Humble Equipment Co Inc v. Team Eagle Ltd et al

Filing 29

MEMORANDUM RULING re 26 REPORT AND RECOMMENDATION re 9 MOTION to Dismiss Action for Forum Non Conveniens filed by Team Eagle Ltd, Steve McKeown. Signed by Judge Terry A Doughty on 8/15/2018. (crt,Crawford, A)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION
HUMBLE EQUIPMENT CO., INC.

CIVIL ACTION NO. 3:17-CV-01575

VERSIS

JUDGE TERRY A. DOUGHTY

TEAM EAGLE LTD., ET AL.

MAG. JUDGE KAREN L. HAYES
RULING

Humble Equipment Co., Inc. (“Humble”), a Louisiana corporation, filed this civil action
in the Third Judicial District Court, Lincoln Parish, Louisiana, against Team Eagle, Ltd. (“Team
Eagle”), a Canadian corporation, and Steve McKeown (“McKeown”), president of Team Eagle
and a Canadian resident, seeking a declaratory judgment and monetary damages. Defendants
removed the case to this Court. Before the Court is Defendants’ Motion to Dismiss for Forum
Non Conveniens [Doc. No. 9].
On July 18, 2018, the Magistrate Judge issued a Report and Recommendation
recommending that the motion be granted [Doc. No. 26].

On August 1, 2018, Humble filed an

Objection to the Magistrate Judge’s Recommendation [Doc. No. 27]. On August 14, 2018,
Team Eagle and McKeown filed a Response to the objection [Doc. No. 28]. Having conducted a
de novo review of the record in this matter, the Court DECLINES to adopt the Report and
Recommendation, and DENIES the motion.
I.

FACTUAL BACKGROUND
Humble was formed in Louisiana in 1990 and has been located in Ruston, Louisiana,

since its inception. It provides high-production pavement texturing services to the transportation
industry under the trade name “Skidabrader.” In 2012, Team Eagle expressed interest in

purchasing Humble’s assets. In December 2016, the negotiations intensified. During this time,
Team Eagle was aware that Humble was also negotiating with Blastrac Global, Inc. (“Blastrac”)
and another company for the purchase of its assets.
Humble engaged Victor Mah (“Mah”), a Canadian resident, to represent it in seeking a
buyer for its assets. From December 2016 to May 2017, Mah conducted negotiations in Canada
with McKeown, president of Team Eagle. Humble’s owners occasionally participated in the
negotiations via email with Mah and McKeown. The extent of Mah’s authority to act on behalf
of Humble is disputed. Mah asserts that Humble authorized him to represent himself as
Humble’s chief executive officer and selling agent and that he, on behalf of Humble, agreed to
the essential terms to sell Humble’s assets to Team Eagle in May 2017. However, Humble’s
owners, Jon and Daniel Swain, assert that Mah was not authorized to enter into any agreement
with Team Eagle or anyone else.
On May 4, 2017, Mah sent an email to McKeown stating: “we will accept your offer to
purchase Humble equipment,” subject to several conditions enumerated therein. Both Mah and
McKeown assert that McKeown, acting on behalf of Team Eagle, contemporaneously accepted
those conditions and that Mah informed McKeown that Humble had ceased negotiations with
other potential purchasers. Later that month, Mah and McKeown exchanged several emails
regarding which buildings would be included in the sale. Daniel Swain responded to Mah and
McKeown stating that certain parcels of property were then owned by two separate companies,
but that he was securing a loan to buy them from one of the companies and bring all of the land
into a single company that he and Jon Swain could and would sell to Eagle.
Notwithstanding these communications, on August 3, 2017, Team Eagle sent Humble a
“Letter of Intent for the Purchase of Skidabrader Interest” (the “LOI”), which communicated in

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writing to Humble that, as of August 3, 2017, there was no agreement between the parties and
that the parties would become obligated to one another only if they entered into an asset purchase
agreement. The pertinent provisions of the LOI provide as follows:
Upon the acceptance of this letter of intent by the Seller, the
Parties will devote best efforts toward the preparation of a
definitive, and legally binding agreement(s) between the Buyer
and the Seller regarding the acquisition (the ‘Acquisition’) of
the Company by way of an Asset Purchase Agreement
(‘Purchase Agreement’).
...
This Letter of Intent is intended to be a statement of the mutual
interest of the parties with respect to a possible Transaction and
is subject to execution and delivery of a mutually satisfactory
Purchase Agreement. Apart from the Exclusive Dealing and
Confidentiality provisions (sections J and K of the Term Sheet),
nothing herein shall constitute a binding commitment of either
party. The parties will become legally obligated with respect
to the Transaction only in accordance with the terms contained in
the Purchase Agreement relating thereto if, as and when such
Document has been executed and delivered by the parties.
The LOI was prepared by Team Eagle and transmitted by McKeown to Dan and Jon
Swain, via email on August 3, 2017. The LOI was never executed by Humble. It is undisputed
that the parties never entered into an Asset Purchase Agreement.
Humble continued conducting negotiations with Blastrac. In September 2017, Humble
and Blastrac reached a tentative agreement. On September 15, 2017, Humble informed Team
Eagle of its intention to sell its assets to Blastrac. Upon receiving the news, Team Eagle asserted
that it had an enforceable agreement with Humble for the purchase of Humble’s assets and
threatened to sue Humble to enforce that agreement. On November 2, 2017, Team Eagle wrote
Humble reiterating its position and threatening to initiate legal action in Canada seeking an
injunction to prevent the sale to Blastrac. McKeown contacted Blastrac and informed it of Team

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Eagle’s position. Thereafter, Blastrac informed Humble that it was suspending its purchase of
Humble’s assets.
On November 13, 2017, Humble filed its Petition for Declaratory Judgment and Damages
in the Third Judicial District Court, Lincoln Parish, Louisiana, naming Team Eagle and
McKeown as defendants, seeking a declaratory judgment finding no enforceable agreement with
Team Eagle, and seeking monetary damages from Team Eagle and McKeown for false and
defamatory statements as well as damages resulting from Blastrac’s refusal to move forward
with its purchase of Humble’s equipment. Team Eagle removed the case to this Court on
December 4, 2017.
On December 12, 2017, Team Eagle initiated legal proceedings against Humble in the
Superior Court of Justice for the Province of Ontario in Toronto, Canada, [hereinafter “the
Canadian court”] seeking specific performance of the agreement for the sale and purchase of
Humble’s assets or, alternatively, compensatory damages for breach of contract and
misrepresentation, punitive or aggravated damages, costs and interest.
On December 22, 2017, Defendants filed the instant motion, on the bases that (1) the
Canadian court is an available and adequate forum that would be most convenient to the parties
and witnesses because the majority of the witnesses and evidence are located in Canada, and (2)
Humble filed the instant suit for the purpose of forum shopping in anticipation of its suit against
Humble.
As indicated above, the Magistrate Judge filed a Report and Recommendation [Doc. No.
26], recommending that Defendant’s Motion to Dismiss for Forum Non Conveniens [Doc. No. 9]
be granted. Humble has filed an Objection to the Report and Recommendation [Doc. No. 27].
Defendants have filed a Response to Humble’s Objection [Doc. No. 28].

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The matter is ripe.
II.

STANDARD OF REVIEW
Pursuant to FED. R. CIV. P. 72(3), this Court’s review of the Report is de novo:
(3) Resolving Objections. The district judge must determine de novo any part
of the magistrate judge's disposition that has been properly objected to. The
district judge may accept, reject, or modify the recommended disposition;
receive further evidence; or return the matter to the magistrate judge with
instructions.
With respect to the Report, pursuant to 28 U.S.C. § 636(b)(1), “[a] judge of the court

shall make a de novo determination of those portions of the [magistrate judge’s] report [and
recommendation] or specified proposed findings or recommendations to which objection is
made.” Section 636(b)(1) further states “[a] judge of the court may accept, reject or modify, in
whole or in part, the findings or recommendations made by the magistrate judge. The judge may
also receive further evidence or recommit the matter to the magistrate judge with instructions.”
See also Hernandez v. Estelle, 711 F.2d 619, 620 (5th Cir. 1983).
III.

LAW AND ANALYSIS
A.

Forum Non Conveniens

The federal doctrine of forum non conveniens provides that,
when an alternative forum has jurisdiction to hear [a] case, and when
trial in the chosen forum would establish . . . oppressiveness and vexation
to a defendant . . . out of all proportion to plaintiffs convenience, or when
the chosen forum [is] inappropriate because of considerations affecting
the court’s own administrative and legal problems, the court may, in the
exercise of its sound discretion, dismiss the case, even if jurisdiction and
proper venue are established.
Am. Dredging Co. v. Miller, 510 U.S. 443, 447–48, 114 S. Ct. 981, 985 (1994) (citations and
internal quotation marks omitted). In other words, “the doctrine of forum non conveniens is

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nothing more or less than a supervening venue provision, permitting displacement of the
ordinary rules of venue when, in light of certain conditions, the trial court thinks that jurisdiction
ought to be declined.” Id.
To obtain a forum non conveniens dismissal the movant must show “(1) the existence of
an available and adequate alternative forum and (2) that the balance of relevant private and
public interest factors favor dismissal.” Moreno v. LG Elecs., USA Inc., 800 F.3d 692, 696 (5th
Cir. 2015) (quoting Vasquez v. Bridgestone/Firestone, Inc., 325 F.3d 665, 671 (5th Cir. 2003)).
A defendant invoking non conveniens ordinarily bears a heavy burden in opposing
plaintiff’s chosen forum. Tellez v. Madrigal, 223 F.Supp. 3d, 626, 634 (W.D. Tex. 2016), (citing
Sinochem Intern. Co., Ltd. v. Malaysia Intern. Shipping Corp., 549 U.S. 422, 430 (2007)).
Defendant bears the burden on all aspects of the forum non conveniens analysis. Festor v. Wolf,
647 F.Supp.2d 750, 754 (W.D. Tex. 2009).
The plaintiff’s choice of forum is entitled to great weight in the balancing of factors, and
unless the balance strongly favors the defendants, the plaintiff’s choice of forum should not be
overturned. Syndicate 420 at Lloyd’s London v. Early Am. Ins. Co., 796 F.2d 821, 830 (5th Cir.
1986).
1.

Availability of an Adequate Alternative Forum

“A court facing a motion to dismiss for forum non conveniens must first assess whether
an alternate forum is both available and adequate.” Alpine View Co. Ltd. v. Atlas Copco AB, 205
F.3d 208, 221 (5th Cir. 2000) (citation omitted). The Fifth Circuit explained:
A foreign forum is available when the entire case and all parties can come
within the jurisdiction of that forum. Meanwhile, a foreign forum is adequate
when the parties will not be deprived of all remedies or treated unfairly, even
though they may not enjoy the same benefits as they might receive in an
American court.

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Adams v. Merck & Co. Inc., 353 F. App’x 960, 962 (5th Cir. 2009) (internal quotation marks and
citation omitted) (quoting Alpine View, 205 F.3d at 221). “Mere differences in the foreign
forum’s law do not automatically render a foreign forum inadequate, so long as the plaintiff is
not deprived of all remedies, or is not limited to a clearly unsatisfactory remedy.” Brokerwood
Int'l (U.S.), Inc. v. Cuisine Crotone, Inc., 104 F. App’x 376, 384 (5th Cir. 2004) (citing Gonzalez
v. Chrysler Corp., 301 F.3d 377, 380 (5th Cir. 2002)). “The substantiative [sic] law of the
foreign forum is presumed to be adequate unless the plaintiff makes some showing to the
contrary, or unless conditions in the foreign forum made known to the court plainly demonstrate
that the plaintiff is highly unlikely to obtain basic justice there.” DTEX, LLC v. BBVA
Bancomer, S.A., 508 F.3d 785, 796 (5th Cir. 2007) (quoting Tjontveit v. Den Norske Bank ASA,
997 F. Supp. 799, 805 (S.D. Tex. 1998)).
Defendants have cited Canadian statutory and case law on defamation and fraudulent
misrepresentation which establish Humble would have a potential remedy in the Canadian court
for false and defamatory statements. Defendants have also cited Canadian law which recognizes
a claim for declaratory relief and provides a remedy of the kind and nature sought in this case,
and which permits claims for damages of the nature Humble alleges. Defendants argue that
Humble has not asserted any rationale for why it would be highly unlikely to obtain justice in the
Canadian court. Defendants further suggest that the immovable property at issue is actually
owned by a Swain-controlled affiliate of Humble.
Humble contends that Defendants have not established that the Canadian court could hear
its false and defamatory statements claims against Defendants, or apply Louisiana law on those
claims. Humble further contends that the primary relief that Team Eagle is seeking against
Humble is the specific performance of an alleged agreement involving the transfer of certain

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assets owned by Humble located in Louisiana, as well as immovable property located in
Louisiana, which is not owned by Humble. Furthermore, any agreement to sell immovable
property must be in writing and contain a definite price in order to be enforceable under
Louisiana law, and there is no written agreement here, as indicated by Team Eagle’s Letter of
Intent. Humble argues that the Canadian court is not an available forum for the entirety of the
case because Team Eagle cannot obtain specific performance of an alleged oral agreement that
includes the sale of immovable property located in Louisiana owned by an entity which Team
Eagle did not even name as a defendant in the Canadian suit.
The Court finds that, although Humble has shown that Team Eagle may not be able to
obtain all the relief it seeks in the Canadian court, i.e., specific performance of an agreement to
sell immovable property in the name of a non-party, Humble has nevertheless failed to
demonstrate that in the Canadian court it (Humble) will be deprived of the remedies it seeks, i.e.,
a declaratory judgment and damages. Therefore, the Court concludes that the Superior Court of
Justice for the Province of Ontario is an available and adequate forum insofar as the claims
Humble asserts. However, that does not end the inquiry, as Team Eagle still has a heavy burden
in opposing a plaintiff’s choice of forum.
2.

Weighing Public and Private Interests

The Court next must assess whether, upon consideration of certain relevant private
interest and public interest factors, dismissal is warranted. Alpine View, supra. The private
interest factors include: (1) the relative ease of access to sources of proof; (2) the availability of
compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing
witnesses; and (4) all other practical problems that make trial of a case easy, expeditious, and
inexpensive. DTEX, LLC v. BBVA Bancomer, S.A., 508 F.3d 785, 794–95 (5th Cir. 2007)

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(citation omitted). The public interest factors are: (1) the administrative difficulties flowing from
court congestion; (2) the local interest in having localized interests decided at home; (3) the
familiarity of the forum with the law that will govern the case; and (4) the avoidance of
unnecessary problems of conflict of laws or in the application of foreign law. The defendant
bears the burden of proof on all elements of the forum non conveniens analysis. DTEX, LLC,
supra (citation omitted). The local interest factor seeks to uphold the ideal that “[j]ury duty is a
burden that ought not to be imposed upon the people of a community which has no relation to the
litigation.” In re Volkswagen AG, 371 F.3d 201, 206 (5th Cir. 2004) (citing Gulf Oil Corp. v.
Gilbert, 330 U.S. 501, 508-09, 67 S. Ct. 839 (1947)).
a)

Private Interest Factors

Team Eagle contends that the cornerstone of this case is whether Humble and Team
Eagle entered into a binding agreement for the purchase and sale of Humble’s assets, and that
crucial to resolution of that issue will be a determination of the extent of Mah’s authority to act
on behalf of Humble. Team Eagle asserts that the negotiations took place almost exclusively in
Ontario, Canada, between Mah, a resident of Manitoba, Canada, and McKeown, a resident of
Ontario, Canada, and that the vast majority of the witnesses to the negotiations and to Team
Eagle’s actions supporting its detrimental reliance claim reside in Ontario, Canada. These
witnesses include the appraisers of Team Eagle’s assets, the bankers to whom Team Eagle turned
for the capital needed to perform under the agreement, the witnesses who developed the business
plan for integrations of Team Eagle’s assets with Humble Equipment, and other witnesses to
Team Eagle’s substantial investments of effort, manpower, time and expenditures to prepare to
perform under the agreement.

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Humble responds that the cornerstone of this case is not whether Team Eagle and
Humble entered into an oral agreement, rather it is the enforceability of the alleged oral
agreement and whether Team Eagle repudiated it by virtue of its own actions, namely, by
representing to Humble in the LOI that no agreement, oral or otherwise, existed. Humble further
argues that key witnesses, who are available to testify in Louisiana, are not available in Ontario,
Canada. This includes Blastrac’s president, Mark Haworth, a resident of Oklahoma, who is
willing and able to appear as a witness in Louisiana, but not Ontario. Humble points out that
Mah, a resident of Canada, has agreed to appear as a witness in either Ontario or Louisiana.
The Magistrate Judge agreed with Team Eagle’s contentions, concluding that the
resolution of whether there was any agreement between Humble and Team Eagle will turn on a
determination of the extent of Mah’s authority to act on behalf of Humble, and that the Canadian
court can compel the appearance of Team Eagle’s eighteen witnesses, but this Court cannot. The
Magistrate Judge addressed Humble’s concerns about the Canadian court being unable to compel
the attendance of witnesses in the United States, including Blastrac representatives, by asserting
they could give depositions to be used in either court.
This Court finds that Team Eagle has failed to carry its burden of proving that the private
interest factors favor the Canadian court. Assuming that it is correct that the resolution of
whether there was any agreement between Humble and Team Eagle will turn on a determination
of the extent of Mah’s authority to act on behalf of Humble, then the only witnesses who have
any personal knowledge of that issue are Mah, Dan Swain, and Jon Swain. The Swains are the
sole owners of Humble and residents of Ruston, Louisiana, and Mah has signed a declaration
stating he is willing to travel to Louisiana to testify before this Court. If the witnesses in the
United States, including the Blastrac witnesses, can give depositions to be used in either court,

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then, by the same token, so can the eighteen witnesses in Canada, assuming their testimony will
be relevant. Furthermore, Dan Swain and Jon Swain, will incur a significant cost, expense and
burden if they are required to travel to Ontario, Canada, to pursue their company’s claims against
Team Eagle.
At best, the private interest factors do not aggregate in favor of either side, and Team
Eagle has clearly not carried its burden of proving they favor the Canadian court.
b)

Public Interest Factors

Team Eagle argues that the public interest factors decisively favor the Canadian court
because Canada has a compelling interest in adjudicating disputes arising directly from
negotiations between Canadian residents in Canada and a Canadian company’s damage claims
arising from those dealings in Canada. Team Eagle further argues that, even if Louisiana law
will apply to some issues in this case, such as the law dealing with immovable property
agreements, the Canadian court is fully capable of applying that law. Finally, Team Eagle
contends that Louisiana has little interest in resolving disputes arising from a Louisiana
company’s decision to clothe a Canadian resident with authority to negotiate on its behalf in
Canada with a Canadian company.
The Magistrate Judge concluded that the first two public interest factors--administrative
difficulties and local interest--are neutral. The Magistrate Judge further concluded that the
remaining public interest factors--familiarity of the forum with the law that will govern the case
and the avoidance of unnecessary problems of conflict of laws or in the application of foreign
law--favor the Canadian court as the forum for this case. She reasoned that, although Louisiana
law applies to the transfer of title for real property located in Louisiana, the dispute in this case

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does not involve the actual transfer of title, but whether an enforceable agreement to transfer
exists.
Humble objects to the Report and Recommendation, contending that it failed to properly
evaluate the Louisiana immovable property component of the alleged oral agreement that Team
Eagle is seeking to enforce, inasmuch as Louisiana law requires that even an agreement to
purchase immovable property must be in writing and contain a definite price. Humble further
objects that the Report failed to mention Louisiana’s strong public interest in protecting
Louisiana companies, such as Humble, which have always had their principal place of business
in Louisiana.
This Court finds that Team Eagle has failed to carry its burden of showing that the public
interest factors favor the Canadian court. The second factor, the local interest in having localized
controversies resolved at home, rather than being neutral, favors Louisiana. The dispute here is
whether a Louisiana company, located in Louisiana, entered into a binding agreement to sell
movable and immovable property located in Louisiana. Louisiana has a public interest in
protecting companies, such as Humble, which were formed and have always had their principal
places of business located in Louisiana. Louisiana has an even stronger public interest in
determining the rights of parties with respect to immovable property located in Louisiana. The
third and fourth factors: the familiarity of the forum with the law that will govern the case and
the avoidance of unnecessary problems of conflict of laws or in the application of foreign law
would favor a Louisiana forum, which would be more familiar with the law that will likely
govern this action.
To summarize, the case law is clear that the plaintiff’s choice of forum is entitled to great
weight in the balancing of factors, and unless the balance strongly favors the defendants, the

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plaintiff’s choice of forum should not be overturned. Syndicate 420 at Lloyd’s, supra. A
weighing of the factors in this case indicates that the factors are either neutral or favor a
Louisiana forum. Therefore, the Court finds that Team Eagle has failed to carry its burden of
proving that it is entitled to a forum non conveniens dismissal.
B.

Anticipatory Lawsuit

The Magistrate Judge agreed with Team Eagle’s argument that dismissal of this action is
proper because it was filed as a preemptive, anticipatory action in order to gain a forum
advantage, citing Pac. Employers Ins. Co. v. M/V Capt. W.D. Cargill, 751 F.2d 801, 804–05 (5th
Cir. 1985); v. Pertuit Youthspan, Inc., No. CIV.A. 02-1188, 2003 WL 356021, at *5, 6 (E.D. La.
Feb. 13, 2003).
To determine whether a lawsuit is anticipatory, courts look to the conduct of the parties
prior to the filing of the lawsuit. Paragon Indus., L.P. v. Denver Glass Mach., Inc., No.
CIV.A.3-07CV2183-M, 2008 WL 3890495, at *4 (N.D. Tex. Aug. 22, 2008). “Lengthy
negotiations and the tenor of the party's relationship will serve as evidence that a suit was
expected to be filed.” Mill Creek Press, Inc. v. The Thomas Kinkade Co., No. CIVA.3:04-CV1213-G, 2004 WL 2607987, at *7 (N.D. Tex. Nov. 16, 2004). When a party is on notice of an
imminent lawsuit involving the same or similar issues, “[c]ourts will generally not allow a party
to select its preferred forum by filing an action for a declaratory judgment.” Paragon, 2008 WL
3890495, at *4. To permit otherwise would “divest” the “true plaintiff” “of his right to select the
proper forum.” Id.; see also Bedrock, 2017 WL at 1547013, at *2 (“In these cases, deferring to
the plaintiff's choice of forum incentivizes and rewards the winner of a race to the courthouse.”).

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The Magistrate Judge reasoned that since Humble filed suit with full notice that Team
Eagle intended to file its breach of contract action in Canada, only one conclusion is reasonable:
this action was filed in order to give Humble a forum advantage.
Humble objects that the Magistrate Judge make an unexplainable leap in so concluding,
and asserts that it filed suit primarily to obtain a declaratory judgment, so it could proceed with
the sale of its assets to Blastrac and for damages. Team Eagle’s threats caused Blastrac to
terminate its negotiations with Humble, and the only way Humble could pursue the sale to
Blastrac was to file suit for declaratory relief against Team Eagle here.
This Court finds that Team Eagle has failed to prove that Humble filed this lawsuit as a
preemptive, anticipatory action to gain a forum advantage. Both sides in this case were clearly
threatening to file lawsuits in their home forums. Humble happened to file its lawsuit first.
However, the mere fact that one party is threatening litigation in its home forum, standing alone,
does not create a presumption that the other party is seeking a forum advantage when it files suit
first in its home forum. If it did, then Humble would be entitled to the benefit of that same
presumption had Team Eagle filed suit in the Ontario court first. That would be too great a leap
to make. There has to be something more in order to conclude the first suit was an anticipatory
suit. Accordingly, the Court finds that Defendants have failed to show that they are entitled to
dismissal of this action on the basis that Humble filed it as a preemptive, anticipatory action in
order to gain a forum advantage.
IV.

CONCLUSION
For the reasons set forth above, the Court DECLINES to adopt the Magistrate Judge’s

Report and Recommendation, and the pending Motion to Dismiss Action for Forum Non
Conveniens [Doc. No. 9] is DENIED.

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Monroe, Louisiana, this 15th day of August, 2018.

_________________________________________
TERRY A. DOUGHTY
UNITED STATES DISTRICT JUDGE

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