United States District Court, E.D. Texas, Sherman Division
ZODIAC SEATS U.S. LLC, Plaintiff,
SYNERGY AEROSPACE CORPORATION, Defendant.
MEMORANUM AND OPINION
KIMBERLY C. PRIEST JOHNSON UNITED STATES MAGISTRATE JUDGE.
before the Court are two issues: (1) whether the United
Nations Convention on Contracts for the International Sale of
Goods (“CISG”) applies to a breach of contract
and warranty dispute between Plaintiff Zodiac Seats U.S. LLC
(“Zodiac”) and Defendant Synergy Aerospace
Corporation (“Synergy”); and (2) if the CISG
applies, whether the CISG precludes recovery of
attorneys' fees. See Dkts. 66, 67, 68, 69. For
the limited purpose of determining these issues of law, the
parties consented to proceed before the undersigned United
States Magistrate Judge. See Dkts. 66, 67. The
determination of these limited issues was subsequently
referred to the undersigned Magistrate Judge. See
review of the entire docket, including the updated briefing
and exhibits submitted in this matter, the Court finds the
CISG controls the parties' dispute. The Court further
finds the CISG does not preclude recovery of attorneys'
fees pursuant to Chapter 38 of the Texas Civil Practice and
and Synergy entered into a series of agreements wherein
Zodiac agreed to manufacture commercial airplane seats, both
for tourist and business class passengers, for use in Airbus
airplanes manufactured for use by Synergy. Both parties argue
that the purchase orders, which acted as contracts between
the parties, were breached. Generally, Zodiac asserts that
Synergy breached because Zodiac never received full payment
for the products manufactured and delivered. Generally,
Synergy asserts that Zodiac breached because the seats were
delivered both late and with product defects and, as a
result, Synergy asserts counterclaims for breach of contract
and breach of express and implied warranties. Both parties
assert a claim for attorneys' fees. See Dkt. 6
at 9; Dkt. 23 at 6.
is an American business based in Texas. Synergy is a South
American conglomerate which operates in Colombia and Brazil,
among other locations. The contracts at issue fail to specify
whether the CISG governs their terms and whether a party
asserting breach thereof can recover attorneys' fees.
filed a partial motion for summary judgment (Dkt. 40)
arguing: (1) the CISG applies and pre-empts Texas state
contract law; and (2) under the CISG, Zodiac may not collect
attorneys' fees. See Dkt. 40 at 4-6. Zodiac
filed a response (Dkt. 49), and Synergy filed a reply (Dkt.
54). The Court held oral arguments on the motion on January
15, 2019. See Dkt. 64. The undersigned issued a
Report and Recommendation, recommending that Synergy's
partial motion for summary judgment be denied because there
existed a genuine issue of material fact regarding
Synergy's “place of business.” See
Dkt. 69. The district court issued a Memorandum Adopting the
Report (Dkt. 79) and denying Synergy's partial motion for
summary judgment. The parties consented to proceed before the
undersigned on the limited issues of determining conflict of
law and whether the CISG precludes recovery of attorneys'
fees in this case. See Dkts. 66, 67, 68. The Court
issued a briefing schedule on the issues, as agreed upon by
the parties. See Dkt. 68. Synergy filed a brief with
exhibits (Dkt. 72), Zodiac filed a response with exhibits
(Dkt. 73), and Synergy filed a reply (Dkt. 75).
argues that the CISG controls the law in this case because
its “place of business” is located in Colombia
for the purpose of the Zodiac contracts. See Dkt. 72
at 2. Additionally, Synergy asserts that Zodiac cannot bring
a claim for attorneys' fees because the damages provision
of the CISG does not include attorneys' fees in its
definition of “loss.” See Dkt. 72 at 4.
Zodiac argues that Synergy, a business with multiple
locations, is not based in Colombia for purposes of this
contract, but rather is based in Brazil. See Dkt. 73
at 1. Additionally, Zodiac argues that even if the CISG
applies, it can still recover attorneys' fees, as they
were sought pursuant to a Texas state statute, not the
damages provision of the CISG. See Dkt. 73 at 3.
CISG was ratified by the United States Senate in 1986. United
Nations Convention on Contracts for the International Sale of
Goods, opened for signature Apr. 11, 1980, 19 I.L.M.
668; see also BP Oil Int'l, Ltd. v. Empresa
Estatal Petroleos de Ecuador, 332 F.3d 333, 336 (5th
Cir. 2003). The CISG “creates a private right of action
in federal court” and “applies to
‘contracts of sale of goods between parties whose
places of business are in different States . . . [w]hen the
States are Contracting States.'” Id.
(quoting the CISG art. 1(1)(a)). “As incorporated
federal law, the CISG governs [any dispute arising out of
contracts for sales of goods between member states] so long
as the parties have not elected to exclude its
application.” BP Oil, 332 F.3d at 336
(requiring parties to show a clear intent to affirmatively
opt-out of the CISG). An intent to preempt state law has been
found in the introductory text of the CISG, which states that
“the adoption of uniform rules which govern contracts
for the international sale of goods and take into account the
different social, economic[, ] and legal systems would
contribute to the removal of legal barriers in international
trade and promote the development of international
trade.” Honey Holdings I, Ltd. v. Alfred L. Wolff,
Inc., 81 F.Supp.3d 543, 551 (S.D. Tex. 2015) (quoting
Asante Technologies, Inc. v. PMC-Sierra, Inc., 164
F.Supp.2d 1142, 1151-52 (N.D. Cal. 2001)) (internal
APPLICATION OF THE CISG
parties do not dispute that the contracts at issue were for
the sale of goods, in the form of commercial airline seats.
The contracts are silent, however, as to the applicability of
the CISG. As an American business, Zodiac is bound by the
terms of the CISG if it contracts with a party whose
“place of business” is in a country that is a
signatory to the CISG at the time the contract was signed.
Thus, to determine whether the CISG applies to the disputed
contracts, the Court must determine Synergy's
“place of business” with the closest relationship
to the contracts.
argues that it is based in Colombia, while Zodiac argues
Synergy is based in Brazil. See Dkt. 40 at 4; Dkt.
49 at 6-7. Colombia adopted the CISG in 1999, and reaffirmed
it in 2000. See Corte Constitucional [Constitution]
May 10, 2000 (Colum.); see also U.N. General
Assembly, United Nations Commission on International
Trade Law: Case Law on UNCITRAL TEXTS (Clout), 4, U.N.
Doc. A/CN.9/SER.C/ABSTRACTS/123 (Sep. 26, 2012). Brazil
entered the CISG in 2014, after the formation of the
contracts (e.g., purchase orders) at issue. See Juan
Antonio Gaviria-Gil, The Puzzle of the Lack of Colombian
Cases on the CISG, 26 International Law, Revista
Colombiana de Derecho Internacional, 289, 301 (2015);
see also Dkt. 6 at 4-5. Thus, for the CISG to apply,
Synergy must establish that its place of business with regard
to the contracts at issue was in Colombia.
10 of the CISG provides, “[I]f a party has more than
one place of business, the place of business is that which
has the closest relationship to the contract and its
performance, having regard to the circumstances known to or
contemplated by the parties at any time or at the conclusion
of the contract.” CISG art. 10. In weighing which
location has the closest relationship to the contract, courts
consider where the communications about the contract
or representations about the product
originated. See McDowell Valley Vineyards, Inc. v.
Sabate USA Inc., 2005 WL 2893848, at *3 (N.D. Cal. Nov.
2, 2005) (holding the CISG does not apply where most
communications emanated from the United States, thus under
the CISG, the parties were both American, not from different
member states); Asante Technologies, Inc. v. PMC-Sierra,
Inc., 164 F.Supp.2d 1142, 1149 (N.D. Cal. 2001) (Finding
the “place of business” to be Canada where
“most if not all of the defendant's representations
regarding the technical specifications of the products
emanated from Canada.”).
issue in this case is not just from where
communications emanated, but also when those
communications were sent. Scholars interpreting the CISG
explain that when Article 10 “refers to the performance
of the contract, it is referring to the performance that the
parties contemplated when they were entering into the
contract.” Guide to CISG Article 10, Secretariat
Commentary, available at Pace Law School
institute of International Commercial Law, “Place of
Business, subparagraph (a), ”
(last updated Aug. 29, 2006). Moreover, “[t]he phrase
‘the contract and its performance' refers to the
transaction as a whole, including factors relating to the
offer and acceptance[, ] as well as the performance of the
contract. The location of the head office or principal place
of business is irrelevant for the purposes of [A]rticle 9 and
[A]rticle 10 unless [that location] has the closest
relationship to the contract and its performance.”
Secretariat Commentary on Article 9, Article 10 regarding
1978 Draft, CISG, available at
Thus, the Court must consider from where Synergy's
communications with Zodiac regarding entering into the
case, the parties did not execute a single contract covering
all goods ordered and delivered. While the parties negotiated
and edited a comprehensive contract, it was never signed or
adopted by the parties. See Dkt. 73-1. Thus, the
contracts asserted in this case are in fact a series of
purchase orders, executed between February 20, 2013, and
December 2, 2013. Dkt. 6 at 5-7. Moreover, Synergy asserts
that during the performance of the purchase orders, new
agreements were formed and novation occurred. Dkt. 23 at 4.
Accordingly, because there is no single contract, the Court
considers the parties' communications prior to the
execution of each ...