The case of the day is CTI Systems, SA v. Herr Industrial, Inc. (E.D. Pa. 2015). CTI, a Luxembourg company, contracted with Herr, a Pennsylvania corporation, for supplies and labor in connection with a “painting installation” in Kansas. The contract amount was $5.2 million, and the contract had Luxembourg choice of law and choice of forum clauses. According to the allegations in the complaint, Herr failed to complete the work required by the contract, and CTI overpaid Herr.
In 2014, CTI sued Herr in the District Court of Luxembourg, seeking to recover the alleged overpayment. Herr was served with process but did not appear. The Luxembourg court entered a default judgment for nearly $400,000. CTI then sued in the Eastern District of Pennsylvania, seeking recognition and enforcement of the judgment.
In between the date of the Luxembourg judgment and the date when CTI sued on the judgment, Herr sued CTI in the District of Kansas, alleging that it was still owed money under the contract. The suit alleged a violation of the Kansas Fairness in Private Construction Contracts Act (the KFPCCA), which requires all payment disputes concerning Kansas construction contracts to be brought in Kansas courts. Herr served process on CTI before CTI filed its suit for recognition and enforcement.
The issue before the Pennsylvania court was whether to dismiss CTI’s claim on the grounds that the Kansas suit was the first-filed suit.