O'Brien & Gere Engineers, Inc. v. Taleghani

Citations: 504 F. Supp. 399; 1980 U.S. Dist. LEXIS 15844Docket: Civ. A. 79-4309

Court: District Court, E.D. Pennsylvania; December 8, 1980; Federal District Court

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Two motions filed by defendant Khalil Taleghani are addressed: a motion to stay pending arbitration and a motion to dismiss the business entity Taleghani-Daftary for lack of personal jurisdiction. The plaintiff, O'Brien Engineers, Inc., withdrew its claim against Taleghani-Daftary, rendering the jurisdictional motion moot. Jurisdiction over Khalil Taleghani remains unchallenged. The central issue is whether the dispute is subject to arbitration under the parties' agreement.

The agreement, signed on February 21, 1978, includes an arbitration clause specifying that disputes shall be settled under the International Chamber of Commerce's rules. Following political unrest in Iran, the defendants requested a suspension of work, except for one nearly completed project. The plaintiff completed this project but withheld delivery pending payment assurances. On March 31, 1979, the parties acknowledged outstanding debts, with the defendants agreeing to pay $157,755.19 within 15 days of fund availability, referencing the February agreement for payment terms.

The plaintiff seeks recovery of this sum from the individual defendants, who argue that any recovery depends on the February agreement, which includes the arbitration clause. The key dispute centers on the interpretation of the March 1979 letter, which does not explicitly mention arbitration. The plaintiff contends that the reference to the February agreement pertains solely to payment terms, while the defendants assert that it incorporates the entire agreement, including the arbitration clause. The court finds the phrase "the provisions of the parties' Agreement dated February 21, 1978" ambiguous, making it a factual question whether the March letter supplements or supersedes the February agreement.

The plaintiff opposes the defendants' motion to stay the proceedings, arguing primarily that the March 1979 letter does not explicitly include an arbitration clause. Even if the March letter were deemed to incorporate the arbitration clause from the February 1978 contract, the plaintiff asserts that the current action is not contract-based, thereby not warranting a stay. The plaintiff claims entitlement to recover from the defendants under the principle of partnership by estoppel, referencing the Uniform Partnership Act, 59 Pa.Stat. Ann. 328 (Purdon Supp. 1980). The entity in question, Taleghani-Daftary, is established under Iranian law as a limited liability entity. Despite this, the plaintiff argues that the defendants presented the entity as a partnership, holding themselves out as partners, thus incurring personal liability for the entity's debts. The plaintiff contends that such representations negate any defenses the business entity might have related to the contract, contrary to the statutory provisions cited. Prior case law suggests that an estopped partner retains contract defenses when obligated to the contract's terms. The plaintiff's reliance on any representations made is contingent upon the contract's terms, which raises factual questions regarding whether those terms are found solely in the February agreement, the March letter, or both. Since the determination of arbitrability hinges on the contract's terms, the defendants' motion to stay is denied. Additionally, it is noted that defendant Taleghani is represented in this case, acknowledging the court's jurisdiction, while the other defendant, Jamshed Daftary, is unrepresented and has not responded, leading to a default judgment against him.