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ISRAELI AIRCRAFT INDUS. v. SANWA BUS. CREDIT CORP.

March 18, 1993

ISRAELI AIRCRAFT INDUSTRIES, LTD., Plaintiff,
v.
SANWA BUSINESS CREDIT CORPORATION and SANWA BANK OF JAPAN, Defendants.


Zagel


The opinion of the court was delivered by: JAMES B. ZAGEL

Plaintiff Israeli Aircraft Industries, Ltd., an Israeli corporation, alleges that defendants Sanwa Business Credit Corporation ("Sanwa") and Sanwa Bank of Japan "torpedoed" the formation of a joint venture between Israeli Aircraft and Quadrant Management Inc. ("Quadrant"). The purpose of the proposed joint venture between Israel Aircraft and Quadrant was to bid on the assets of Fairchild Aircraft Corporation ("Fairchld"), a bankrupt American corporation. Plaintiff claims that defendants violated the anti-boycott provisions of the Export Administration Act ("EAA"), 50 U.S.C. App. § 2407. Plaintiff also alleges that defendants tortiously interfered with its prospective economic advantage and conspired against plaintiff in violation of Illinois common law. Defendants have moved to dismiss plaintiff's complaint for failure to state a claim upon which relief can be granted.

 FACTS

 Sanwa was the senior lender to, and a secured creditor of, Fairchild, a manufacturer of small aircraft. Fairchild filed for bankruptcy protection in February 1990, and a final bid deadline of September 17, 1990 was set for the purchase of Fairchid's assets. Around July 1990, Quadrant expressed an interest in purchasing Fairchild's assets, and officials from Quadrant met with Sanwa management to negotiate the restructuring of Fairchild's outstanding debt to Sanwa. Sanwa informed Quadrant that in order to continue negotiations on the purchase of Fairchild's assets, Quadrant would have to find a partner that was experienced in the aviation industry.

 Quadrant and Israeli Aircraft then signed a letter of intent to enter into a joint venture for the purpose of acquiring certain Fairchild assets. Sanwa insisted that Israeli Aircraft represent a substantial interest in the acquiring entity, and this requirement was met in the letter of intent. After several months of negotiation, Israeli Aircraft, Quadrant, and Sanwa reached agreement on all of the major terms of the proposed asset acquisition. The parties scheduled a meeting for September 11, 1990 to finalize the agreement.

 On September 11, 1990, Sanwa advised Quadrant that Sanwa Bank had ordered Sanwa to refuse to extend credit to a venture that involved a participant with ties to Israel. This communication occurred seven days before the bid deadline and one day before the scheduled meeting between Israeli Aircraft, Quadrant and Sanwa. Quadrant tried to persuade the Sanwa defendants to reconsider but Sanwa refused, restating its position that Sanwa was withdrawing because Israeli Aircraft was a business concern organized under the laws of Israel. Plaintiff alleges that Israeli Aircraft and Quadrant were unable to complete the joint venture to submit a bid for the purchase of Fairchild's assets as a direct result of Sanwa's and Sanwa Bank's refusal to extend credit to the joint venture.

 In their motion, defendants argue that Counts I and II, which are founded on the anti-boycott provisions of the EAA, should be dismissed because there is no private right of action under the Act. Defendants further contend that the common law claims pled in Counts III, IV and V should be dismissed for failure to state a claim. In reviewing defendants' motion to dismiss under Rule 12(b)(6), "we must accept as true all the plaintiff's well-pleaded factual allegations and the inferences reasonably drawn from them." Gibson v. Chicago, 910 F.2d 1510, 1520 (quoting Yeksigian v. Nappi, 900 F.2d 101, 102 (7th Cir. 1990)). A plaintiff fails to state a claim upon which relief may be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Leahy v. Board of Trustees of Community College District No. 508, 912 F.2d 917, 921 (7th Cir. 1990) (quoting Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 101-02, 2 L. Ed. 2d 80 (1957)).

 ANALYSIS

 I. The Anti-Boycott Provisions of the Export Administration Act

 Plaintiff brings this action under § 2407(a)(1)(A) of the EAA which states:

 
(1) For the purpose of implementing the policies set forth in subparagraph (A) or (B) of paragraph (5) of section 3 of this act . . . the President shall issue regulations prohibiting any United States person, with respect to his activities in the interstate or foreign commerce of the United States, from taking or knowingly agreeing to take any of the following actions with intent to comply with, further, or support any boycott fostered or imposed by a foreign country against a country which is friendly to the United States and which is not itself the object of any form of boycott pursuant to United States law or regulation:
 
(A) Refusing, or requiring any person to refuse, to do business with or in the boycotted country, with any business concern organized under the laws of the boycotted country with any national or resident of the boycotted country, or with any other person, pursuant to an agreement with, a requirement of, or a request from or on behalf of the boycotting country . . . .

 50 U.S.C. App. § 2407(a)(1)(A) (1979).

 Plaintiff does not allege that there is an express private right of action under the anti-boycott provision of the EAA. 500 U.S.C. App. § 2407 (1979). Counts I and II of the complaint, therefore, must be dismissed unless there is an implied right of action under § 2407 of the EAA.

 The Standard for an Implied Private Right of Action

 In Cort v. Ash, 422 U.S. 66, 45 L. Ed. 2d 26, 95 S. Ct. 2080 (1975), the Supreme Court set forth a four-part test for determining whether a private right ...


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