Skipper Marine Corp v. Azimut Benetti SPA et al

Filing 23

ORDER signed by Judge J P Stadtmueller on 4/4/13: granting 4 Defendant's Motion to Compel Arbitration; the parties shall electronically file a joint status report on or before 10/1/13 and every 90 days thereafter; denying without prejudic e 4 Defendant's Motion to Dismiss for improper venue; granting 17 Plaintiff's Motion for Leave to File a Sur-Reply Brief; granting 18 Defendant's Motion for Leave to File a Response to Plaintiff's Sur-Reply Brief. The Clerk is directed to administratively close this matter. (cc: all counsel) (nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
SKIPPER MARINE HOLDING INC.,
Plaintiff,
v.

Case No. 12-CV-1274-JPS

AZIMUT BENETTI S.p.A.,

ORDER
Defendant.

1.

BACKGROUND
Plaintiff Skipper Marine Holding Inc. (“Skipper”), a Midwestern-U.S.-

based boat dealer, seeks various redress from defendant Azimut Benetti
S.p.A. (“Azimut”),1 an Italian yacht manufacturer, in connection with
termination of the parties’ yacht-distribution relationship.
To that end, Skipper filed a complaint in the Circuit Court of the State
of Wisconsin, Waukesha County, on November 13, 2012, bringing five claims
relating to termination of the parties’ yacht-distribution relationship: (i)
breach of implied contract; (ii) breach of covenant of good faith and fair
dealing; (iii) promissory estoppel; (iv) intentional interference with
contractual relationship; and (v) intentional interference with prospective
contractual relationship. (Docket #1-1).
Subsequently, Azimut filed a notice of removal in this Court based on:
(i) Azimut’s contention that the subject matter of the complaint is covered by
an arbitration agreement that falls under the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards (the “Convention”), 9 U.S.C.

1

The parties do not dispute that Azimut is an Italian corporation. See infra
Section 2.1. Ostensibly a Società per Azioni (S.p.A), Azimut is improperly
designated. See e.g., (Docket #1-3, 2).

§§ 202 and 205 (i.e., a federal question by virtue of 9 U.S.C. § 203) (Docket #1,
4); and (ii) the parties’ complete diversity of citizenship and a sufficient
amount in controversy, 28 U.S.C. §§ 1332 and 1446. (Docket #1, 6).
Now, Azimut moves to dismiss or, in the alternative, compel
arbitration. (Docket #4). Skipper opposes each motion. (Docket #s 11 and
17-12).
2.

JURISDICTION
Azimut proposes two bases for this Court’s original subject matter

jurisdiction over Skipper’s action: diversity of citizenship (with the requisite
amount in controversy), 28 U.S.C. § 1332, and a federal question arising
under the Convention, 9 U.S.C. § 203. The Court will address each basis in
turn.
2.1

28 U.S.C. § 1332

With regard to jurisdiction under § 1332, it is undisputed that: (i)
Skipper is a Delaware corporation whose principle place of business is
located in Illinois (Docket #20, 1); (ii) Azimut is an Italian corporation whose
principle place of business is located in Italy (Docket #1, 2); and (iii) Skipper
complains, inter alia, that “Azimut has refused and continues to refuse to
repurchase” two Azimut yachts Skipper holds in inventory representing a
“combined investment” of “over $2 million” (Docket #1-1, 6-7). Therefore, the
parties’ citizenship is diverse within the meaning of 28 U.S.C. § 1332 (a)(2)
and the amount-in-controversy requirement of § 1332 is satisfied. Subject
matter jurisdiction exists under § 1332.

2

For the sake of completeness of the record, the Court will grant both
Skipper’s motion for leave to file a sur-reply brief in opposition to Azimut’s
motions (Docket #17) and Azimut’s motion for leave to file a response to Skipper’s
sur-reply brief (Docket #18).

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2.2

9 U.S.C. § 203
2.2.1

The Convention

Chapter Two of the Federal Arbitration Act (“FAA”) implements the
Convention in the United States Code. “An arbitration agreement…arising
out of a legal relationship, whether contractual or not, which is considered
as commercial…falls under the Convention” when at least one non-U.S.
citizen is a party to that relationship. 9 U.S.C. § 202.3 In turn, Section 203
provides that “[a]n action…falling under the Convention shall be deemed to
arise under the laws and treaties of the United States” and “[t]he district
courts of the United States…shall have original jurisdiction over such an
action or proceeding, regardless of the amount in controversy.”
Therefore, if this Court finds that the subject matter of Skipper’s
complaint is covered by an arbitration agreement arising out of a legal
relationship (commercial in nature) between the parties, Section 203
constitutes an independent basis for subject matter jurisdiction over this
action.4
2.2.2

Is The Subject Matter of Skipper’s Complaint Covered
By An Arbitration Agreement Falling Under The
Convention?

To determine whether a contract's arbitration clause applies to
a given dispute, federal courts apply state-law principles of
contract formation. Rosenblum v. Travelbyus.com Ltd., 299 F.3d
657, 662 (7th Cir.2002). Once it is clear, however, that the

3

When the relationship is entirely between citizens of the United States,
a statutorily sufficient non-U.S. nexus is necessary.
4

Azimut is the requisite non-U.S. citizen because, as noted above, it is
incorporated in Italy and its principle place of business is in Italy. See Section 202
(“[A] corporation is a citizen of the United States if it is incorporated or has its
principle place of business in the United States”).

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parties have a contract that provides for arbitration of some
issues between them, any doubt concerning the scope of the
arbitration clause is resolved in favor of arbitration as a matter
of federal law. Moses H. Cone Mem'l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983);
Miller v. Flume, 139 F.3d 1130, 1136 (7th Cir.1998). “To this end,
a court may not deny a party's request to arbitrate an issue
‘unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that
covers the asserted dispute.’” Kiefer Specialty Flooring, Inc. v.
Tarkett, Inc., 174 F.3d 907, 909 (7th Cir.1999) (quoting United
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574,
582–83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)).
Gore v. Alltel Communications, LLC, 666 F.3d 1027, 1032-1033 (7th Cir. 2012)
2.2.2.1

Relevant Factual Background

Skipper’s complaint brings claims relating to termination “[i]n or
about August 2012" of the parties’ yacht-distribution relationship. (Docket #11, 5-8). The parties agree that the most recent written contract governing their
relationship was executed on January 17, 2010, and expired by its terms (save
for surviving provisions) on September 15, 2011 (the “Written Contract”).
(Docket #1-3, 3 and 20); (Docket #11, 2 n.1).
According to Skipper’s complaint, the parties’ course of conduct
following expiration of the Written Contract “manifested the parties’ mutual
intent to continue Skipper Marine’s dealership” and their relationship ended
only when Skipper learned (and Azimut confirmed) that MarineMax had
taken over Skipper’s exclusive dealership territory. (Docket #1-1, 5).
Likewise, Azimut submits that the parties’ commercial relationship endured
beyond the term of the Written Contract. (Docket #16, 13).
Section 17.1 of the Written Contract provides:

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The Provisions of Articles 14, 16, 18, 19 and 20 shall survive the
expiration or termination of this Agreement and any claims
Azimut may have for the collection of money or the
enforcement of any obligations which may be in the nature of
continuing obligations shall also survive the expiration or
termination of this Agreement.
(Docket # 1-3, 14).
In turn, Section 20.7 of the Written Contract provides:
Any dispute arising out or in connection with the execution,
interpretation or termination of this Contract or the
relationship between [Skipper] and Azimut must be
exclusively submitted by the Parties to and determined by a
sole arbitrator in the City of Turin in accordance with the Rules
of the Turin Chamber of Commerce and the Italian Civil Code,
such arbitrator to be legally qualified and to be appointed by
agreement between the parties or (failing agreement within
fourteen days after the written request referred to) by the
President of the Turin Chamber of Commerce. The decision of
the sole arbitrator will be final and binding.
(Id. at 20).
2.2.2.2

Is the Arbitration Clause Valid?

[W]hen parties commit to arbitrate contractual disputes, it is a
mainstay of the [FAA’s] substantive law that attacks on the
validity of the contract, as distinct from attacks on the validity
of the arbitration clause itself, are to be resolved “by the
arbitrator in the first instance, not by a federal or state court.”
Preston v. Ferrer, 552 U.S. 346, 349, 128 S.Ct. 978, 169 L.Ed.2d
917 (2008); see also Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). For these
purposes, an “arbitration provision is severable from the
remainder of the contract,” Buckeye [Check Cashing, Inc. v.
Cardegna, 546 U.S. 440] at 445, 126 S.Ct. 1204, and its validity is
subject to initial court determination; but the validity of the
remainder of the contract (if the arbitration provision is valid)
is for the arbitrator to decide.

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Nitro-Lift Technologies, L.L.C. v. Howard, 133 S.Ct. 500, 503 (2012); see generally
9 U.S.C. § 208 (providing for residual application of Chapter One of the FAA
(General Provisions) to Chapter Two of the FAA (which implements the
Convention)).
In its sur-reply brief, Skipper mounts a (belated) attack on the validity
of the arbitration clause in Section 20.7 of the Written Contract. Skipper’s
attack reasons that because the parties agree that “application of the survival
clause to the Article 18 termination provisions is ‘bizarre’ and does not make
sense” (Docket #18-1, 6; #11, 9; and #17-1, 3), the parties were mutually
mistaken at formation in extending survivability to Article 18 and so the
survival clause should be deleted wholesale as the product of a mutual mistake
(Docket #17-1, 3).
The Court finds that Skipper’s conclusion (italicized above) is not
supported by law. Even if the parties were mutually mistaken at formation
in extending survivability to Article 18 (Termination), Skipper cites no
Wisconsin law sufficient to support its conclusion that Article 17 (Survival)
– which on its terms causes five distinct contractual articles to survive –
should be deleted wholesale.5 Therefore, the Court finds Skipper’s argument
fails and the arbitration clause is valid.

5

Notwithstanding the fact that Section 20.6 of the Written Contract provides
that “[t]his agreement and the rights and obligations of the parties hereunder shall
be governed by and constructed in accordance with the laws of Italy, without
regard to conflicts of laws[,]” the parties’ briefs make no mention of this choice of
law provision and exclusively cite to American law (and to Wisconsin state law in
particular for principles of contract). Therefore, the parties have waived the issue
of the applicable law. Adams v. Raintree Vacation Exchange, LLC, 702 F.3d 436, 438
(7th Cir. 2012).

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2.2.2.3

Does The Arbitration Clause Fall Under The
Convention?

Here, the arbitration clause is part of the Written Contract and so it
clearly arises out a legal relationship (commercial in nature) between parties
which include a non-U.S. citizen (Azimut). 9 U.S.C. § 202. Therefore, the
arbitration clause falls under the Convention.
2.2.2.4

Is The Subject Matter of Skipper’s Complaint
Covered By The Arbitration Clause?

As noted in Section 2.2.2 supra:
Once it is clear…that the parties have a contract that provides
for arbitration of some issues between them, any doubt
concerning the scope of the arbitration clause is resolved in
favor of arbitration as a matter of federal law. Moses H. Cone
Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25, 103
S.Ct. 927, 74 L.Ed.2d 765 (1983); Miller v. Flume, 139 F.3d 1130,
1136 (7th Cir.1998). “To this end, a court may not deny a
party's request to arbitrate an issue ‘unless it may be said with
positive assurance that the arbitration clause is not susceptible
of an interpretation that covers the asserted dispute.’” Kiefer
Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 909 (7th
Cir.1999) (quoting United Steelworkers v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 582–83, 80 S.Ct. 1347, 4 L.Ed.2d
1409 (1960)).
Gore v. Alltel Communications, LLC, 666 F.3d 1027, 1032-1033 (7th Cir. 2012)
Here, the Court found the arbitration clause to be valid. See supra
Section 2.2.2.2. By its terms, the arbitration clause applies to “[a]ny dispute
arising out or in connection with the execution, interpretation or termination
of this Contract or the relationship between [Skipper] and Azimut….” (Docket
#1-3, 20) (emphasis added).
According to Skipper’s complaint, the parties’ course of conduct
following expiration of the Written Contract “manifested the parties’ mutual
intent to continue Skipper Marine’s dealership” and their relationship ended
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only when Skipper learned (and Azimut confirmed) that MarineMax had
taken over Skipper’s exclusive dealership territory. (Docket #1-1, 5).6 Now,
Skipper brings claims related to termination of that continued relationship.
(Docket #1-1, 5-8).
Against this factual backdrop and with the benefit of the teachings of
Gore, the Court is obliged to find that the subject matter of Skipper’s
complaint is covered by the arbitration clause. The arbitration clause is
drafted broadly to capture the parties’ relationship (instead of only disputes
arising from the Written Contract itself) and Article 17.1 plainly causes the
arbitration clause to survive the Written Contract’s expiration. It is
undisputed that the parties’ commercial relationship continued after the term
of the Written Contract expired (Docket #1-1, 5; #16, 13), and Skipper’s claims
plainly relate to that relationship, (Docket #1-1). Therefore, the subject matter
of Skipper’s complaint is covered by the arbitration clause. Because the
arbitration clause falls under the Convention, Section 203 of the FAA
constitutes an independent basis for subject matter jurisdiction over this
action.7
3.

MOTION TO DISMISS OR COMPEL ARBITRATION
Azimut moves, in the alternative: (i) to dismiss Skipper’s complaint on

grounds that this Court is not the proper venue for the claims to be heard on
the merits; or (ii) to compel arbitration. (Docket #4; #5, 10).
In general, “[a] lack of venue challenge, based upon a forum-selection
clause, is appropriately brought as a Rule 12(b)(3) motion to dismiss.”

6

Likewise, Azimut submits that the parties’ commercial relationship
endured beyond the term of the Written Contract. (Docket #16, 13).
7

Skipper’s briefing ignores the plain language of the arbitration clause and
consequently cites a litany of inapposite cases.

Page 8 of 10

Continental Ins. Co. v. M/V ORSULA, 354 F.3d 603, 606-607 (7th Cir. 2003)
(citations omitted). “Arbitration clauses, the Supreme Court has held, are a
species of forum selection clause.” Automobile Mechanics Local 701 Welfare and
Pension Funds v. Vanguard Car Rental USA, Inc., 502 F.3d 740, 746 (7th Cir.
2007) (citation omitted). Here, the arbitration clause falls under the
Convention because it arises out of an international commercial agreement
(the Written Contract). See Section 2.2.2.3 supra.
In general, the [FAA] creates a strong presumption in favor of
arbitration, especially in international commercial agreements.
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 638-40, 105 S.Ct. 3346, 3359-61, 87 L.Ed.2d 444 (1985);
Scherk v. Alberto Culver Co., 417 U.S. 506, 519-20, 94 S.Ct. 2449,
2457, 41 L.Ed.2d 270 (1974).
Jain v. de Mere, 51 F.3d 686, 688-689 (7th Cir. 1995) (emphasis added).
With the benefit of the foregoing analysis (and given the Court’s
finding that Section 203 of the FAA constitutes an independent basis for
subject matter jurisdiction over this action), the Court will: (i) grant Azimut’s
motion to compel arbitration of Skipper’s claims in accordance with Section
20.7 of the Written Contract, 9 U.S.C. § 206;8 and (ii) deny without prejudice
Azimut’s motion to dismiss for improper venue.
Accordingly,

8

Section 206 of Chapter Two of the FAA (the chapter implementing the
Convention) provides, in relevant part, “[a] court having jurisdiction under this
chapter may direct that arbitration be held in accordance with the agreement at any
place therein provided for, whether that place is within or without the United
States.”

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IT IS ORDERED that Defendant’s motion to compel arbitration
(Docket #4) be and the same hereby is GRANTED; Skipper’s complaint shall
be submitted to arbitration in accordance with Section 20.7 of the Written
Contract;
IT IS FURTHER ORDERED that the parties shall electronically file
a joint status report on or before October 1, 2013, and every 90 days
thereafter;
IT IS FURTHER ORDERED that Defendant’s motion to dismiss for
improper venue (Docket #4) be and the same hereby is DENIED without
prejudice;
IT IS FURTHER ORDERED that Plaintiff’s motion for leave to file a
sur-reply brief (Docket #17) be and the same hereby is GRANTED; and
IT IS FURTHER ORDERED that Defendant’s motion for leave to file
a response to Plaintiff’s sur-reply brief (Docket #18) be and the same hereby
is GRANTED.
The Clerk of the Court is directed to administratively close this matter.
Dated at Milwaukee, Wisconsin, this 4th day of April, 2013.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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