Lafayette Texaco, Inc. et al v. Smith et al

Filing 59

MEMORANDUM OPINION AND ORDER that defendant Moore Oil Company, Inc.'s 52 Motion to Transfer Venue, Compel Arbitration, and Strike Jury Demand is granted to the following extent only: (1) Plaintiff RM & JW, Inc.'s (d/b/a Junction Citgo)cla ims against defendant Moore Oil Company, Inc. are transferred to the United States District Court for the Northern District of Alabama. The clerk of the court is to take appropriate steps to effect the transfer. The claims brought by plaintiff RM & J W, Inc. (d/b/a Junction Citgo) against defendants Kevin Smith, Jason Janes, Mike Burch, and Mark Parish will remain in this court; (2)Plaintiffs Bridges Enterprises, Inc. (d/b/a Bridges Travel Plaza) and YPCB Fuel LLC (d/b/a The Village Mart at Oglet ree) are to arbitrate their claimsagainst defendant Moore Oil Company, Inc. All remaining claims brought by plaintiffs Staci and Mike McCullers, Lafayette Texaco, Inc., The Village Mart at Southside, LCC, RM & JW, Inc. (d/b/a Junction Citgo), Bridges Enterprises, Inc. (d/b/a Bridges Travel Plaza), and YPCB Fuel LLC (d/b/a The Village Mart at Ogletree) against defendants Moore Oil Company, Inc., Smith, Janes, Burch,and Parish in this litigation are not subject of arbitration. (3) The claims broug ht by plaintiff Village Mart at Southside, LCC against defendant Moore Oil Co., Inc. are to proceed non-jury. All remaining claims brought by plaintiffs Staci and Mike McCullers, Lafayette Texaco, Inc., The Village Mart at Southside, LCC, RM & JW, In c. (d/b/a Junction Citgo), Bridges Enterprises, Inc. (d/b/a Bridges Travel Plaza), and YPCB Fuel LLC (d/b/a The Village Mart at Ogletree) against defendants Moore Oil Company, Inc., Smith, Janes, Burch, and Parish in this litigation are to proceed with a jury. Signed by Honorable Myron H. Thompson on 2/19/2010. (Attachments: # 1 Civil Appeals Checklist)(cb, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE MIDDLE DISTRICT OF ALABAMA, EASTERN DIVISION

LAFAYETTE TEXACO, INC., et al., Plaintiffs, v. KEITH SMITH, et al., Defendants.

) ) ) ) ) ) ) ) ) )

CIVIL ACTION NO. 3:08cv406-MHT (WO)

OPINION AND ORDER In this lawsuit, the disputes center on whether a fuel supplier met its obligations in regard to furnishing fuel to several gas stations. and Mike McCullers, and The plaintiffs are Staci Lafayette Texaco, Inc.

(collectively referred to as "Lafayette"); The Village Mart at Southside, LCC (referred to as "Southside"); RM & JW, Inc. d/b/a Bridges Junction Citgo (referred d/b/a to as

"Junction");

Enterprises,

Inc.

Bridges

Travel Plaza (referred to as "Bridges"); and YPCB Fuel LLC d/b/a The Village Mart at Ogletree (referred to as "Ogletree"). The defendants are Moore Oil Company, Inc.

(referred to as "Moore Oil") and its employees Kevin Smith, Jason Janes, Mike Burch, and Mark Parish

(collectively referred to as the "Moore Oil employees" or the "employees"). Moore Oil entered into contractual agreements with the plaintiffs to supply them with fuel. The plaintiffs

claim that, among other things, the defendants failed to provide all of the promised fuel, falsified invoices, and charged the stations for undelivered fuel. Based on these allegations, the plaintiffs assert the following claims against the defendants: and a federal Corrupt claim under the Act

Racketeer

Influenced

Organizations

(referred to as "RICO"), 18 U.S.C. §§ 1961-1968, and state-law claims for fraud, conversion, theft, negligentand-wanton contract. training and supervision, is proper and breach 18 of

Jurisdiction

under

U.S.C.

§ 1964(c) (RICO), 28 U.S.C. § 1331 (federal question), and 28 U.S.C. § 1367 (supplemental).

2

Moore Oil has moved for a change of venue from the Middle District of Alabama to the United States District Court for the Northern District of Alabama as to Junction and to compel arbitration and strike jury demands as to all plaintiffs; the Moore Oil employees have not joined in the motion, nor has Moore Oil contended that the employees are subject to the motion. For the reasons

that follow, and as to Moore Oil only, the venue motion will be granted as to the claims brought by Junction; arbitration will be compelled as to the claims brought by Bridges and Ogletree; and the jury request will be struck as to the claims brought by Southside. Change of Venue: Junction's contract with Moore Oil

provides that it "consents to the jurisdiction of any state or federal court located in Birmingham, Alabama and waives any objection Buyer may have based upon improper venue or forum non conveniens or to the conduct of any proceedings in any such court." Compl. Ex. 3. Def.'s Obj. Mot. Amend.

Pursuant to this provision, Moore Oil asks

3

that the court transfer its dispute with Junction to the Northern located. 28 U.S.C. § 1404(a) authorizes a district court to transfer a civil action to any other district in which it might have been brought "for the convenience of parties and witnesses, in the interest of justice." Because District of Alabama, where Birmingham is

federal courts afford deference to a plaintiff's choice of forum on a § 1404 motion, the burden is normally on the movant to show that the suggested forum is more convenient or that litigation there would be in the interest of justice. 573 (11th Cir. 1989). A choice of forum clause is "a significant factor that figures centrally in the District Court's calculus" in deciding a change v. of venue Corp., factors motion, 487 might U.S. Stewart 22, 29 In re Ricoh Corp., 870 F.2d 570,

Organization, (1988), and,

Inc.

Ricoh

"while

other

conceivably

militate against a transfer, ... the venue mandated by a

4

choice of forum clause rarely will be outweighed by other 1404(a) factors." In re Ricoh Corp., 870 F.2d at 573 Accordingly,

(quotation marks and citation omitted).

"when a motion under section 1404(a) seeks to enforce a valid, reasonable choice of forum clause, the opponent bears the burden of persuading the court that the

contractual forum is sufficiently inconvenient to justify retention of the dispute." on Junction to demonstrate Id. The burden is therefore why this forum-selection

clause should not be enforced. Junction argues that the forum-selection clause in its contract with Moore Oil is merely a "consent to venue, not a choice of venue clause." Amend. Compl. Ex. 3. Def.'s Obj. Mot.

Junction does not explain this The

distinction, and its argument is without merit.

language of the contract's clause is clear: both parties assented to Birmingham serving as the venue for any dispute arising out of the contract.

5

The venue for all of Junction's claims against Moore Oil will therefore be transferred to the United States District Court for the Northern District of Alabama. Whether Junction should be compelled to arbitrate its claims against Moore Oil and whether it is entitled to a jury trial in its dispute with Moore Oil are both matters for resolution after transfer. Moore Oil employees have not Of course, because the joined in Moore Oil's

motion, Junction's claims them against them will remain in this court. Arbitration: The next issue is whether the remaining plaintiffs (Lafayette, Southside, Bridges, and Ogletree) should be compelled to arbitrate their claims against Moore Oil pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16. Lafayette's contract with Moore Oil

does not contain an arbitration provision. Def.'s Obj. Mot. Amend. Compl. Ex. 1. the following provision: "27. Waiver of Jury, Arbitration and Proper Venue. For purposes of 6 Southside's contract contains

arbitration or litigation of any cause of legal action arising from this Agreement, the Parties agree that the courts of Montgomery County, Alabama shall be the sole proper venue for such legal action and that the Courts for the State of Alabama and the United States sitting in Montgomery County, Alabama shall have sole jurisdiction of any such arbitration or legal action unless expressly agreed upon otherwise by the parties." Def.'s Obj. Mot. Amend. Compl. Ex. 2. contains the following provision: "27. Arbitration and Proper Venue. All claims, disputes or matters in questions between Dealer and Price Oil Inc. established hereby, shall be decided by arbitration in accordance with the applicable rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise.1 The foregoing agreement to arbitrate shall be specifically enforceable under the prevailing 2 arbitration law." 1. Moore Oil assumed this agreement from Price Oil. The parties agree that the Price Oil fuel supply contracts, which Moore Oil assumed, govern Moore Oil's relationship with the respective dealer plaintiffs. Def.'s Mot. Compel Arbitration at 2. 2. In its brief, Moore Oil mischaracterizes its (continued...) 7 Bridges's contract

Def.'s Obj. Mot. Amend. Compl. Ex. 4. contract contains this provision:

And Ogletree's

"28. ARBITRATION. All disputes, claims, or controversies between Dealer and Price and/or any of Price's employees, arising from or relating to this Contract, the making of this Contract or the validity of this arbitration clause, shall be resolved by binding arbitration in accordance with the applicable arbitration rules of the American Arbitration Association then existing, unless the parties agree otherwise. This arbitration Contract is made pursuant to a transaction in interstate commerce, and shall be governed by the Federal Arbitration Act at 9 U.S.C. Section 1 ... The parties agree and understand that all disputes arising under case law, statutory law, and all other laws including, but not limited to, all contract, tort, fraud and property disputes, will be subject to binding arbitration in accord with this Contract." Def.'s Obj. Mot. Amend. Compl. Ex. 5 (emphasis in

original).

2. (...continued) contract with Bridges. Moore Oil cites to Def.'s Obj. Mot. Amend. Compl. Ex. 4, p. 13 for Bridges's contract, but it does not cite the correct language of the contract found in that exhibit. 8

As a general matter of federal policy, "where [a] contract contains an arbitration clause, there is a

presumption of arbitrability,"

AT & T Technologies, Inc.

v. Communications Workers of America, 475 U.S. 643, 651 (1986) (citation omitted), and courts are required to "construe arbitration clauses generously, resolving all doubts in favor of arbitration." Ruby-Collins, Inc. v.

City of Huntsville, Alabama, 748 F.2d 573, 576 (11th Cir. 1984). However, there are limits to this policy

preference, as "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which she has not agreed so to submit."

Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960). have Accordingly, submitted "the a question whether dispute the to

parties

particular

arbitration, i.e., the `question of arbitrability,' is `an issue for judicial determination unless the parties clearly and unmistakably provide otherwise.'" Howsam v.

9

Dean

Witter

Reynolds,

Inc.,

537

U.S.

79,

83

(2002)

(quoting AT & T Technologies, Inc., 475 U.S. at 649). The provision FAA in makes "a enforceable contract a written a arbitration transaction

evidencing

involving commerce."

9 U.S.C. § 2.

The FAA provides

that, "A party aggrieved by the alleged failure, neglect, or refusal of another party to arbitrate under a written agreement for arbitration may petition any United States district court ... for an order directing that such arbitration proceed in the manner provided for in such agreement." satisfied 9 that U.S.C the § 4. making Furthermore, of the "upon being for

agreement

arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the

parties to proceed to arbitration in accordance with the terms of the agreement." Id.

In this case, Ogletree agrees that it is bound to arbitrate its dispute with Moore Oil. The question

therefore remains as to only Bridges, Lafayette, and

10

Southside.

Because Bridges's contract states that, "All

claims, disputes or matters in questions ... shall be decided by arbitration," the record is clear that Bridges consented to arbitration with Moore Oil and thus is required to arbitrate its dispute. Lafayette and Southside did not contractually agree to arbitration. Nonetheless, Moore Oil contends that

they should be estopped from avoiding arbitration because their claims are "intimately founded in and intertwined with the underlying contract obligations [of the other plaintiffs]." Cir. 2007). Becker v. Davis, 491 F.3d 1292, 1299 (11th "Estoppel ... may bar a non-signatory from

avoiding arbitration if the non-signatory relies on a contract containing an arbitration clause." World

Rentals and Sales, LLC v. Volvo Const. Equipment Rents, Inc., 517 F.3d 1240, 1249 (11th Cir. 2008). Although it

makes perfect sense, in terms of judicial economy, to arbitrate all of the plaintiffs' claims together because they bring identical claims against Moore Oil, Lafayette

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and Southside each have their own contract with Moore Oil, and Moore Oil is entitled to arbitrate with only the stations that agreed to do so in contract. Ogletree and Bridges will be compelled to arbitrate their claims against Moore Oil; Lafayette and Southside will not be compelled to arbitrate their claims against Moore Oil. have not Of course, because the Moore Oil employees joined in Moore Oil's motion, Lafayette,

Southside, Junction, Bridges, and Ogletree will not be compelled to arbitrate their claims against them. Waiver of Jury Trial: The final issue is whether the remaining plaintiffs (Lafayette and Southside) have

waived their right to a jury trial.

Lafayette's contract

with Moore Oil does not contain a waiver of jury demand. See Def.'s Obj. Mot. Amend. Compl. Ex. 1. Southside, on

the other hand, agreed in its contract with Moore Oil "to waive any and all right to trial by jury in the event any dispute between the parties shall not be arbitrated for

12

any

reason."

Def.'s

Obj.

Mot.

Amend.

Compl.

Ex.

2.

Indeed, Southside does not dispute this waiver. Therefore, as requested, Southside's claims against Moore Oil will be heard in a bench trial. Because

Lafayette maintains its jury-trial right, its claims against Moore Oil will be heard by jury. If Lafayette,

Southside, Junction, Bridges, and Ogletree proceed to trial together, the court will empanel a jury to hear all their remaining claims against Moore Oil and its

employees except for Southside's claims against Moore Oil, for which the court will sit simultaneously as the factfinder. *** Accordingly, it is ORDERED that defendant Moore Oil Company, Inc.'s motion to transfer venue, compel

arbitration, and strike jury demand (Doc. No. 52) is granted to the following extent only: (1) Plaintiff RM & JW, Inc.'s (d/b/a Junction Citgo) claims against defendant Moore Oil Company, Inc. are

13

transferred to the United States District Court for the Northern District of Alabama. The clerk of the court is The

to take appropriate steps to effect the transfer.

claims brought by plaintiff RM & JW, Inc. (d/b/a Junction Citgo) against defendants Kevin Smith, Jason Janes, Mike Burch, and Mark Parish will remain in this court. (2) Plaintiffs Bridges Travel Bridges and Enterprises, YPCB Fuel LLC Inc. (d/b/a The

Plaza)

(d/b/a

Village Mart at Ogletree) are to arbitrate their claims against defendant Moore Oil Company, Inc. All remaining

claims brought by plaintiffs Staci and Mike McCullers, Lafayette Texaco, Inc., The Village Mart at Southside, LCC, RM & JW, Inc. (d/b/a Junction Citgo), Bridges

Enterprises, Inc. (d/b/a Bridges Travel Plaza), and YPCB Fuel LLC (d/b/a The Village Mart at Ogletree) against defendants Moore Oil Company, Inc., Smith, Janes, Burch, and Parish in this litigation are not subject of

arbitration.

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(3) The claims brought by plaintiff Village Mart at Southside, LCC against defendant Moore Oil Co., Inc. are to proceed non-jury. All remaining claims brought by

plaintiffs Staci and Mike McCullers, Lafayette Texaco, Inc., The Village Mart at Southside, LCC, RM & JW, Inc. (d/b/a Junction Citgo), Bridges Enterprises, Inc. (d/b/a Bridges Travel Plaza), and YPCB Fuel LLC (d/b/a The Village Mart at Ogletree) against defendants Moore Oil Company, Inc., Smith, Janes, Burch, and Parish in this litigation are to proceed with a jury. DONE, this the 19th day of February, 2010. /s/ Myron H. Thompson UNITED STATES DISTRICT JUDGE