Sayles et al v. Knight Transportation Company, Incorporated

Filing 30

MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that Defendant's Motion to Transfer (ECF No. 14 ) is GRANTED. IT IS FURTHER ORDERED that this action is transferred to the United States District Court for the District of Arizona. Signed by District Judge Ronnie L. White on 12/02/2016. (KCB)

UNITED ST ATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
JA YSAN SAYLES and JAIMSON
STIRJLING, d/b/a SAYLES
TRANSPORTATION COMP ANY,
Plaintiffs,
v.
KNIGHT TRANSPORATION COMPANY,
INC.,
Defendant.

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No. 4:16-CV-683 RLW

MEMORANDUM AND ORDER
This matter is before the Court on Defendant's Motion to Transfer (ECF No. 14). This
matter is fully briefed and ready for disposition. 1

BACKGROUND
On April 15, 2016, Plaintiffs filed a lawsuit against Defendant Knight Transportation
Company, Inc. ("Knight") 2 in the Circuit Court of St. Louis County, Missouri, styled Jasan

Styles and Jamison Stirling dlb/a Sayles Transportation Company v. Knight Transportation
Company, Inc. , Case No. 16SL-CC1376. Knight removed this action to federal court pursuant to
28 U.S.C. § 1332, asserting complete diversity of citizenship exists between Plaintiffs and Knight
and that more than $75,000 is in dispute.

1

Plaintiffs filed a Motion for Leave to File a Sur-Reply (ECF No. 26). The Court will allow
Plaintiff to file the arguments that are included in the Motion (ECF No. 26). To the extent (if
any) that Plaintiffs are seeking to file another document, the Motion is denied.
2
Plaintiffs do not have a contract with Knight Transportation Company, Inc. Rather, Knight
Logistics, LLC is the entity with which Plaintiffs contracted. (ECF No. 15 at 2). The Court
refers to these two companies interchangeably as "Knight" and notes that both are citizens of
Arizona. Plaintiffs admit that Knight is a foreign corporation with its principal place of business
located in Arizona.

On August 14, 2014, Sayles Transportation Company ("Sayles") entered into a
Transportation Brokerage Agreement with Knight. 3

As part of the Transportation Brokerage

Agreement, Plaintiffs agreed that Sayles would provide contract carriage and related services to
Knight pursuant to the terms of the Transportation Brokerage Agreement. In turn, Knight agreed
to pay Sales for the transportation of property.

As part of the Transportation Brokerage

Agreement, Sayles agreed to procure and maintain, at its sole cost and expense, minimum
insurance coverage, including Commercial Automobile Liability Insurance and Motor Truck
Cargo Legal Liability Insurance. Paragraph 19 of the Transportation Brokerage Agreement,
entitled, "Resolution of Disputes" provides, in relevant part, " [t]he parties consent and agree to
the exclusive jurisdiction of the federal or state courts of Arizona in any action under this
Agreement and that any such court in Arizona will be an appropriate forum for such action."
The Transpiration Brokerage Agreement is the only written agreement between Knight and
Plaintiffs or Sayles, other than load confirmation sheets. In the Complaint, Plaintiffs appear to
allege that Knight breached another written contract- a contract for insurance-even though no
such written contract for insurance exists between Plaintiffs and Knight. Rather, approximately
fifteen months after entering into the Transportation Brokerage Agreement, Sayles' requested
Knight' s assistance in obtaining insurance.

Knight referred Sayles to Transtar Insurance

Brokers, Inc. ("Transtar"). Sayles applied to become part of a group insurance policy through
Transtar. As part of its application, Sayles also applied to become a member of Avant RPG, Inc.,
a risk retention group.

In conjunction with its application, Sayles signed a Membership

Agreement with Avant RPG, Inc.

On December 4, 2015, Transtar issued a certificate of

3

Knight Brokerage, LLC and Knight Logistics, LLC are the same entity. On February 3, 2015
Knight Brokerage, LLC changed its named to Knight Logistics, LLC. The Court collectively
refers to the Knight entities as "Knight" for simplicity.

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insurance to Sayles for the insurance coverage required under the Transportation Brokerage
Agreement.
DISCUSSION
A. Motion to Transfer

Knight argues that this Court should enforce the forum-selection clause and transfer this
entire action to Arizona.
In response, Plaintiffs assert that Knight's Motion is untimely and Knight should have
removed this action directly to the District of Arizona. Next, Plaintiffs maintain that, even if
Defendant is "based" in Arizona, Missouri still has jurisdiction over Plaintiffs' claims under
Missouri ' s Long-Arm Statute, R.S. Mo. 506.500. (ECF No. 22 at 3). Plaintiffs assert that this
Court has jurisdiction over Plaintiffs' claims because the relevant contract relates to Plaintiffs
and Plaintiffs' business, which were all located in Missouri at the time of formation of the
contract. (ECF No. 22 at 3). Plaintiffs assert that their tort claims do not arise of the contract,
but arise out of Knight's
negligence in cancelling the contract prematurely and in error, but more
significantly, Plaintiffs' tort claims arise out of Defendant' s negligence, including
defamation and tortuous [sic] interference with business expectancy, when
Defendant communicated to unrelated third parties, who in turn relied to
Plaintiffs' detriment, on Defendant's defamatory representations, resulting in
substantial loss of business to Plaintiffs.
(ECF No. 22 at 5). Finally, Plaintiffs maintain that Knight should be estopped from requesting a
change in venue "at this late hour" because Knight failed to seek transfer prior to removal. (ECF
No. 22 at 5-6).
As an initial matter, the Court holds that Knight's Motion to Transfer is not untimely.
Knight was required to remove this case to this federal court prior to seeking a transfer to the

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District Court of Arizona. See 28 U.S.C. §1446 ("A defendant or defendants desiring to remove
any civil action from a State court shall file in the district court of the United States for the
district and division within which such action is pending a notice of removal. .. "). Knight could
not have removed this case directly to the District Court of Arizona.
Next, the Court holds that the forum selection clause in the Transportation Brokerage
Agreement is an enforceable contract. As a general rule, courts enforce valid forum selection
clauses. " [W]hen the parties' contract contains a valid forum-selection clause, which represents
the parties' agreement as to the most proper forum ."' Atl. Marine Const. Co. v. US Dist. Court

for W Dist. of Texas, 134 S. Ct. 568, 581 (2013) (quoting Stewart Org. , Inc. v. Ricoh Corp., 487
U.S. 22, 31 (1988)). The "enforcement of valid forum-selection clauses, bargained for by the
parties, protects their legitimate expectations and furthers vital interests of the justice system."

Stewart Org. , Inc., 487 U.S. at 33. The Court notes that although jurisdiction and venue are
appropriate in this forum, personal jurisdiction and venue are also appropriate in Arizona
pursuant to the forum selection clause.

The Eighth Circuit has held that " [d]ue process is

satisfied when a [party] consents to personal jurisdiction by entering into a contract that contains
a valid forum selection clause." Dominium Austin Partners, LLC v. Emerson, 248 F.3d 720, 726
(8th Cir. 2001); CIC Grp., Inc. v. Mitchell, No. 4:10CV1789MLM, 2010 WL 5184990, at *3
(E.D. Mo. Dec. 15, 2010).

Plaintiffs waived their argument that venue in Arizona is

inconvenient to them because they consented to jurisdiction there under the forum selection
clause.

Nicolais v. Balchem Corp., No. 4:14-CV-1936 CAS, 2015 WL 6436747, at *2 (E.D.

Mo. Oct. 22, 2015) (citing Atl. Marine Const. Co. v. US Dist. Court for W Dist. of Texas, 134
S. Ct. 568, 582, (2013) ("Once parties agree to a forum-selection clause, 'they waive the right to

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challenge the preselected forum as inconvenient,' and the district court may consider publicinterest factors only.").
Finally, the Court holds that all of Plaintiffs' claims are subject to the forum selection
clause and the entire case shall be transferred to the District Court in Arizona. '"Whether tort
claims are to be governed by forum selection provisions depends upon the intention of the parties
reflected in the wording of particular clauses and the facts of each case."' Terra Int'!, Inc. v.

Mississippi Chem. Corp., 119 F.3d 688, 693 (8th Cir. 1997) (quoting Berrett v. Life Ins. Co. of
the Southwest, 623 F.Supp. 946, 948-49 (D. Utah 1985)). The forum selection clause provides:
"[t]he parties consent and agree to the exclusive jurisdiction of the federal or state courts of
Arizona in any action under this Agreement and that any such court in Arizona will be an
appropriate forum for such action." The Court construes this clause and determines that this
clause does not clearly indicate whether the clause applies to Plaintiffs' tort claims. However,
that is not the end of the inquiry. The Eighth Circuit stated that courts should look to three
guiding principles to determine whether a forum selection clause applies to tort claims: (1)
whether the tort claims ultimately depend upon the relationship created by the existence of the
contract, (2) whether resolution of the tort claims relates to the interpretation of the contract, and
(3) whether the tort claims involve the same operative facts . Terra Int'!, Inc. v. Mississippi

Chem. Corp., 119 F.3d 688, 694 (8th Cir. 1997). Applying these factors, the Court holds that
Plaintiffs' tort claims are covered under the forum selection clause. 4 The Court notes that the

4

Plaintiffs' tort claims include claims for defamation (Count II), tortious interference with a
business expectancy (Count IV), and fraudulent misrepresentation (Count V). The Court notes
that Plaintiffs' claim for punitive damages (Count VI) cannot stand alone as a separate count.
"There is no independent cause of action for punitive damages under either federal or Missouri
law." Jackson v. Asplundh Constr. Corp., No. 4:15CV00714 ERW, 2016 WL 4701589, at *3
(E.D. Mo. Sept. 8, 2016) (citing Jackson v. Wiersema Charter Serv., Inc., No. 4:08CV00027
JCH, 2009 WL 1310064, at *3 (E.D. Mo. May 11, 2009) (quoting Reed v. Bd. of Trs. of
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relationship between Plaintiffs and Knight derives completely from the Transportation Brokerage
Agreement. This Agreement is the only agreement between the parties and the sole basis for any
business relationship.

Plaintiffs' tort claims would not have arisen independent of the

Transportation Brokerage Agreement. The Transportation Brokerage Agreement required that
Sayles maintain minimum insurance coverage. Based upon that requirement, Sayles obtained
insurance from Transtar.

The tort claims all relate to Plaintiffs' insurance coverage procured

solely to comply with the terms of the Transpiration Brokerage Agreement.

Plaintiffs'

defamation claim alleges that Defendant attempted to cancel the "insurance contract between
Knight and Sayles Transportation Company." (ECF No. 5,

~26).

Therefore, the resolution of

Plaintiffs' defamation claim relates to the parties' insurance obligations under the Transportation
Brokerage Agreement, the only contract between the parties.

Likewise, Plaintiffs' tortious

interference with business expectancy claim contends that Knight told transportation company
brokers false and unlawful information, such as Sayles "was not covered by any policy of
insurance during the relevant time periods" and Knight "breached or induced the breach of these
contract/'rate confirmations' without legal justification or excuse." (ECF No. 5,

~49).

And, in

the fraudulent misrepresentation count, Plaintiffs allege that Knight misrepresented that Sayles'
"insurance policy was cancelled, when in fact such was not the case." (ECF No. 5, ~55) . These
allegations regarding insurance coverage depend upon the relationship between Plaintiffs and
Knight and relate to Plaintiffs' insurance obligations under the Brokerage Transportation
Agreement. The Court holds that all of these tort claims necessarily involve the Brokerage
Transportation Agreement and cannot be determined independent of that contract. See Crescent

Columbia College, No. 07-04155- CV- C- NKL, 2008 U.S . Dist. LEXIS 105167, at *41 , 2008
WL 5432287 (W.D. Mo. Dec. 31 , 2008)).

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Int'!. , Inc. v. Avatar Communities, Inc., 857 F.2d 943 , 944 (3d Cir.1988) ("[P]leading alternate
non-contractual theories is not alone enough to avoid a forum selection clause if the claims
asserted arise out of the contractual relation and implicate the contract's terms."); Tsai v. Karlik,
No. 4:14-CV-244 CEJ, 2014 WL 3687201 , at *3 (E.D. Mo. July 24, 2014). Consequently, the
Court holds that the tort claims are subject to the forum selection clause in the Brokerage
Transportation Agreement. See Terra Int'!, Inc., 119 F.3d at 694. The Court transfers this entire
case to the United States District Court for the District of Arizona.

Accordingly,
IT IS HEREBY ORDERED that Defendant' s Motion to Transfer (ECF No. 14) is
GRANTED.
IT IS FURTHER ORDERED that this action is transferred to the United States District

Court for the District of Arizona.

Dated this 2nd day of December, 2016.

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UNITED STATES DISTRICT JUDGE

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