ImagePoint, Inc. v. BFS Retail & Commercial Operations, LLC

Filing 27

ORDER granting in part and denying in part 12 Defendant's Motion to Dismiss for Lack of Jurisdiction or to Transfer Venue. The motion is GRANTED to the extent that the Defendant moves the Court to transfer this matter to the United States District Court for the Northern District of Illinois. The motion is otherwise DENIED; and this matter is hereby TRANSFERRED to the United States District Court for the Northern District of Illinois. Signed by District Judge Karen K Caldwell on June 6, 2013. (AYB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
KNOXVILLE DIVISION
CIVIL ACTION NO. 3:12-410
In Re:
IMAGEPOINT, INC.,

DEBTOR

IMAGEPOINT, INC. by JAMES R. MARTIN,
Secured Creditor
v.

PLAINTIFF

OPINION AND ORDER

BFS RETAIL & COMMERCIAL
OPERATIONS, LLC

DEFENDANT
**********

This matter is before the Court on the motion to dismiss or to transfer venue (DE 12)
filed by the Defendant, BFS Retail & Commercial Operations, LLC.
The issue on this motion is whether this matter should be dismissed or transferred to the
United States District Court for the Northern District of Illinois pursuant to the forum-selection
clause contained in the contract between the parties. For the following reasons, the Court will
grant the motion to transfer venue.
I.

Facts.

On February 24, 2006, the parties to this action entered into an agreement by which
ImagePoint agreed to repair and replace certain signs for BFS. (DE 12, Ex. A, Contract, ¶ 1.)
ImagePoint asserts that, pursuant to the agreement, it provided products and services to BFS but
that BFS has not paid it as required. ImagePoint asserts that BFS owes it $1,128,007.45. (DE 4,
Amended Complaint ¶ 12.) It asserts breach of contract and quantum-meruit claims against BFS.

ImagePoint initially filed this as an adversary proceeding in the bankruptcy court for the
Eastern District of Tennessee as part of its Chapter 11 bankruptcy case. (DE 4 at CM-ECF p. 12.) The case was later converted to a Chapter 7 bankruptcy. ImagePoint then moved without
opposition to withdraw the reference of this matter to the bankruptcy court and this Court
assumed jurisdiction over the matter.
The action is now brought by James R. Martin on ImagePoint’s behalf. Martin was the
president of ImagePoint from 1986 until 2006 and its CEO until it ceased operating in 2009. (DE
16, Martin Aff.) He is also a secured creditor of ImagePoint and was substituted as the Plaintiff
in this matter because he has a contractual right to collect on ImagePoint’s accounts receivable.
BFS now moves to dismiss this action under Federal Rule of Civil Procedure 12(b)(6) or
to transfer it to the United States District Court for the Northern District of Illinois under 28
U.S.C. § 1404(a).
II.

Analysis.

In support of it motion, BFS cites the forum-selection clause of the agreement between
the parties which provides that “[t]he parties hereby agree that the sole and exclusive for[u]m for
any litigation arising out of this Agreement shall be any appropriate state or federal court located
in Cook County, Illinois.” (DE 12, Ex. A, Agreement § 22) (emphasis added.)
In its response, ImagePoint does not dispute that the forum-selection clause is valid and
enforceable. Instead, it argues that a motion to dismiss under Rule 12(b)(6) is not the proper
mechanism to enforce the provision and that transfer to the Northern District of Illinois under 28
U.S.C. § 1404(a) is not appropriate because that forum is not more convenient than this one. It
also argues that the clause does not apply to its quantum-meruit claim.

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As to the proper mechanism to enforce a valid forum-selection clause, the law is far from
clear and the Supreme Court has recently granted certiori to address this issue. See Atlantic
Marine Constr. Co. v. United States District Court for the Western District of Texas, 133 S.Ct.
1748 (April 1, 2013); http://www.scotusblog.com/case-files/cases/atlantic-marine-constructionco-v-united-states-district-court-for-the-western-district-of-texas/ .
Under current controlling law, however, transfer of this case to the Northern District of
Illinois under 28 U.S.C. § 1404(a) is appropriate. See Stewart Org., Inc. v. Ricoh Corp. Org., 487
U.S. 22, 29, 32 (1988) (holding that § 1404(a) controls a party’s request to enforce a forumselection clause and to transfer a case to the selected forum.) See also Kerobo v. Southwestern
Clean Fuels, Corp., 285 F.3d 531, 539 (6th Cir. 2002) (holding that § 1404(a) controls whether a
forum-selection clause should be given effect.) But see Langley v. Prudential Mortg. Capital
Co., LLC, 546 F.3d 365, 369 (6th Cir. 2008) (indicating in dicta that a forum-selection clause
may be enforced through a motion under either Rule 12(b)(6) or § 1404(a).)
Section 1404(a) provides that “[f]or the convenience of parties and witnesses, in the
interest of justice, a district court may transfer any civil action to any other district or division
where it might have been brought or to any district or division to which all parties have
consented.” The decision requires an “individualized, case-by-case consideration of convenience
and fairness,” Van Dusen v. Barrack, 376 U.S. 612, 622 (1964), and the Court has broad
discretion to decide whether or not to transfer a case. Phelps v. McClellan, 30 F.3d 658, 663 (6th
Cir. 1994).
In Stewart, the Supreme Court instructed that “[t]he presence of a forum-selection clause
. . . will be a significant factor that figures centrally in the district court’s calculus.” 487 U.S. at
29. The Court must consider the convenience of the Illinois forum “given the parties’ expressed

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preference for that venue, and the fairness of transfer in light of the forum-selection clause and
the parties’ relative bargaining power.” Id. While, under Stewart, the forum-selection clause is
not dispositive, id. at 31, “forum-selection clauses generally are enforced by modern courts
unless enforcement is shown to be unfair or unreasonable.” Security Watch, Inc. v. Sentinel Sys.,
Inc., 176 F.3d 369, 374 (6h Cir. 1999).
Generally, the moving party bears the burden of showing that transfer is appropriate and
the plaintiff’s choice of forum is entitled to considerable weight.

MSDG Mobile, LLC v.

American Federal, Inc., No. 1:05-CV-123, 2006 WL 515531, at *6 (W.D. Ky Feb. 28, 2006).
Where a valid forum-selection clause applies, however, the burden shifts to the plaintiff to show
why he should not be bound by it. “A forum-selection clause should be upheld absent a strong
showing that it should be set aside.” Wong v. PartyGaming, Ltd., 589 F.3d 821, 828 (6th Cir.
2009). “The party opposing the application of the clause bears the burden of showing it should
be set aside.” Id.
In determining whether to transfer a case under § 1404(a), in addition to considering the
forum-selection clause, the Court must “weigh a number of case-specific factors such as the
convenience of the parties and witnesses, public-interest factors of systemic integrity, and private
concerns falling under the heading ‘the interest of justice.” Kerobo, 285 F.3d at 537 (citing
Stewart, 487 U.S. at 31) (internal quotations omitted).
Courts within the Sixth Circuit have identified nine factors which should be considered
when ruling upon a motion to transfer venue under 28 U.S.C. § 1404(a):
(1) the convenience of witnesses; (2) the location of relevant documents and
relative ease of access to sources of proof; (3) the convenience of the parties; (4)
the locus of the operative facts; (5) the availability of process to compel the
attendance of unwilling witnesses; (6) the relative means of the parties; (7) the
forum's familiarity with the governing law; (8) the weight accorded the plaintiff's

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choice of forum; and (9) trial efficiency and the interests of justice, based on the
totality of the circumstances.
Perceptron, Inc. v. Silicon Video, Inc., 423 F. Supp. 2d 722, 729 (E.D. Mich., 2006).
With regard to convenience to the parties and witnesses, ImagePoint “must show that
enforcement of the clause would be so inconvenient such that its enforcement would be unjust or
unreasonable.” Wong, 589 F.3d at 829.

While some witnesses and the Plaintiff reside in

Knoxville, some witnesses also reside in Illinois. Any inconveniences of this nature and any
issues regarding the Illinois court’s ability to compel Knoxville witnesses to appear before it can
often be managed through videotaped deposition testimony. ImagePoint has made no showing
that

deposition

testimony

of

these

witnesses

would

not

be

adequate.

It also appears that some documents are located in Knoxville. But, “[i]n an era of electronic
documents, easy copying and overnight shipping, this factor assumes much less importance than
it did formerly.” ESPN, Inc. v. Quicksilver, Inc., 581 F. Supp. 2d 542, 548 (S.D.N.Y. 2008).
Regardless, ImagePoint is going to have to produce the documents to BFS in discovery at some
point.
As to where the operative facts occurred, this is a dispute over a contract between a
company located in Tennessee and a company located Illinois about work that occurred in
various states. This factor does not strongly favor either forum. As to the forum’s familiarity
with the governing law, the agreement between the parties mandates not only that the sole and
exclusive forum for any litigation shall be Illinois but also that it shall be governed by Illinois
law. (DE 12, Ex. A, Agreement § 22.) As to the general preference for the Plaintiff’s chosen
forum, as discussed, this presumption is negated by a valid forum-selection clause. See Braman
v. Quizno's, No. 5:07-CV-2001, 2008 WL 611607, at *5 (N.D. Ohio 2008). Instead, the clause
should be “treated as a manifestation of the parties’ preference as to a convenient forum.”
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Jumara v. State Farm Ins. Co., 55 F.3d 873, 880 (3rd Cir. 1995). See also Egrsco, LLC v. Evans
Garment Restoration, LLC, No. 2:09-cv-358, 2009 WL 3259423, at *5 (S.D. Ohio 2009). Thus,
the Plaintiff’s first chosen forum was Illinois as reflected in the forum-selection clause.
ImagePoint also argues that, even if the forum-selection clause does require that its
breach-of-contract claim be litigated in Illinois, the clause does not apply to its quantum-meruit
claim. The clause applies broadly to “any litigation arising out of this Agreement.” (DE 12, Ex.
A, Agreement § 21) (emphasis added). With its quantum-meruit claim, ImagePoint asserts that it
provided products and services to BFS pursuant to the agreement between the parties and that it
would be unjust for BFS to retain those products and the benefit of the services without paying
for them. Thus, the claim arises out of the agreement between the parties and is covered by the
forum-selection clause. See Interamerican Trade Corp. v. Companhia Fabricadora de Pecas,
973 F.2d 487, 490 (6th Cir. 1992); C. Thorrez Indus., Inc. v. LuK Transmissions Sys., LLC, No.
5:09-CV-01986, 2010 WL 1434326, at * 5 (N.D. Ohio 2010).
The Court recognizes that ImagePoint argues that Martin has fewer resources than BFS.
Nevertheless, considering all of the relevant factors and the strong preference for enforcing
forum-selection clauses, Wong, 589 F.3d at 828, Security Watch, 176 F.3d at 374, the Court finds
that the interests of justice warrants transferring this matter to the United States District Court for
the Northern District of Illinois.
III.

Conclusion.

For all these reasons, the Court hereby ORDERS that the Defendant’s motion to dismiss
pursuant to Rule 12(b)(6) or to transfer venue under 28 U.S.C. § 1404(a) (DE 12) is GRANTED
in part and DENIED in part as follows:

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1)

The motion is GRANTED to the extent that the Defendant moves the Court to transfer

this matter to the United States District Court for the Northern District of Illinois. The motion is
otherwise DENIED; and
2)

this matter is hereby TRANSFERRED to the United States District Court for the

Northern District of Illinois.
Dated this 6th day of June, 2013.

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