Ron's beef was not with being quoted, but rather with being uncredited.
In your example, Carl, you cite the source of the paragraph and the paragraph itself cites another specific source for its content, which all seems fair.
Fair use may let you borrow materials, but you really should credit the source.
"12. Lack of credit, or improper credit, weighs against finding fair use. However, giving someone appropriate credit, will not, alone transform a "foul" use into a "fair use."
-Copyright Permission & Libel Handbook
http://copylaw.com/new_articles/fairuse.html
Regards,
Matt