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Forestal Guarani S.A. v. Daros International

July 21, 2010

FORESTAL GUARANI S.A., APPELLANT
v.
DAROS INTERNATIONAL, INC.



On Appeal from the United States District Court for the District of New Jersey, (D.C. No. 2-03-cv-04821), District Judge: Honorable Joseph A. Greenaway, Jr.

The opinion of the court was delivered by: Fisher, Circuit Judge.

PRECEDENTIAL

Submitted Pursuant to Third Circuit LAR 34.1(a) April 16, 2010

Before: FISHER and COWEN, Circuit Judges, and PRATTER,*fn1 District Judge.

OPINION OF THE COURT

At issue in this appeal is the interpretation of the United Nations Convention on Contracts for the International Sale of Goods as it relates to a contract dispute between two corporations, one based in the United States and the other in Argentina. The Convention contains a provision allowing a contract to be proved even if it is not in writing but also authorizes a signatory state to make a declaration opting out of that and related provisions. The United States has not made such a declaration; Argentina has. The District Court concluded that Argentina's declaration imposed a writing requirement and that the absence of a written contract in this case precluded the plaintiff's claim. We disagree with that approach. We conclude that where, as here, one party's country of incorporation has made a declaration while the other's has not, a court must first decide, based on the forum state's choice-of-law rules, which forum's law applies, and then apply the law of the forum designated by the choice-of-law analysis.

We cannot decide on this record whether New Jersey or Argentine law applies here. Furthermore, because the parties have not briefed the issue and the District Court did not address it, we are reluctant to determine whether the claim asserted here would survive under either jurisdiction's laws. Accordingly, we will vacate the District Court's grant of summary judgment for the defendant and remand for further proceedings.

I.

Forestal Guarani S.A.*fn2 is an Argentina-based manufacturer of various lumber products, including wooden finger-joints.*fn3 Daros International, Inc., is a New Jersey-based import-export corporation. In 1999, Forestal and Daros entered into an oral agreement whereby Daros agreed to sell Forestal's wooden finger-joints to third parties in the United States. Pursuant to that agreement, Forestal sent Daros finger-joints worth $1,857,766.06. Daros paid Forestal a total of $1,458,212.35. Forestal demanded the balance due but Daros declined to pay. In April 2002, Forestal sued Daros in the Superior Court of New Jersey, asserting a breach-of-contract claim based on Daros' refusal to pay. Daros thereafter removed the case to the United States District Court for the District of New Jersey. In its answer, Daros admitted that it had paid Forestal $1,458,212.35 in exchange for the finger-joints but denied that it owed Forestal any additional money. Discovery ensued.

In June 2005, Daros moved for summary judgment, arguing that the parties lacked a written agreement in violation of the United Nations Convention on Contracts for the International Sale of Goods, Apr. 11, 1980, S. Treaty Doc. No. 98-9 (1983), 19 I.L.M. 671 (1980), reprinted at 15 U.S.C. App. (1998) ("CISG"), and that Forestal could not otherwise substantiate its damages claim with credible evidence. The District Court summarily denied the motion, concluding that genuine questions of material fact existed. The Court later held a conference with the parties and ordered briefing on several specific questions regarding the applicability of the CISG. Both parties complied and agreed that the CISG governed Forestal's claim. In October 2008, the District Court granted Daros' summary judgment motion, concluding that the CISG governed the parties' dispute and barred Forestal's claim because the parties' agreement was not in writing. The Court also found that Forestal had not adduced any other evidence of its alleged agreement with Daros. Forestal has timely appealed the District Court's ruling.*fn4

II.

The District Court had jurisdiction under 28 U.S.C. § 1331 and we have jurisdiction under 28 U.S.C. § 1291. Our review of the District Court's denial of summary judgment is plenary. Chambers ex rel. Chambers v. Sch. Dist. of Phila. Bd. of Educ., 587 F.3d 176, 181 (3d Cir. 2009). We apply the same test the District Court should have used. Oritani Sav. & Loan Ass'n v. Fidelity & Deposit Co. of Md., 989 F.2d 635, 637 (3d Cir. 1993). Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c).

III.

The parties do not dispute that the CISG governs their dispute. While Daros does not deny that it had a contract with Forestal, the thrust of Daros' argument is that the parties do not have a written contract and that, under the CISG, the absence of a writing precludes Forestal's claim. While conceding that the CISG applies generally, Forestal contests the District Court's ruling on the ground that the lack of a writing, in its view, is inconsequential in light of the parties' course of dealing, as evidenced by Forestal's delivery of finger-joints to ...


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