Fometal S.R.L. v. Admiral Metals Servicenter Company Incorporated

Background

Fometal S.R.L., an Italian limited liability company, alleged that defendants schemed to obtain aluminum steel without paying for it. Fometal alleged claims for breach of contract under the United Nations Convention on Contracts for the International Sale of Goods and common law, fraud, conversion, unjust enrichment, tortious interference, civil conspiracy, account stated, and civil violations of the Racketeer Influenced and Corrupt Organizations Act.

Fometal alleged that Keili Trading acted as a broker for Admiral and Metalwest, and that Keili Trading entered purchase agreements with Fometal on behalf of those customers. Fometal shipped the goods, including goods intended for Admiral that were valued at $151,171.79, but alleged that it received no payment. Admiral acknowledged that it sought to purchase steel from Keili Trading but argued that it had no contractual relationship with Fometal. Reliance acquired Admiral approximately three years after the alleged breach.

Keili Trading and Mendel Levitin did not appear. The court had previously entered a default judgment against them on Fometal’s breach-of-contract claim and had denied default judgment on Fometal’s other claims. The court stated that it was not deciding the merits of the amended claims against those defendants because Fometal had not sought a new default judgment.

Personal Jurisdiction Over Reliance and Metalwest

Reliance and Metalwest moved under Federal Rule of Civil Procedure 12(b)(2), which permits dismissal when the court lacks authority over the defendant. The court granted both motions.

As to Reliance, the court rejected Fometal’s arguments that Reliance’s acquisition of Admiral, its listing on the New York Stock Exchange, an agency relationship with Admiral, or successor liability created personal jurisdiction in New York. The court concluded that Fometal had not made the required initial showing that Reliance was subject to personal jurisdiction there. Because the court lacked jurisdiction, it did not consider Reliance’s separate motion under Rule 12(b)(6), which argues that a complaint does not adequately state a claim.

As to Metalwest, the court concluded that Fometal had not connected Metalwest’s transactions to New York. The alleged transactions involved an Italian company, a Washington broker, and goods shipped from Italy to California. The court therefore granted Metalwest’s motion under Rule 12(b)(2) and did not reach Metalwest’s Rule 12(b)(6) arguments.

Claims Against Admiral

Admiral and Reliance moved under Rule 12(b)(6). The court considered the claims against Admiral because Admiral acknowledged the court’s personal jurisdiction over it.

The court denied Admiral’s motion as to Fometal’s two breach-of-contract claims. Although Admiral was not alleged to have signed the agreements, Fometal plausibly alleged that Keili Trading acted as Admiral’s agent. The court relied on allegations that Admiral ordered steel through Keili Trading, Keili Trading held itself out as Admiral’s broker, Admiral was listed as the consignee and intended destination, and Admiral received and accepted the goods. The court emphasized that discovery could later produce evidence contradicting an agency relationship, but found that Fometal’s allegations were sufficient at the pleading stage.

The court granted Admiral’s motion as to Fometal’s fraud, conversion, unjust-enrichment, and account-stated claims because they arose from the same facts and sought the same basic damages as the contract claims. The court also granted the motion as to civil conspiracy because Fometal had not pleaded a viable underlying tort and had offered only vague and conclusory allegations about a conspiracy. Finally, the court granted the motion as to the civil RICO claims because Fometal had not adequately pleaded the existence of a RICO enterprise or the defendants’ respective roles in one.

Disposition

The court’s conclusion states that Reliance’s and Metalwest’s motions to dismiss under Rule 12(b)(2) were granted. Admiral’s motion under Rule 12(b)(6) was denied as to Fometal’s breach-of-contract claims and granted as to all remaining claims. The court directed Fometal and Admiral to meet and confer and submit a proposed case-management plan.