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TRANS-ORIENT MARINE CORP. v. STAR TRADING & MARINE

February 7, 1992

TRANS-ORIENT MARINE CORP., Plaintiff, against STAR TRADING & MARINE, INC., Defendant.

CONNER


The opinion of the court was delivered by: WILLIAM C. CONNER

CONNER, D.J.:

 This is an action by plaintiff, Trans-Orient Marine corporation ("Trans-Orient"), to recover damages from defendant, Star Trading & Marine, Inc. ("Star"), for breach of an agreement entered into on January 10, 1985. A two-day non-jury trial was held before this Court beginning on January 8, 1990. At the conclusion of plaintiff's case, this Court dismissed the action pursuant to Fed. R. Civ. P. Rule 41(b). On appeal, the Court of Appeals for the Second Circuit reversed and remanded the case for further proceedings. On November 25, 1991, the bench trial was resumed. The Court has carefully reviewed the record herein, argument of counsel for the parties, the testimony of the witnesses, as well as the proposed findings of fact and conclusions of law submitted by each side. This Opinion and Order incorporates the Court's findings of fact and conclusions of law as required by Rule 52(a), Fed. R. Civ. P.

 BACKGROUND

 On October 14, 1983, Trans-Orient, a New York corporation, entered into a contract with the Embassy of the Sudan to provide shipping agency services for the Sudan in connection with United States government relief programs. Plaintiff's Exh. 28. The program involved here, the P.L. 480 Program, was enacted as Title I of the Agricultural Trade Development and Assistance Act of 1954, 7 U.S.C. §§ 1701-1715. P.L. 480 permits developing nations to purchase surplus United States agricultural products and often involves the use of transportation agents representing the recipient country. The 1983 agreement, effective from October 1, 1984 through September 30, 1989, was signed by Alisan Dobra, President of Trans-Orient, and Mamoun O. Medani, Economic Counsellor for the Embassy of the Democratic Republic of the Sudan. Plaintiff's Exh. 28.

 On January 3 and 4, 1985, Medani informed Trans-Orient in two letters that, pursuant to an agreement between the Sudan and the United States, a 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. See Plaintiff's Exhs. 34, 35. Those letters also informed Trans-Orient that CIDCO would appoint its own shipping agent in the future. See id. On January 10, 1985, CIDCO proceeded to appoint Star as its shipping agent. See Plaintiff's Exh. 37.

 On the same day, despite Trans-Orient's claim that it was entitled to continue as the exclusive shipping agent for all P.L. 480 commodities, 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. See Plaintiff's Exh. 38. Together, these two agreements provided that Star would receive two-thirds of the regular 2 1/2 percent commissions on the freight charges and Trans-Orient would receive one-third of such commissions. See Plaintiff's Exhs. 37, 38. Also on January 10, Trans-Orient and Star Trading executed a document which states in its entirety:

 As we are, this afternoon, signing each a separate agreement, with CEREAL INVESTMENT & DEVELOPMENT CO., LTD. (CIDCO) of Sudan, Star Trading & Marine, Inc. as its agent, and Trans-Orient Marine Corp. as its sub-agent, both appointed today, we agree and guarantee to each other that we are in the future [sic] renew our contracts only together and in agreement with each other.

 See Plaintiff's Exh. 39. This is the agreement that Trans-Orient claims was breached by Star.

 This Court found, and the Second Circuit affirmed, that the consideration for the January 10, 1985 agreements was Trans-Orient's acceptance of the new agency relationships in place of the former, without protest or complaint. See Tr. dated January 9, 1990, at 209; Trans-Orient Marine Corp. v. Star Trading & Marine, Inc., 925 F.2d 566, 571-72 (2d Cir. 1991). As noted by the Second Circuit, "Dobra himself testified on cross-examination that Trans-Orient was offered the contract paying one-third of the commissions for which it was to render no services so that he would 'keep [his] mouth shut and do nothing.'" 925 F.2d at 572.

 Notwithstanding Trans-Orient's apparent agreement to accept the new agency relationships without protest or complaint, Trans-Orient almost immediately filed with the U.S. Department of Agriculture ("USDA") a complaint charging various improprieties or illegalities on the part of CIDCO and Star. In addition, in June 1985, Trans-Orient filed suit in the United States District Court for the District of Columbia against Star, alleging, inter alia, that both the sub-agency contract and the joint renewal contract were entered into under duress. See Defs. Exh. K, Direct Testimony of Alisan Dobra in D.C. Action, at 10. Trans-Orient took the position in that litigation that CIDCO, the Government of Sudan, and Star had all conspired to deprive it of its agency agreement with the Sudan and the monetary gain associated therewith. In April of 1986, District Judge Richey found that Trans-Orient had failed to prove any of its claims by a preponderance of the evidence. See Defs. Exh. L.

 During the term of the 1985 agreements, and despite its continuing adversarial position towards Star and CIDCO, Trans-Orient received and cashed checks from Star representing one-third of the commissions on the P.L. 480 shipments to the Sudan. Tr. dated January 9, 1990, at 165-66. Trans-Orient performed no services in exchange for these payments.

 In late 1985, CIDCO made several efforts to renew the sub-agency contract with Trans-Orient, provided Trans-Orient withdraw its suit against Star. See Tr. dated November 25, 1991, at 62-65, 91-93. Mr. Dobra rejected these offers and countered with a proposal of his own. Mr. Dobra required as conditions to renewal that (1) CIDCO agree to pay Trans-Orient one-half of the commissions, (2) CIDCO name Trans-Orient "co-agent," (3) and CIDCO agree to sign some sort of guarantee to renew Trans-Orient's contract in every year subsequent to the expiration of that contract. See Testimony of Saeed Mahammad Sheikh, principal of Star Trading, and Testimony of Salah El-Din El-Zubeir, Managing Director of CIDCO, Tr. dated November 25, 1991 at 63, 91. In both February and May of 1986, CIDCO again approached Trans-Orient and offered it a sub-agency contract on the same terms and conditions agreed to in the January 10, 1985 contract. See Tr. dated November 25, 1991, at 93-95. Mr. Dobra again refused CIDCO's advances, insisting on CIDCO's acceptance of the three conditions which had been previously proposed. See id.

 In February 1986, Star entered into a short-term contract with CIDCO to process part of the P.L. 480 shipment without the participation of Trans-Orient as sub-agent. Beginning in May 1986, Star entered into long-term shipping contract with CIDCO which continued through September 1987, again without the participation of Trans-Orient. See Tr. dated November 25, 1991, at 95-96. Plaintiff ...


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