American United Petroleum Corporation v. Freightquote.com, Inc.
Filing
10
MEMORANDUM AND ORDER granting 8 MOTION to Transfer Case to Federal District of Kansas (Signed by Judge Ewing Werlein, Jr) Parties notified.(kcarr, ) [Transferred from Texas Southern on 6/21/2012.]
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
AMERICAN UNITED PETROLEUM
CORPORATION,
§
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§
§
§
§
§
§
§
§
Plaintiff,
v.
FREIGHTQUOTE.COM, INC.,
Defendant.
CIVIL ACTION NO. H-12-0740
MEMORANDUM AND ORDER
Pending
is
Defendant
Freightquote.com,
Transfer Venue (Document No. 8).
Inc.’s
Motion
to
After carefully considering the
motion, response, and applicable law, the Court concludes that this
case should be transferred to the District of Kansas.
I.
Background
Plaintiff American United Petroleum Corporation (“Plaintiff”)
alleges
it
contracted
with
Defendant
Freightquote.com,
Inc.
(“Defendant”) to carry a shipment of sucker rods from Houston to a
buyer in Pharr, Texas.1
Plaintiff alleges that Defendant failed to
deliver the sucker rods on time and in a suitable condition.2
1
Document No. 1-2 ¶ 5 (Orig. Pet.).
2
Id. ¶ 7.
As
a result, Plaintiff alleges, the buyer rejected the entire shipment
worth $267,560 and cancelled a second order worth $650,000.3
Plaintiff alleges breach of contract, misrepresentation, and
negligence
and
seeks
damages,
costs
and
attorney’s
fees.4
Defendant moves to transfer venue pursuant to 28 U.S.C. § 1406(a),
asserting that a mandatory forum selection clause requires that any
action
be
litigated
in
United
States
District
Court
for
the
District of Kansas.
II.
A.
Discussion
Legal Standards
1.
28 U.S.C. § 1406(a)
Under 28 U.S.C. § 1406(a), when venue is found to be improper,
“[t]he district court . . . shall dismiss, or if it be in the
interest of justice, transfer such case to any district or division
in which it could have been brought.”
28 U.S.C. § 1406(a); see
also Launey v. Carnival Corp., No. CIV. A. 97-1470, 1997 WL 426095,
at *2 (E.D. La. July 25, 1997) (“Section 1406 . . . provides the
mechanism for disposing of an action which has been filed in an
improper
venue
.
.
agreement . . . .”).
3
.
in
contravention
of
[a]
contractual
“Although both sections [1404 and 1406] were
Id. ¶ 7-8.
4
.
Id. ¶¶ 9-21.
2
broadly designed to allow transfer instead of dismissal, § 1406(a)
provides for transfer from forums in which venue is wrongly or
improperly laid, whereas, in contrast, § 1404(a) operates on the
premises that the plaintiff has properly exercised his venue
privilege.”
Van Dusen v. Barrack, 84 S. Ct. 805, 818 (1964).
“The problem which gave rise to the enactment of [§ 1406(a)] was
that
of
avoiding
the
injustice
which
had
often
resulted
to
plaintiffs from dismissal of their actions merely because they had
made an erroneous guess with regard to the existence of some
elusive fact of the kind upon which venue provisions often turn.”
Goldlawr, Inc. v. Heiman, 82 S. Ct. 913, 915 (1962).
If venue is
improper, “a district court has broad discretion in determining
whether to dismiss or transfer a case in the interest of justice.”
Caldwell v. Palmetto State Savs. Bank of S. C., 811 F.2d 916, 919
(5th Cir. 1987).
2.
Forum Selection Clause
Federal law governs the determination of the enforceability of
a forum selection clause for diversity cases in federal court.
Haynsworth v. The Corporation, 121 F.3d 956, 962 (5th Cir. 1997).
A forum selection clause is “prima facie valid and should be
enforced unless enforcement is shown by the resisting party to be
‘unreasonable’ under the circumstances.” M/S Bremen v. Zapata OffShore Co., 92 S. Ct. 1907, 1913 (1972) (internal quotation marks
3
and citations omitted); see also Mitsui & Co. (USA), Inc. v. Mira
M/V, 111 F.3d 33, 35 (5th Cir. 1997); Afram Carriers, Inc. v.
Moeykens, 145 F.3d 298, 301 (5th Cir. 1998), cert. denied, 119
S. Ct. 1031 (1999).
“Unreasonableness potentially exists where
(1) the incorporation of the forum selection clause into the
agreement was the product of fraud or overreaching; (2) the party
seeking to escape enforcement ‘will for all practical purposes be
deprived of his day in court’ because of the grave inconvenience or
unfairness of the selected forum; (3) the fundamental unfairness of
the
chosen
law
will
deprive
the
plaintiff
of
a
remedy;
or (4) enforcement of the forum selection clause would contravene
a strong public policy of the forum state.”
at 963.
Haynsworth, 121 F.3d
“The party resisting enforcement [of the forum selection
clause] on these grounds bears a ‘heavy burden of proof.’”
Id.
(quoting The Bremen, 92 S. Ct. at 1917); accord Afram Carriers, 145
F.3d at 301.
B.
Analysis
Defendant asserts that venue is improper because its contract
with Plaintiff designates the District Court of Kansas, Kansas
City, as the exclusive forum.5
Plaintiff does not challenge the
5
See Document No. 8 at 3. The forum selection clause in the
contract governing this dispute states: “Any claim, dispute or
litigation relating to these Terms and Conditions, any shipment
scheduled or tendered hereunder or through the Company’s website
. . . shall be filed in the District Court of Johnson County,
4
validity of the forum selection clause or argue that the clause is
the product of fraud or overreaching, that it violates a strong
public policy, or that enforcement of the clause deprives the
plaintiff of its day in court.
Instead, Plaintiff asserts that it
would be inconvenient, costly, and that it would be unfair to
require Plaintiff, a small company with limited resources, to
travel to Kansas to litigate this dispute against a large company.
However, it is “incumbent on the party seeking to escape his
contract to show that trial in the contractual forum will be so
gravely difficult and inconvenient that he will for all practical
purposes be deprived of his day in court.
basis
for
concluding
that
it
would
Absent that, there is no
be
unfair,
unreasonable to hold a party to his bargain.”
unjust,
or
The Bremen, 92 S.
Ct. at 1917; see also L.A. Pipeline Const. Co. v. Tex. E. Prods.
Pipeline Co., 699 F. Supp. 185, 188 (S.D. Ind. 1988) (finding that
a disparity in size between litigants and fact that the majority of
witnesses were closer to plaintiff did not prevent enforcement of
the forum selection clause and transfer to Texas). Plaintiff fails
to meet its “heavy burden” to show that the clause is unreasonable
or that transfer would be improper. Because the District of Kansas
is
the
venue
agreed
to
by
transferred to that district.
the
parties,
this
case
will
be
28 U.S.C. § 1406(a).
Kansas or in the United States District Court for the District of
Kansas in Kansas City and shall be subject to Kansas law.” Id.,
ex. 4 ¶ 5.
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III.
Order
It is therefore ORDERED that
Defendant Freightquote.com, Inc.’s Motion to Transfer Venue
(Document No. 8) is GRANTED, and this case is TRANSFERRED to the
United States District Court for the District of Kansas, Kansas
City, Kansas, pursuant to 28 U.S.C. § 1406(a).
The Clerk will mail a copy of this Order of Transfer to the
Clerk of the United States District Court for the District of
Kansas, Kansas City, Kansas, and shall notify all parties and
provide them with a true copy of this Order.
The Clerk will enter this Order and send copies to all counsel
of record.
SIGNED at Houston, Texas on this 20th day of June, 2012.
____________________________________
EWING WERLEIN, JR.
UNITED STATES DISTRICT JUDGE
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