UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
March 30, 2009
EUROPLASMA, S.A. PLAINTIFF,
SOLENA GROUP, INC. DEFENDANT.
The opinion of the court was delivered by: Henry H. Kennedy, Jr. United States District Judge
Plaintiff Europlasma S.A. ("Europlasma") brings this action to enforce the terms of a promissory note requiring Defendant Solena Group, Inc. ("Solena") to pay Europlasma the principal amount of €394,517, plus interest at an annual rate of 4%, in consideration for equipment that Solena purchased and received from Europlasma. Before the court is Solena's motion to dismiss or, in the alternative, to stay and compel arbitration [##6, 7] and Europlasma's motion for summary judgment [#9]. Upon consideration of the motions, the oppositions thereto, and the arguments of counsel at a hearing, the court concludes that Solena's motion to dismiss should be denied and Europlasma's summary judgment motion should be granted.
A. Promissory Note
On or about October 3, 2006, Solena ordered a plasma torch from Europlasma and paid the shipping costs and part of the purchase price. On September 14, 2007, the parties executed an unsecured promissory note ("Note") for the balance of €394,517 remaining on the torch purchase, plus interest at an annual rate of 4%. Compl. ¶¶ 6-7; Compl. Exh. 1 ("Note"). The Note provides that if Solena fails to meet its obligations under the Note, Europlasma is entitled to recover all costs, including reasonable attorney's fees, incurred in collecting or attempting to collect on the note, "whether or not a lawsuit is commenced." Note at 1. Solena did not make the required payment on the Note by its due date of January 10, 2008.
B. Master Teaming Agreement
On May 29, 2007, after the torch purchase and before the execution of the Note, the parties entered into the Master Teaming Agreement ("Agreement"). Mot. to Dismiss at 2 & Exh. 2 ("Master Teaming Agreement"). Among other things, the Agreement states that "Solena commits to treat Europlasma as its Preferred Provider of torch systems, and as such, Solena commits to purchase all of the plasma torch systems from Europlasma for Solena Projects utilizing Solena Technology from the date of this agreement." Agreement ¶ 1.2.1. In consideration for Europlasma serving as Solena's exclusive source, Europlasma agreed to provide Solena with discount pricing for the purchase of multiple torch systems. Id. ¶ 1.2.2. The parties agreed that the Agreement would have a term of three years "from the date first above written, which term may be renewed or extended by the parties." Id. ¶ 5.1.
The Agreement includes an alternative dispute resolution clause that reads:
6.2 If [sic] the event of a controversy, claim or dispute arising out of or relating to this Agreement, the representatives of the Parties shall meet and confer in good faith negotiations with the object of reaching mutual agreement and a settlement. If the Parties' representatives are unable to agree, such representatives shall promptly commence discussion with respect to resolving the dispute through non-binding alternative dispute resolution ("ADR") procedures fashioned by the representative themselves or with the assistance of persons or organizations experienced in ADR procedures such as the International Chamber of Commerce.
6.3 Any controversy, claim or dispute arising out of or relating to this Agreement, or the breach thereof, that the Parties can not [sic] amicably resolve under the procedures in Article 6.2., shall be settled by arbitration administered by the International Chamber of Commerce under its Commercial Arbitration Rules using an arbitrator that both Parties consent to in writing, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The place of arbitration shall be London, England and the arbitrator shall determine the matters in dispute in accordance with Applicable Law. The parties agree that the award of the arbitrator shall be binding and shall be the sole and exclusive remedy among them regarding claims, counterclaims, issues or accountings presented to the arbitrator.
Id. ¶¶ 6.2, 6.3.
Finally, the Agreement contains an integration clause, specifying that "[t]his Agreement constitutes the entire agreement between the Parties, relating to the subject matter hereof, and supersedes any previous agreements or understandings between them, whether oral or written." Id. ¶ 10.1.
A. Because The Note Is Unambiguous, The Court Will Not Consider Extrinsic Evidence
Europlasma's complaint raises a single claim: breach of promissory note. Solena moves to dismiss Europlasma's complaint on the grounds that the dispute over the Note is subject to the Master Teaming Agreement's mandatory arbitration clause. Europlasma responds that the Note contains no arbitration provision and because it is unambiguous on its face, the court should not consider any extrinsic evidence, such as the Master Teaming Agreement. The court agrees with Europlasma.
In relevant part, the Note states that Solena promises to pay Europlasma the sum of €394,517, plus interest on the unpaid principal at the annual rate of 4% from the date of the Note, September 14, 2007. The Note provides that the unpaid principal and accrued interest shall be payable in full on January 10, 2008. The Note could not be clearer and is unambiguous. See Rhone-Poulenc Basic Chems. Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992) ("[A] contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings.").*fn1
Under well-settled principles of contract law, "[u]nambiguous written agreements should be enforced according to their terms, without using extrinsic evidence 'to interpret the intent of the parties, to vary the terms of the contract or to create an ambiguity.'" MBIA Ins. Corp. v. Royal Indem. Co., 426 F.3d 204, 210 (3rd Cir. 2005) (quoting Eagle Indus. v. DeVilbiss Health Care, 702 A.2d 1228, 1232 (Del. 1997)); Capital Mgmt. Co. v. Brown, 813 A.2d 1094, 1097 (Del. 2002) ("If a contract is unambiguous, extrinsic evidence may not be used to interpret the intent of the parties, to vary the terms of the contract or to create ambiguity."). Solena argues that the Master Teaming Agreement requires arbitration of the dispute over non-payment of the Note. Because the Note is unambiguous, however, the court will not consider evidence de hors the Note, including the Master Teaming Agreement.
B. Were The Court To Consider the Agreement, It Would Find That The Dispute Is Not Subject to Arbitration
Even if the court were to consider the Agreement, it would find the Agreement's arbitration provision does not "arise out of or relate to the Agreement" ¶ 6.2, and therefore does not require arbitration of the dispute regarding non-payment of the Note.*fn2
When a contract contains a broad arbitration clause, as here,*fn3 to determine whether the dispute at issue is subject to arbitration, the court must ask whether the claim at issue would be assertable even if the contract containing the arbitration clause did not exist. Parfi Holding AB, 817 A.2d at 155. Where the purportedly arbitrable claim "would be independently and separately assertable" even if the arbitration clause contract did not exist, the claim is not "in connection with" the contract containing the arbitration clause. Id.
Under this analysis, the court finds that Europlasma's claim based on Solena's non-payment of the Note would exist even in the absence of the Agreement. The purpose of the Agreement was to establish Europlasma as Solena's exclusive torch provider and to guarantee Solena discounting pricing in consideration for that exclusive arrangement. The Agreement creates no rights or obligations necessary for Europlasma's claim for breach of a promissory note. Indeed, no provision in the Agreement creates an obligation upon which Europlasma could base a claim of breach of a promissory note. In contrast, the Note alone provides a basis for Europlasma's claim. Accordingly, even were the court to consider the Agreement, it would conclude that Europlasma's claim is not subject to arbitration.*fn4
C. Europlasma Is Entitled to Summary Judgment, As Well As Attorneys' Fees and Costs
Solena does not dispute that the Note contains no arbitration clause, that the Note obligated Solena to pay Europlasma by January 10, 2008, and that Solena has failed to do so. Because there is no genuine dispute of material fact, the court finds that Europlasma is entitled to summary judgment.
The Note provides that if it is not paid when due, Solena is "obligated to pay all costs of collection, including reasonable attorney fees, whether or not a lawsuit is commenced." Note at 1. Europlasma initially requested attorneys' fees in the amount of $39,461.00 and costs of $737.35, totaling $40,198.35. In response to Solena's objections to this amount as unreasonable, Europlasma enumerated potential reductions of its claim to a total of $27,705.85 in fees and costs.
Supplemental Affidavit of Joanne L. Zimolzak.*fn5 [#18] The court finds that the reduced amount is reasonable, and that Europlasma is therefore entitled to $27,705.85 in attorneys' fees and costs.
For the foregoing reasons, Solena's motion to dismiss, or in the alternative, to stay and to compel arbitration [##6, 7] is DENIED and Europlasma's cross-motion for summary judgment is GRANTED [#9]. An appropriate order accompanies this memorandum opinion.