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ILAN-GAT ENGRS., LTD. v. SHELTER SYS. CORP.

December 22, 1994

ILAN-GAT ENGINEERS, LTD., Plaintiff,
v.
SHELTER SYSTEMS CORP., Defendant.



The opinion of the court was delivered by: CLARKSON S. FISHER

 FISHER, District Judge

 This case raises questions of a contractual nature, including the construction of a choice-of-forum clause in a contract between a United States firm and an Israeli enterprise. Plaintiff, Ilan-Gat Engineers, LTD., moves this court for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure in connection with its contractual dispute with defendant, Shelter Systems Corp., Inc. For the reasons expressed below, the motion is denied.

 By contract executed December 13, 1990 (the agreement), Ilan-Gat Engineers, LTD. (nan-Gat), an Israeli housing contractor, agreed to purchase approximately $ 2 million in prefabricated housing units from Shelter Systems Corp. (Shelter), a New Jersey company that manufactures and sells such units. Shelter shipped the housing units in early 1991, after which Ilan-Gat assembled them pursuant to a contract with the Israeli Ministry of Housing, such contract known as Tender 315. Shelter alleges that in default of its express obligation under the agreement, Ilan-Gat was six months late in paying for these housing units. By letter dated May 3, 1991, Patrick F. Carr, chief financial officer for Shelter, acknowledged payment in full in connection with Tender 315, but did not disclose when it had received payment. Ilan-Gat maintains that its letter of credit for payment in full was timely received by Shelter.

 Apparently, the parties contemplated that Shelter would supply Ilan-Gat with additional housing units in connection with future tenders by the government of Israel. Accordingly, the agreement stipulated that Ilan-Gat would be Shelter's exclusive agent in Israel for the sale of prefabricated housing units. Paragraph 13 of the agreement, captioned "Exclusivity," states:

 
Shelter hereby appoints Ilan-Gat as its sole and exclusive representative in the State of Israel for the sale, distribution, erection and assembly of prefabricated houses in the State of Israel similar to the Houses for a period of one year after the date hereof (the "Exclusivity Period"). The parties acknowledge that Ilan-Gat shall receive a payment equal to 6% of the sales price F.O.B. of each house sold during the exclusive period promptly after payment of such sales price to Shelter and such payment has already been taken into account of the calculation of the PPH and shall be taken into account in the calculation of the PPH with respect to any additional Order.
 
Notwithstanding the above, in the Exclusive Period, Shelter shall be entitled to sell the House Components to other Israeli builders and [in] such event, Ilan-Gat shall be entitled to a payment equal to 3% of the sales price F.O.B. of each house sold during the Exclusive Period. If Ilan-Gat is in default of any payment owing and due to Shelter pursuant to this Contract, for more than 14 days, this exclusivity clause shall be null and void.

 In January 1991, representatives of Shelter met with representatives of Ephraim Fleiner Construction and Investment Co. (Fleiner) to discuss Fleiner's purchase of prefabricated housing from Shelter for use in an upcoming project by the Israeli government designated as Tender 321.

 Ilan-Gat received a letter dated February 17, 1991, from a Nelson Joyner (Joyner). The letter was written on letterhead bearing the name "Shelter Systems." The letter states that Ilan-Gat was entitled to a 6% commission for the housing sold to Fleiner.

 Shelter, for its part, denies that Joyner had authority to make such a representation. Shelter also claims that even if the letter was binding, any commission was contingent on Ilan-Gat's obtaining all necessary regulatory approvals required by the Israeli government in connection with Tender 321. Shelter maintains that because Ilan-Gat breached this agreement, it is not entitled to the 6% commission even if Joyner had authority to modify the agreement.

 In September 1991, Shelter and Fleiner executed a contract for Fleiner's purchase of approximately 200 housing units for a total price of $ 1,653,000. In December 1991, Ilan-Gat demanded 6% of the total purchase price of Shelter's sale to Fleiner, which demand Shelter refused. Ilan-Gat then sued Shelter in Israel. In light of the forum selection clause contained in the agreement, the Israeli tribunal dismissed the case, and Ilan-Gat refiled its claim in this court.

 That forum selection clause provides:

 
Any claim brought by Shelter, against Ilan-Gat, shall be tried exclusively in the state of Israel before an Israeli court or arbitrator.
 
Any claim brought by Ilan-Gat against Shelter shall be tried exclusively in the United States, before ...

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