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MECOS v. GEORAL INTERNATIONAL

August 25, 2005.

MECOS, S.r.L., Plaintiff,
v.
GEORAL INTERNATIONAL, LTD. dba GEORAL INTERNATIONAL aka GEORAL INTERNATIONAL OF CALIFORNIA, GEORAL INTERNATION OF NEW YORK, INC. dba GEORAL INTERNATIONAL aka GEORAL INTERNATIONAL OF CALIFORNIA, GEORAL INTERNATIONAL OF CALIFORNIA dba GEORAL INTERNATIONAL, Defendant.



The opinion of the court was delivered by: FREDERIC BLOCK, District Judge

MEMORANDUM & ORDER

Plaintiff Mecos, S.r.L. ("Mecos") brought a breach-of-contract action against defendants Georal International, Ltd., Georal International of New York, Inc. and Georal International of California (collectively, "defendants"). Defendants move to compel arbitration. For the following reasons, the Court grants the motion. BACKGROUND

  This dispute arose after the defendants failed to tender payment to Mecos for forty specially-ordered security portals. The following facts are not in dispute.

  A. Distributorship Agreement

  In December 1995, "Mecos S.p.A., of Bologna, Italy" and "Georal International of Whitestone, New York, U.S.A." entered into a Distributorship Agreement ("Agreement").*fn1 See Agreement at 1, att'd as Ex. A to Defs.' Notice of Mot. to Compel Arbitration ("Defs.' Notice").

  1. Parties to Agreement

  Mecos argues that none of the defendants have standing to enforce the Agreement because they were not signatories to the Agreement.

  The Agreement stated that it was "between Mecos S.p.A., of Bologna, Italy (`Mecos') and Georal International of Whitestone, New York, U.S.A. (`Georal')." See Agreement at 1. With two exceptions, the Agreement, thereafter, referred to the parties as "Mecos" and "Georal": (1) Article XII provided that "notices . . . shall be sent . . . to: Mecos S.p.A. . . . [and] Georal International"; and (2) the Agreement was executed by Piero Zambuto ("Zambuto"), who was listed as the president of "Mecos S.p.A." and Alan J. Risi ("Risi"), who was listed as the president of "Georal International." See id. at 6-7.

  2. Terms of the Agreement

  The Agreement appointed Georal as a distributor of Mecos's products in the United States and Canada and set forth the terms of sales for those products. See id., arts. I, VIII. The Agreement contained an arbitration provision, which provided:
Should any problems, disagreements or disputes arise between Mecos and Georal in connection with this Agreement, the parties shall attempt to resolve all such matters on a friendly and business-like basis. If they should be unsuccessful they will each appoint a representative, familiar with their business to act as arbitrators. The two representatives will review the circumstances of the dispute and apply business principles to arrive at a resolution. The decision of the representatives will be binding.
Id., art. XIII.
  The Agreement set an initial term of three years, which expired well before the instant dispute occurred; however, it was renewable for additional two-year terms "upon agreement on the `sales goals' for the new term, and unless either party decides not to renew, pursuant to the terms of ARTICLE IV[,]" which provided:
The sole grounds for not renewing this Agreement shall be the failure of performance of the other part. The innocent party must give the non-performing party 90-days written notice of its failure to perform and a demand for proper performance. If the failure is not cured within the 90-day period, the innocent party may terminate the Agreement.
See id., arts. III, IV. Although the parties never engaged in further negotiations of sales goals, see Aff. of Zambuto ¶ 9, the Agreement was never formally terminated by sending written notice of a party's non-performance. See Aff. of Pryor (Oct. 17, 2004) ¶ 16, att'd to Defs.' Notice.

  B. Georal Entities

  Risi is the sole shareholder and president of each of the defendants. See Aff. of Risi (Oct. 17, 2004) ¶ 1, attached to Defs.' Notice. Georal International, Ltd. was formed on October 24, 1995 for the express purpose of doing business with Mecos and engages in the sale of security portals. See Aff. of Pryor ¶ 14.

  Georal International of New York, Inc. and Georal International California were formed in November 1999 and September 1999 respectively, subsequent to the ...


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