Armadillo Distribution Enterprises, Inc. v. Hai Yun Musical Instruments Manufacture Co. LTD.

Filing 52

ORDER: Armadillo Distribution Enterprises, Inc.'s Motion to Dismiss 41 is DENIED. The parties have until and including July 3, 2014, to file an English translation of the Chinese judgment. Armadillo Distribution Enterprises, Inc. has until and including July 14, 2014, to file an answer to Hai Yun Musical Instruments Manufacture Co. Ltd.'s Amended Counterclaims. Signed by Judge Virginia M. Hernandez Covington on 6/23/2014. (KNC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
ARMADILLO DISTRIBUTION
ENTERPRISES, INC.,
Plaintiff,
v.

Case No. 8:12-cv-1839-T-33EAJ

HAI YUN MUSICAL INSTRUMENTS
MANUFACTURE CO. LTD.,
Defendant.
____________________________/
ORDER
This

cause

is

before

Plaintiff/Counterclaim-Defendant

the

Court

Armadillo

pursuant

to

Distribution

Enterprises, Inc.’s Motion to Dismiss Counterclaim, or in the
alternative, Motion for a More Definite Statement, filed on
March 26, 2014. (Doc. # 41). Defendant/Counterclaim-Plaintiff
Hai Yun Musical Instruments Manufacture Co. Ltd. filed a
response in opposition to the Motion to Dismiss on April 14,
2014 (Doc. # 42), to which Armadillo filed a reply on April
29, 2014 (Doc. # 47). For the reasons stated below, and for
the reasons stated at the hearing on June 13, 2014, the Court
denies Armadillo’s Motion.
I. Background

Hai Yun, a Chinese corporation that manufactures musical
instruments, issued certain purchase orders between May 10,
2010,

and

November

22,

2010,

to

Armadillo,

a

musical

instrument distributor headquartered in Tampa, Florida, for
the manufacture of approximately 1,000 musical instrument
drum kits. (Doc. # 38 at ¶¶ 68-69, 72). According to Hai Yun,
Armadillo

“gave

significant

input

into

the

drum

kits,

manufacture”

of

approved

January

in

sample
of

2011.

(Id.

at

the

design

which
¶¶

and

Armadillo

74-76).

After

receiving approval, Hai Yun manufactured and delivered four
(4) shipping containers to Armadillo’s Tampa headquarters.
(Id. at ¶ 76).
Upon

receipt

of

the

containers,

Armadillo

began

distributing the drum kits to its retail outlet customers.
(Id. at ¶ 78). According to Hai Yun, by the time Armadillo
inspected and evaluated the drum kits on December 7, 2012,
the

drum

aeration,

kits

“were

adversely

temperature,

and

affected

humidity

by

inside

the

lack

of

Armadillo’s

warehouse.” (Id. at ¶ 79). Hai Yun submits that prior to
December of 2012, Armadillo had not given Hai Yun any notice
regarding alleged defects in the drum kits. (Id. at ¶ 80).

2

Furthermore, according to Hai Yun, it has yet to receive
payment for the delivered drum kits. (Id. at ¶ 81).
Hai Yun initiated a breach of contract action against
Armadillo in China for failure to pay the amount owed for the
drum kits pursuant to the purchase orders. (Id. at ¶ 82).
According to Hai Yun, both parties appeared in the Chinese
proceedings and were represented by counsel. (Id. at ¶¶ 8384). Hai Yun provides that the Chinese court found in favor
of Hai Yun and issued a judgment against Armadillo for the
price of the drum kits pursuant to the purchase orders, as
well as other damages. (Id. at ¶¶ 85-86).
Armadillo initiated this present action on August 14,
2012, alleging breach of contract as well as violations of
the implied covenant of good faith and fair dealing, the
express warranty under Fla. Stat. § 672.313, the implied
warranty of merchantability pursuant to Fla. Stat. § 672.314,
and the implied warranty of fitness for a particular purpose
under Fla. Stat. § 672.315. (See generally Doc. # 1).
Hai Yun filed an Answer on December 4, 2013, asserting
the affirmative defenses of waiver and setoff and presenting
a counterclaim for breach of contract. (Doc. # 22). Armadillo
answered Hai Yun’s counterclaim, admitting in relevant part
that the purchase orders served as a valid contract between

3

the parties and that Armadillo had yet to pay Hai Yun. (Doc.
# 26 at ¶¶ 69, 76, 79).
Hai Yun amended its counterclaims on February 18, 2014.
(Doc. # 33). Hai Yun subsequently filed an Amended Answer,
Affirmative Defenses, and Amended Counterclaims on February
26, 2014. (Doc. # 38). In the operative responsive pleading,
Hai Yun asserted the affirmative defenses of waiver, setoff,
comity, collateral estoppel, and res judicata, and set forth
two

counterclaims:

breach

of

contract

(Count

I),

which

mirrored the counterclaim that Hai Yun initially filed on
December 4, 2013, and domestication of foreign money judgment
(Count II). (Id.).
Armadillo filed the present Motion to Dismiss seeking
dismissal of Hai Yun’s counterclaims on March 26, 2014. (Doc.
# 41). Hai Yun filed a response in opposition to the Motion
to Dismiss on April 14, 2014 (Doc. # 42), to which Armadillo
filed a reply on April 29, 2014 (Doc. # 47).
II. Legal Standard
On a motion to dismiss, this Court accepts as true all
the allegations in the complaint and construes them in the
light most favorable to the plaintiff. Jackson v. Bellsouth
Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004).
this

Court

favors

the

plaintiff

4

with

all

Further,
reasonable

inferences from the allegations in the complaint.

Stephens

v. Dep’t of Health & Human Servs., 901 F.2d 1571, 1573 (11th
Cir. 1990) (“On a motion to dismiss, the facts stated in [the]
complaint and all reasonable inferences therefrom are taken
as true.”). However:
While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
level.
Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007)(internal
citations omitted).
as

true

a

legal

Further, courts are not “bound to accept
conclusion

couched

as

a

factual

allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986).
In

accordance

with

Twombly,

Federal

Rule

of

Civil

Procedure 8(a) calls “for sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (quoting
Twombly, 550 U.S. at 570). A plausible claim for relief must
include “factual content [that] allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
III. Analysis

5

A. Count I: Breach of Contract
Armadillo contends that Hai Yun failed to sufficiently
plead the necessary elements to establish a breach of contract
claim. (Doc. # 41 at ¶ 2). Specifically, Armadillo argues
that Hai Yun does not describe the specific purchase orders
that constituted a valid contract, the details of the alleged
contract,

and

basic

information

to

identify

the

alleged

contract. (Id. at ¶ 13). Armadillo claims that because it has
a “long-standing business relationship over several years”
with Hai Yun, it would be nearly impossible for Armadillo to
determine which purchase orders are at issue in Hai Yun’s
breach

of

contract

claim.

(Id.

at

¶

15).

According

to

Armadillo, Twombly and Iqbal provide a “heightened” pleading
requirement in order to survive dismissal, and Hai Yun did
not

meet

those

requirements

because

its

counterclaim

contained “labels” and mere legal conclusions. (Doc. # 47 at
2-3) (citing Iqbal, 556 U.S. 662; Twombly, 550 U.S. 544).
Conversely, Hai Yun contends that it has sufficiently
pled a breach of contract claim under Fed. R. Civ. P. 8 and
Florida law. (Doc. # 42 at ¶ 4). Specifically, Hai Yun submits
that it has alleged the existence of a contract, a breach of
that contract resulting from Armadillo’s failure to pay, and

6

damages exceeding $275,000 as a result of the breach. (Id. at
¶ 5) (citing Doc. # 38 at ¶¶ 72-76, 81, 95, 98, 100). Hai Yun
further submits that it has alleged the time period of the
purchase orders, the parties, each party’s obligations, the
failure of Armadillo to fulfill its obligations, and Hai Yun’s
resulting damages. (Doc. # 38 at ¶¶ 72-74, 76, 81, 96, 100).
Rule 8, even after Twombly and Iqbal, provides for a
liberal pleading standard that requires “a short and plain
statement of the claim showing that the pleader is entitled
to relief.” See Fed. R. Civ. P. 8. To sufficiently plead a
claim for breach of contract under Florida law, Hai Yun “must
assert the existence of a contract, a breach of such contract,
and damages resulting from such breach.” Bray & Gillespie
Mgmt. LLC v. Lexington Ins. Co., 527 F. Supp. 2d 1355, 1365
(M.D. Fla. 2007).
Taking the allegations as true, this Court finds that
Hai Yun has alleged the existence of a contract — the purchase
orders — that Armadillo breached the contract through failing
to pay Hai Yun in accordance with the purchase orders, and
that the damages from the breach exceeded $275,000. (Doc. #
42 at ¶ 5) (citing Doc. # 38 at ¶ 72-76, 81, 95-96, 98, 100).
Accordingly, the Court finds that Hai Yun sufficiently pled
its breach of contract claim to survive a Fed. R. Civ. P.

7

12(b)(6) motion to dismiss. Therefore, Armadillo’s Motion is
denied as to Count I.
B. Count II: Domestication of Chinese Judgment
Count II of Hai Yun’s counterclaim seeks to domesticate
the Chinese judgment pursuant to Fla. Stat. §§ 55.601-55.607,
known as the Florida Uniform Out-of-Country Money-Judgment
Recognition Act (“Act”), which states:
(1)

(2)

An out-of-country foreign judgment is not
conclusive if:
a. The judgment was rendered under a system
which does not provide impartial tribunals
or
procedures
compatible
with
the
requirements of due process of law.
b. The foreign court did not have personal
jurisdiction over the defendant.
c. The foreign court did not have jurisdiction
over the subject matter.
An out-of-country foreign judgment need not be
recognized if:
a. The defendant in the proceedings in the
foreign court did not receive notice of the
proceedings in sufficient time to enable
him or her to defend.
b. The judgment was obtained by fraud.
c. The cause of action or claim for relief on
which the judgment is based is repugnant to
the public policy of this state.
d. The judgment conflicts with another final
and conclusive order.
e. The proceeding in the foreign court was
contrary to an agreement between the
parties under which the dispute in question

8

was to be settled otherwise than by
proceedings in that court.
f. In the case of jurisdiction based only on
personal service, the foreign court was a
seriously inconvenient forum for the trial
of the action.
g. The foreign jurisdiction where judgment was
rendered would not give recognition to a
similar judgment rendered in this state. .
. .
Fla. Stat. § 55.605 (emphasis added).
According to Fla. Stat. § 55.603, the Act “applies to
any

out-of-country

foreign

judgment

that

is

final

and

conclusive and enforceable where rendered, even though an
appeal therefrom is pending or is subject to appeal.” Fla.
Stat. § 55.603.
Armadillo seeks dismissal of Count II, claiming that the
Chinese judgment does not satisfy the Act because (1) the
Chinese

court

system

lacks

impartiality

and

due

process

protections, (2) the Chinese judgment is not final, and (3)
China would be unlikely to recognize a similar judgment
rendered

in

this

State.

(Doc.

#

41

at

¶¶

20,

24-34).

Conversely, Hai Yun asserts that dismissal of Count II is not
warranted because Armadillo has not satisfied its burden
under Fla. Stat. §§ 55.603 and 55.605 to prove that any of
the grounds for non-recognition of the Chinese judgment,

9

namely the lack of an impartial tribunal, finality, and
reciprocity, are present here. (Doc. # 42 at ¶¶ 11, 17, 21).
The Court will address each ground alleged by Armadillo in
turn.
1. Impartiality
Armadillo asserts that this Court should not recognize
the Chinese judgment because China’s court system does not
provide

impartial

tribunals

or

procedures

that

meet

the

requirements of due process of law as required by the Act.
(Doc. # 41 at ¶ 20). Armadillo cites to Osorio v. Dole Food
Co., 665 F. Supp. 2d 1307 (S.D. Fla. 2009), to support its
proposition, contending that the Osorio court refused to
recognize

a

Nicaraguan

judgment

after

determining

that

Nicaragua lacked impartial tribunals by looking to the United
States Department of State Country Reports on Nicaragua’s
civil law system. (Doc. # 47 at 5; Doc. # 41 at ¶¶ 21-23).
Similarly, Armadillo references the 2013 Country Report
on Human Rights Practices (“Country Report”) prepared by the
United States Department of State to support its contention
that China lacks “fair public tribunals” and “due process in
judicial proceedings.” (Doc. # 47 at 5; Doc. # 41 at ¶¶ 2427).

The

excerpts

of

the

Country

10

Report,

provided

by

Armadillo, document issues regarding the lack of due process
in the Chinese judicial system:
[E]xecutions without due process . . . detention
and harassment of lawyers . . . and others who
sought to exercise peacefully their rights under
the law; a lack of due process in judicial
proceedings; political control of courts and
judges; closed trials . . . widespread corruption
. . . .
(Doc. # 41 at ¶ 26).
The excerpts also document issues regarding judicial
power in China:
The judiciary did not exercise judicial power
independently . . . Judges regularly received
political guidance on pending cases, including
instructions on how to rule, from both the
government and the CCP [Chinese Communist Party].
. . .
(Id. at ¶ 27).
The excerpts further discuss issues regarding judicial
corruption:
[C]orruption also influenced court decisions.
Safeguards against judicial corruption were vague
and poorly enforced. Local governments appoint and
pay local court judges and, as a result, often
exerted influence over the rulings of judges in
their districts.
(Id.)
Armadillo also cites to the United States Department of
State’s

U.S.

Passports

&

International

Travel

Bureau

of

Consular Affairs’ website to demonstrate that “because the

11

judicial branch in China is dominated by political forces,
and in general, does not dispense impartial justice . . . the
alleged Chinese judgment should not be recognized by this
Court.” (Id. at ¶¶ 28-29).
In response, Hai Yun points out that Armadillo cites no
case law or evidence aside from the Country Report and the
United

States

Passport

&

International

Travel

Bureau

of

Consular Affairs’ warnings to support its assertion that the
Chinese judgment “was rendered under a system which does not
provide impartial tribunals or procedures compatible with the
requirements of due process of law.” (Doc. # 42 at ¶ 11)
(internal quotations omitted). Hai Yun outlines the process
of

the

relevant

Chinese

proceedings,

in

which

Armadillo

appeared and defended itself, and cites multiple cases that
recognize “the sufficiency of China’s legal system and due
process procedures,” in the context of determining whether
China presented an adequate forum in forum non conveniens
actions. (See id. at ¶¶ 12-13) (citing e.g. Folex Golf Indus.
v.

China

Shipbuilding

Indus.,

No.

CV09-2248-R,

2013

WL

1953628, at *5 (C.D. Cal. May 9, 2013) (concluding that the
Chinese

judgment

was

entitled

to

recognition

because

defendant received fair notice and had fair opportunity to

12

defend

itself,

and

due

to

long-standing

principles

of

international comity)).
In arguing that the Chinese proceeding afforded due
process, Hai Yun largely relies on Hubei Gezhouba Sanlian
Indus. Co., Ltd. v. Robinson Helicopter Co., Inc., No. 2:06cv-01798-FMC-SSx, 2009 WL 2190187 (C.D. Cal. July 21, 2009),
in which the court found that a Chinese proceeding was
compliant with the requirements of due process of law because
(1) a three judge panel reviewed the evidence presented at
trial, considered the merits, and ruled separately on each
claim, (2) the party not domiciled in China had 30 days to
appeal the judgment or file a motion for extension of time to
appeal, and (3) the judgment became “final, conclusive, and
enforceable under [Chinese] law based on the nature of the
[Chinese] Judgment and the exhaustion of the time period for
appeal.” See Robinson Helicopter, 2009 WL 2190187, at *4, 67.
Hai Yun also relies on Zschernig v. Miller, 389 U.S. 429
(1968) to support its proposition that the dispute between
Armadillo and Hai Yun regarding the content of Chinese law
and the impartiality of its judicial system is a question of
fact that requires the presentation of evidence, and thus the
counterclaim should be allowed to proceed. See Zschernig, 389

13

U.S. at 461 (Harlan, J., concurring)(“When there is a dispute
as to the content of foreign law, the court is required under
the common law to treat the question as one of fact and to
consider

any

evidence

presented

as

to

the

actual

administration of the foreign legal system.”). Hai Yun also
points out that Armadillo does not articulate any specific
problems in the Chinese proceeding that would present a due
process issue, but rather argues in general that China lacks
an impartial justice system. (Doc. # 42 at ¶ 16).
At

this

juncture

and

upon

review

of

the

arguments

provided by the parties, this Court finds that there is not
enough

information

to

determine

the

impartiality

of

the

Chinese proceedings. The Court notes that many of the cases
cited by Hai Yun determined the sufficiency of the Chinese
court system under a forum non conveniens standard rather
than

a

domestication

insightful

standard,

verification

of

but

instances

these
where

cases

provide

the

Chinese

judicial system has been discussed, evaluated, and determined
appropriate by United States federal courts. (See id. at ¶
13).
Although

the

Country

Report

presented

by

Armadillo

speaks generally about the Chinese judicial system, neither
party presents any evidence in the pleadings to confirm or

14

dispute the existence of impartiality in this particular
Chinese proceeding. Though Armadillo relies on Osorio to
support

its

proposition

that

the

Country

Report

should

constitute sufficient evidence of a lack of impartiality,
many other pieces of evidence supported the Osorio court’s
conclusion

regarding

the

lack

of

impartiality

in

the

Nicaraguan judicial system aside from the State Department’s
Country Reports, including reports from other sources and
expert

testimony

organizations

and

as

well

as

officials

“United

States

(including

government

United

States

ambassadors to Nicaragua), foreign governments, international
organizations,

and

credible

Nicaraguan

authorities.”

See

Osorio, 665 F. Supp. 2d at 1349. Given the limited information
that a court can review on a motion to dismiss, this Court
finds that it lacks sufficient information to make any factual
determinations regarding the impartiality of the relevant
Chinese proceeding at this juncture.
2. Finality
Armadillo

asserts

that

because

the

finality

of

the

judgment is a prerequisite for recognition of a foreign money
judgment under Fla. Stat. § 55.603, the Chinese judgment
should

not

be

enforced

given

that

under

Chinese

Civil

Procedure Law, “there is a procedure for retrying cases even

15

after they have gone to judgment.” (Doc. # 41 at ¶¶ 30-31).
According to Armadillo, under Chinese Civil Procedure Law,
there is no equivalent to Fed. R. Civ. P. 59 or 60; the court
can retry a case even after issuance of final judgment either
on its own motion or “at the request of the procuratorate,”
a Chinese “state organ for legal supervision.” (Id. at ¶¶ 3132, n.1). Also, there is no specified time limit for retrial.
(Id. at ¶ 32). Therefore, Armadillo argues that because the
Chinese judgment is not final, conclusive and capable of
enforcement in China, it cannot be domesticated by this Court.
(Id. at ¶¶ 18, 30-32).
Hai

Yun

disputes

Armadillo’s

proposition

that

the

Chinese judgment is not final, conclusive, and enforceable by
explaining that under Chinese law, Armadillo had the right to
file an appeal of the Chinese judgment within thirty (30)
days, but failed to do so, and thus, the Chinese judgment
became final and enforceable. (Doc. # 42 at ¶ 17-20) (citing
Robinson Helicopter, 2009 WL 2190187, at *5 (concluding that
the

Chinese

judgment

became

final,

conclusive,

and

enforceable under Chinese law for the purposes of the Uniform
Foreign Money-Judgments Recognition Act when the defendant
opposing domestication neither appealed nor requested an

16

extension of time to appeal the Chinese judgment in the
required time frame)).
This Court finds it inappropriate at this stage to make
a conclusion about the finality provided by the Chinese Civil
Procedure

Laws.

Armadillo

and

Hai

Yun

disagree

on

the

interpretation of the relevant Chinese Civil Procedure Laws
in this case, and there is inadequate information in the
pleadings to determine whether the ways in which a case can
be retried after final judgment generate a recognition issue
under Florida law. As previously mentioned, this Court is
limited in the materials it can consider on a Motion to
Dismiss, and as a result, the Court finds that ruling on the
issue of finality is inappropriate at this time.
3. Reciprocity
Fla. Stat. § 55.605(2)(g) provides that “An out-ofcountry foreign judgment need not be recognized if . . . [t]he
foreign jurisdiction where judgment was rendered would not
give recognition to a similar judgment rendered in this
state.”
agreement

Armadillo
currently

contends
exists

that

because

between

China

no

reciprocity

and

the

United

States, China would be unlikely to recognize a judgment of
this State, and thus, the Chinese judgment need not be

17

recognized by this Court under Fla. Stat. § 55.605(2)(g).
(Doc. # 41 at ¶¶ 33-34; See Doc. # 49).
Hai Yun submits, however, that Armadillo’s determination
that China would be unlikely to recognize a judgment rendered
in the courts of this State is a “bald, unsupported assertion”
that does not meet the burden of showing that Fla. Stat. §
55.605(2)(g) prohibits recognition of the Chinese judgment,
especially given that reciprocity is a permissive rather than
a mandatory ground for non-recognition. (Doc. # 42 at ¶¶ 2123).
At this procedural juncture, this Court finds that the
pleadings lack sufficient information to support a factual
determination regarding the issue of reciprocity. Armadillo
offers no support for its contention that China would be
unlikely to recognize a judgment of this Court. Therefore,
this Court will not make any findings as to this ground at
this time. For the reasons stated above, Armadillo’s Motion
is denied as to Count II.
IV. Conclusion
Upon due consideration, Armadillo’s Motion to Dismiss as
to

Count

I

is

denied

as

the

Court

finds

that

Hai

Yun

sufficiently pled its breach of contract claim. Armadillo’s
Motion to Dismiss as to Count II is also denied as the Court

18

determines that Hai Yun’s domestication of Chinese judgment
claim is adequately pled, and further finds that the factual
dispute concerning whether the Chinese judgment is entitled
to recognition under Florida Law constitutes an issue not
proper for resolution on the present Motion to Dismiss.
Furthermore, as stated at the hearing on June 13, 2014,
the parties have until July 3, 2014, to file an English
translation of the Chinese judgment, and Armadillo has until
July 14, 2014, to file its answer to Hai Yun’s Amended
Counterclaims.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Armadillo Distribution Enterprises, Inc.’s Motion to
Dismiss (Doc. # 41) is DENIED.

(2)

The parties have until and including July 3, 2014, to
file an English translation of the Chinese judgment.

(3)

Armadillo Distribution Enterprises, Inc. has until and
including July 14, 2014, to file an answer to Hai Yun
Musical

Instruments

Manufacture

Counterclaims.

19

Co.

Ltd.’s

Amended

DONE and ORDERED in Chambers, in Tampa, Florida, this
23rd day of June, 2014.

Copies: All Counsel of Record

20