of cancellation, while Defendants sought summary judgment dismissing claims against GEFCS and opposing veil piercing against GE Microgen and Plug Power.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract—supply, best efforts, and information sharing | Soroof asserts GEFCS failed to supply and share information as promised. | GEFCS owed only ‘reasonable efforts’ and not guaranteed supply; integration clause bars extrinsic claims. | Breach claims dismissed; repleading allowed for meritorious theory with facts. |
| Misrepresentation claims | Soroof alleges fraudulent statements and omissions; timing and specifics are alleged. | Claims are not plead with Rule 9(b) particularity. | Misrepresentation dismissed without prejudice to replead per Rule 9(b). |
| Conversion claim | GEFCS wrongfully controlled the $1,000,000 payment. | Payment was expressly labeled non-refundable and authorized by contract. | Conversion claim dismissed with prejudice. |
| Constructive trust and unjust enrichment | Relief should be available despite contract. | Valid contract governs; quasi-contractual relief unavailable. | Dismissed with prejudice; no relief under quasi-contract. |
| Veil piercing and liability against GE Microgen/Plug Power | GEFCS was alter ego; pierce the veil to hold others liable. | Insufficient evidence to pierce; contract limits liability. | Veil pierced; allow claims against GE Microgen and Plug Power; dismiss claims against GEFCS. |
Key Cases Cited
- FlightSafety Int’l., Inc. v. Flight Options, LLC, 418 F. Supp. 2d 103 (E.D.N.Y. 2005) (contract interpretation; unambiguous terms govern; parol evidence exclusion)
- R/S Assoc. v. New York Job Dev. Auth., 98 N.Y.2d 29, 744 N.Y.S.2d 358 (N.Y. 2002) (parol evidence not used to create ambiguity; integration clause binding)
- Morgan Stanley High Yield Sec., Inc. v. Seven Circle Gaming Corp., 269 F. Supp. 2d 206 (S.D.N.Y. 2003) (parol evidence rule and integration in fully integrated contracts)
- Iqbal v. Ashcroft, 556 U.S. 662, 129 S. Ct. 1937 (U.S. 2009) (pleading standard; plausibility required)
- Ely-Cruikshank v. Bank of Montreal, 81 N.Y.2d 399, 599 N.Y.S.2d 501 (N.Y. 1993) (accrual of contract claims)
- Kalisch-Jarcho v. City of New York, 58 N.Y.2d 377, 461 N.Y.S.2d 746 (N.Y. 1983) (exculpatory agreements and public policy limits)
- In re First Central Fin. Corp., 377 F.3d 209, 212-213 (2d Cir. 2004) (unjust enrichment generally precluded where contract governs)
- Manhattan Motorcars, Inc. v. Automobili Lamborghini, S.p.A., 244 F.R.D. 204 (S.D.N.Y. 2007) (pleading requirements for fraudulent concealment/omission)