Allianz Global Risks U.S. Ins. Co. v. Ershigs, Inc.

• Decision Date: 06 October 2015
• Docket Number: Case No. C14–1255JLR.
• Citation: 138 F.Supp.3d 1183
• Parties: ALLIANZ GLOBAL RISKS U.S. INSURANCE COMPANY, Plaintiff, v. ERSHIGS, INC., Defendant.
• Court: U.S. District Court — Western District of Washington

138 F.Supp.3d 1183

ALLIANZ GLOBAL RISKS U.S. INSURANCE COMPANY, Plaintiff,

v.ERSHIGS, INC., Defendant.

Case No. C14–1255JLR.

United States District Court, W.D. Washington, at Seattle.

Signed Oct. 6, 2015.

Douglas B. Fox, Cozen O'Connor, Philadelphia, PA, Kyle A. Farnam, Cozen O'Connor, Seattle, WA, for Plaintiff.

Allyssa Lamb, G. William Shaw, Lauren E. Sancken, K&L Gates LLP, Seattle, WA, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

JAMES L. ROBART

, District Judge.

I. INTRODUCTION

This matter comes before the court on Defendant Ershigs, Inc.'s ("Ershigs") motion to dismiss Plaintiff Allianz Global Risks U.S. Insurance Company's ("Allianz") complaint. (Mot. (Dkt. # 16).) In the alternative, Ershigs asks the court to compel arbitration pursuant to the governing contract's arbitration provision. (Id.; see also Reply (Dkt. # 18).) Allianz opposes that motion. (Resp. (Dkt. # 17).) Having reviewed the submissions of the parties, the relevant portions of the record, and the applicable law,¹ the court GRANTS Ershigs's motion to dismiss, on the condition that Ershigs consider the statute of limitations tolled from April 4, 2014 until 30 days after the filing of this order.

II. BACKGROUND

Prior to February 20, 2012, Ershigs entered into a contract with Vale Newfoundland & Labrador Ltd. ("Vale"). (Compl. (Dkt. # 1) ¶¶ 1, 6.) Ershigs agreed to provide Vale with five fiberglass-reinforced plastic tanks. (Id. ¶ 6.) When the tanks arrived in Long Harbour, Newfoundland and Labrador, Canada, on February 20, 2012, Vale discovered that at least two of the tanks had suffered damage in transit. (Id. ¶ 8.) Vale paid in excess of $75,000.00 to repair the tanks and called upon Allianz, Vale's insurer, to cover those losses. (Id. ¶¶ 9–10.) Allianz then filed suit as Vale's subrogee against Ershigs, alleging gross negligence, negligence, and breach of contract. (Id. ¶¶ 11–18.)

Allianz first filed suit against Ershigs on November 14, 2013, making essentially the same allegations as in this case.² See Complaint, Allianz Global Risks U.S. Ins. Co. v. Ershigs, Inc., No. C13–2056RSM (W.D.Wash. Nov. 14, 2013), Dkt. # 1; (see also Resp. at 2.) However, after discovering several latent issues impacting that lawsuit, Allianz and Ershigs agreed to voluntarily dismiss the case without prejudice. (See Fox Decl. (Dkt. # 17) ¶ 2, Ex. A ("Tolling Agmt.") at 1); Stipulation for Dismissal, Allianz Global Risks U.S. Ins. Co. v. Ershigs, Inc., No. C13–2056RSM, Dkt. # 16. Allianz and Ershigs also contractually agreed to toll the statute of limitations pertaining to those claims for a six-month period, which concluded on October 4, 2014. (Tolling Agmt. at 1–2.) Allianz refiled the instant action on August 14, 2014 (see Compl.), and Ershigs filed its answer on September 9, 2014 (see Ans. (Dkt. # 8)). The deadline for dispositive motions is January 5, 2016, and Ershigs filed its motion to dismiss on July 16, 2015. (See Min. Ord. (Dkt. # 14); Mot.) Neither party filed any document of substantive consequence between September 9, 2014 and July 16, 2015.

Ershigs seeks dismissal on forum non conveniens grounds pursuant to the forum—selection clause in the general terms and conditions ("GTCs" or "GTC § [# ]") governing Vale's purchase order ("PO") with Ershigs.³ (See Mot. at 4–8; GTC § 25.1; PO at 3 (incorporating the GTCs).) That clause confers exclusive jurisdiction on Ontarian courts, which are to apply Ontarian law to disputes arising out of the contract:

The Purchase Order shall be interpreted and enforced in accordance with, and its administration and performance governed by, the laws of the Province of Ontario, and subject to the terms of GTC 21 (Settlement of Disputes) the Parties hereby agree to submit to the exclusive jurisdiction of the courts of the Province of Ontario for the purpose of adjudicating any suits or claims arising from the Purchase Order. GTC § 25.1. In the alternative, Ershigs moves to compel arbitration pursuant to GTC § 21.5 (which is referenced in GTC § 25.1):

The parties herein agree that all Disputes relating to or arising from this Purchase Order including, without limitation, all proceedings to enforce the Purchase Order, shall be referred to and finally resolved by arbitration ... conducted in Toronto, Ontario and shall be subject to the substantive law of Ontario. The parties further agree that all arbitral awards shall be final and binding on the parties and shall not be subject to any appeal or judicial review, save and except any proceedings initiated to obtain enforcement or recognition of arbitral awards made in arbitrations conducted pursuant to the provisions of this Purchase Order.

GTC § 21.5.

Allianz does not dispute that as Vale's subrogee, the PO and GTCs apply to its relationship and dispute with Ershigs. (See generally Resp.) Instead, Allianz argues that Ershigs's actions render these clauses unenforceable. (See id. )

III. ANALYSIS

Although the arguments Allianz mounts against granting forum non conveniens dismissal are opaque, the court understands two separate contentions: waiver of the right to seek forum non conveniens dismissal and invalidity of the forum-selection clause.

A. Waiver of the Right to Seek Forum Non Conveniens Dismissal

Allianz contends that Ershigs waived its right to move for dismissal by failing to raise forum non conveniens as a defense in its answer, which it filed on September 9, 2014.⁴ (Resp. at 6.) "[T]he appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens. " Atl. Marine Constr. Co. v. U.S. Dist. Court for the W. Dist. of Tex., ––– U.S. ––––, 134 S.Ct. 568, 580, 187 L.Ed.2d 487 (2013)

. Rule 12(b) provides that "[e]very defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required." Fed.R.Civ.P. 12(b). Moreover, Rule 8(c) (1) requires that "[i]n responding to a pleading," a party must "affirmatively state any avoidance or affirmative defense." See Fed.R.Civ.P. 8(c)(1). In its answer, Ershigs identified the "binding arbitration clause in the contract" as a defense (Ans. at 4), but Ershigs did not mention the forum-selection clause or forum non conveniens (see generally id. ). Without providing any explanation (see generally Reply), Ershigs waited more than eleven months to raise the forum-selection clause in its motion to dismiss (see Mot.).

This presents the question of whether forum non conveniens constitutes an "avoidance or affirmative defense" that must be raised in a responsive pleading. Fed.R.Civ.P. 8(c)(1)

. Although the Ninth Circuit has not spoken on this procedural issue, the Tenth Circuit and several district courts have concluded that the failure to include forum non conveniens as a defense in the answer does not preclude a subsequent motion to dismiss on that basis. See Yavuz v. 61 MM, Ltd., 576 F.3d 1166, 1173–74 (10th Cir.2009) (noting that both the plaintiff and the court failed to identify any authority supporting the proposition that a defendant waived its forum non conveniens defense by failing to include it in an answer); Fragrance House, Inc. v. Hanjin Shipping Co., Ltd., No. 2:14–cv–04565–R–PJW, 2014 WL 8708237, at *2 (C.D.Cal. Dec. 11, 2014) ; Edwards v. Texaco, Inc., Civ. A. No. 86–5240, 1987 WL 9293, at *1 (E.D.Pa. Apr. 10, 1987) ; Kahn v. Nat'l R.R. Passenger Corp., No. 85 Civ. 3586–CSH, 1986 WL 1456, at *2 (S.D.N.Y. Jan. 28, 1986) (citing Snam Progetti S.p.A. v. Lauro Lines, 387 F.Supp. 322, 323 (S.D.N.Y.1974) ). The clearest rationale for these conclusions is stated in Snam Progetti:

[T]here are sound logical reasons for not requiring a forum non conveniens motion to be made within the limited time period allowed for a defendant to file an answer or to move to amend his answer.... This time is certainly adequate to check the venue statutes and determine whether they have been met. However, the factors of equity and convenience, such as the location of important witnesses and evidence, which control a forum non conveniens motion may not be apparent without time-consuming investigation and, frequently, discovery.

387 F.Supp. at 323

(dismissing on forum non conveniens grounds based on this rationale and the lack of prejudice resulting from the delay).

This rationale is less applicable, however, when the defendant seeks a forum non conveniens dismissal based on a contractual forum-selection clause.⁵ See Atl. Marine, 134 S.Ct. at 580 (2013). In this case, Ershigs did not need "time-consuming investigation" or "discovery" to unveil the basis for its forum non conveniens motion. See id. Indeed, counsel for Allianz emailed counsel for Ershigs on May 28, 2014, July 1, 2014, and August 15, 2014. (See Fox. Decl. Ex B, at 1–3.) All of those emails questioned whether Ershigs would allow the suit to proceed in the Western District of Washington in light of the contractual language. (See id. ) Apparently, Ershigs never meaningfully responded to those inquiries. (See id. ) Moreover, this action had already been filed in this court and Ershigs had filed its answer. See Answer, Allianz Global Risks U.S. Ins. Co. v. Ershigs, Inc., No. C13–2056RSM, Dkt. # 11. In sum, Ershigs had an abundance of notice of the basis for its forum non conveniens motion, even before Allianz filed this lawsuit.

Nevertheless, in light of the Supreme Court's admonition that "a forum selection clause be ‘given controlling weight in all but the most exceptional cases,’ " the court is disinclined to find Ershigs's forum non conveniens defense waived solely by virtue of Ershigs's delay. Atl. Marine, 134 S.Ct. at 579

(quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 34, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) ). Some courts have imposed a requirement that "a defendant must assert a motion to dismiss for forum non conveniens within a reasonable time after the facts or circumstances which serve as the basis for the motion have developed and become known or reasonably knowable to ...