Ershigs Inc v. MIR Industrial et al

Filing 26

MEMORANDUM DECISION AND ORDER - denying 24 Motion for Summary Judgment because Ershigs fails to allege facts sufficient to show that the Court has subject matter jurisdiction to decide this case. Additionally, the Court Orders Ershigs to Show Cause why the Court should not dismiss the action for lack of subject matter jurisdiction within fourteen days of this order. Signed by Magistrate Judge Evelyn J. Furse on 9/27/2017. (las)

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

ERSHIGS, INC., a Washington
Corporation,

MEMORANDUM DECISION AND ORDER
DENYING PLAINTIFF’S MOTION FOR
SUMMARY JUDGMENT (ECF NO. 24),
AND ORDER TO SHOW CAUSE

Plaintiff,
v.

Case No. 2:16-cv-00258-EJF
MIR INDUSTRIAL LLC, a Utah Limited
Liability Company

Magistrate Judge Evelyn J. Furse

Defendant.

Plaintiff Ershigs, Inc. (“Ershigs”) moves the Court1 for summary judgment on its
breach of contract claim against Defendant MIR Industrial LLC (“MIR”). MIR did not file
an opposition to Ershigs’s Motion for Summary Judgment (“Motion”). However, Ershigs
fails to allege facts sufficient to establish the Court’s subject matter jurisdiction to hear
this case. This failure alone necessitates the denial of Ershigs’s Motion. Furthermore,
the contract forming the basis for Ershigs’s claims against MIR contains a forum
selection clause mandating that the parties resolve their disputes in “the courts of the
State of Washington located in Whatcom County,” and a choice of law provision
requiring that the contract “be construed in accordance with the laws of the State of
Washington.” (Terms & Conditions ¶ 12, ECF Nos. 2-3 & 24-2.) Should Ershigs
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The parties consented to proceed before the undersigned Magistrate Judge in
accordance with 28 U.S.C. § 636(c) and Federal Rule of Civil Procedure 73. (ECF No.
21.)

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demonstrate this Court’s subject matter jurisdiction, it should prepare to address the
issues raised by the forum selection clause and the choice of law provision.
Accordingly, the Court DENIES Ershigs’s Motion and ORDERS Ershigs to
SHOW CAUSE why the Court should not dismiss the action for lack of subject matter
jurisdiction within fourteen (14) days of this Order.
SUMMARY JUDGMENT STANDARD
Under Federal Rule of Civil Procedure 56(a), courts grant summary judgment if
the movant shows no genuine dispute as to any material fact exists, and “the movant is
entitled to judgment as a matter of law.” The party moving for “summary judgment
always bears the initial responsibility of informing the district court of the basis for its
motion, and identifying those portions of [the record], which it believes demonstrate the
absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986) (internal quotations omitted). Courts grant summary judgment “only when
the moving party has met its burden of production” under Rule 56. Reed v. Bennett,
312 F.3d 1190, 1194 (10th Cir. 2002).
A court must make this determination even where, as in this case, a party fails to
respond to a motion for summary judgment. “[A] party’s failure to file a response to a
summary judgment motion is not, by itself, a sufficient basis on which to enter judgment
against the party.” Reed, 312 F.3d at 1195. “If the nonmoving party fails to respond,
the district court may not grant the motion without first examining the moving party's
submission to determine if it has met its initial burden of demonstrating that no material
issues of fact remain for trial and the moving party is entitled to judgment as a matter of
law.” Id. at 1194–95. “If the evidence produced in support of the summary judgment

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motion does not meet this burden, ‘summary judgment must be denied even if no
opposing evidentiary matter is presented.’” Id. at 1194 (emphasis in original) (quoting
Adickes v. S. H. Kress & Co., 398 U.S. 144, 160 (1970)).
The Court notes that Ershigs’s Motion relies solely on its Complaint, MIR’s
Answer, and three of the documents attached to the Complaint. (Mot. 5, ECF No. 24.)
The Court also notes, without determining the sufficiency, that Ershigs did not cite any
authority on judicial admissions to support its argument that MIR’s purported admissions
in its Answer establish all elements of Ershigs’s breach of contract claim. Nor did
Ershigs present any other evidence, such as affidavits or declarations, testimony,
discovery responses, or other materials to support its Motion.
SUBJECT MATTER JURISDICTION
Before ruling on the merits of a case, the Court must determine whether it holds
subject matter jurisdiction over Ershigs’s claims. See Sinochem Int'l Co. v. Malay. Int'l
Shipping Corp., 549 U.S. 422, 430–31 (2007) (requiring findings of subject matter and
personal jurisdiction prior to reaching a case’s merits). Federal district courts hold
limited subject matter jurisdiction; the Constitution and acts of Congress set forth the
scope of their authority. Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1225 (10th
Cir. 2004). Even when no party questions subject matter jurisdiction, a federal court
holds “an independent obligation to determine whether subject-matter jurisdiction
exists.” 1mage Software, Inc. v. Reynolds & Reynolds Co., 459 F.3d 1044, 1048 (10th
Cir. 2006) (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006)). “Parties cannot
confer on a federal court jurisdiction which has not been granted by the Constitution and
Congress, and parties cannot waive lack of subject matter jurisdiction.” Henry v. Office

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of Thrift Supervision, 43 F.3d 507, 511 (10th Cir. 1994).
Subject matter jurisdiction arises through one of two ways. First, Congress
grants federal district courts diversity jurisdiction “over ‘all civil actions where the matter
in controversy exceeds the sum or value of $75,000 ... and is between ... citizens of
different States.’” Grynberg v. Kinder Morgan Energy Partners, L.P., 805 F.3d 901, 905
(10th Cir. 2015), cert. denied, 578 U.S. ―, 136 S. Ct. 1714 (2016) (quoting 28 U.S.C. §
1332). Second, Congress provides the federal district courts with federal question
jurisdiction “over civil actions arising under the Constitution, laws, or treaties of the
United States.” Firstenberg v. City of Santa Fe, 696 F.3d 1018, 1023 (10th Cir. 2012)
(quoting 28 U.S.C. § 1331).
The Complaint alleges diversity jurisdiction. (Compl. ¶ 5, ECF No. 2.) The
Complaint sets forth an amount in controversy in excess of the statutory requirement for
the Court to have diversity jurisdiction. (Id. 9-11.) However, neither the Complaint nor
the Motion contains sufficient facts about the citizenship of MIR for the Court to
conclude it has jurisdiction to decide this matter.
To invoke diversity jurisdiction, “the citizenship of all defendants must be different
from the citizenship of all plaintiffs.” McPhail v. Deere & Co., 529 F.3d 947, 951 (10th
Cir. 2008). Consideration of subject matter jurisdiction includes a determination as to
whether diversity of citizenship exists and must occur prior to reaching the merits of an
action. Lompe v. Sunridge Partners, LLC, 818 F.3d 1041, 1046 (10th Cir. 2016)
(describing a court’s obligation to determine whether jurisdiction exists). “Supreme
Court precedent makes clear that in determining the citizenship of an unincorporated
association for purposes of diversity, federal courts must include all the entities'

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members.” Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1237–38
(10th Cir. 2015) (citing Carden v. Arkoma Assocs., 494 U.S. 185, 195–96 (1990) &
ConAgra Foods, Inc. v. Americold Logistics, LLC, 776 F.3d 1175, 1180 (10th Cir.
2015)).
The Complaint alleges that MIR is a Utah limited liability company with its
principal place of business in Utah, (Compl. ¶ 2, ECF No. 2), but makes no allegations
about the citizenship of its members. Absent such information, the Court cannot
determine whether it has jurisdiction to hear the case. For this reason alone, the Court
must DENY Ershigs’s Motion for Summary Judgment. To resolve this problem, the
Court ORDERS Ershigs to SHOW CAUSE why the Court should not dismiss the action
for lack of subject matter jurisdiction within fourteen (14) days of this Order.
If this Court has jurisdiction, the parties should be prepared to address the
following issues going forward.
FORUM NON CONVENIENS
The contract in this case—which the parties agree consists of a Purchase Order
and Terms and Conditions (Compl. ¶ 10, ECF No. 2; Answer ¶ 1, ECF No. 8)—contains
a forum selection clause. That provision states: “If a dispute arises under this
Agreement, the parties agree that jurisdiction and venue shall be in the courts of the
State of Washington located in Whatcom County. Jurisdiction and venue as set forth
shall be exclusive.” (Terms & Conditions ¶ 12, ECF Nos. 2-3 & 24-2 (emphasis
added).)
This forum selection clause appears to mandate that “exclusive” jurisdiction and
venue over a dispute arising out of the contract lies in Washington state courts in

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Whatcom County. See, e.g., Excell, Inc. v. Sterling Boiler & Mech., Inc., 106 F.3d 318,
321 (10th Cir. 1997) (construing forum selection clause that “[j]urisdiction shall be in the
State of Colorado, and venue shall lie in the County of El Paso, Colorado” as a
mandatory forum selection clause requiring parties to bring actions in the state district
court of El Paso County only). Courts evaluate forum selection clauses pointing to a
nonfederal forum through the forum non conveniens doctrine. See Atl. Marine Constr.
Co. v. U.S. Dist. Ct., 571 U.S. __, 134 S. Ct. 568, 580 (2013). “[F]orum-selection
clauses should control except in unusual cases.” Id. at 582.
CHOICE OF LAW
In its Motion, Ershigs applies Utah law to its breach of contract claim against
MIR. (Mot. 3-6, ECF No. 24.) However, the contract at issue contains a choice of law
provision stating: “This Agreement is made with reference to and shall be construed in
accordance with the laws of the State of Washington.” (Terms & Conditions ¶ 12, ECF
Nos. 2-3 & 24-2.)

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CONCLUSION
The Court DENIES Ershigs’s Motion for Summary Judgment because Ershigs
fails to allege facts sufficient to show that the Court has subject matter jurisdiction to
decide this case. Additionally, the Court ORDERS Ershigs to SHOW CAUSE why the
Court should not dismiss the action for lack of subject matter jurisdiction within fourteen
(14) days of this Order.
DATED this 27th day of September 2017.
BY THE COURT:

_______________________________
EVELYN J. FURSE
United States Magistrate Judge

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