White Pearl Inversiones S.A. v. Cemusa, Inc.
647 F.3d 684
7th Cir.2011Background
- White Pearl Inversiones S.A. (Uruguay) and Sanlo Corp. sue Cemusa, Inc. under international diversity jurisdiction for unpaid fees.
- Letter Agreement (Mar 25, 2003): White Pearl to provide strategy and introduction services for $240,000 over nine months; payment deducted from future Master Agreement fees.
- Master Agreement (Mar 31, 2003) provides 3.75% of Cemusa's net advertising revenue as White Pearl’s fee for each city, vesting after an RFP is issued; otherwise terminable on 30 days' notice.
- New York City did not issue an RFP by early 2004; Cemusa terminated the Master Agreement Feb 17, 2004.
- NYC issued RFPs in 2004; Cemusa won contracts for all five boroughs and paid only $240,000, prompting White Pearl to file suit.
- Issue arises whether White Pearl, as a Uruguayan entity, is a 'corporation' under § 1332 for complete diversity; the court analyzes Uruguay’s sociedad anónima forms and investor citizenship.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is complete federal diversity met? | White Pearl is a Uruguayan corporation-like entity; its investors are Brazilian. | Uruguay’s entity may be treated as a corporation; but the citizenship of equity investors matters if a joint-stock structure applies. | Complete diversity established; treating White Pearl as a joint-stock equivalent with Brazilian investors. |
| What law governs the contract claims and choice of law analysis? | Spanish law should apply per the Letter Agreement. | Choice of law should be Illinois/New York due to district court; Spanish law not addressed. | Spanish law governs; court proceeds without resolving conflicts between foreign and domestic law. |
| Are White Pearl's various contract-related claims plausibly pled under Rule 12(b)(6) or 12(c)? | Complaint states plausible claims including breach, estoppel, quantum meruit, unjust enrichment, etc. | Many claims are insufficient or duplicative; the principal issue is a fixed fee under the Letter Agreement. | The complaint is not sufficient to avoid dismissal; judgment warranted on Rule 12(c) grounds. |
| Is White Pearl entitled to more than the $240,000 under the Letter Agreement? | Settlement negotiations and expected 2 million if NYC bid succeeded justify more compensation. | Settlement negotiations are inadmissible and not binding; Master Agreement does not obligate more than $240,000. | No; quantum meruit/unjust enrichment do not apply; White Pearl only entitled to $240,000. |
| Should the case be decided under Illinois law on quantum meruit principles? | Illinois law recognizes quantum meruit where a party's services are terminated after substantial work. | No entitlement for volunteered services when contract terminates before the city issued an RFP. | Illinois negative; no entitlement beyond $240,000; broader remedies rejected. |
Key Cases Cited
- Twohy v. First National Bank of Chicago, 758 F.2d 1185 (7th Cir.1985) (civil-law sociedad anónima not automatically a corporation for § 1332)
- Chapman v. Barney, 129 U.S. 677 (U.S. 1889) (joint-stock companies not corporations for diversity purposes)
- Indiana Lumbermens Mut. Ins. Co. v. Reinsurance Results, Inc., 513 F.3d 652 (7th Cir.2008) (businesses cannot obtain extra contract price for volunteered services)
- Lear Corp. v. Johnson Electric Holdings Ltd., 353 F.3d 580 (7th Cir.2003) (civil-law entities treated for corporate-ness attributes relevant to jurisdiction)
- Rhoades v. Norfolk & Western Ry., 78 Ill.2d 217 (1979) (contingent-fee and termination scenarios in Illinois law)
- Kenilworth Realty Co. v. Sandquist, 56 Ill.App.3d 78 (1977) (agents’ fees upon termination or failure to complete deal)
- Penzell v. Taylor, 219 Ill.App.3d 680 (1991) (commission entitlement when salesman is fired before payment)