Open Solutions Inc. v. Granite Credit Union
ORDER denying 25 Motion to Dismiss for lack of personal jurisdiction but granting 25 Motion to Transfer. The Clerk is directed to transfer the action to the United States District Court for the District of Utah. Please see the attached Ruling for details. Signed by Judge Robert N. Chatigny on 9/29/13. (Warden Rodgers, H.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
OPEN SOLUTIONS INC.,
GRANITE CREDIT UNION,
Case No. 3:12-CV-1353 (RNC)
RULING AND ORDER
Plaintiff Open Solutions Inc. ("OSI") brings this
diversity action against defendant Granite Credit Union
("Granite") seeking to recover damages for breach of
Granite now moves to dismiss the complaint
pursuant to Federal Rule of Civil Procedure 12(b)(2) on the
ground that the Court lacks personal jurisdiction over
In the alternative, Granite moves pursuant to 28
U.S.C. § 1404(a) for a discretionary transfer of the action
to the District of Utah.
For the reasons stated below, the
motion to dismiss is denied, and the motion to transfer is
Beginning in the 1980s, Granite, a Utah Corporation,
contracted with SOSystems, a Utah-based company, to provide
Granite with computer software, hardware maintenance, and
See Azevedo Decl. (ECF No. 39-2) ¶ 7.
In 2005, SOSystems was acquired by OSI, a Delaware
corporation with its principal place of business in
See Burgener Aff. (ECF No. 40-3) ¶ 4.
Granite entered into a new licensing and services agreement
(the "Agreement"), which related to the implementation of a
core processing system1 known as the "SME System."
Granite contracted to be a test site for a new version
of SME System software, known as "2006.2."
See id. ¶ 11.
In January 2011, after several years of implementing
the Agreement, Granite notified OSI that it would not
proceed with the conversion.
See id. ¶¶ 15, 17.
to Granite, testing had revealed that the system could not
adequately perform regular, day-to-day business activities
See Azevedo Decl. ¶¶ 23, 26.
refused to pay amounts allegedly due under the Agreement and
deconverted from the SME System altogether.
See Compl. ¶
Granite chose CMC Flex, a Utah-based company, to
provide new software for Granite and to assist with the
deconversion from the SME System.
See Azevedo Decl. ¶ 29.
A core processing system is the software and hardware
used by a credit union to process financial transactions,
such as ATM transactions, loan applications, and account
transactions. Burgener Aff. ¶ 9.
In September 2012, OSI filed this suit, alleging that
Granite had breached the Agreement.
II. Personal Jurisdiction
On a motion to dismiss for lack of personal
jurisdiction under Rule 12(b)(2), "plaintiff bears the
burden of showing that the court has jurisdiction over the
In re Magnetic Audiotape Antitrust Litig., 334
F.3d 204, 206 (2d Cir. 2003) (per curiam).
conducting discovery, a plaintiff may defeat a motion to
dismiss "by pleading in good faith legally sufficient
allegations of jurisdiction."
Ball v. Matallurgie
Hoboken–Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)
(internal citation omitted).
"[W]here the issue is
addressed on affidavits, all allegations are construed in
the light most favorable to the plaintiff and doubts are
resolved in the plaintiff's favor . . . ."
A.I. Trade Fin.,
Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993).
determine whether personal jurisdiction exists in a
diversity case, federal courts apply the long-arm statute of
the forum state, subject to the limits of the Due Process
Clause of the Fourteenth Amendment.
Metro. Life Ins. Co. v.
Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996).
Plaintiff contends that the defendant is subject to
suit under Connecticut General Statutes § 33-929(f)(1),
which allows for jurisdiction over every foreign corporation
on any cause of action arising "[o]ut of any contract made
in this state."
In Connecticut, "a contract is considered
made when and where the last thing is done which is
necessary to create an effective agreement."
BCH Am., Inc.
v. DEKO Int’l Co., No. FST-CV-064008327S, 2007 WL 448868, at
*5 (Conn. Super. Ct. Jan. 26, 2007) (quoting Elec. Regulator
Corp. v. Sterling Extruder Corp., 280 F. Supp. 550, 555 (D.
In Alfred M. Best Co. v. Goldstein, 124 Conn.
597 (1938), the Connecticut Supreme Court held that a
contract is made in the location where the final signature
is placed on the contract because it is the acceptance of an
Id. at 602; see also Res. Sys. Group, Inc. v.
Internetcash Corp., CV000181480, 2001 WL 752720, at *3
(Conn. Super. Ct. June 12, 2001) ("The parties do not
dispute that the final act of signing was done by the
plaintiff in Connecticut.
Consequently, the agreement
between the parties was a 'contract made in this state,'
within the meaning of General Statutes § 33-929(f)(1).").
Plaintiff urges that the Agreement was made in Connecticut
as the final act of signing was done by OSI in Connecticut
on November 30, 2005.
See Compl. Ex. A (ECF No. 1-1) at 10.
Granite argues that the Agreement became enforceable
when Granite signed it on November 29, 2005 in Utah, as
evidenced by the November 29, 2005 effective date, and that
OSI's signature the next day was a mere formality.
at 1, 10.
"The question of whether a written contract must
be signed to be binding is a question of the parties' intent
. . . ."
17 C.J.S. Contracts § 85.
On the last page of the
Agreement, it states, "ACCEPTED AND AGREED TO BY OPEN
SOLUTIONS, INC.," above a blank space for OSI's signature.
See Compl. Ex. A at 10.
Had it been the intent of the
parties to not require OSI's signature, this section likely
would not have been included.
See, e.g., Leodori v. CIGNA
Corp., 814 A.2d 1098, 1107 (N.J. 2003) ("Our contract law
does not permit defendant to contemplate or require
plaintiff's signature on an agreement and then successfully
to assert that the omission of that signature is irrelevant
to the agreement's validity.").
proper under Connecticut General Statute § 33-
Because jurisdiction exists on the ground that the
contract was made in Connecticut, it is unnecessary to decide
Turning to due process, Granite's contacts with OSI in
Connecticut, viewed collectively, were substantial enough
that it should reasonably have anticipated being sued here.
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 476
Granite knowingly contracted with OSI, a
Connecticut-based corporation, and included in the Agreement
a Connecticut choice-of-law provision.
See id. at 482
(stating that the defendant "purposefully availed himself of
the benefits and protections of Florida's laws by entering
into contracts expressly providing that those laws would
govern franchise disputes").
Moreover, Granite communicated
with OSI personnel in Connecticut and sent payment for
invoices to Connecticut.
Because the minimum contacts requirement is satisfied,
jurisdiction is proper unless exercising specific personal
jurisdiction over the defendant on the basis of its contacts
with Connecticut would be unfair.
See id. at 477–78
("[M]inimum requirements inherent in concept of 'fair play
and substantial justice' may defeat the reasonableness of
jurisdiction even if the defendant has purposefully engaged
in forum activities.").
Granite has not shown that
where the contract was "performed" as defined under Connecticut
General Statute § 33-929(f)(1).
litigating in Connecticut would be so costly or inconvenient
that for all practical purposes it would be deprived of a
day in court.
Accordingly the defendant's motion to dismiss
III. Motion For Transfer
Under 28 U.S.C. § 1404(a), the Court has discretion to
transfer the action to the District of Utah, where it could
have been brought originally.
The relevant factors include
the location of witnesses, the availability of process to
compel witnesses to testify, the location of relevant
documents, the locus of the operative facts, the relative
means of the parties, the plaintiff's choice of forum, and
the interests of justice, among others.
A Slice of Pie
Prods., LLC v. Wayans Bros. Entm't, 392 F. Supp. 2d 297, 305
(D. Conn. 2005).
The moving party has the burden of
establishing the propriety of transfer by a clear and
Wilson v. DirectBuy, Inc., 821 F. Supp.
2d 510, 513 (D. Conn. 2011).
The "[c]onvenience of the witnesses is the most
powerful factor governing the decision to transfer a case."
Adams v. Time Warner, 83 F. Supp. 2d 296, 298 (D. Conn.
In addition to its own Utah-based employees, Granite
has identified five current OSI employees and three former
OSI employees who live in Utah and are expected to be called
See Azevedo Decl. ¶¶ 13, 16, 28.
also has identified other individuals in Utah who may be
called as witnesses, such as a computer programmer who
assisted with the transfer to CMC Flex.
See id. ¶ 29.3
the other hand, OSI has identified only two Connecticutbased employees who are likely to be called as witnesses:
the Director of SME Implementation, who helped create the
implementation team, and an OSI officer who would testify
about calculation of damages.
The only other witness OSI
mentions is a client care manager, who currently lives in
See Pl.'s Supplemental Mem. Opp'n Mot. Dismiss (ECF
No. 40) at 2-3.
Another primary factor is the locus of operative facts,
Another key witness is Jeanette Azevedo, a former Granite
officer currently living in Florida, who oversaw implementation
of the SME System. Ms. Azevedo states that due to financial
constraints, she is able to travel to Utah, but not Connecticut.
See Azevedo Decl. ¶ 30. OSI responds that it is willing to
travel to Florida to take Ms. Azevedo's deposition, and is
prepared to use video of her deposition testimony at trial. Yet
"[t]he use of video depositions would . . . fail as an equivalent
for live testimony, both because of the expense involved, and
because counsel would be unable to sharpen their questioning at
trial based on a considered review of the deposition, or alter
the scope of questioning to reflect unanticipated trial
developments." United Rentals, Inc. v. Pruett, 296 F. Supp. 2d
220, 229 (D. Conn. 2003).
which, in a breach of contract case, considers "where the
contract was negotiated or executed, where it was to be
performed, and where the alleged breach occurred."
v. Dow Chemical Co., No. 07Cv3641(RPP), 2007 WL 2324351, at
*6 (S.D.N.Y. Aug. 13, 2007).
The Agreement arose out of
discussions between Granite and SOSystems, which had a
longstanding relationship with Granite until SOSystems was
acquired by OSI.
See Azevedo Decl. ¶¶ 12, 13.
Agreement was negotiated with former SOSystems employees
operating out of SOSytems' office in Orem, Utah.
Pursuant to the Agreement, Granite ordered IBM servers,
which were initially shipped to OSI in Orem and then
relocated to Granite's office in Utah.
See id. ¶ 18.
software was loaded directly onto the servers in Utah, and
all code was written by programmers located in Utah and run
on the servers located in Utah.
to terminate the Agreement on the basis of complications it
claims to have encountered implementing 2006.2, and its use
of third parties, such as CMC Flex, to deconvert from the
SME system, occurred in Utah.
The Connecticut contacts to
which OSI points – Granite's notice of termination letter
sent to OSI in Connecticut, the injury to OSI resulting from
the alleged breaches, and email communications sent via
OSI's Connecticut servers –- do not undercut Granite's
showing that the locus of operative facts is Utah.
Another important consideration is the availability of
process to compel attendance of witnesses at trial.
Rule 45, a nonparty witness may not be compelled to attend a
trial if the witness is located out of state and would have
to travel more than 100 miles.
See Fed. R. Civ. P.
Granite lists four nonparty Utah
witnesses–-three former OSI employees and a computer
programmer--who could not be compelled to testify at a trial
OSI responds that under Rule 45(c)(3)(C),
the Court may compel the appearance of any witness under
However, this section of the Rule
is designed to accommodate a trial witness who lives within
the forum state, but farther than 100 miles from the
See, e.g., Todd v. LaMarque, C 03-3995 SBA,
2008 WL 564802, at *1-2 (N.D. Cal. Feb. 28, 2008); see also
Charles Alan Wright & Arthur R. Miller, 9A Fed. Prac. &
Proc. Civ. § 2461 (3d ed. 2008).
To offset the weight of the foregoing factors, which
strongly favor transfer, OSI relies primarily on the weight
usually accorded a plaintiff's choice of forum.
Iragorri v. United Techs. Corp., 274 F.3d 65, 70 (2d Cir.
A plaintiff's choice of forum receives less
deference, however, when the locus of operative facts is
elsewhere, as is the case here.
See Charter Oak Fire Ins.
Co. v. Broan-Nutone, LLC, 294 F. Supp. 2d 218, 220 (D. Conn.
2003) (plaintiff's choice of forum has less weight "where
the case's operative facts have little connection with the
chosen forum") (internal quotation mark omitted).4
Balancing the pertinent factors, the Court concludes
that it is necessary and appropriate to transfer the case to
Utah, the locus of the operative facts, notwithstanding the
plaintiff's preference for Connecticut as the forum, in
order to serve the convenience of the witnesses, and to
ensure that process will be available to compel the
attendance of witnesses at trial.
The parties disagree about whether documents relating to
the claims in the complaint are located on servers in Connecticut
or at Granite's place of business in Utah, but "given the ease of
transmitting documents, this factor is relatively unimportant."
Labonte v. TD Bank, N.A., 3:10-CV-1335 RNC, 2011 WL 3930296, at
*4 (D. Conn. May 11, 2011). And although the Agreement includes
a Connecticut choice-of-law provision, the District of Utah would
not have difficulty applying Connecticut contract law as "federal
courts are accustomed in diversity actions to applying laws
foreign to the law of their particular State." Pitney Bowes,
Inc. v. Nat'l Presort, Inc., 33 F. Supp. 2d 130, 132 (D. Conn.
Accordingly, Granite's motion to dismiss is hereby
denied, and Granite's [ECF No. 25] motion to transfer is
granted. The Clerk is directed to transfer the action to the
United States District Court for the District of Utah.
Robert N. Chatigny
United States District Judge
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