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Wholesale Gadget Parts, Inc. v. Global Cellular, Inc.

United States District Court, N.D. Oklahoma

September 26, 2017

WHOLESALE GADGET PARTS, INC., Plaintiff,
v.
GLOBAL CELLULAR, INC. and CELLAIRIS FRANCHISE, INC., Defendants.

          OPINION AND ORDER

          JAMES H. PAYNE, UNITED STATES DISTRICT JUDGE

         Before the Court is Defendants' Motion to Compel Mediation and Stay Proceedings or, Alternatively, Motion to Dismiss Under the Doctrine of Forum Non Conveniens (Doc. No. 11). Plaintiff opposes the Motion (Doc. No. 13). For the reasons explained below, Defendants' request to stay proceedings and compel mediation is GRANTED.

         BACKGROUND

         I. Factual and Procedural Background

         Plaintiff Wholesale Gadget Parts (“Wholesale”) and Defendant Global Cellular, Inc. (“Global”) entered into a Purchaser-Seller Agreement (“Agreement”) in 2012 (Doc. No. 2-1, Exh. A (Agreement)). Pursuant to the Agreement, Wholesale produces and supplies cellular telephone accessories and other related products to Global. (See Id. § 2(A)). Global then sells those products to franchisees of Defendant Cellairis Franchise, Inc. (“Cellairis”), as well as other distributors and retailers. (See Id. § 2(B)). While not a signatory to the Agreement, Cellairis is an intended third party beneficiary of the Agreement “with full power and authority to enforce its terms.” (Id. § 24).

         In this case, Wholesale alleges that Global breached the Agreement by failing to pay Wholesale as agreed under the terms of the Agreement. (See Doc. No. 2-1 (Petition), ¶ 9). Specifically, Wholesale alleges Global failed to pay invoices for seventy-four orders placed between October 29, 2015, and December 1, 2015, totaling $209, 373.58. (Id. ¶¶ 9, 12). Wholesale further alleges that the invoices have now remained unpaid for over one year. (Id. ¶ 10).

         Wholesale filed suit against Global and Cellairis (together, “Defendants”) in the Tulsa County District Court on December 15, 2016, asserting claims for (1) breach of contract against Global for failure to pay the invoices and (2) unjust enrichment against Cellairis for receiving and marketing products for which Wholesale has not been paid. (Doc. No. 2-1 (Petition)). Defendants subsequently removed the case to this Court. (Doc. No. 2). In their Verified Answer, Defendants raise an affirmative defense that many of the parts that Wholesale delivered were defective, which they allege entitled Defendants to an offset for the damages claimed by Plaintiff. (Doc. No. 8, at 4 (Third Affirmative Defense)).

         II. Relevant Terms of the Agreement

         The Agreement is governed by Georgia choice of law and the Georgia Uniform Commercial Code. (Agreement, § 21). The Agreement contains a detailed dispute resolution process in Section 22. That provision begins: “The parties desire not to engage in court proceedings, but rather to have disputes resolved through face-to-face meetings, mediation and, if necessary, legal proceedings.” (Id. § 22). Section 22 thereafter details the process for dispute resolution, including requirements for a face-to-face meeting and mediation as prerequisites for bringing suit. Subsection (a) addresses the face-to-face meeting requirement for “any claim relating to an alleged breach of this Agreement other than issues arising from Section 2(K).” Section 2(K), titled “Payment, ” contains its own meeting requirement in Subsection (iv):

In the event either party notifies the other party of any billing or payment dispute, the parties within three (3) Business Days shall in good faith communicate by telephone and attempt to resolve any such discrepancy. In the event a telephone conversation does not resolve the billing or payment dispute, then the parties shall have a face-to-face meeting held at Global's office within ten (10) days after the failure of the telephone conference. In the event the face-to-face meeting is unsuccessful then, and only after the face-to-face meeting has occurred, [Wholesale] shall have the right to terminate this Agreement without penalty to either party and except for any continuing obligations specified in Sections 4, 9, 10, 21, and 22, the parties shall be relieved of any obligations, conditions, or limitations.

         Section 22(b) provides the procedure that occurs “if the face-to-face meeting does not resolve the dispute between the parties”:

the parties shall submit to mediation for a minimum of eight hours and which shall take place within twenty days after the face-to-face meeting (to the extent a meeting occurs); (i) in Georgia before a mediator of [Wholesale's] choice if [Wholesale] brings a claim against Global; or alternatively, (ii) in Oklahoma before a mediator appointed by Global if Global brings a claim against [Wholesale]. The mediator shall be a neutral person. Each party shall pay 50% of the costs of any mediation (though each party will be solely responsible for any respective attorney's fees and costs). The parties jointly agree that no mediation will be required to extend beyond eight hours. Any party may be represented by lawyers and may, with permission of the mediator, bring persons appropriate to resolving the claim. In the event that the non-proposing party does not appear at the mediation, then the proposing party may immediately proceed to court.

         If the mediation fails, then Section 22(c) provides the requirements for court proceedings “in the event [Wholesale] seeks injunctive relief”:

The Georgia State Courts for Fulton County, Georgia, or if such court lacks jurisdiction, the U.S. District for the Northern District of Georgia, shall be the exclusive venue and exclusive proper forum in which to adjudicate any case or controversy arising either, directly or indirectly, under or in connection with this Agreement and Global and [Wholesale] further agree that, in the event of litigation arising out of or in connection with ...

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