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Folex Golf Industries, Inc., A California v. China Shipbuilding Industry Corporation

December 2, 2010

FOLEX GOLF INDUSTRIES, INC., A CALIFORNIA CORPORATION, PLAINTIFF,
v.
CHINA SHIPBUILDING INDUSTRY CORPORATION, A CHINESE COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Manuel L. Real United States District Judge

FINDINGS OF FACT AND

CONCLUSIONS OF LAW

On October 4, 2010, Defendant O-TA Precision Industries Co., Ltd.'s Motion for Summary Judgment came on for regular hearing in the above-entitled Court before the Court.

After consideration of the moving and opposing papers, including supplemental briefs, in connection with this motion, hearing oral arguments thereon, and finding good cause therefor, the Court finds that O-TA Precision Industries Co., Ltd. is entitled to summary judgment as to all of Plaintiff Folex Golf Industries, Inc.'s claims for the reasons stated herein.

I. FINDINGS OF FACT

A. Relevant Procedural History 1. This lawsuit was originally filed on March 31, 2009, by Plaintiff Folex Golf Industries, Inc. ("Folex") against defendants China Shipbuilding Industry Corporation, a Chinese company ("China Shipbuilding"), Luoyang Ship Material Research Institute, a Chinese Company ("LSMRI"), and O-TA Precision Industries Co., Ltd., a Taiwan company ("O-TA"). Folex filed the operative First Amended Complaint ("FAC") on June 26, 2009.

2. Folex filed a declaration advising that it had initiated proceedings under the Hague Convention to serve China Shipbuilding and LSMRI, both of which are entities located in the People's Republic of China ("PRC"). However, neither entity was served or appeared before this Court.

3. LSMRI is alleged by Folex to be a subsidiary of China Shipbuilding. The two entities shall be referred to collectively as LSMRI throughout this order.

4. On March 22, 2010, O-TA filed a motion to dismiss for, among other things, lack of personal jurisdiction. This Court denied the motion to dismiss on or about May 3, 2010. Trial was initially set for July 27, 2010.

5. O-TA filed its Answer on June 24, 2010. On July 9, 2010, O-TA filed an ex parte request to extend the trial dates and commensurate discovery schedule by nine (9) months. Folex objected to O-TA's request and instead proposed a sixty (60) day extension of time of the pre-existing dates. Folex advised the Court that it wished to pursue its claims against O-TA notwithstanding LSMRI's absence from the case. This Court adopted Folex' proposed schedule and set a trial date of October 5, 2010.

6. Based on Folex' proposed schedule adopted by this Court, O-TA filed its Motion for Summary Judgment on August 16, 2010. The Court, on its own motion, extended the time for Folex to file its opposition papers to August 30, 2010. O-TA filed its reply papers on September 7, 2010. The Court, on its own motion, granted Folex leave to file a supplemental brief by September 27, 2010.

7. The Court heard oral argument on O-TA's motion for summary judgment on October 4, 2010.

B. Relevant Uncontroverted Facts 1. The 1996 SST-LSMRI Agreement 8. On November 23, 1996, the SST Company of the United States ("SST") entered into an "Agency Agreement" with LSMRI (hereinafter "the 1996 SST-LSMRI Agreement"). (Declaration of William C. Hsu ("Hsu Decl."), Ex A.) O-TA was not a party or signatory to the 1996 SST-LSMRI Agreement.

9. Under the 1996 SST-LSMRI Agreement, LSMRI agreed to pay SST a commission of between 6%-10% of the selling price on all sales made directly by LSMRI to customers introduced by SST. LSMRI was to make payment to SST in a form to be requested by SST within five (5) working days after LSMRI received payment from a customer.

2. The 1996 Folex/SST Contract 10. In addition to the 1996 SST Agreement, Folex Golf Industries, Inc./SST Company entered into another "Agency Contract" with LSMRI also dated November 23, 1996 (hereinafter "the 1996 Folex-LSMRI Contract"). (Declaration of Lin, Chon Chen ("Lin Decl."), Ex. A.) OTA was not a signatory or party to 1996 Folex/SST Contract.

11. Under the 1996 Folex-LSMRI Contract, LSMRI agreed to pay Folex a commission of between 6%-10% of the selling price on all sales made directly by LSMRI to customers introduced by Folex. Payments from customers introduced by Folex to LSMRI were to be made to Folex which would deduct its commission and then pay the remaining balance to LSMRI.

3. The 2000 Folex-LSMRI Addendum 12. On or about February 2000, Folex Corporation of the United States and its subsidiary, Folex Golf Industries, entered into an "Addendum to Agency Agreement" with LSMRI (hereinafter "the Folex-LSMRI 2000 Addendum"). (Hsu Decl., Ex. B.) O-TA was not a signatory or party to the Folex-LSMRI 2000 Addendum.

4. Cooperation Agreement Between O-TA and LSMRI 13. On October 20, 2000, O-TA entered into a Cooperation Agreement with LSMRI (hereinafter "the 2000 Cooperation Agreement"). (Hsu Decl., Ex. C.) Pursuant to the 2000 Cooperation Agreement, O-TA and LSMRI agreed that the "parties should resolve problems they encounter with a spirit of amicable consultation and consent to request the third party, [Folex], to act as the mediator." (See id.) The 2000 Cooperation Agreement was signed by O-TA, LSMRI and Folex. Folex signed the 2000 Cooperation Agreement in its capacity as the agreed upon "Mediator" between O-TA and LSMRI. (See id.)

5. The Relationship Between O-TA, LSMRI and FoleX 14. O-TA was a customer of LSMRI and purchased certain titanium casting products from LSMRI. In 1998, O-TA was instructed to remit payment directly to Folex. The record reflects that Folex would then take its commission and forward the remainder to LSMRI. Those instructions remained unchanged for approximately six years until March or ...


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