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In diversity cases, federal district courts must apply the choice-of-law rules of the state where the federal court sits. No specific rules of law of any foreign jurisdiction are at issue on the instant motion, and no party seeks to have any specific rules applied as an alternative to Washington contract principles.
This was a contract dispute case involving an approximately $ 1-million purchase of Western Red Cedar siding for use at a construction site in Moscow, Russia. Plaintiff Prime Start Ltd. was a British Virgin Islands corporation that supplies construction materials to clients around the world. Plaintiff entered into a contract with Defendant Maher Forest Products, Ltd., a Washington corporation, for custom-manufactured wood products to be used by plaintiff's client in Russia. Defendant Pacific Lumber Inspection Bureau also a Washington corporation, contracted with plaintiff to provide services related to quality control of the goods supplied by Defendant Maher. Plaintiff's complaint alleged that both defendants breached their contracts with plaintiff. They allegedly supplied nonconforming goods, while the other allegedly failed to inspect the goods according to the terms of the parties' agreement, thus allowing delivery of nonconforming goods to the job site in Russia. Defendant Maher has asserted counterclaims against plaintiff for costs incurred as a result of plaintiff's alleged breach of the contract between them. The instant motion was made jointly by both defendants and seeks dismissal of all of plaintiff’s claims.
Did the Washington contract law apply?
The court denied defendants' motion to strike as moot because it prematurely addressed factual evidence not yet properly before the court. The defendants' motion for summary judgment and dismissal of all claims against them was denied. The court found that the parties have acquiesced in the application of Washington law to their dispute since both sides have either relied on or tacitly approved of reliance on Washington law. The court also found that plaintiff had raised a genuine issue of fact as to whether a reinspection rule was actually incorporated into the contract; accordingly, the court could not find as a matter of law that plaintiff failed to follow that rule's reinspection procedures. While not conclusive as to the question of the existence of oral terms regarding stain application and appearance of the goods, there was evidence sufficient to prevent summary judgment. The court found that there was sufficient evidence to prevent summary judgment as to the defendant inspector. Lastly, the court also held that because not all parties were from countries that signed the United Nations Convention on Contracts for the International Sale of Goods (CISG), it did not apply to the dispute.