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Conax Florida Corp. v. Astrium Ltd.

July 18, 2007

CONAX FLORIDA CORP., PLAINTIFF,
v.
ASTRIUM LTD., DEFENDANT.



ORDER

THIS CAUSE came on to be heard upon the defendant's Motion to Quash Service of Process and to Dismiss for Lack of Personal Jurisdiction or Alternative Motion to Stay Proceedings and Compel Arbitration (Doc. 4), the plaintiff's response (Doc. 7), and the defendant's reply (Doc. 13). Because the plaintiff properly served process upon the defendant, and the defendant had sufficient contacts with Florida to satisfy Florida's long-arm statute and constitutional due process requirements, the defendant's request to quash service of process and to dismiss for lack of personal jurisdiction will be denied. However, based on an arbitration provision in the parties' contract which makes arbitration mandatory under these circumstances, the alternative request to stay these proceedings and compel arbitration will be granted.

I.

The plaintiff, Conax Florida Corporation, is headquartered in St. Petersburg, Florida. It specializes in the design and manufacture of pyrotechnic valves ("pyrovalves") that are used in satellites.*fn1 Defendant Astrium Limited is an English company with its principal place of business in the United Kingdom. It builds and maintains satellites for civil and military communications.

In 2000, the defendant contacted the plaintiff regarding the purchase of pyrovalves for its Eurostar 3000 commercial telecommunication satellites (Guenthardt Aff., Doc. 7-2, ¶8). The parties had previously developed a relationship when the defendant purchased from the plaintiff pyrovalves for its aerospace industry satellites (id. at ¶¶ 6, 7).

On July 24, 2000, the defendant gave the plaintiff in Florida an Authorization to Proceed and work order to manufacture pyrovalves for its Eurostar 3000 satellites (id. at ¶9; Doc. 7-5, Ex. 2). In March 2001, the defendant sent a team of employees to the plaintiff's facility in Florida in order to advance from the work authorization to the final contract (Guenthardt Aff., ¶10). The parties reached in Florida an oral agreement, which was subsequently placed in writing and signed by the defendant in England (id. at ¶¶ 11, 12).*fn2 The parties' Subcontract for Pyrotechnic Valves ("Subcontract") (Doc. 4-2) was then executed by the plaintiff in Florida (Guenthardt Aff., ¶12).

The defendant agreed to purchase from the plaintiff 406 pyrovalves, which were to be manufactured in four batches between April 2001 and June 2005 (Kovacik Aff., Doc. 7-7, Ex. B, ¶11). The Subcontract afforded the defendant full access to the plaintiff's facilities in order to observe, inspect, examine, and evaluate the plaintiff's work (Doc. 4-2, Art. 14, §14.1(a)).*fn3 The Subcontract further specified that the defendant had "the right to participate in or execute surveys, audits, reviews, source inspections, test observations, mandatory inspections and any other activity in pursuance of the terms of this Subcontract or have itinerant personnel" at the plaintiff's facilities (id. at §14.7). It also provided the defendant's representatives with office space and facilities when they were in Florida (Doc. 4-5, Art. 11, §11.12; see also Guenthardt Aff., ¶13).

Accordingly, approximately every other month throughout the term of the Subcontract the defendant's representatives traveled to the plaintiff's facility in St. Petersburg, Florida, to oversee the manufacturing and testing of the pyrovalves (Kovacik Aff., ¶¶ 12-14; Guenthardt Aff.,¶13). Additionally, the defendant brought its customers to Florida to tour the plaintiff's facility (Kovacik Aff., ¶12).

By June 2005, three of the four batches of pyrovalves had been manufactured and successfully tested. However, on June 28, and June 29, 2005, during the testing of the fourth batch of pyrovalves, both parties observed cracking in the valves (Guenthardt Aff., ¶15; Kovacik Aff., ¶16). Additionally, further examination of earlier batches of pyrovalves also showed cracking (Kovacik Aff., ¶16). The defendant's representatives subsequently visited the plaintiff's facility several times to investigate with the plaintiff the cause of the cracking (Guenthardt Aff., ¶¶ 15, 17; Kovacik Aff., ¶¶ 17-21).

Thereafter, a dispute arose regarding the scope of the plaintiff's liability under the contract for the nonconforming pyrovalves (see Guenthardt Aff., ¶22). Thus, in October 2005, the defendant claimed damages of approximately 24.5 million euros (which is in excess of thirty million United States dollars) (id. at ¶19). The plaintiff argues that this demand is excessive and is unrelated to the measure of damages contemplated in the Subcontract.

With regard to disputes, the Subcontract provides (Doc. 4-3, Art. 20, §20.2):

In the event of any dispute arising out of the terms of this Subcontract, the Parties shall undertake to make every reasonable effort to reach an amicable settlement. Failing such settlement, a controversy or claim arising out of or relating to this Subcontract may be finally settled by arbitration in accordance with the rules then in effect of the International Chamber of Commerce.

After the parties investigated liability, they communicated on settlement issues, without success. The parties subsequently agreed to mediate this dispute on December 15, 2006, in Florida (Giobbe Dec., Doc. 4-8, ¶5).

On December 12, 2006, Francesco P. Giobbe, defendant's counsel, traveled from France to Tampa to attend the mediation conference (id. at ¶7). The parties attended the mediation, but it ended in an impasse.

At the conclusion of the mediation, the mediator advised defense counsel to remain in the conference room (id. at ¶12). Thereafter, plaintiff's counsel entered the room with a process server and gave Giobbe a copy of the summons and complaint filed in this case (id. at ¶13).*fn4 Unbeknownst to the defendant, the plaintiff had filed this lawsuit in Pinellas County Circuit Court the previous day, December 14, 2006 (Doc. 4-6).

The plaintiff's complaint concedes that its pyrovalves failed, but it disputes the scope of its liability (Doc. 2, p. 4). The plaintiff seeks a declaratory judgment that its liability for the failed pyrovalves does not extend beyond their repair, replacement, or a refund to the defendant of the amount received by the plaintiff for the nonconforming valves (id. at p. 3).

After removing this lawsuit from state court (Doc. 1), the defendant filed its Motion to Quash Service of Process and to Dismiss for Lack of Personal Jurisdiction, or Alternative Motion to Stay Proceedings and Compel Arbitration (Doc. 4). The plaintiff submitted an opposition to this motion (Doc. 7). The defendant was permitted to file a reply (Doc. 13). Oral argument on the motion was subsequently conducted (Doc. 26).

II.

The defendant argues that the case should be dismissed pursuant to Rule 12(b)(5), Fed.R.Civ.P., for insufficient service of process (Doc. 4, pp. 6-10). The plaintiff contends that it properly effected personal service of process upon the defendant pursuant to §48.031, Fla. Stat., and substitute service under §§ 48.161 and 48.181, Fla. Stat. (Doc. 7, pp. 5-11).

A. Under §48.031(1)(a), Fla. Stat., a party may effectuate service of process by "delivering a copy of it to the person to be served with a copy of the complaint, petition, or other initial pleading or paper...." The plaintiff contends that it complied with this provision when it served Giobbe, the defendant's corporate representative, in Tampa on December 15, 2006, following the failed mediation (Doc. 7, pp. 5-8).

The defendant argues that the plaintiff's service of process upon Giobbe is insufficient because the plaintiff accomplished service by luring him into Florida under the guise of settlement negotiations, which is a tactic prohibited by Florida law (Doc. 4, p. 6). Thus, in Citrexsa, S.A. v. Landsman, 528 So.2d 517 (Fla. App. 1988), service of process was quashed after the defendants, who traveled from Mexico to Florida to attend a settlement conference, were served with process prior to the mediation. The court found that the plaintiffs' conduct demonstrated that they "never intended to participate in good faith settlement negotiations, and that their agreement to participate in the settlement ...


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