US judge rules in favour of Guyanese company after soured fertilizer deal

Sep 29, 2013 News

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A judge in the United States of America has ruled in favour of a Guyanese company over its American counterpart following a soured multimillion dollar fertilizer deal.
The judge JAMES A. TEILBORG, presiding in the United States District Court, D. Arizona, in May, upheld nine counts of a 13-count complaint stemming from a breach of contract, filed by R. Prasad Industries (“Prasad”), a Guyanese company with its principal place of business in Corentyne, Berbice, against Flat Irons Environmental Solutions Corporation (“Flat Irons”), an Arizona corporation with its principle place of business in Prescott, Arizona, and three husband and wife couples.
The fallout is over the failure by the US company to supply fertilizer to the local importer, who does business with the Guyana Sugar Corporation (GuySuCo).
The Guyanese company had sued the defendants for failing to provide the fertiliser even after they had received part payment, but the defendants filed a counter claim in the court, which sought to dismiss the claims in the lawsuit.
In the end the judge in a written ruling found that the US company had indeed breached the terms of its agreement with the Guyanese entity.
R. Prasad Industries is a Guyanese company which sells and distributes fertilizer to companies and business in Guyana and the Caribbean region as well as South America.
The US company, Flat Irons Environmental Solutions Corporation, sources fertilizer globally and sells fertilizer as a wholesale supplier.
Defendants Gary Miller and Robert Carlile are the two Directors and shareholders of Flat Irons (Carlile is CEO and Miller has primary responsibility for operations) and, at all relevant times, represented themselves as acting on Flat Irons’ behalf.
Defendant James Keylon at all relevant times, represented himself as Flat Irons’ agent and was compensated based on the transactions between Prasad and Flat Irons.
According to court documents, having previously formed a relationship with Prasad, James Keylon, acting as a compensated intermediary, introduced Prasad to Flat Irons in 2012 and represented Flat Irons as a “long-standing, reputable, reliable and dependable supplier of fertilizer . . . able to source all of Prasad’s needs for fertilizer.”
In March 2012, Prasad contacted Robert Carlile and discussed Prasad’s current and future needs for sourced fertilizer; Carlile represented that Flat Irons could supply fertilizer to Prasad “with virtually any specifications or quantity.
All went well as from March through August 2012, Prasad and Flat Irons successfully completed multiple small fertilizer transactions.
But problems surfaced as soon as the deal began to get bigger.
In August 2012, Prasad informed Keylon that his company may soon enter into a large state contract in Guyana (with “Guysuco”) and asked if Flat Irons would be interested and capable of sourcing the request.
Keylon responded that Flat Irons “was fully capable of fulfilling such an order.”
The GuySuCo deal was for 5000 metric tonnes of urea.
The US company assured that the urea would be sourced and shipped from Mexico, and “a sample would be sent to Prasad for approval and they forwarded a quotation for the “Total Contract Amount” of US$2,115,000, which included financing, shipping, and transportation charges.
The US company requested that Prasad provide an advance payment of US$500,000.
On September 19, Prasad, after sealing his deal with Guysuco, complied with Carlile’s request and remitted $525,000 to Miller, but the funds were never used to pay the Mexican source of urea, hence the fertilizer was not shipped.
When Prasad inquired about the status of the urea shipment, all he was told was “we are working on it.”
But a few days later the US firm informed the Guyanese company that the deal with the Mexican supplier had been cancelled and that because of a rising market price for urea, they would now have to source urea “able to ship immediately” from China at a higher price than previously agreed.
Several queries from the Guyanese company proved futile as directors of the US entity never answered Prasad’s questions.
When the director of the local company finally managed to make contact with his US counterpart, he was given a series of contradictory explanations, raising suspicions about their arrangement.
By then the US company had acknowledged receipt of the US$525,000 from Prasad and kept assuring that everything was in place and shipment of 1400 metric tonnes of urea was ready from China.
The two companies traded emails but could not reach agreement as the suspicion of the Guyanese company grew to the extent that on October 11, a letter was sent to Flat Irons “terminating the agreement” and requesting “an immediate return of the $525,000 deposit that Prasad had wired to Flat Irons” so that Prasad could “find a reliable supplier to fulfill its obligations and commitments timely to Guysuco.”
Prasad retained Guyanese counsel, repeatedly requested a refund from Flat Irons, and, on November 2, at Keylon’s suggestion, flew to Arizona in a failed attempt to personally negotiate a partial refund.
Prasad then retained Phoenix counsel and demanded an immediate refund of the $525,000 advance payment but the defendants ignored his requests.
According to the court documents because Flat Irons failed to source the urea and refused to refund Prasad’s $525,000 advance payment, Prasad failed to meet its contractual obligations to Guysuco and defaulted on its security bond.
Guysuco sued Prasad and Prasad’s “business has been virtually destroyed.”

 

 

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