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Tai Corporation v. FCI USA

April 26, 2000


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

Not for Publication



The matter before the court in this action based on diversity is defendant's motion for summary judgment seeking an order to compel arbitration and to dismiss these proceedings. The defendant, FCI USA, Incorporated, seeks relief based on an arbitration clause of a service agreement that it entered into with the plaintiff, TAI Corporation, and pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq. (the "Act" or "FAA"). The plaintiff opposes the motion, alleging that its fraud claim falls outside of the scope of the arbitration clause. The plaintiff further alleges that the defendant waived its right to demand arbitration, first by filing pleadings in state court, and second, by failing to demand arbitration within a "reasonable time" as required by the agreement. For the reasons discussed below, the court grants the defendant's motion to compel arbitration and dismisses these proceedings.


The plaintiff, TAI Corporation ("TAI"), is a New Jersey corporation that offers promotion and sales services. *fn1 The defendant, FCI USA, Incorporated ("FCI"), is a New York corporation which manufactures consumer and industrial electronic equipment and components. The defendant, then known as Bundy Corporation, entered into a "Sales Rep Agreement" ("the Agreement") with the plaintiff, made effective on February 1, 1993, which appoints the plaintiff as the defendant's "Exclusive Sales Representative" for various electronic components in selected "territories" in the Northeast, including certain counties of New Jersey and Pennsylvania and the entire State of Delaware. (See Agreement at 1, ¶ 1(a), Schedules A & B Attached). The Agreement further contains the following arbitration clause:


All claims and disputes relating to this Agreement shall be subject to arbitration in accordance with the Rules of the American Arbitration Association. Written notice of demand for arbitration shall be filed with the other party and the Association within a reasonable time after the dispute has arisen. Such arbitration shall be held at the Association's offices in New York, New York. Agreement at 5-6, ¶ 17.

Apparently, the relationship between the parties ended sometime in September of 1998, when the defendant terminated the plaintiff's services. (See Pl.'s Am. Compl. at 2, ¶ 7.)

The plaintiff filed an Amended Complaint with the Superior Court of New Jersey, Burlington County, in June of 1999, alleging that the defendant terminated the plaintiff's exclusive sales representative status in violation of the Agreement. (Id. at 2-3). The plaintiff sought compensatory and punitive damages under various theories of recovery including breach of contract, fraud, tortious interference with contractual relationships, and negligence. (Id. at 3-10.) On September 16, 1999, the defendant moved to dismiss the Amended Complaint for failure to state a claim upon which relief could be granted. The Superior Court of Burlington County partially granted the defendant's motion, dismissing plaintiff's claims for negligence and punitive damages.

The defendant then filed an Answer and Counterclaim on November 1, 1999. In it, the defendant stated at paragraph two (2) under its Affirmative Defenses that "[c]laims sued upon are subject to determination by arbitration pursuant to the contractual agreement of the parties." (Def.'s Answer & Countercl. at 6, ¶ 2.) The defendant further stated in the introductory paragraph under its Counterclaims that it was pursuing its counterclaims "without waiving its arbitration rights." (Id. at 7.) On November 11, 1999, the defendant moved to compel arbitration of the remaining claims in the Superior Court of Burlington County.

On November 24, 1999, the defendant removed the case to this court. On December 9, 1999, the defendant filed the present motion, and the plaintiff filed a Brief in Opposition on January 5, 2000.


The defendant now moves for summary judgment, requesting that this court dismiss these proceedings and enter an order compelling arbitration as provided by the arbitration clause of the Agreement and under section two of the FAA. *fn2 (See Def.'s Br. & Reply Br.) In opposition, the plaintiff argues that the arbitration clause does not apply to its fraud in the inducement claim. (Pl.'s Br. in Opp'n at 13-16.) The plaintiff further argues that the defendant has waived its right to arbitrate all of its claims when it filed pleadings in state court, and ...

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