A U.S. Court of Appeals has denied an appeal by Linglong Americas Inc. seeking arbitration in its 18-month-old breach-of-contract trade case against Horizon Tire Inc.
Medina, Ohio-based Linglong Americas — a subsidiary of China’s Shandong Linglong Tire Co. Ltd. — is weighing its options for appeal and will decide within the next few weeks, said Stephen Williger, an attorney for Cleveland-based Thompson Hine L.L.P., representing Linglong.
The suits’ origins date to 2006, when Linglong and independent wholesale distributor Horizon signed a five-year collaboration agreement to create a new brand, Crosswind, for the U.S. market, according to the order by Sixth Circuit Court of Appeals, in Cincinnati.
By 2011, Linglong and Horizon were collaborating on a wide range of tires, including the Crosswind brand, the order said.Although the two companies did not renew the agreement when it lapsed that year, the companies continued to affirm that Horizon would remain Linglong’s exclusive U.S. dealer, it said.
By early 2015, however, Linglong had started to sell Crosswind tires in the U.S. and provide them to other U.S. distributors, according to the order. Furthermore, Linglong refused to deliver most of the tires it promised to Horizon, or repay a $3.6 million loan from Horizon, it said.
Horizon filed two lawsuits in May 2015 against Linglong in California federal court, according to the order the Sixth Circuit issued Dec. 1.
Linglong countersued in Cleveland federal district court and filed a motion for that court to compel arbitration of Horizon’s claims. The Cleveland court denied that motion, and the Sixth Circuit affirmed.
Linglong petitioned the Cleveland district court to dismiss or stay Horizon’s claims pending arbitration. That court denied Linglong’s motion, and it was correct in doing so, the Sixth Circuit ruled.Linglong argued that the collaboration agreement’s arbitration clause survived the expiration of the agreement itself, because the dispute arose from issues relating to the contract, the appeals court said.
However, since Horizon itself said the collaboration agreement was no longer in force, the arbitration clause does not apply to Horizon’s claims, according to the court.
“It remains only to note that Horizon is now judicially estopped from any claim against Linglong based on the collaboration agreement,” the court said.
According to various online dictionaries, “judicial estoppel” precludes a party from taking a position in a case that is contrary to a position it has taken in earlier legal proceedings.
