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Roberts Irrigation Co. Inc. v. Hortau Corp.

United States District Court, W.D. Wisconsin

June 20, 2016

HORTAU CORP. and HORTAU, INC., Defendants.



         Plaintiff Roberts Irrigation Company, Inc. (“Roberts”) has sued defendants Hortau Corp. and Hortau, Inc. (collectively, “Hortau”) under theories of unjust enrichment and breach of contract for damages arising from Hortau’s alleged breach of a distribution agreement. Citing to an arbitration clause in a distribution agreement between Roberts and Hortau Inc., Hortau has moved under Fed.R.Civ.P. 12(b)(3) to dismiss or stay this action and to compel Roberts to arbitrate pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 201 et seq. See Dkt. 13. In the alternative, Hortau moves to dismiss this case for lack of personal jurisdiction or under the doctrine of forum non conveniens. Because I find that Hortau has failed to show that the parties had a written arbitration agreement that applies to the instant dispute, and that there is no merit to its jurisdiction and inconvenient forum arguments, the court is denying the motion in both parts.

         One preliminary matter requires court action: Roberts seeks permission to file a sur-reply with respect to Hortau’s contention that the arbitration clause survived expiration of the parties’ 2008 Distribution Agreement, which Roberts says was raised for the first time in Hortau’s reply brief. Dkt. 19. Hortau objects, asserting that the argument on which Roberts seeks to be heard was raised in Hortau’s opening brief. Dkt. 20. Hortau is correct, but only to a point. Hortau raised the argument briefly in its opening brief, dkt. 14, at 9, but did not develop it in any depth until its reply brief. It is only fair to allow Roberts to respond to the more well-developed argument. Accordingly, I am granting Roberts’s motion and will consider its sur-reply.

         In deciding a motion to dismiss, the court accepts all well-pled factual allegations in the complaint as true, Adams v. City of Indianapolis, 742 F.3d 720, 728 (7th Cir. 2014), and views them in the light most favorable to plaintiff as the non-movant, Santiago v. Walls, 599 F.3d 749, 756 (7th Cir. 2010).


         Plaintiff Roberts Irrigation Company is a Wisconsin corporation with its principal place of business in Plover, Wisconsin. Roberts is engaged in the business of contracting, installing and selling agricultural irrigation products.

         Defendant Hortau, Inc. is a Canadian corporation with its principal place of business in Lévis, Quebec. Defendant Hortau Corp. is a Delaware Corporation with its principal place of business in California. Hortau, Inc. and Hortau Corp. are in the business of providing goods and services for use in the agriculture industry. Hortau Corp. is an authorized agent of Hortau, Inc. in its dealings with Roberts.[1]

         Roberts and Hortau, Inc. entered into a “Distribution Agreement” on or about February 15, 2008. Amended Complaint, dkt. 10, exh. A. The Agreement contains an arbitration provision, § 20, which states:

Any dispute which arises in the course of or following the performance of the present contract will be definitively settled under the auspices of the Canadian Commercial Arbitration Center, by means of arbitration and to the exclusion of courts of law, in accordance with its General Commercial Arbitration Rules in force at the time this contract is signed and to which the parties declare they have adhered.

         The parties further agreed that the agreement would be “construed and interpreted according to the laws of the province of Quebec, Canada, and the laws of Canada applicable therein.” § 17.

         Section 12.A of the Agreement is a termination provision which states:

The term of this Agreement shall begin and end as of the dates indicated in Attachment “A.” Annual renewal will be granted from year to year only through a new copy of Attachment “A” duly executed by both Parties prior to the date of termination.

         Attachment “A” identified Roberts’ territory, minimum inventory level and annual sales target and listed the products and corresponding discount being offered by Hortau. It also provided that, “[i]n reference with section 12 (Effective date and termination), this Agreement shall begin on February 15th 2008 and shall terminate on April 30th 2009.” Section 15.B provides that “[n]o change of any terms and conditions herein will be valid unless in writing signed by an authorized representative of each party.” The Distribution Agreement expired by its terms on April 30, 2009, when the parties failed to renew it. Am. Comp., ¶¶10-11. However, the parties continued to do business with each other. Under the terms of this “implied” distributorship agreement, the parties agreed that: (1) Roberts would continue to maintain a minimum inventory of the products; (2) Roberts would makes sales of the products within the same territory, (3) Roberts would market and promote Hortau products within the same territory; (4) Roberts would service the products within the same territory; (5) Roberts would retain the exclusive right to sell Hortau products in the same territory; and (6) Hortau would provide products, payment, marketing materials and other related support to Roberts. In addition, the parties agreed that Hortau would pay Roberts 40% for its service of “web-tx3" products.

         Roberts alleges that Hortau has breached this implied distributorship agreement by failing to pay service commissions or repurchase inventory. In addition, it asserts that Hortau has been unjustly enriched by performance under the agreement. Id. at ¶¶ 25-40.

         Roberts filed its complaint on November 30, 2015, in the Circuit Court for Portage County, Wisconsin, naming only Hortau Corp. as a defendant. On January 12, 2016, Hortau Corp. removed the matter to this court, but objected to the court’s personal jurisdiction on the ground of improper service. With Hortau Corp.’s agreement, on March 14, 2016 Roberts filed an amended complaint in which it added Hortau, Inc. as a defendant. The Hortau defendants now move to dismiss ...

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