Inovateus Solar LLC v. Polamer Precision Inc

Filing 60

OPINION AND ORDER DENYING 40 MOTION to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(2) filed by Solar Landscape, LLC.. Signed by Magistrate Judge Michael G Gotsch, Sr on 7/10/17. (kjp)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
INOVATEUS SOLAR, LLC,

)
)
Plaintiff/Counterclaim-Defendant,
)
)
v.
)
)
POLAMER PRECISION, INC.,
)
)
Defendant/Counterclaim-Plaintiff
)
______________________________________ )
)
INOVATEUS SOLAR, LLC,
)
)
Third-party Plaintiff,
)
)
v.
)
)
SOLAR LANDSCAPE, LLC,
)
)
Third-party Defendant.
)

CAUSE NO. 3:16-cv-00312-JD-MGG

OPINION AND ORDER
On December 8, 2016, third-party Defendant Solar Landscape, LLC (“Solar”) timely filed
the instant motion to dismiss third-party Plaintiff Inovateus Solar, LLC’s (“Inovateus”) third-party
complaint. Inovateus filed its response on January 5, 2017. Plaintiff’s motion became ripe on
January 12, 2017, when its reply brief was filed. The undersigned may enter a ruling in this matter
based on the parties’ consent and 28 U.S.C. 636(c).
I.

RELEVANT BACKGROUND
Inovateus, an Indiana LLC, was contracted by Polamer Precision, Inc. (“Polamer”), a

Connecticut corporation, to install rooftop solar panels at a facility in Connecticut (“the Project”).
The Engineering, Procurement, and Construction Agreement (“EPC Agreement”) between
Inovateus and Polamer includes a forum-selection clause that provides, in relevant part:

16.4. Governing Law; Submission to Jurisdiction; Venue; No Jury
Trial.
(a) Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND INTERPRETED AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF
INDIANA, EXCLUDING ANY CONFLICT OF LAW
PRINCIPLES.
(b) Submission to Jurisdiction, Venue. The Parties agree that any
suit, action or other legal proceeding by or against any Party (or its
affiliates or designees) with respect to or arising out of this
Agreement shall be brought exclusively in the United States District
Court for the Northern District of Indiana or the courts of the State
of Indiana, in the City of South Bend, as the Party instituting such
suit, action or other legal proceeding may elect. By execution and
delivery of this Agreement, each Party (for itself, its affiliates and
its designees) irrevocably and unconditionally consents and submits
to the exclusive jurisdiction of such courts and the appellate courts
therefrom, and waives any right it may have to assert the doctrine of
forum non conveniens or similar doctrine or to object to venue with
respect to any proceeding.

[DE 1-1 at 17]. Inovateus then executed a subcontract with Solar, a Connecticut limited liability
company, to perform at least part of the work at the Project. The Master Subcontract Agreement
(“Subcontract”) between Inovateus and Solar contains a clause that purports to fully incorporate
the forum-selection clause between Inovateus and Polamer into the Subcontract, as if Solar has
agreed to all of the terms that were agreed to by Inovateus and Polamer. Article 1.1 of the
Subcontract states that:
… The Contract Documents for each Project shall consist of this
Master Agreement and all exhibits attached hereto, the Job Order,
the Engineering, Procurement and Construction agreement… Such
documents form the Contract Documents and are as fully a part of
this Master Agreement as if attached to this Master Agreement or
repeated herein.

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[DE 42-1 at 9]. In addition, Articles 9.1, 9.2, and 10.1 of the Subcontract also state that Solar has
a two-year warranty obligation towards Inovateus as well as a duty to indemnify Inovateus. Id. at
17.
Disputes about the Project arose between Inovateus and Polamer and could not be resolved.
Litigation began when Inovateus filed its complaint in this Court against Polamer based on
diversity jurisdiction on May 20, 2016. Inovateus alleged that Polamer defaulted on its payments
for work done on the Project and sought $225,000 in damages. Polamer timely answered the
Inovateus complaint, asserting its defenses as well as a counterclaim alleging that work on the
Project had been faulty. Inovateus then filed a third-party indemnification claim against Solar on
November 16, 2016, citing Solar’s contractual obligations in Articles 9.1, 9.2, and 10.1 of the
Subcontract in support of its claim that Solar is responsible for any liability resulting from
Polamer’s counterclaim. Solar filed this motion to dismiss for lack of personal jurisdiction
pursuant to Fed. R. Civ. P. 12(b)(2) in response to Inovateus’ third-party complaint.
II.

LEGAL STANDARD
A federal court “sitting in diversity must apply the personal jurisdiction rules of the state

in which it sits.” Kipp v. Ski Enter. Corp. of Wis., 783 F.3d 695, 697 (7th Cir. 2015). A federal
court’s exercise of jurisdiction over a defendant must be permitted by the forum state’s personal
jurisdiction statute and comply with the requirements of the Due Process Clause of the Fourteenth
Amendment. Felland v. Clifton, 682 F.3d 665, 672 (7th Cir. 2012). The applicable statute in this
case is Indiana Trial Procedure Rule 4.4, which provides that Indiana courts have jurisdiction over
a defendant on “any basis not inconsistent with the Constitution of this state or the United States.”
Ind. R. Trial P. 4.4(A).

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A plaintiff has the burden of showing that a federal court has personal jurisdiction over a
defendant, and when the issue of jurisdiction is raised in a motion to dismiss “based on the
submission of written materials, without the benefit of an evidentiary hearing… plaintiff ‘need
only make out a prima facie case of personal jurisdiction.’” Purdue Research Found. v. SanofiSynthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (internal citation omitted). The Court will
construe “all facts concerning jurisdiction in favor of the nonmovant, including disputed or
contested facts.” Reliable Tool & Mach. Co. v. U-Haul Int’l, 837 F. Supp. 274, 279 (N.D. Ind.
1993).
Inovateus asserts in its third-party complaint that this Court has general jurisdiction over
Solar. When a defendant has “continuous and systematic” contacts with the forum state, the
defendant is subject to general jurisdiction in that forum. Felland, 682 F.3d at 673 (internal citation
omitted). General jurisdiction requires that the defendant’s contacts “be sufficiently extensive and
pervasive to approximate physical presence.” Id (internal citation omitted). For a corporation, “the
place of incorporation and principal place of business are paradig[m]… bases for general
jurisdiction.” Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014).
If general jurisdiction does not exist over a defendant, specific jurisdiction may also be
used to exert jurisdiction over that defendant. The Seventh Circuit follows a three-prong test to
determine if specific jurisdiction exists over a defendant. The three prongs are:
(1) the defendant must have purposefully availed himself of the
privilege of conducting business in the forum state or purposefully
directed his activities at the state; (2) the alleged injury must have
arisen from the defendant’s forum related activities; and (3) the
exercise of jurisdiction must comport with traditional notions of fair
play and substantial justice.
Felland, 682 F.3d at 673. The first prong is met when a “defendant deliberately engages in
significant activities within the forum state or creates continuing obligations between himself and
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residents of the forum.” Family Time Snacks, Inc. v. Allen, No. 2:09-cv-49JVB, 2010 WL 746754,
at *3 (N.D. Ind. Feb. 26, 2010). A plaintiff must also demonstrate that his injury “arises out of or
relates to the conduct that comprises the defendant’s contacts.” Felland, 682 F.3d at 676 (citing
Tamburo v. Dworkin, 601 F.3d 693, 708 (7th Cir. 2010)) (internal quotations omitted).
III.

ANALYSIS
As noted above, a federal court may assert its jurisdiction over a case or controversy so

long as the court has either general jurisdiction or specific jurisdiction over a party.
A.

Lack of General Jurisdiction Over Solar

While Inovateus asserts in its third-party complaint that this Court has both general and
specific jurisdiction over Solar, the facts of the case and the briefs show that this Court does not
have general jurisdiction over Solar. The record shows that Solar is a Connecticut limited liability
company and maintains its principal place of business in either New York or New Jersey. Solar
must be incorporated, or have its principal place of business, in Indiana to be subject to general
jurisdiction here. Solar is neither incorporated in Indiana, nor does it have its principal place of
business here.

Therefore, Solar does not meet the requirements for general jurisdiction.

Furthermore, Inovateus does not contest, and therefore concedes, Solar’s assertion that this Court
does not have general jurisdiction over Solar.
B.

Specific Jurisdiction Analysis

Accordingly, the analysis here will focus solely on whether specific jurisdiction exists over
Solar via the forum-selection clause in the Inovateus-Polamer EPC Agreement or the three-prong
test provided in Felland. Before turning to the three-prong test, the effect on Solar of the forumselection clause contained in the Inovateus-Polamer EPC Agreement must be determined.

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1.

The EPC Agreement forum-selection clause’s incorporation into the
Master Subcontract Agreement

Article 1.1 of the Subcontract signed by both Inovateus and Solar explicitly incorporates
the Inovateus-Polamer EPC Agreement when it defines “contract documents” to include the EPC
Agreement and states that the Contract Documents “are as fully a part of this Master Agreement
as if attached to this Master Agreement or repeated herein.” [DE 42-1 at 9]. Based on Article 1.1,
the Inovateus-Polamer forum-selection and venue clause found in Article 16.4 of the EPC
Agreement reflecting Inovateus’s and Polamer’s agreement to submit to jurisdiction in Indiana
state court or the federal courts of the Northern District of Indiana is arguably incorporated into
the Inovateus-Solar Subcontract.
However, the parties disagree as to whether this clause, agreed to by Inovateus and Polamer
in their contract, defines the forum and venue for any disputes between Inovateus and Solar. Solar
argues that this clause only repeats the forum-selection agreement made between Inovateus and
Polamer and does not bind it to dispute resolution in Indiana. Inovateus contends that Article 1.1
fully incorporates all of the provisions in the EPC Agreement into the Subcontract, and therefore
binds Solar to its forum-selection clause.
According to Indiana law, “the goal of contract interpretation is to determine the intent of
the parties at the time they made the agreement.” Bobeck Real Estate Co., Inc. v. Frontier North
Inc., 120 F. Supp.3d 845, 851 (N.D. Ind. 2015) (citing Citimortgage, Inc. v. Barabas, 975 N.E.2d
805, 813 (Ind. 2012). The Court starts with “the plain language of the contract, reading it in context
and, whenever possible, construing it so as to render each word, phrase, and term meaningful,
unambiguous, and harmonious with the whole.” Id. “When necessary, the court may look to the
four corners of the document to understand the text of a disputed provision.” Id. A contract
provision is only ambiguous when a “reasonable person could find its terms susceptible to more
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than one interpretation.” Id. If a term is ambiguous, it is construed “to determine and give effect
to the intent of the parties at the time they entered the contract.” Citimortgage, Inc., 975 N.E.2d at
813.
Article 1.1, on its own, is ambiguous. A reasonable person could find it to mean that Article
16.4 is fully incorporated into the Subcontract between Inovateus and Solar or to mean that the
agreement between Inovateus and Polamer is only repeated in the Subcontract. Without resolving
the meaning of Article 1.1, however, the Court can ascertain whether the Inovateus-Polamer
forum-selection clause applies to Solar based on another provision in the Inovateus-Solar
Subcontract. Article 1.3 of the Subcontract states that Solar, as the:
Subcontractor agrees, without limiting any obligations stated in this
Master Agreement, to assume toward the Contractor [defined as
Inovateus] all of the obligations and the responsibilities that
Contractor by the Contract Documents assumes toward the Owner
[defined as Polamer], and the Contractor shall, in addition to other
rights and remedies provided by this Master Agreement, have the
same rights and remedies against Subcontractor that the Owner has
against Contractor under the Contract Documents as though the
terms of those documents were set forth in full in this Master
Agreement. Should any provision of the Contract Documents be
inconsistent with any provision of this Master Agreement, this
Master Agreement shall govern.
[DE 42-1 at 10].
The critical language in Article 1.3 states that Inovateus “ha[s] the same rights and
remedies against [Solar] that [Polamer] has against [Inovateus] under the Contract Documents as
though the terms of those documents were set forth in full in this Master Agreement.” Id. In other
words, the plain language of Article 1.3 endows Inovateus with all of the same rights and remedies
against Solar, as Polamer has against Inovateus under the EPC Agreement as one of the Contract
Documents. Under Article 16.4 of the EPC Agreement, Polamer and Inovateus “irrevocably and
unconditionally consent[ed] and submitt[ed] to the exclusive jurisdiction” of the Indiana state
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courts or the Northern District of Indiana in South Bend for resolution of any legal action. Having
signed the Sucontract that incorporates all the rights and remedies provided in the EPC Agreement,
including Article 16.4, Solar has expressed its intention to be bound by the Article 16.4 forumselection clause. “Federal law recognizes forum-selection provisions to be prima facie valid and
requires such provisions to be enforced unless the party opposing the provision establishes that
enforcement of the forum-selection clause would be unreasonable.” Whiting-Turner Contracting
Co. v. Westchester Fire Ins. Co., No. JFM-13-348, 2013 WL 3177881, at *3 (D. Md. June 20,
2013) (citing M/S Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 10 (1972). Accordingly, it would
not be appropriate to allow Solar to renege on its intentional submission to the jurisdiction of this
Court with regard to disputes arising from the Polamer Project.
2.

The validity of the forum-selection clause

Having decided that Solar is bound by the Section 16.4 forum-selection clause, the Court
turns its attention to Solar’s argument that the clause is invalidated by Conn. Gen. Stat. Ann. § 42158m. Section 42-158m provides:
Any provision in a construction contract for the performance of
work on a construction site located in this state that purports to
require that any dispute arising under the construction contract be
mediated, arbitrated or otherwise adjudicated in or under the laws of
a state other than Connecticut shall be void and of no effect,
regardless of whether the construction contract was executed in this
state
.

Conn. Gen. Stat. Ann. § 42-158m. Solar further relies on Atlantic Marine Constr. Co., Inc. v. U.S.
Dist. Court for the W. Dist. of Tex., 134 S. Ct. 568 (2013), Whiting-Turner Contracting Co., 2013
WL 3177881, and M/S Bremen, 407 U.S. 1 to argue that while forum-selection clauses are
presumptively valid under federal law, they are unenforceable if they contravene a strong public
policy of the forum the suit is brought. Solar contends that enactment of Section 42-158m against

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forum-selection clauses contained within construction contracts purporting to remove suits to
another forum is evidence of a strong public policy in the forum state that nullifies the clause.
However, Inovateus uses both Atlantic Marine and Whiting-Turner to argue the opposite
result. Inovateus argues that federal law deems forum-selection clauses to be presumptively valid
and that Connecticut’s statute is not an example of a strong public policy of the forum state
requiring a federal court’s deference. Inovateus further argues that Solar should not be permitted
to escape its contractual obligations via a Connecticut statute when it knowingly agreed to an
Indiana choice-of-law provision, as well as an Indiana forum-selection clause.
Solar concedes that forum-selection clauses are presumptively valid and enforceable under
federal law, which preempts state law. See Armstrong v. Exceptional Child Center, Inc., 135 S.
Ct. 1378, 1383 (2015).

However, Solar also notes correctly that forum-selection clauses are

invalid when “the party opposing the provision establishes that enforcement of the forum-selection
clause would be unreasonable.” Whiting-Turner, 2013 WL 3177881, at *3 (citing M/S Bremen,
407 U.S. 1, 10); see also Jackson v. Payday Fin., LLC, 764 F.3d 765 (7th Cir. 2014). An example
of when enforcement of a forum-selection clause would be unreasonable is if “enforcement would
contravene a strong public policy of the forum in which suit is brought.” M/S Bremen, 407 U.S.
1, 15 . However, forum-selection clauses must be given “controlling weight in all but the most
exceptional cases.” Atlantic Marine, 134 S. Ct. at 579.
In Whiting-Turner, the plaintiff was a Maryland corporation that filed its lawsuit against a
Pennsylvania company in Maryland according to a forum-selection clause in their contract. 2013
WL 3177881, at *3. Like Connecticut, Pennsylvania has a statute forbidding forum-selection
clauses in construction contracts. 62 Pa. Stat. and Consol. Stat. Ann. § 3937 (West). There, the
court found that the forum-selection clause did not contravene any Maryland public policy, and

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was therefore enforceable. Whiting-Turner, 2013 WL 3177881, at *3-4. The court reasoned that
the forum-selection clause did not violate the Pennsylvania statute because Maryland was the
forum state in which suit was brought when the plaintiff filed the action and Maryland and was a
Maryland corporation, and Maryland had public policy against its citizens maintaining suit there.
Id. Similarly, the court in Bremen established that the forum-selection clause should only be held
unenforceable when it contravenes a strong public policy “of the forum in which suit is brought.”
Bremen, 407 U.S. at 15.
Here, Solar argues that Connecticut public policy, as expressed in its statute, invalidates
the Inovateus-Solar forum-selection clause. Therefore, the case parallels the situation in WhitingTurner because Inovateus, an Indiana limited liability company, filed suit in Indiana, its own state
of citizenship, not Solar’s state of citizenship. Whiting-Turner, 2013 WL 3177881, at *3.
Accordingly, the public policy of Indiana, not Connecticut, is relevant in determining whether the
Inovateus-Solar forum-selection clause is valid.
Solar presents no argument or evidence that the forum-selection clause at issue violates a
strong public policy of Indiana. Indeed, it is doubtful Indiana would have a strong public policy
against its citizens retaining lawsuits within its borders. Furthermore, the Court agrees with
Inovateus’s contention that Solar should not be permitted to escape its contractual obligations,
which it knowingly agreed to, via a convenient state statute once litigation has begun. Doing so
would offend the “traditional notions of fair play and substantial justice” that are the defining bases
of personal jurisdiction. See Int’l Shoe Co. v. State of Wash., Office of Unemployment &
Compensation & Placement, 326 U.S. 310 (1945).
Therefore, the Inovateus-Solar forum-selection clause is valid despite the Connecticut
statute prohibiting such clauses that force litigation outside the borders of Connecticut. Whiting-

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Turner, 2013 WL 3177881, at *3. Consequently, the Court finds that the forum selection clause
in the Subcontract provides this Court specific jurisdiction over Solar.
C.

Specific Jurisdiction without the Forum-Selection Clause

Moreover, this Court’s exercise of specific jurisdiction is bolstered by the three-prong test
established by Felland. As to the first prong of purposeful availment, Solar purposefully directed
its communications at Inovateus, an Indiana citizen, obligated itself to a continuing two-year
warranty, and agreed to indemnify Inovateus against any claims arising from the Project. Felland,
682 F.3d at 673. With those communications and contractual obligations to Indiana, Solar
purposefully directed activities at Inovateus’s home state of Indiana. Id. See Felland, 681 F.3d
673; Family Time Snacks, 2010 WL 746754, at *3.
Having determined that Solar’s communications and contractual obligations were directed
at Indiana and therefore qualified as forum-related activities, the Court turns its attention to
Felland’s second-prong – whether Inovateus’s alleged injury arose from these activities. See
Felland, 682 F.3d at 673. Solar’s communications with Inovateus established the contract giving
rise to this suit and kept Inovateus informed on the progress of the Project. Moreover, any injury
Inovateus could suffer if found liable on Polamer’s counterclaim – the focus of Inovateus’s thirdparty complaint against Solar – will require payment from Inovateus’s accounts that will affect
Inovateus’s business in Indiana. Therefore, Inovateus’s alleged injury does arise from Solar’s
forum-related activities.
Lastly, the Inovateus-Solar Subcontract, especially the indemnification and forumselection clauses, made it reasonable for Solar to foresee being haled into Indiana court.
Accordingly, it does not offend the traditional notions of fair play and substantial justice for this
Court to retain jurisdiction over Solar. See Felland, 682 F.3d 673.

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Therefore, specific jurisdiction exists over Solar whether through the Subcontract’s forumselection clause or based on the three-prong test for jurisdiction provided by Felland. 1
IV.

CONCLUSION
For the reasons stated above, the Court finds that: (1) the Article 16.4 forum-selection

clause, incorporated into the Inovateus-Solar Subcontract is enforceable and establishes this
Court’s jurisdiction over Solar; (2) Conn. Gen. Stat. Ann. § 42-158m does not invalidate the Article
16.4 forum-selection clause; and (3) specific jurisdiction exists over Solar based on the Felland
three-prong test. Therefore, the Court DENIES Solar’s motion to dismiss pursuant to Fed. R. Civ.
P. 12(b)(2). [DE 40].
SO ORDERED.
Dated this 10th day of July 2017.
s/Michael G. Gotsch, Sr.
Michael G. Gotsch, Sr.
United States Magistrate Judge

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Inovateus’s argument that the Arbitration Clause found in Article 2.2 of the Subcontract confers jurisdiction over
solar is unpersuasive because no authority supports extending limitations in arbitration clauses to legal proceedings.
See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (holding arbitration clauses are a
“specialized kind of forum-selection clause” for the purpose of enforcing arbitration proceedings only). Having found
specific jurisdiction over Solar for other reasons, the Court need not consider Inovateus’s Arbitration Clause argument
further.

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