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Corestar International Pte. Ltd v. LPB Communications

May 10, 2007

CORESTAR INTERNATIONAL PTE. LTD, PLAINTIFF/COUNTER DEFENDANT,
v.
LPB COMMUNICATIONS, INC., DOMINICK SPADEA AND THOMAS SPADEA, DEFENDANTS/COUNTER CLAIMANT.



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

OPINION

This matter has come before the Court on Defendants' motion for summary judgment and Plaintiff's cross-motion for summary judgment. For the reasons expressed below, the parties' motions will be granted in part and denied in part.

BACKGROUND

This case involves a dispute over Plaintiff Corestar International's purchase of shortwave radio transmitters and amplifier modules from Defendant LPB Communications ("LPB"). In the beginning of February 2005, Corestar International ("Corestar"), a company based in Singapore, inquired about purchasing seven 10kw shortwave transmitters from LPB, a company based in Camden, New Jersey. Through email communications, the parties discussed the purchase price and terms of delivery. During their negotiations, Corestar inquired whether LPB could "stick to the old price," meaning whether LPB could price its transmitters based on the 2004 price list rather than the new 2005 price list, and whether LPB could "deliver the transmitters in a reasonable time frame." (Pl.'s Ex. A at P001.) LPB replied that it would have to "look at the numbers" about the pricing, and stated that regarding the delivery, the earliest that the transmitters would be ready was the middle of April or early May, with a delivery capacity of two transmitters a month. (Id.)

On February 12, 2005, LPB sent Corestar an email with the following terms: "Selling cost to you = $48,996 each (based on a 7 transmitter order) 75% pre-pay[,] 25% Balance of each transmitter at shipping[.] Delivery schedule 2 transmitters per month. Shipping cost - your side." (Id. at P008.) LPB also stated that a formal quote would be forthcoming.

On February 16, 2005, LPB emailed Corestar a formal quotation. The quotation was dated February 15, 2005 and contained the following relevant terms:

Product: 10kW short-wave transmitter

Price: $46,995 each, Quantity 7 = $325,465

VALIDITY OF QUOTE: 30 Days, subject to confirmation there after. Quote # 103591

Delivery Schedule: Two transmitters per month starting June 30, 2005 (earlier permitted)

PAYMENT TERMS: Pre-payment 75% of full order value Balance to be pro-rated against shipments

(Pl.'s Ex. B.) The quotation also contained two fine-print provisions:

Prices are for transmitters as listed below, F.O.B. Camden, New Jersey, USA in U.S. Dollars. Acceptance of the Conditions Governing Quotations is automatic on issuance of a Purchase Order or Contract for any equipment offered by LPB Communications, Inc.

CONDITIONS: The price and terms on the quotation are not subject to verbal changes or other agreements unless approved in writing by the Seller. All quotations and agreements are contingent upon availability of materials and all other causes beyond our control. Prices quoted are based on this quote in its entirety. Terms inconsistent with those stated herein which may appear on the Purchaser's formal order will not be binding on the Seller.

(Id.)

On February 17, 2005, Corestar emailed LPB its purchase order. The purchase order included a reference to quotation number 103591, and contained the following relevant terms:

LPB 10KW SOLID STATE SW TRANSMITTER 7 set 46,995.00 328,965.00 . . .*fn1

EACH TX TO BE LABELED CLEARLY WITH FREQ & STATION NAME ON CRATE SPECIAL WOODEN CRATES PACKING 2 TX PER MONTH FROM JUNE OR EARLIER LAST SHIPMENT BY O1 AUGUST

Remarks: Voltage is 220V unless stated otherwise above 75% DEPOSIT, BALANCE PRORATED

(Pl.'s Ex. B.) The purchase order also contained a fine-print provision:

Goods will not be accepted unless our Purchase Order Reference is quoted. Goods supplied must be in accordance with quality and quantity specified. We reserve the right to cancel this order if materials are not delivered within the time specified and according to specification.

(Id.)

Corestar's email accompanying the purchase order also stated that it wanted to further clarify the payment and delivery terms: "We will pay a 75% deposit (US$244098.75) by Monday[.] The balance of US$81366.25 is to be paid when the 6th tx is ready. Trust that this is okay. Kindly ensure that the transmitters are labelled (sic) clearly with frequency and station name. We also hope to receive all the transmitters by 1 August and would like to ship the last 3 transmitters together. Thanks and look forward to your reply." (Pl.'s Ex. A at P0010.)

That same day, LPB sent an email acknowledging receipt of Corestar's email and purchase order. It stated that it would let LPB know when it received the money transfer, and it would "get the ball rolling immediately on procurement activities for this project." (Id.) The email also agreed to Corestar's statement of further clarification on the payment and delivery terms--"Ok to points below." (Id.) It ended the email with, "Thank you [a]gain for this excellent order and for your prompt actions." (Id.)

On March 31, 2005, Corestar emailed LPB, asking whether LPB could move up delivery of the first two transmitters and include three transmitters in the second shipment because Corestar's customer needed his transmitters "urgently." (Id. at P0015.) Corestar also asked for a quotation on 28 700w short wave amplifier modules. (Id.) On April 2, 2005, LPB replied, providing a quote for the amplifier modules. (Id.) LPB did not address Corestar's request for expedited shipment of the transmitters.

On April 5, 2005, Corestar sent another email to LPB asking about the delivery schedule for the transmitters. (Id. at P0017.) Later that same day, LPB replied, stating that it was "still confident for June shipments and will do anything . . . to expedite." (Id. at P0020.) In an April 8, 2005 email, LPB stated, "regarding accelerating the schedule[,] while we will do everything possible it will be difficult to be sure to move the schedule up."

(Id. at P0021.)

On April 12, 2005, Corestar emailed LPB its purchase order for twenty-eight amplifiers totaling $28,644.00. On its purchase order, which used the same form as the purchase order for the transmitters, Corestar stated that the amplifiers were to be shipped with the transmitters. (Pl.'s Ex. D.) LPB acknowledged the order in an email, stating, "All is 'right' with it. Yes, we will make sure to deliver[] amps with transmitter shipments." (Pl.'s Ex. A at P0027.) Payment in full was made the next day via wire transfer. (Pl.'s Ex. D.)

A couple weeks later on May 3, 2005, Corestar again asked LPB whether LPB would be able to "pull off a miracle" and have an early shipment of the first transmitter. LPB replied, "No miracle yet. I am trying however." (Pl.'s Ex. A at P0026.) A few weeks later, on May 24, 2005, Corestar sent LPB, which apparently had not been able to expedite shipping, another email asking for the status on the shipments of the transmitters, and whether LPB would be able to comply with the originally-agreed-upon schedule. (Id. at P0033.) LPB responded that "things have not gone as planned," due to production of transmitters for the government, as well as one of its lead engineer's medical emergency. (Id.) LPB stated that it was "working around this problem but it is having an impact on our best plans." (Id.) Corestar replied that it needed the transmitters by the end of June because it "already specified a definite delivery date" to its customer and "would face penalties" if the transmitters were not shipped on time. (Id. at P0032-33.) LPB responded that its "best hopes" would be to ship one transmitter by the end of June. (Id. at P0032.)

On June 14, 2005, Corestar notified LPB that its customer was concerned about the delivery of the transmitters, and asked for an update. (Id. at P0031.) The next day, LPB responded with "not so good news." LPB explained that the government transmitters must be finished before Corestar's, and that shipment of Corestar's transmitters "look improbable for June," but are "certainly" expected to ship "at least one in July if not two." (Id.) Corestar replied on July 21, and related that it was "sorely disappointed." Corestar stated that it had paid the seventy-five percent deposit in February "in the expectation that LPB will meet the agreed delivery schedule." (Id.) Corestar further explained that it made a business commitment to its customer and was "liable to deliver the goods as agreed." (Id.) Corestar requested the current time frame for delivery and needed "to know that best and worst case scenario." (Id.)

In the days following that email, Corestar attempted to contact LPB again via telephone and email, and LPB responded on July 1, 2005. LPB responded that it was "still difficult to confirm the actual schedule." (Id. at P0030.) It explained that its "problem from the beginning" was "getting the two transmitters . . . for the government out of here." (Id.) LPB acknowledged that it could not give Corestar a definite delivery schedule, but it would try to do so the next week. (Id.)

On July 19, 2005, Corestar emailed LPB and implored LPB to provide a delivery schedule. (Id. at P0035.) LPB replied the next day, stating, in part,

I apologize for not replying more promptly to you. It is always difficult to reply when the news is not as good as it should be. Frankly, the delay to ship the first Department of the Navy transmitter and the fact that we are working on the second of two for that order has delayed our work on your order. Cutting to the key point I am 6 weeks away from delivering your first transmitter (best scenario). Now the background. Yes we are late. The government transmitters are special custom transmitters and were ordered long before your transmitters. I truly expected that we could finish these transmitters as early as March but technical issues and material delays delayed our effort.

(Id. at P0040-41.) Corestar replied that LPB "took 75% deposit telling us that with that upfront money, we will not experience this problem we are discussing. . . . I guess we can only implore that you do your best as our money is already there with you." (Id. at P0040.)

On August 11, 2005, Corestar emailed LPB and informed it that it is in "dire straits" because its "dealer is in jail due to the inability to delivery the goods as promised and we have a responsibility towards his family in solving this problem." (Id. at P0065.) It also stated, "According to your quotation and our purchase order, delivery was to be scheduled 2 transmitters / month starting from June. However, it is now August and we still don't have a firm delivery date. This is despite our 75% deposit in Feb when we placed the order! It is great that LPB is doing well and securing many government tenders. However, if you were not able to deliver according to your offer, our order should not have been accepted. In accepting our deposit, you now owe us some due care & accountability." (Id.) Corestar then asked for a solution "urgently." (Id.)

By August 16, 2005 Corestar proposed a new delivery schedule as per a telephone conversation between the parties on August 11. Corestar proposed that the first transmitter be shipped the first week of September, the second and third be shipped the first week of October, the fourth and fifth be shipped the first week of November, and the final two transmitters be shipped the first week of December. (Id. at P0063.) On August 19, 2005, LPB replied that "your schedule is OK for me. . . . Do you still need something formal from me?" (Id.) LPB then provided a letter "confirming a schedule for the delivery" of the transmitters. It changed Corestar's proposed schedule by providing for shipment of one transmitter in the second week of September, October and November, and two transmitters in the second week of December and January. (Id.) LPB concluded that it has "confidence in this schedule, this is manufacturing and there are no guarantees, just our promise to make every effort to meet this schedule and or improve on it." (Id.)

Corestar replied on August 22, 2005 and questioned why the schedule proposed in LPB's letter was different from the one LPB confirmed on August 17, as well as different from the schedule originally agreed upon. (Id. at P0067.) Corestar further questioned why "[w]ith every week, you are giving us a worse schedule without explaining why it is taking more than 5 months to build just 1 transmitter." (Id.)

After numerous email exchanges on the status of the shipment of the first transmitter, Corestar emailed LPB on September 8, 2005 stating that it was "imperative that the transmitter is shipped by 12 September from the factory. Any other delay will cause Corestar and our customer more problems." (Id. at P0082.) That evening, LPB responded that "the 12th will not happen" and that the earliest it could be shipped was September 16. (Id.) After days of more emails back and forth between the parties--Corestar imploring that the transmitter be shipped and LPB explaining the difficulties it was facing--on September 21, 2005 Corestar sent LPB an email expressing how LPB's inability to ship any transmitters has "created chaos" in its business and has "totally ruined all goodwill" that it has "painstakingly built up over the years." (Id. at P0092.) It expressed that the third delivery schedule LPB provided in its August 19, 2005 letter was "unacceptable," and based on even the second revised schedule, LPB would have had nine months to complete the order, which is "way beyond industry norm." (Id.) Corestar requested a firm delivery schedule by September 23, and informed LPB that it and its customer would be coming to visit the factory in the following week. (Id.)

Through even more email communications and LPB's failure to deliver the first transmitter, Corestar sent an email to LPB recapping the situation as it currently stood, and proposed a solution for a resolution. Corestar stated,

"At present, this is where we are and they are the facts:

1. LPB is late in delivering the first set of our SW transmitter order by about 4 months. Balance order remains at 06 sets.

2. LPB currently has complete transmitter parts to build another 3 sets of SW transmitters.

3. LPB does not have the capability to complete building and testing the balance of our 06 sets ...


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