In this suit alleging breach of contract by a Guatamalan corporation, the plaintiff moves to confirm an ex parte attachment and for a preliminary injunction. The defendant opposes these motions and moves to dismiss.
In September, October, and November of 1979, Philipp Brothers Division of Engelhard Minerals & Chemical Corporation (Phil
The issues raised are:
1. Whether the court has in personam jurisdiction, and, if not, quasi-in-rem jurisdiction over El Salto?
2. Has Philipp established “that it is probable that [it] will succeed on the merits” within the meaning of CPLR § 6212(a), thereby justifying the continuance of the attachment?
3. Has Philipp shown that it will be irreparably harmed if a preliminary injunction is not granted?
1. Jurisdiction
Relying on Merrill Lynch, Pierce, Fenner & Smith Inc. v. Lecopulos, 553 F.2d 842 (2d Cir. 1977), Philipp contends that this court has personal jurisdiction over El Salto because each of the five contracts between the parties provides for arbitration in New York of any disputes arising under the contract. In Merrill Lynch, the Court of Appeals held that a contract clause requiring that disputes be arbitrated in New York constituted a consent by each party to the jurisdiction of the courts within the state. Quoting its own previous opinion in Victory Transport Inc. v. Comisaria General, 336 F.2d 354, 363 (2d Cir. 1964), cert. denied, 381 U.S. 934, 85 S.Ct. 1763, 14 L.Ed.2d 698, the court observed that “To hold otherwise would be to render the arbitration clause a nullity.” 553 F.2d at 844.
It is true that the plaintiff here has not yet demanded the arbitration to which it is entitled under the contract. Such a failure, however, is at least at the moment not fatal. In Merrill Lynch the court rejected the argument that an agreement to arbitrate in New York was not an effective consent to jurisdiction until a demand for arbitration had been made; and remarked:
“That [the plaintiff] chose instead to file suit and move for a stay — evidently to gain the benefit of attachment — is not improper.” Id. at 845.
Accordingly, we find that the court has jurisdiction of the person of El Salto.2
The decision in Sterling National Bank v. Southern Scrap Export Co., 468 F.Supp. 1100 (S.D.N.Y.1979), on which El Salto relies, is not to the contrary. There, among other critical differences, the plaintiff itself was not a party to the arbitration agreement and thus not entitled to the benefits of consent to jurisdiction which it conferred. Id. at 1103 n. 2.
2. Quasi-in-Rem Jurisdiction
El Salto contends that the court does not have quasi-in-rem jurisdiction because
“Where a corporation located in another state is continuously involved in the commerce of New York and has repeatedly consented to arbitration in New York, we see nothing unfair or unreasonable in requiring it to defend in New York an action arising out of such commerce.” 575 F.2d at 1023.
3. Probability or Likelihood of Success
To prevail on its motion to confirm the ex parte attachment, Philipp must demonstrate that it will probably succeed on the merits, CPLR § 6212(a), and similarly, to prevail on its motion for a preliminary injunction, it must demonstrate that it is likely to succeed on the merits, Jack Kahn Music Co. v. Baldwin Piano & Organ Co., 604 F.2d 755, 758 (2d Cir. 1979). El Salto claims that Philipp has not established probability or likelihood of success on the merits because, in El Salto’s view, the contracts called for advance payments which were not made by Philipp. This argument suffers two defects. First, it begs the question whether such payments were in fact contracted for; second, it assumes that evidence respecting the alleged oral agreement for advance payments would be admissible to vary the terms of the written contracts. On the latter point, we believe that El Salto’s position founders. The New York parol evidence rule provides:
“Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement . . .” New York U.C.C. § 2-202.
El Salto contends that the rule is inapplicable here because, according to it, the parties did not intend the written contract to be a “final expression of their agreement.” The difficulty with this argument is that at least in the first instance the question of whether the parties intended the written instrument to be their final agreement is not to be judged on the basis of evidence as to the subjective attitude of the parties but by measuring the completeness of the written instrument itself.
The only item of contract incompleteness which El Salto points out is that the written agreements do not specify the dates by which the buyer must furnish a letter of credit. However, even assuming that such a deficiency might render the contract incomplete within the meaning of the statute (a proposition which is not at all clear), El Salto would not be free to put evidence before the court which contradicts the specific and unambiguous contractual
El Salto contends that Philipp has not established that it was ready, willing and able to perform the agreement or that El Salto breached the agreement. We disagree, and find that Philipp has sufficiently demonstrated its intention, willingness and ability to purchase the sugar it contracted for and that El Salto terminated the agreement for reasons not authorized by the written contract.
4. Irreparable Harm
El Salto argues that in any event no injunction should be granted because Philipp cannot demonstrate irreparable harm, since El Salto is good for any judgment for money damages that Philipp might obtain. The argument is good in theory but it does not carry the day. While El Salto has submitted evidence which purports to show that it has a net worth in excess of $10,000,-000., several factors suggest that Philipp might encounter difficulty collecting a money judgment. First, El Salto is located in a relatively distant foreign country with admitted current political instability. Second, El Salto’s mills are presently shut down because of a shortage of sugar cane caused by political unrest and labor disputes. Third, a large part of El Salto’s net worth is found in its fixed rather than liquid assets. Fourth, as indicated in the audit of El Sal-to’s financial condition prepared by its own outside accountants, it suffered cumulative losses of $4,593,025. through October 31, 1979, including losses of $2,154,148. between October 31, 1978 and October 31, 1979. In the circumstances, we conclude that Philipp has demonstrated the need for preliminary injunctive relief to protect it from irreparable harm.
For the reasons stated above, the plaintiff’s motion for confirmation of the attachments and for injunctive relief is granted.4 The defendant’s motion to dismiss is denied.
It is so ordered.
1.
The agreements are typically exemplified by Exhibit 1 to the affidavit of George Thomas in support of plaintiffs motion.
2.
In its reply memorandum, Philipp concedes that the court might lose jurisdiction of El Sal-to’s person if Philipp were to waive its right to arbitrate the dispute. The ruling above that the court presently has jurisdiction of El Salto is, of course, without prejudice to a new motion by El Salto to dismiss if at any time Philipp should waive the right to arbitrate or refuse to arbitrate. Without expressing any final view of the matter it is also arguable that jurisdiction found to exist in a Merrill Lynch type case may evaporate if the plaintiff who has secured jurisdiction against the defendant because of the terms of an arbitration clause unduly delays initiating the arbitration process.
3.
For instance, the parties’ first contract dated September 27, 1979 (which appears to be identical with all the others) provides:
“Buyer shall open an irrevocable Letter of Credit in favor of Seller with a prime New York bank. The credit shall provide for payment of 98% (ninety eight percent) value of the material basis 96 degrees polarization and Bill of Lading weights, against presentation of shipping documents consisting of:
—Full set, Clean on Board Ocean Bills of Lading made out to order and blank endorsed; —Commercial Invoice in quadruplicate;
—Certificate of Origin;
—Certificate indicating polarization minimum 96 degrees at time of shipment; and
—Any other obtainable documents which may be required by receivers at destination, provided Buyer notifies Seller in reasonable time of the additional documents required.”
4.
In view of our decision to confirm the attachments and issue a preliminary injunction, we agree with El Salto that the adequacy of the security posted by Philipp should be reviewed. However, Philipp is entitled to an opportunity to submit its views on the question. Accordingly, it is directed to furnish a letter or affidavit relating to the matter no later than 3:00 P.M., Friday, April 11, 1980.