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The present decision does not concern a CISG transaction (at least not in a narrow sense), but a seemingly entirely domestic dispute involving exclusively parties based in the U.S.: The Claimants are a U.S. citizen who owned a water softener system that had flooded his residence causing water damage (Patrick Mealey) and his U.S.-based insurer (USAA Casualty Insurance Company), and the Respondents are three U.S. companies that had manufactured (Nuvo H2O) or sold the water softener system to Claimant Mealey (Nuvo Residential LLC) or supplied allegedly defective components of the water softener system (Hydro Systems International, Inc.).

The CISG is only addressed in the decision because the contract for the sale of the water softener system components concluded between Respondent Hydro Systems International, Inc. (a company incorporated in Connecticut with its registered office in New York) and Respondent Nuvo Residential LLC (a company incorporated in Utah, where it also had its principal place of business) contained the following choice-of-law clause:

„Applicable Law and Settlement of Disputes:

This Contract shall be governed and regulated by CISG (United Nations Convention on Contracts for the International Sale of Goods, Vienna 1980). Any questions not covered by CISG will be governed by the law of Italy. Any dispute may arise between Hydro Systems International NY and the Customer in connection with this Contract, its interpretation, performance, breach of termination shall be finally referred to the Court of Reggio Emilia – Italy.”

It is not clear from the decision why an express contractual choice of the CISG – which probably formed part of Hydro Systems' standard terms – was used in a purely domestic U.S. contract, but a reason may have been that Hydro Systems had sourced the components from an Italian manufacturer (see para. 8 of the decision). It is conceivable that a constant U.S.-Italian business relationship may have enticed Hydro Systems to "mirror" the choice-of-law clause used in its contracts with the Italian manufacturer also in its contracts with its own domestic or international customers.

The District Court did in any case not apply the CISG to the only question it had to decide in the present decision, namely the recovery of attorneys' fees and expert costs incurred by Hydro Systems. In support of not applying the choice-of-law clause, the Court noted that the issues in the case at hand fell outside the choice-of-law clause's scope, and that the clause had only now (belatedly) been raised by Hydro Systems; it therefore applied Arizona law instead (paras. 9, 10 of the decision). (The District Court did therefore not address the disputed question whether attorneys' fees are recoverable under the CISG at all.)