Showhomes Franchise Corporation v. LEB Solutions, LLC et al

Filing 38

MEMORANDUM AND ORDER: The defendants' Motion 25 is GRANTED, and the court hereby ORDERS that this action be transferred to the United States District Court for the Northern District of Texas, Dallas Division. Signed by District Judge Aleta A. Trauger on 8/24/2017. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(mg)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
SHOWHOMES FRANCHISE
CORPORATION,

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Plaintiff,
v.
LEB SOLUTIONS, LLC
and LINDA SAAVEDRA,
Defendants.

Case No. 3:17-cv-00508
Judge Aleta A. Trauger

MEMORANDUM & ORDER
Pending before the court is a Motion to Dismiss or, in the Alternative, Transfer Venue
Pursuant to 28 U.S.C. § 1404(a) (Docket No. 25) filed by the defendants, LEB Solutions, LLC
(“LEB”) and Linda Saavedra, to which the plaintiff, Showhomes Franchise Corporation
(“Showhomes”), has filed a Response in opposition (Docket No. 27), and the defendants have
filed a Reply (Docket No. 37). For the reasons discussed herein, the defense motion will be
granted with regard to the request to transfer venue, and the case will be transferred to the
Northern District of Texas. The court will not address the grounds for dismissal of this action.

FACTS & PROCEDURAL HISTORY
Showhomes is a Georgia corporation with its principal place of business in Nashville,
Tennessee. LEB is a Florida corporation with its principal place of business in Florida.
Saavedra is an individual who resides in Tampa, Florida, and is the sole member of LEB.
Showhomes is a residential property staging company that provides various services to help
accelerate the sale of vacant properties and assist owners of occupied properties with redesign
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and interior updating. In October 2008, Showhomes entered into a contract that granted LEB the
right to own and operate a Showhomes franchised business in Florida for ten years. This
contract was followed in January 2009 by another contract (collectively, the “Franchise
Agreements”) granting LEB the right to own and operate a second Showhomes franchised
business in Florida. In December 2015, LEB assigned all rights, title, interest, and obligations
under the Franchise Agreements to a third party, Custom Brands, LLC, pursuant to an
Assignment and Consent Agreement (“Assignment Agreement”). Showhomes alleges that, in
the fall of 2016, it obtained information indicating that the defendants had breached the
Franchise Agreements before the assignment of rights to Custom Brands. Specifically,
Showhomes alleges that LEB did not accurately report sales, failed to pay fees, and operated
outside of contractually-defined territories. Showhomes further alleges that Saavedra was
operating a competing business in breach of the Franchise Agreements. In December 2016,
Showhomes sent a letter to Saavedra requesting various financial and auditing documents related
to LEB’s business and its contracts with Showhomes. Saavedra did not respond. On March 10,
2017, Showhomes filed this suit against Saavedra and LEB, alleging four counts of breach of
contract and one count of fraud and misrepresentation under the Franchise Agreements. The
defendants responded with a Motion to Dismiss, or, in the Alternative, Transfer Venue, seeking
to have the case dismissed or transferred to Dallas pursuant to a forum-selection clause in the
Franchise Agreements.

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MOTION TO TRASNFER VENUE
In the interest of judicial economy, the court considers the motion to transfer venue first.
For the reasons discussed below, the court finds that the transfer of venue is appropriate, and the
court will not reach the motion to dismiss.

I.

Legal Standard

Under 28 U.S.C. § 1404(a), “[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.” With this statute, “Congress intended to give district courts the discretion to transfer
cases on an individual basis by considering convenience and fairness.” Kerobo v. Sw. Clean
Fuels, Corp., 285 F.3d 531, 537 (6th Cir. 2002). However, this discretion is limited significantly
when a valid forum-selection clause governs the parties’ dispute. In Atlantic Marine
Construction Company v. United States District Court for the Western District of Texas, 134 S.
Ct. 568 (2013), the Supreme Court explained that “[t]he calculus changes . . . when the parties’
contract contains a valid forum-selection clause, which “represents the parties’ agreement as to
the most proper forum.” The “enforcement of valid forum-selection clauses, bargained for by
the parties, protects their legitimate expectations and furthers vital interests of the justice
system.” For that reason, and because the overarching consideration under § 1404(a) is whether
a transfer would promote “the interest of justice,” “a valid forum-selection clause [should be]
given controlling weight in all but the most exceptional cases.” Id. at 581 (internal citations
omitted).

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Atlantic Marine directs that district courts may not consider the plaintiff’s choice of
forum or private interests when a valid forum-selection clause is present. Id. at 581-82. “As a
consequence, a district court may consider arguments about public-interest factors only. Because
those factors will rarely defeat a transfer motion, the practical result is that forum-selection
clauses should control except in unusual cases.” Id. (internal citations omitted).
II.

Analysis

The Franchise Agreements, which govern this dispute, 1 contain a valid forum-selection
clause:
20.8 LITIGATION. WITH RESPECT TO ANY
CONTROVERSIES, DISPUTES OR CLAIMS WHICH ARE
NOT FINALLY RESOLVED THROUGH MEDIATION AS
PROVIDED IN SECTION 20.7. ABOVE, THE PARTIES
IRREVOCABLY SUBMIT THEMSELVES TO THE
JURISDICTION OF THE STATE COURTS OF DALLAS
COUNTY, TEXAS AND THE FEDERAL DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS
DIVSION, AND HEREBY WAIVE ALL QUESTIONS OF
PERSONAL JURISDICTION FOR THE PURPOSE OF
CARRYING OUT THIS PROVISION. THE PARTIES AGREE
THAT SERVICE OF PROCESS MAY BE MADE UPON THEM
IN ANY PROCEEDING RELATING TO OR ARISING OUT OF
THIS AGREEMENT OR THE RELATIONSHIP CREATED BY
THIS AGREEMENT BY ANY MEANS ALLOWED BY TEXAS
OR FEDERAL LAW. FRANCHISEE AND FRANCHISOR
FURTHER AGREE THAT VENUE FOR ANY PROCEEDING
RELATING TO OR ARISING OUT OF THIS AGREEMENT
SHALL BE DALLAS COUNTY, TEXAS.

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The court rejects the defendants’ contention that the Assignment Agreement is the operative
contract for the purposes of this case. It is the Franchise Agreements under which Showhomes
brings its claims, and Showhomes’ pleadings are based on conduct that took place prior to the
execution of the Assignment Agreement and during the time the Franchise Agreements
undisputedly governed the relationship between the parties.
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The Franchise Agreements were understood and willingly entered into by both parties. The
forum-selection clause is clear in its terms and facially valid. The clause thus governs this
dispute.
Showhomes contends that public-interest factors overcome the forum-selection clause
because there is no nexus between the circumstances of this case and Texas. The public-interest
factors that Showhomes cites are as follows: (1) the enforceability of the judgment; (2) practical
considerations affecting trial management; (3) docket congestion; (4) the local interest in
deciding local controversies at home; (5) the public policies of the fora; and (6) the familiarity of
the trial judge with the applicable state law.
As applied, these factors do not supplant Atlantic Marine’s strong presumption in favor
of the forum-selection clause. Moreoever, factors (3) and (6) strongly support transfer, given
this court’s highly-congested docket and the Franchise Agreements’ selection of Texas law for
disputes arising out of the contracts. Factors (1) and (2) are of no concern under the
circumstances of this case—the court sees no issues of enforceability or trial management arising
from a transfer to Texas. And, with regard to factors (4) and (5), there is no local interest or
public policy that requires this case to be heard in Tennessee. The alleged conduct that forms the
basis of Showhomes’ claims took place in Florida, and the Franchise Agreements under which
the claims were brought concerned operations and territories in Florida. Showhomes’ arguments
regarding the lack of nexus between this case and Texas are unavailing, given that Showhomes
drafted the forum-selection clause selecting Texas as the governing forum for the Franchise
Agreements. Showhomes cannot claim that local interest or public policy abrogate a contractual
provision that Showhomes sought in the first place on the ground that the provision has since
become inconvenient. Therefore, the court finds that the public-interest factors do not overcome

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the Atlantic Marine presumption in favor of the forum-selection clause. The clause governs, and
the case will be transferred to Texas accordingly.

CONCLUSION
For the foregoing reasons, the defendants’ Motion is GRANTED, and the court hereby
ORDERS that this action be transferred to the United States District Court for the Northern
District of Texas, Dallas Division.
Enter this 24th day of August 2017.

______________________________
ALETA A. TRAUGER
United States District Judge

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