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LABEACH v. BEATRICE FOODS CO.

November 8, 1978

Lloyd LaBEACH, Plaintiff,
v.
BEATRICE FOODS CO. and Godfrey K. J. Amachree, Defendants



The opinion of the court was delivered by: WERKER

This diversity action was brought by Lloyd LaBeach against his former employer, Beatrice Foods Co. ("Beatrice"), and Godfrey K. J. Amachree, a Nigerian attorney. The complaint alleges that the defendants wrongfully coerced LaBeach into giving up his controlling interest in Express Diary Ltd. ("Express"), a Nigerian company. This matter is presently before the Court on Beatrice's motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.

1.

The undisputed facts are as follows. Prior to September 1976, LaBeach was the principal owner and managing director of Express. As of September 6, 1976, LaBeach owned 60 per cent of the Express stock and as recently as May 1978 LaBeach was the owner of at least 79 per cent. *fn1"

 In September of 1976, LaBeach entered into an employment contract with Beatrice whereby he was appointed managing director of Nigerian operations. The contract, which took the form of a four-page letter agreement, contained a clause wherein LaBeach warranted that he had divested himself of all of his interests in Express. *fn2" The contract also provided that it was to be "construed and governed by the laws of the State of Illinois, regardless of the fact that the performance of (LaBeach's) duties (was to) take place principally in Nigeria." Beatrice exh. D, at 3-4, affid. of James L. Dutt, sworn to Apr. 5, 1978. The contract was terminable at will by either party, and was signed by LaBeach on September 7, 1976.

 In March 1977, LaBeach's employment with Beatrice was terminated.

 On May 7, 1977, LaBeach met in Geneva with James L. Dutt, the president of Beatrice, to settle various claims that LaBeach had against Beatrice. At this meeting, LaBeach presented claims for unpaid salary and commissions due and owing and for reimbursement for various expenses. *fn3" After making certain adjustments, LaBeach and Dutt agreed on a sum of $ 122,210 to cover all of these claims. A check in the sum of $ 121,010 was thereupon tendered to LaBeach, $ 1,200 having been deducted from the agreed sum to repay an advance that had been made to LaBeach by one Anthony Luiso. *fn4"

 Upon receiving the check, LaBeach executed a release in Beatrice's favor. On the second page of the release, LaBeach acknowledged in his own handwriting that he had received the check for $ 121,010 "in full settlement."

 On March 23, 1978, LaBeach commenced the instant action seeking $ 1,000,000 in damages.

 2.

 Beatrice bases its summary judgment motion on LaBeach's release, which it contends extends to and bars LaBeach's claims asserted herein. LaBeach opposes summary judgment on three grounds: (1) the validity of the release is to be resolved under Nigerian law and expert testimony is therefore required, (2) an issue of fact exists as to whether the release was executed as a result of duress, and (3) an issue of fact exists as to the scope of the release, which LaBeach contends turns on the intent of the parties.

 3.

 A. Choice of Law

 A federal court presented with a conflict of laws issue in a diversity case must resolve that issue by applying the conflicts law of the state in which it sits. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941). Hence, New York law applies to the conflicts question raised herein.

 The relevant contacts are spread out over three countries and three states. Beatrice is a Delaware corporation with its principal place of business in Illinois, while LaBeach is a resident of New York. The contract in question was executed in London, Dep. of Lloyd LaBeach, May 15, 1978, at 13, and provides that it is to be construed and governed by Illinois law. LaBeach's duties under the contract were to be performed principally in Nigeria.

 LaBeach argues that Nigerian law applies to the issues raised herein on the grounds that Nigeria is the place with the most significant contacts. Beatrice, on the other hand, argues that the choice of law provision contained in the contract controls, and that Illinois law should therefore govern.

 A number of New York cases have held that where the parties to a contract have included a choice of law provision, effect is to be given to their choice as long as there is a reasonable relation between the transaction and the jurisdiction whose law was chosen. E. g., A. S. Rampell, Inc. v. Hyster Co., 3 N.Y.2d 369, 165 N.Y.S.2d 475, 144 N.E.2d 371 (1957); Levey v. Saphier, 83 Misc.2d 146, 370 N.Y.S.2d 808 (Spec. T. Nassau Co.1975); Sears, Roebuck & Co. v. Enco Associates, 83 Misc.2d 552, 370 N.Y.S.2d 338 (Sup.Ct. Westchester Co.1975), Aff'd, 54 A.D.2d 13, 385 N.Y.S.2d 613 (1st Dep't 1976), Modified, 43 N.Y.2d 389, 401 N.Y.S.2d 767, 372 N.E.2d 555 (1977). The New York Court of Appeals has suggested, however, that this doctrine need not be strictly followed. Instead, it has held that while the parties' choice of law is to be given considerable weight, the law of the jurisdiction with the "most significant contacts" is to be applied. Haag v. Barnes, 9 N.Y.2d 554, 216 N.Y.S.2d 65, 175 N.E.2d 441 (1961). See also Southern International Sales Co. v. Potter & Brumfield Division of AMF Inc., 410 F. Supp. 1339, 1341 (S.D.N.Y.1976); Joy v. Heidrick & Struggles, Inc., 93 Misc.2d 818, 403 N.Y.S.2d 613 (Civ.Ct.N.Y.Co.1977).

 According the parties' choice of law the considerable weight it warrants, See U.C.C. § 1-105; Restatement (Second) of Conflict of Laws § 187 (1971), I find that Illinois is the jurisdiction with the most significant contacts in the instant case. The only Nigerian contact is the place of performance of the contract; the parties to the contract are not Nigerian residents, nor was the contract executed in Nigeria. On the other hand, Beatrice has its principal place of business in Illinois, and both parties clearly intended and expected ...


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