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Jermax, Inc. v. Baosteel America

December 4, 2009

JERMAX, INC., D/B/A GULF & NORTHERN TRADING CORP., PLAINTIFF-RESPONDENT,
v.
BAOSTEEL AMERICA, INC., DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-6324-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 9, 2009

Before Judges Lisa and Baxter.

By leave granted, defendant Baosteel America, Inc. appeals from an April 3, 2009 order that denied its motion to dismiss plaintiff's Law Division complaint and submit the parties' commercial dispute to binding arbitration. Defendant also appeals from a May 1, 2009 order denying its motion for reconsideration. We agree with defendant's contention that the Law Division erred by disregarding the contract, which was signed by plaintiff, that required binding arbitration. We reverse.

I.

Plaintiff Jermax, Inc. is a New Jersey corporation, located in Camden, which processes and resells stainless steel. Defendant Baosteel is the American division of a company owned by the Chinese government. Beginning in 2005, the parties began a business relationship, in which plaintiff placed orders with defendant for the purchase of stainless steel products. These orders were originated when plaintiff generated purchase orders, which specified the quantity of stainless steel ordered, purchase price, packaging and shipping details, and place and time of delivery. Plaintiff forwarded six such purchase orders to defendant between January and May 2008. Among the "Conditions of Supply" in those six purchase orders is paragraph eleven, which provided that

[t]his Purchase Order and the acceptance thereof shall be a contract made in New Jersey and governed by the laws thereof, and it shall supersede any provisions, terms and conditions contained in any confirmation or other writing [defendant] Seller has given or may hereafter give. The Order may be modified only by [plaintiff] Buyer's written change order. (emphasis added).

Upon receipt of each of plaintiff's six purchase orders, defendant faxed to plaintiff a confirming document entitled "Sales Contract." In addition to containing a description of the material, specifications, quantity, price, and place and time of delivery, the "contracts" contained an arbitration provision. The arbitration provision required that

[a]ll disputes in connection with this Contract or the execution thereof shall be settled amicably by negotiation. In case no settlement can be reached, the case under dispute may then be submitted to American Arbitration Association. The arbitration of the said Commission [sic] and the award made by the Commission [sic] shall be accepted as final [and] binding upon both parties for settling the disputes. The fees for arbitration shall be borne by the losing party unless otherwise agreed upon.

Seth Young, the president of Jermax, signed each of the six "contracts" forwarded by defendant without expressing any objection to the arbitration provision, without crossing it out, and without signifying, in any other manner, that he did not intend to be bound by the arbitration provision.

Because of fluctuations in the trading price of nickel, an alloy used in the manufacturing of stainless steel, a disagreement arose between the parties over the unit price defendant intended to charge plaintiff. Another dispute centered on plaintiff's claim that there were manufacturing defects in the stainless steel defendant had provided. On June 7, 2008, after the contracts had already been signed, and after the dispute arose, Young sent an email to one of defendant's principals, stating that "[m]y purchase order and its conditions are what govern the Supply Contract, not the other way around. Your Sales Contract comes as a result of our orders and those governing conditions of supply."

On December 23, 2008, plaintiff filed an eleven-count complaint, which, in addition to alleging that defendant had breached the pricing and quality provisions of the purchase orders, also alleged that defendant had breached a January 2006 "exclusivity agreement" that had given plaintiff the exclusive right to market products manufactured by defendant.

Instead of filing an answer, defendant responded by moving for the dismissal of plaintiff's complaint and for an order compelling arbitration. In opposition to defendant's motion, Young certified that "in light of paragraph eleven of the purchase orders, which specify that the purchase orders would supersede any provisions, terms and conditions contained in any confirmation or other writing [defendant] has given ...


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