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TRANS-ORIENT v. STAR TRADING & MARINE

May 21, 1990

TRANS-ORIENT MARINE CORP., PLAINTIFF,
v.
STAR TRADING & MARINE, INC. AND THE REPUBLIC OF THE SUDAN, DEFENDANTS.



The opinion of the court was delivered by: William C. Conner, District Judge:

OPINION AND ORDER

Defendant Republic of the Sudan moves this Court to dismiss the complaint for failure to state a claim or for summary judgment. It asserts that (1) plaintiff's claim is barred by the Foreign Sovereign Immunities Act; (2) plaintiff's claim is barred by the Act of State doctrine; and (3) plaintiff's alleged five-year exclusive agency contract was extinguished by the execution of subsequent contracts with third parties.*fn1

FACTS

Plaintiff's cause of action against the Sudan arises from an alleged breach of a five-year exclusive agency contract to provide shipping agency services for United States governmental relief programs, specifically, the United States P.L. 480 program.*fn2 The October 14, 1983 agreement, effective from October 1, 1984 through September 30, 1989, provided for payment of two-thirds of the commissions to plaintiff. The alleged breach occurred on January 3, and January 4, 1985 when the Sudan advised Trans-Orient that, pursuant to an agreement between the Sudan and the United States, the Sudanese private company Cereals Investment and Development Co. Ltd. ("CIDCO") had been appointed to assume Trans-Orient's role in dealing with future shipments of wheat and wheat-flour cargoes under the P.L. 480 program. On January 10, 1985, Trans-Orient entered into a one-year sub-agency agreement with CIDCO concerning shipment of the identical wheat and wheat-flour cargoes under the program. Although Trans-Orient performed no services under this agreement, it accepted one-third of the commissions. After the one-year CIDCO contract expired, Trans-Orient refused to renew and instead, brought this action against the Sudan for alleged breach of the five-year agency contract which provided for payment to Trans-Orient of two-thirds of the commissions payable to CIDCO.

DISCUSSION

The Standard for Summary Judgment

On a motion for summary judgment the burden is on the moving party to demonstrate that "there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c); Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2nd Cir. 1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987); see Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment must be denied if the movant does not sustain this burden, even if the non-moving party has not offered any opposition. Adickes v. S.H. Kress & Co., 398 U.S. 144, 161, 90 S.Ct. 1598, 1610, 26 L.Ed.2d 142 (1970). The party opposing summary judgment may not rest on mere allegations or denials, but must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). The task of the trial court in deciding a motion for summary judgment is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, resolving ambiguities and drawing reasonable inferences against the moving party. Knight, 804 F.2d at 11. The inquiry under a motion for summary judgment is thus the same as that under a motion for a directed verdict: "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2511-12, 91 L.Ed.2d 202 (1986). Although summary judgment is ordinarily inappropriate where an individual's intent is implicated, the Court believes it proper in this case.

Subject Matter Jurisdiction

The Sudan argues for the second time that this Court lacks subject matter jurisdiction. By opinion and order dated July 29, 1987, this Court found jurisdiction because plaintiff's claim fell within the commercial activities exception of the Foreign Sovereign Immunities Act, 28 U.S.C. § 1603, 1605(a)(2). Trans-Orient v. Star Trading & Marine, Inc., Slip Op. at 9, 1987 WL 15129 (S.D.N.Y. July 29, 1987). The Court disagrees with defendant's unsupported assertion that plaintiff's "case as now amended is much different than it was when it was first filed," and reiterates its ruling that the Sudan's act of hiring plaintiff as an agent in the United States for the implementation of the P.L. 480 program constitutes a "commercial activity." Because defendant's alleged breach arises from that commercial activity, this Court has jurisdiction over the Republic of the Sudan in this action.

Novation

The Sudan next asserts that Trans-Orient's January 10, 1985 agreements with CIDCO and Star Trading constituted a novation, discharging the Sudan of its obligations under the five-year exclusive agency contract with Trans-Orient. A novation is simply the substitution of a new obligation for an old one, with the intent of extinguishing the old one, often involving the substitution of a third party for one of the original parties to the contract. The elements of a novation are:

(1) a previously valid obligation;

(2) an agreement of all parties to:

(a) extinguishment of the old ...


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