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EAST EUROPE DOMESTIC INTL. SALES CORP. v. TERRA

March 13, 1979

EAST EUROPE DOMESTIC INTERNATIONAL SALES CORP., Plaintiff,
v.
TERRA, Defendant



The opinion of the court was delivered by: COOPER

In this action brought by a New York corporation against a Romanian trading company, jurisdiction is alleged under the Foreign Sovereign Immunities Act of 1976, Pub.L. No. 94-583, 90 Stat. 2891 (1976), codified as 28 U.S.C. §§ 1330, 1601-1611 and amending 28 U.S.C. §§ 1391, 1441. Plaintiff seeks to recover compensatory and punitive damages allegedly caused by defendant's interference with a contract between plaintiff and a third-party and by defendant's alleged wrongful interference with plaintiff's trade and business.

Plaintiff has moved for partial summary judgment on the issue of liability, an expedited trial if summary judgment is denied and for permission to withdraw its demand for a jury trial since juries are forbidden under section 1330(a). Defendant, which initially appeared Pro se, asked leave to file an amended answer and cross-moved for summary judgment on the grounds that this Court lacks jurisdiction in personam and, in the event that this Court has jurisdiction, that this dispute should be submitted to arbitration.

Plaintiff's motion to withdraw its jury demand heretofore has been granted. Mem.Dec. March 28, 1978. On June 20, 1978, we directed the parties to "delve further into the threshold issue of personal jurisdiction." We now find that this Court lacks personal jurisdiction over the defendant and order that plaintiff's complaint be dismissed.

 Facts Relating to the Transaction at Issue

 In describing the facts, the Court has endeavored to resolve all ambiguities in favor of plaintiff, the party opposing the motion to dismiss. Pneuma-Flo Systems, Inc. v. Universal Machinery Corp., 454 F. Supp. 858, 862 (S.D.N.Y.1978).

 Plaintiff East Europe Domestic International Sales Corp. ("East Europe") is a "domestic international sales corporation" pursuant to the special provisions of section 992 et seq. of the Internal Revenue Code. It is a New York corporation and maintains its corporate headquarters and sole office in New York City.

 On or about March 1, 1977, plaintiff entered into a contract with Vitrocim, a Romanian company, to purchase 20,000 metric tons ("mtons") of Portland cement at a price of $ 25.00/mton. The contract was negotiated by plaintiff's President, Robert Ross, while on a trip to Bucharest, Romania during the winter of 1977. As the date for delivery under the contract preceded the date of its execution, various changes in the contract were anticipated and needed. Plaintiff negotiated these changes with Vitrocim through the Office of the Economic Counselor of the Embassy of Romania in New York City and by telex communication. Vitrocim requested that the contract should be amended to include, Inter alia, the requirement that a letter of credit "has to be received by Vitrocim not later than April 10, 1977," (Easter Sunday). Affidavit of Robert Ross in Support of Plaintiff's Motion for Partial Summary Judgment, dated December 5, 1977, Exh. 3 ("Ross affidavit"). By telex of March 17th, East Europe accepted this amendment. Tlx Nr. 15466, Id., Exh. 4. *fn1"

 Throughout March and early April, 1977, plaintiff asserts, the world price of cement was rising. By telex dated March 24, 1977, plaintiff had its first contact with Terra. The Telex reads:

 
Kind Att Mr. Robert Ross
 
We have been informed that you bought 20.000 Mtons Romanian cement . . . from Messrs. Vitrocim, delivery in April 1977. We are ready to take over this quantity from you in same conditions as yours with Messrs Vitrocim at price of US Doll 26.10/Mton.
 
Pls act very fast.
 
Regards Terra 2C

 Tlx Nr. 2061/2C, Ross affidavit, Exh. 9.

 Plaintiff replied by return telex expressing its willingness to enter into a deal with Terra, at a price of $ 27.00/mton, provided that Terra established an irrevocable, confirmed and transferable letter of credit in favor of Vitrocim by March 28, 1977, *fn2" the letter of credit to be confirmed by Vitrocim. Terra was required to pay plaintiff the $ 2.00/mton difference in price from the price under the Vitrocim contract by cabling $ 44,000.00 to a John Foster at Chase Manhattan Bank in New York City. Tlx Nr. 15536, Id., Exh. 10.

 After negotiating by telex over the next several days, plaintiff, Vitrocim and Terra agreed on a price of $ 26.25/mton, with 40 cents of plaintiff's $ 1.25 profit going to Vitrocim as commission. The three-way deal, however, ultimately fell through. Although Terra represented, on at least two separate occasions, that it had established a letter of credit in favor of Vitrocim, Tlx Nrs. 2195/2C, 2203/2C, Id., Exhs. 19, 21, and plaintiff repeatedly requested confirmation of this fact from Vitrocim, Tlx Nrs. 15615, 15665, Id., Exhs. 22, 29, Vitrocim failed to answer until April 7th. *fn3"

 On April 7th, Vitrocim responded to an East Europe telex sent on April 5th: ". . . we did not receive the Elcee (letter of credit) and we think we would not receive it as far as matters were still not clarified." Tlx FS 4941/HM, Id., Exh. 33. Plaintiff unsuccessfully protested to Vitrocim by return telex that it had waited since March 31st for confirmation of the opening of a letter of credit and asked for additional time to open one. Tlx Nr. 15684, Id., Exh. 34. Plaintiff also telexed Terra, stating that it would hold Terra responsible for all damages "occurred by your failure to open your letter of credit as you had advised us you had done." Tlx Nr. 15685, Id., Exh. 35.

 On April 8th (Good Friday) Terra responded to plaintiff:

 
. . . . Messrs Vitrocim Bucharest advised us that you requested from them 40,000 mtons cement instead of 20.000 mtons. Due this is not possible and you already engaged 20.000 mtons with another partner, and in order to avoid troubles with your partner to whom you already sold cement, we renounce to this deal and on this line we ...

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