Electrocraft Arkansas, Inc. v. Super Electric Motors, Ltd.

Chinese company Super Electric Motors, Ltd. (Super Electric) (defendant) manufactured refrigerator motors, which were sold to Electrocraft (plaintiff), an American company. Electrocraft supplied the motors to refrigerator manufacturers. Beginning in July 2008, Electrocraft received notices from customers that Super Electric’s motors were failing at an unacceptable rate. Super Electric acknowledged that the motors were defective but refused to provide any remedy, such as a refund or replacement. Electrocraft lost major customers and had to pay significant amounts to resolve claims. Electrocraft was also left with about 300,000 defective motors that lacked any productive use. Electrocraft sued Super Electric, alleging contract-based and other claims, including violations of the Convention on Contracts for the International Sale of Goods (CISG) and Uniform Commercial Code (UCC) relating to breach of warranty, negligence and/or strict liability, violation of the state’s deceptive trade practices act (ADTPA), unjust enrichment and restitution, and tortious interference with a business expectancy. Super Electric filed a motion to dismiss the complaint based on grounds that the non-CISG claims were all preempted or subsumed by the CISG and the complaint failed to sufficiently state a cause of action under the CISG. It was undisputed that China and the United States were both signatories to the CISG and that a valid contract governed the parties’ sales transactions. Electrocraft conceded that it had alternatively pleaded claims under the UCC in the event that the court found the CISG to be inapplicable.