Jomico, LLC v. Traxys North America, LLC

Filing 29

ORDER granting defendant Traxys North America, LLC 7 Motion to dismiss the complaint for improper venue or alternatively to transfer action to the Southern District of New York and matter is dismissed. Signed by Honorable Jimm Larry Hendren on August 28, 2009. (rw)

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IN THE UNITED STATES DISTRICT COURT W E S T E R N DISTRICT OF ARKANSAS F O R T SMITH DIVISION JOMICO, LLC PLAINTIFF v. C i v i l No. 08-2120 T R A X Y S NORTH AMERICA, LLC ORDER DEFENDANT N O W on this 28th day of August 2009 comes on for consideration t h e Motion of Defendant Traxys North America, LLC to Dismiss the C o m p l a i n t for Improper Venue or Alternatively to Transfer this A c t i o n to the Southern District of New York (document #7) and the r e s p o n s e s and replies thereto. Having reviewed the pleadings of the p a r t i e s and heard oral arguments on the issues, the Court, being w e l l and sufficiently advised, finds and orders as follows: 1. P l a i n t i f f Jomico, LLC (hereinafter "Jomico") brings this a c t i o n against the defendant, Traxys North America, LLC (hereinafter " T r a x y s " ) , asserting a claim for breach of contract with respect to t h r e e separate agreements. Traxys moves to dismiss the complaint, a r g u i n g that venue is improper pursuant to Rule 12(b)(3) of the F e d e r a l Rules of Civil Procedure. Alternatively, Traxys argues that t h i s matter should be transferred to the Southern District of New Y o r k pursuant to 28 U.S.C. 1404(a). 2. motion: * T h e plaintiff, Jomico, LLC, is a Missouri company with its T h e following facts appear to be pertinent to the instant principal place of business in St. Louis, Missouri. * company. N e w York. T h e defendant, Traxys North America, LLC, is a Delaware The principal place of business for Traxys is New York, Traxys maintains offices in three additional states, but T r a x y s does not have an office located in Arkansas. * B e t w e e n January 2008 and June 2008, Jomico and Traxys e n t e r e d into three (3) separate contracts for the purchase and d e l i v e r y of coal. * T h e first contract, described by both parties as "7034" w a s entered into on January 14, 2008. * T h e contract known as 7034 calls for the delivery by J o m i c o to Traxys of approximately 60,000 tons of mid vol coal on or b e f o r e December 31, 2008 at a price of $98 per ton. t h e coal was to take place FOB in Keota, Oklahoma. The delivery of Pursuant to the c o n t r a c t , Traxys would take title and possession of the coal from J o m i c o in Keota, Oklahoma and bear all responsibility for the coal f r o m that point forward. * The contract known as 7034 is memorialized by a c o n f i r m a t i o n letter. The confirmation letter for 7034 was drafted b y Traxys and submitted to Jomico via email attachment. * T r a x y s asserts that a document entitled "General Terms and C o n d i t i o n s to Confirmation of Coal Agreement" is also a part of the 7 0 3 4 contract. -2- * T h e "General Terms and Conditions to Confirmation of Coal A g r e e m e n t " which Traxys contends is a part of the 7034 contract was a l s o drafted by Traxys and was provided to Jomico through an email s e p a r a t e from the email which contained the confirmation letter. * T h e "General Terms and Conditions to Confirmation of Coal A g r e e m e n t " (hereinafter "GT&C #1") which Traxys contends is a part o f the 7034 contract does not include a forum selection clause. d o e s include a choice of law provision. * O n June 5, 2008, Jomico and Traxys entered into the two It ( 2 ) other separate contracts, described by both parties as "7360" a n d "7361". * T h e contracts known as 7360 and 7361 each calls for the d e l i v e r y of coal on or before August 31, 2008 and specifies that d e l i v e r y will take place FOB on the Arkansas River, but does not s p e c i f y a location. * T h e contracts known as 7360 and 7361 are memorialized by s e p a r a t e confirmation letters. * T h e confirmation letter for 7360 was drafted by Traxys and w a s submitted to Jomico through an email attachment. * T h e confirmation letter for 7361 was drafted by Traxys and w a s submitted to Jomico through an email attachment. * T h e first paragraph of the confirmation letters for both 7 3 6 0 and 7361 provide the following: The purpose of this letter agreement/fax (this " C o n f i r m a t i o n " ) is to confirm the terms and conditions of t h e Transaction entered into between TRAXYS'S North -3- America, LLC - Carbon Division ("TNA") and Jomico, LLC ( " C o u n t e r p a r t y " ) (TNA and Counterparty may be collectively r e f e r r e d to as "Parties"), the terms of which were v e r b a l l y agreed to with Janet Billups of TNA of the Trade D a t e specified below. * state: Please confirm that the terms stated herein accurately r e f l e c t the agreement reached on the Trade Date between t h e Parties by returning an executed copy of this C o n f i r m a t i o n Letter . . . . T h e confirmation letters for both 7360 and 7361 also * T r a x y s asserts that a document entitled "General Terms and C o n d i t i o n s for the Purchase and Sale of Coal" is also a part of both t h e 7360 and 7361 contracts. * T h e "General Terms and Conditions for the Purchase and S a l e of Coal" which Traxys contends is a part of the 7360 and 7361 c o n t r a c t s was also drafted by Traxys and was provided to Jomico through an email separate from the email which contained the c o n f i r m a t i o n letters. * T h e "General Terms and Conditions for the Purchase and S a l e of Coal" (hereinafter "GT&C #2") which Traxys contends is a p a r t of the 7360 and 7361 contracts includes a forum selection c l a u s e which states: E A C H PARTY AGREES THAT IT WILL BRING ANY ACTION OR P R O C E E D I N G IN RESPECT OF ANY CLAIM ARISING OUT OF OR R E L A T I N G TO ANY TRANSACTION, WHETHER IN TORT OR CONTRACT O R AT LAW OR IN EQUITY . . . EXCLUSIVELY IN THE UNITED S T A T E S DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW Y O R K OR THE SUPREME COURT OF THE STATE OF NEW YORK FOR THE C O U N T Y OF NEW YORK . . . -4- * T h e GT&C #2 includes the following provision: [ t ] h e following General Terms and Conditions ("GT&Cs") a p p l y to purchases and sales of Coal by Traxys North A m e r i c a , LLC in Transactions into the terms of which these G T & C s are incorporated by reference. 3. J o m i c o filed suit in this Court on November 6, 2008, a l l e g i n g that Traxys had failed to pay for coal supplied to it by J o m i c o pursuant to the contracts and had failed to provide barges f o r Jomico to deliver the remaining coal due under the contracts. On November 26, 2008, Traxys filed suit in the Southern District of N e w York, alleging that Jomico had failed to deliver all of the coal d u e under the 7034 contract and had not delivered any of the coal d u e under the 7360 contract. Apparently, the parties' dispute stems f r o m a disagreement as to whether the coal delivered was supplied p u r s u a n t to the 7034 contract or the more expensive 7360 contract. 4. should be I n its current motion, Traxys argues that this matter dismissed for improper venue, or alternatively, t r a n s f e r r e d to the Southern District of New York. Primarily, Traxys argues that a forum selection clause controls the contractual d i s p u t e s at bar; and, that pursuant to the forum selection clause, t h i s matter should be heard in the Southern District of New York. 1 1 U n d e r federal law, "[f]orum selection clauses are prima facie valid and are e n f o r c e a b l e unless they are unjust or unreasonable or invalid for reasons such as f r a u d or overreaching." M.B. Restaurants, Inc. V. CKE Restaurants, Inc., 183 F.3d 7 5 0 , 752 (8th Cir. 1999)(citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972)). Similarly, under Arkansas law, a forum selection clause should be upheld u n l e s s the forum selection clause is shown to be unreasonable and unfair. Nelms v . Morgan Portable Bldg. Corp., 808 S.W.2d 314, 316-17 (1991); SD Leasing, Inc. v. A l Spain & Assoc., Inc., 640 S.W.2d 451 (1982). See also RMP Rentals v. Metroplex, I n c . , 2004 WL 253511 (Ark. 2004). -5- Traxys also argues that, regardless of the enforceability of the f o r u m selection clause, venue is improper in this Court. T h e Court, having concerns about the enforceability of the f o r u m selection clause and recognizing that if the forum selection c l a u s e is unenforceable general venue issues must be addressed, will f o r e g o exhaustive analysis of the forum selection clause and will i n s t e a d focus its efforts on the appropriateness of venue in this Court. 5. V e n u e of this diversity action is governed by 28 U.S.C. 1391(a) which provides: A civil action wherein jurisdiction is founded only on d i v e r s i t y of citizenship may, except as otherwise provided b y law, be brought only in (1) a judicial district where a n y defendant resides, if all defendants reside in the s a m e State, (2) a judicial district in which a substantial p a r t of the events or omissions giving rise to the claim o c c u r r e d , or a substantial part of property that is the s u b j e c t of the action is situated, or (3) a judicial d i s t r i c t in which any defendant is subject to personal j u r i s d i c t i o n at the time the action is commenced, if there i s no district in which the action may otherwise be brought. 28 U.S.C. 1391(a). Subsection (2) is implicated in this instance. According to Wright, Miller, & Cooper, [i]n determining whether a substantial part of the events o r omissions giving rise to the plaintiff's contract claim o c c u r r e d or did not occur in the district, the factors t h a t courts tend to focus on include: where the contract w a s negotiated or executed, where the contract was to be p e r f o r m e d , and where the alleged breach occurred. 14D Wright, Miller, & Cooper, Federal Practice & Procedure, 3806.1. -6- 6. * I n the present case: T h e contracts were negotiated between Traxys employees in W e s t Virginia and Jomico employees in Missouri. * P e r f o r m a n c e took place when the coal was delivered to T r a x y s in Keota, Oklahoma, and when payments were made from Traxys' o f f i c e in New York. * T h e alleged breach by Jomico occurred when it allegedly The 7034 contract specifies The second and third f a i l e d to deliver the remaining coal. delivery of coal in Keota, Oklahoma. c o n t r a c t s , 7360 and 7361, specify delivery of coal on the Arkansas R i v e r , but do not specify a location. Delivery could have taken p l a c e at any point along the Arkansas River - in Arkansas, Colorado, K a n s a s or Oklahoma and there is no evidence of any specific d e l i v e r y to be made in Arkansas. * T h e alleged breach by Traxys occurred when it allegedly f a i l e d to pay for the coal supplied and these payment decisions were m a d e by Traxys personnel in New York. T h u s , neither the negotiations, performance or breach of the c o n t r a c t s at issue occurred in Arkansas. Although there is evidence o f various "meetings" in Fort Smith, Arkansas, it appears that the p a r t i e s largely used Fort Smith simply as a meeting point and the m e e t i n g s consisted of an introduction to Jomico's coal supplier in F o r t Smith, and discussions regarding renegotiation or settlement e f f o r t s to salvage the contracts. These meetings were not "events o r omissions giving rise" to Jomico's breach-of-contract claims, as -7- required by the venue statute. Cf. Arkansas Poultry Coop., Inc. v. R e d Barn Sys., Inc., 468 F.2d 538, 539-41 (8th Cir. 1972) (finding i n s u f f i c i e n t contacts to establish personal jurisdiction even though d e f e n d a n t ' s representatives traveled to Arkansas to attempt to s e t t l e the dispute); Cutco Indus., Inc. v. Naughton, 806 F.2d 361, 3 6 8 (2nd Cir. 1986) (visits to a state to attempt renegotiation of an existing contract have no jurisdictional relevance); Grynberg P e t r o l e u m Co. v. Evergreen Energy Partners, LLC, 485 F. Supp.2d 1 2 1 7 , 1225 (D. Col. 2007) ("It would be an absurd exercise in c i r c u l a r logic to say that a cause of action `arose out of' a single a p p e a r a n c e in a forum state targeted at resolving the dispute u n d e r l y i n g the cause of action"); Slapshot Beverage Co., Inc. v. S o u t h e r n Packaging Mach., Inc., 980 F. Supp 684, 688 (E.D. N.Y. 1 9 9 7 ) (physical presence of a defendant in state for purpose of n e g o t i a t i n g a settlement of a contractual dispute is insufficient to s u p p o r t exercise of personal jurisdiction). 7. B a s e d on the foregoing, the Court finds that this Court i s not "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a s u b s t a n t i a l part of property that is the subject of the action is s i t u a t e d " , that venue is improper, and that this matter should be d i s m i s s e d pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure. -8- IT IS, THEREFORE, ORDERED that Motion of Defendant Traxys North America, LLC to Dismiss the Complaint for Improper Venue or A l t e r n a t i v e l y to Transfer this Action to the Southern District of N e w York (document #7) is granted and this matter is dismissed. IT IS SO ORDERED. /s/ Jimm Larry Hendren JIMM LARRY HENDREN U N I T E D STATES DISTRICT COURT -9-

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