Sanact, Inc. v. U.S. Pipelining LLC

Filing 72

ORDER ON JURISDICTION AND VENUE - Signed by JUDGE HELEN GILLMOR on 6/29/2018. The Court has subject-matter jurisdiction over the proceeding based on diversity jurisdiction. Venue is proper in the United States District Court for the District of Hawaii. Defendant has waived any challenge to the Court's jurisdiction and venue based on the forum-selection clause pursuant to Fed. R. Civ. P. 12(h). Defendant is also estopped from raising such challenges as it has taken clearly inconsistent positions in the litigation to the Plaintiff's detriment. (emt, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
SANACT, INC.,

)
)
Plaintiff,
)
)
vs.
)
)
US PIPELINING LLC; JOHN DOES 1- )
5; JANE DOES 1-5; DOE
)
CORPORATIONS 1-5; DOE LIMITED
)
LIABILITY COMPANIES 1-5; DOE
)
PARTNERSHIPS 1-5; DOE ENTITIES )
1-5,
)
)
Defendant.
)
__________________________________________)

CIVIL NO. 16-00377 HG-RLP

ORDER ON JURISDICTION AND VENUE

Plaintiff Sanact, Inc., doing business as Roto Rooter, filed
suit against Defendant US Pipelining, LLC seeking payment for
services rendered to Defendant when it worked as a subcontractor
on a construction project at the Kaanapali Alii condominium
complex on the island of Maui.
On June 20, 2016, Plaintiff filed a Complaint against
Defendant US Pipelining in the Circuit Court of the Second
Circuit, State of Hawaii.

Defendant US Pipelining removed the

case to the United States District Court for the District of
Hawaii on July 7, 2016, and unsuccessfully sought to consolidate
the case with other pending cases in the District Court.
Nearly two years later, in its May 2018 Pretrial Conference
Statement, Defendant for the first time challenged jurisdiction
and venue in the United States District Court for the District of
1

Hawaii.
The Court finds that jurisdiction and venue in the United
States District Court for the District of Hawaii are proper.
PROCEDURAL HISTORY
On June 20, 2016, Plaintiff filed a Complaint against
Defendant in the Circuit Court of the Second Circuit, State of
Hawaii.

(ECF No. 1-1).

On July 7, 2016, Defendant filed a Notice of Removal in the
United States District Court for the District of Hawaii.

(ECF

No. 1).
On August 5, 2016, Defendant filed its Answer.

(ECF No.

11).
On August 31, 2016, the case was assigned to the Honorable
Derrick K. Watson.
On October 7, 2016, Defendant US Pipelining LLC filed a
MOTION TO CONSOLIDATE, seeking to consolidate this action with
other cases in the U.S. District Court for the District of
Hawaii. US Pipelining v. Johnson Controls, Inc.; AOAO Kaanapali
Alii; Allana Buick & Bers, 16-cv-00132 HG-RLP and Curaflo
Services, LLC v. US Pipelining LLC, 16-cv-00508 HG-KJM. (ECF No.
21).
On December 6, 2016, the Magistrate Judge issued an ORDER
GRANTING IN PART AND DENYING IN PART PLAINTIFF U.S. PIPELINING
LLC’S MOTION TO CONSOLIDATE.

(ECF No. 24).

The Magistrate Judge

granted consolidation of US Pipelining v. Johnson Controls, Inc.;
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AOAO Kaanapali Alii; Allana Buick & Bers, 16-cv-00132 HG-RLP and
Curaflo Services, LLC v. US Pipelining LLC, 16-cv-00508 HG-KJM
and denied consolidation of the instant case Sanact, Inc. v. US
Pipelining LLC, 16-cv-00377 DKW-RLP.
On January 3, 2017, the case was reassigned to the Honorable
Helen Gillmor who was the District Judge in the other two cases
involving US Pipelining which it had attempted to consolidate
with the case brought against it by Plaintiff Sanact, Inc. (ECF
No. 25).
On February 22, 2018, the Court held a Status Conference to
set a firm trial date.

(ECF No. 47).

On May 8, 2018, Plaintiff filed its FINAL PRETRIAL
STATEMENT.

(ECF No. 57).

On May 14, 2018, Defendant filed its PRETRIAL STATEMENT.
(ECF No. 58).
On May 15, 2018, the Magistrate Judge held a FINAL PRETRIAL
CONFERENCE.

(ECF No. 59).

On May 29, 2018, Plaintiff filed its EXHIBIT LIST and
PROPOSED FINDINGS OF FACT.

(ECF Nos. 60, 61).

On the same date, Defendant filed its PROPOSED FINDINGS OF
FACT.

(ECF No. 62).

On May 31, 2018, Plaintiff filed its TRIAL BRIEF.

(ECF No.

64).
On the same date, Defendant filed its TRIAL BRIEF.
63).
On June 21, 2018, the Court held its FINAL PRETRIAL
3

(ECF No.

CONFERENCE.

(ECF No. 69).

At the hearing, the Parties were

offered the opportunity to speak on the issue of jurisdiction and
venue raised in the Defendant’s Pretrial Conference Statement and
Trial Brief.

Both Parties rested on the arguments presented in

their Pretrial Conference Statements and Trial Briefs.
ANALYSIS
I.

Subject-Matter Jurisdiction
Subject matter jurisdiction is conferred on federal courts

either through federal question jurisdiction pursuant to 28
U.S.C. § 1331 or through diversity jurisdiction pursuant to 28
U.S.C. § 1332.

Peralta v. Hispanic Bus., Inc., 419 F.3d 1064,

1068 (9th Cir. 2005).
A.

No Federal Question Subject-Matter Jurisdiction

There is no federal question presented in the Complaint.
The basis for the Court’s jurisdiction is diversity jurisdiction.
B.

The Court Has Subject-Matter Jurisdiction Based On
Diversity

28 U.S.C. § 1332(a)(1) states that “[t]he district courts
shall have original jurisdiction of all civil actions where the
matter in controversy exceeds the sum or value of $75,000 ... and
is between citizens of different States.”
1332(a)(1).

28 U.S.C. §

Section 1332(a) requires complete diversity.

4

Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996).
There is complete diversity between the Parties.
Plaintiff Sanact, Inc. is a California corporation.
at ¶ 1, ECF No. 1-1).

(Complaint

Defendant US Pipelining, LLC is a

Pennsylvania limited liability company.

(Id. at ¶ 2).

There is more than $75,000 at controversy in the case.

The

Complaint seeks recovery of more than $123,203.16 in money owed.
(Id. at ¶¶ 8, 21, 24, 35, 39).

II.

Venue

In actions removed from state court, venue is automatically
proper in the federal district court located where the state
action was pending.

28 U.S.C. § 1441(a); Polizzi v. Cowles

Magazines, Inc., 345 U.S. 663, 665-666 (1953).
Here, the Complaint was filed in the Circuit Court for the
Second Circuit, State of Hawaii.

Defendant removed the action to

the United States District Court for the District of Hawaii.
Venue is automatically proper in the United States District
Court for the District of Hawaii as it is the federal district
court where the state action was pending.

Polizzi, 345 U.S. at

666; see Kerobo v. Southwestern Clean Fuels, Corp., 285 F.3d 531,
534 (6th Cir. 2002); Davis v. Abercrombie, Civ. No. 11-00144 LEKBMK, 2011 WL 2118276, *4 (D. Haw. May 27, 2011).

5

III. Defendant US Pipelining’s Untimely Challenges to Venue And
the Court’s Jurisdiction
A.

Defendant Voluntarily Removed The Case To Federal Court
And Did Not Raise Its Venue And Jurisdiction Challenges
During Two Years Of Litigation

On June 20, 2016, Plaintiff filed suit in Hawaii State Court
against Defendant US Pipelining.
Three weeks later, on July 7, 2016, Defendant chose to
remove the case from Hawaii State Court to federal court on the
basis of diversity jurisdiction.

(Notice of Removal, ECF No. 1).

Defendant did not challenge venue nor jurisdiction for the
United States District Court for the District of Hawaii when it
removed the case.
Defendant did not raise either of these defenses in its
August 5, 2016 Answer.
To the contrary, on October 7, 2016, Defendant filed a
Motion to Consolidate, seeking to consolidate this action with
other cases in the District of Hawaii.

US Pipelining v. Johnson

Controls, Inc.; AOAO Kaanapali Alii; Allana Buick & Bers, 16-cv00132 HG-RLP and Curaflo Services, LLC v. US Pipelining LLC, 16cv-00508 HG-KJM. (ECF No. 21).
On December 6, 2016, the other two cases were consolidated
but consolidation with this case was denied.

(ECF No. 24).

On June 26, 2017, an Amended Rule 16 Scheduling Conference
was held before the Magistrate Judge and on January 18, 2018, a
Settlement Conference was held before the Magistrate Judge.
Nos. 32, 45).
6

(ECF

On February 22, 2018, a Status Conference was held before
the Honorable Helen Gillmor.

(ECF No. 47).

No challenge to the Court’s subject-matter jurisdiction or
venue was raised at any of the hearings.
Approximately five weeks before trial, on May 14, 2018,
Defendant US Pipelining alleged for the first time that this
Court lacks subject-matter jurisdiction and that venue is
improper.
In its May 14, 2018 Pretrial Conference Statement, US
Pipelining stated that this Court lacked jurisdiction and venue
based on a forum-selection clause in a written contract.
Defendant alleged there is a written Subcontract Agreement
(that was signed only by Plaintiff) providing that any dispute
between the Parties related to the contract shall be determined
exclusively by the courts of the State of Pennsylvania and that
venue for any suit brought against US Pipelining shall be in the
County of Berks, Pennsylvania.

(US Pipelining Pretrial

Conference Statement at pp. 2-6, ECF No. 58).
B.

US Pipelining’s Untimely Challenges Based On The
Purported Forum-Selection Clause
1.

Defendant’s Arguments For Improper Venue and Lack
of Jurisdiction Are Waived

Federal Rules of Civil Procedure 12(b),(g), and (h) provide,
in pertinent part, the following:
Rule 12(b) How to Present Defenses. Every defense
to a claim for relief in any pleading must be asserted
in the responsive pleading if one is required. But a
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party may assert the following defenses by motion:
(1)

lack of subject-matter jurisdiction;

(2)

lack of personal jurisdiction;

(3)

improper venue;

(4)

insufficient process;

(5)

insufficient service of process;

(6)

failure to state a claim upon which relief
can be granted; and

(7)

failure to join a party under Rule 19.

A motion asserting any of these defenses must be
made before pleading if a responsive pleading is
allowed. If a pleading sets out a claim for relief
that does not require a responsive pleading, an
opposing party may assert at trial any defense to that
claim. No defense or objection is waived by joining it
with one or more other defenses or objections in a
responsive pleading or in a motion.
...
12(g)(2) Limitation on Further Motions. Except as
provided in Rule 12(h)(2) or (3), a party that makes a
motion under this rule must not make another motion
under this rule raising a defense or objection that was
available to the party but omitted from its earlier
motion.
12(h) Waiving and Preserving Certain Defenses.
(1) When Some Are Waived. A party waives any
defense listed in Rule 12(b)(2)-(5) by:
(A)

omitting it from a motion in the
circumstances described in Rule 12(g)(2); or

(B)

failing to either:
(i) make it by motion under this rule; or
(ii) include it in a responsive pleading or
in an amendment allowed by Rule 15(a)(1)
as a matter of course....

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a.

US Pipelining Did Not Raise Improper Venue Or
Lack Of Jurisdiction Defenses In Its Answer

On August 5, 2016, Defendant US Pipelining filed its Answer
to Plaintiff Sanact’s Complaint.

(ECF No. 11).

Defendant did

not raise defenses of improper venue or lack of jurisdiction in
its Answer.
Pursuant to Federal Rule of Civil Procedure 15(a)(1)(A), a
party may amend its pleading once as a matter of course within 21
days.

Defendant US Pipelining did not amend its Answer to

include defenses for improper venue or lack of subject matter
jurisdiction.
b.

US Pipelining Did Not File A Motion Raising
Improper Venue Or Lack Of Jurisdiction

Defendant US Pipelining did not file any motion raising the
issues of improper venue or lack of jurisdiction.

No Motion was

filed pursuant to Federal Rule of Civil Procedure 12(b) on any
basis.
c.

US Pipelining Waived The Defenses Of Improper
Venue and Lack Of Jurisdiction Based On The
Forum-Selection Clause

US Pipelining raised the defense of improper venue and lack
of jurisdiction for the first time in its May 14, 2018 pleading.
US Pipelining seeks to enforce a purported forum-selection clause
that it claims was part of an agreement it made with Plaintiff
Sanact.
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Defenses based on a forum-selection clause “must be raised
at the first available opportunity or, if they are not, they are
forever waived” pursuant to Federal Rule of Civil Procedure
12(h)(1).

Gootnick v. Lighter, 2005 WL 3079000, *5 (N.D. Cal.

Nov. 16, 2005) (citing Am. Ass’n of Naturopathic Phys. v.
Hayhurst, 227 F.3d 1104, 1006-07 (9th Cir. 2000)).
There can be no dispute that the defenses based on the
forum-selection clause were not raised by Defendant US Pipelining
at the first available opportunity in its Answer.

Defendant’s

defenses based on the forum-selection clause are waived pursuant
to Fed. R. Civ. P. 12(h)(1).
d.

The Forum-Selection Clause Does Not Divest
The Federal Court Of Subject-Matter
Jurisdiction

To the extent Defendant argues that this Court does not have
subject-matter jurisdiction based upon a forum-selection clause,
the argument fails.
A forum-selection clause does not affect a federal court’s
subject-matter jurisdiction.

Kamm v. ITEX Corp., 568 F.3d 752,

754 (9th Cir. 2009) (citing M/S Bremen v. Zapata Off-Shore Co.,
407 U.S. 1, 12 (1972)).

A contract cannot be interpreted to

deprive a federal court of subject-matter jurisdiction.

U.S.

Composite Pipe South, LLC v. Frank Coluccio Const. Co., Civ. No.
12-00538 JMS-KSC, 2014 WL 3778539, *4 (D. Haw. July 30, 2014).
Defendant US Pipelining is unable to assert a defense of
lack of subject-matter jurisdiction based on the forum-selection
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clause.
2.

Defendant’s Arguments For Improper Venue and Lack
of Jurisdiction Are Also Precluded Based On
Judicial Estoppel

In addition to waiver, US Pipelining is judicially estopped
from arguing improper venue and lack of jurisdiction.
Judicial estoppel prevents a party from prevailing in one
phase of a case on an argument and then relying on a
contradictory argument to prevail in another phase.
Hampshire v. Maine, 532 U.S. 742, 749 (2001).

New

The doctrine

applies to a party’s stated position whether it is an expression
of intention, statement of fact, or legal assertion.
Gerson, 105 F.3d 530, 535 (9th Cir. 1997).

Helfand v.

Factors relevant in

deciding to apply the doctrine include:
(1)

whether the party’s later position is “clearly
inconsistent” with its earlier position;

(2)

whether the party has successfully advanced the earlier
position; and,

(3)

whether the party seeking to assert an inconsistent
position would derive an unfair advantage or impose an
unfair detriment on the opposing party if not estopped.

New Hampshire, 532 U.S. at 751.
Here, Defendant removed the case from Hawaii State Court
asserting that this Court had jurisdiction and that venue was
proper.

When a case is removed from state to federal court, the

burden of establishing federal jurisdiction is upon the party
seeking removal.

Emrich v. Touche Ross & Co., 846 F.2d 1190,

1195 (9th Cir. 1988).

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On July 7, 2016, Defendant successfully removed the case on
the basis of diversity jurisdiction.
1).

(Notice of Removal, ECF No.

Defendant’s position in its May 14, 2018 Pretrial Conference

Statement that this Court lacks jurisdiction and that venue is
improper is clearly inconsistent with its July 7, 2016 Notice of
Removal.
Defendant’s inconsistent position at this phase of the case
imposes an unfair detriment on Plaintiff who is ready to proceed
to trial.

Defendant has affirmatively sought the Court’s

jurisdiction and even moved for consolidation of its cases in the
United States District Court for the District of Hawaii.
Defendant is estopped from raising its newly argued,
inconsistent defenses on the eve of trial, two years after the
case was removed.
The Court need not determine if the forum-selection clause
is valid or enforceable as Defendant may not rely on it to
challenge the Court’s jurisdiction and venue due to waiver and
judicial estoppel.
CONCLUSION
The Court has subject-matter jurisdiction over the
proceeding based on diversity jurisdiction.
Venue is proper in the United States District Court for the
District of Hawaii.
Defendant has waived any challenge to the Court’s
jurisdiction and venue based on the forum-selection clause
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pursuant to Fed. R. Civ. P. 12(h).
Defendant is also estopped from raising such challenges as
it has taken clearly inconsistent positions in the litigation to
the Plaintiff’s detriment.
IT IS SO ORDERED.
DATED:

Honolulu, Hawaii, June 29, 2018.

Sanact, Inc. v. US Pipelining LLC; John Does 1-5; Jane Does 1-5;
Doe Corporations 1-5; Doe Limited Liability Companies 1-5; Doe
Partnerships 1-5; Doe Entities 1-5; Civ. No. 16-00377 HG-RLP;
ORDER ON JURISDICTION AND VENUE
13