Educational Visions, Inc. v. Time Trend, Inc., Cause No. 1:02-cv-1146-DFH (S.D. Ind. 4/17/2003)
| Decision Date | 17 April 2003 |
| Docket Number | Cause No. 1:02-cv-1146-DFH. |
| Parties | EDUCATIONAL VISIONS, INC., d/b/a E-VISIONS, Plaintiff, v. TIME TREND, INC., Defendant. |
| Court | U.S. District Court — Southern District of Indiana |
This diversity case presents the question of which federal district should be the forum for a contract dispute. Plaintiff Educational Visions, Inc. (d/b/a "E-Visions" and "EVI"), a Georgia corporation, has sued defendant Time Trend, Inc., a Louisiana corporation. EVI contends that it agreed with Time Trend to submit a joint proposal to provide computers and related services to the State of Indiana. EVI alleges that after the State of Indiana selected the parties' joint proposal, Time Trend breached the agreement to squeeze EVI out of the Indiana deal.
Time Trend moved to dismiss the action for improper venue under Federal Rule of Civil Procedure 12(b)(3), or for transfer of this action to the Western District of Louisiana pursuant to 28 U.S.C. § 1404. As explained below, the court denies defendant's motion to dismiss or transfer. The present dispute is not subject to a forum selection clause contained in an earlier written contract between the two parties. Without a binding forum selection clause, venue is governed by 28 U.S.C. § 1391(a) and is proper in this district. In addition, the case should not be transferred. Keeping the case in the Southern District of Indiana should ensure convenient access to most non-party witnesses.
Plaintiff EVI, a Georgia corporation that is authorized to do business in Indiana, sells computer hardware, software, and related services to governments and schools. Cplt. ¶ 1. EVI acted as the sales agent of Inacom, a corporation that distributed computer products. In 1998, EVI and Inacom won the exclusive right to sell IBM personal computer products to Indiana and its agencies under a Quantity Purchase Award. Cplt. ¶ 4; Luther Aff. ¶ 3. Inacom then encountered financial difficulties. Shortly before Inacom filed for bankruptcy in June 2000, it assigned its rights under the Indiana contract to EVI. Cplt. ¶ 4.
With Indiana's permission, EVI assigned to Time Trend Inacom's rights under the contract in September 2000. Luther Aff. ¶ 4. In turn, EVI and Time Trend entered into an agreement (the "Subcontract Agreement") to cover the remaining time of the Indiana Quantity Purchase Award. The Subcontract Agreement contained a forum selection clause providing for exclusive jurisdiction in Louisiana:
This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana and of the United States of America without reference to any conflicts of law principles; the parties submit themselves to the jurisdiction of the federal and state courts located in Rapids Parish, Louisiana, which shall have exclusive jurisdiction of any disputes arising hereunder, and the parties waive any objection to venue therein.
Pl Ex. B. The Subcontract Agreement also provided a termination date for the contract:
The term of this Agreement shall be the same as the term of the Indiana Contract. The current term of the Indiana Contract terminates on December 28, 2000. Any extensions to the term of the Indiana Contract shall extend the term of this Agreement for the same period of time.
Pl. Ex. B. Around the same time that the parties entered into the Subcontract Agreement, EVI and Time Trend also entered into a Customer Direct Agreement, which governed the parties' business in other states. See Whittington Aff. ¶ 4.
The Indiana Quantity Purchase Award agreement was extended until June 30, 2002. Both parties agree that there were no further extensions, and that both the Quantity Purchase Award and their Subcontract Agreement with the forum selection clause expired on June 30, 2002.
In 2001, before the Quantity Purchase Award expired, Indiana issued a request for proposals for a new contract to provide computers and related services to nearly all state agencies. Time Trend submitted a proposal on August 23, 2001. The complaint alleges and David Luther, President and CEO of EVI, testified that Time Trend and EVI jointly prepared and submitted the proposal to Indiana. Cplt. ¶ 5; Luther Aff. ¶¶ 5, 7. The proposal was submitted in Time Trend's name, but it prominently featured EVI as a partner in making the proposal. For example: "We will join together with IBM and E-Visions to offer [Indiana] the best products, expertise and services. . . ." Pl. Ex. C. Or: "your Time Trend-EVI team really has some particular value to add to the State of Indiana and its end users." Id. Or: "We also have a strategic alliance with EVISIONS (EVI) to provide marketing support and is [sic] the primary customer contact organization." Id. Many pages of Time Trend's business proposal are labeled: "This confidential response is prepared jointly by EVI and IBM."
EVI's Luther also testified that EVI and Time Trend entered into a new "partnering" agreement during their joint efforts to secure the 2002 Indiana computer contract. Luther Aff. ¶ 6. According to Luther, former Time Trend representative Holly Simon accepted EVI's offer to partner with Time Trend and assured EVI that it would be compensated on a pay scale similar to that specified in the Subcontract Agreement. Luther Aff. ¶ 7. Time Trend denies that Simon made these representations and states that even if she had made such statements, she had no authority to do so. Pl. Ex. D.
In April 2002, Indiana announced that it would award the new computer sales contract to Time Trend pursuant to the proposal reflecting the partnership with EVI. Time Trend executed the new contract in May 2002. Indiana executed the contract a month later.
In the meantime, though, other disputes had arisen between Time Trend and EVI. In October 2001, Time Trend filed suit against EVI in the Ninth Judicial District of the State of Louisiana for breach of contract and conversion. The petition alleged that EVI had illegally retained the balance of a customer payment under the parties' Consumer Direct Agreement (for business with states other than Indiana). See Def. Ex. 1. In its response, EVI asserted a "reconventional" demand for penalties and interest that it alleged Time Trend had improperly assessed under the Subcontract Agreement governing their Indiana business. See Def. Ex. 2.
On June 28, 2002, Time Trend informed EVI that there was no "partnering agreement" between the parties in connection with the new Indiana contract, and that if the parties were to continue doing business, EVI's future commissions would have to be cut substantially. Cplt. ¶ 10. On July 24, 2002 Time Trend told EVI: "Currently, no Subcontract Agreement exist [sic] between Time Trend and EVI, meaning there is no contractual agreement between EVI and Time Trend with respect to the new QPA [Quantity Purchase Award] business." Pl. Ex. D. Time Trend further stated:
With respect to reaching an agreement with respect to the new Indiana business, the two threshold questions which must be answered are (I) what is the scope of EVI's services in Indiana and (ii) what should EVI be paid by Time Trend for the performance of those services? Time Trend has informed EVI on several occasions that if a new agreement is to be reached, the scope of services to be provided by EVI in Indiana will significantly decrease, and therefore EVI's compensation will significantly decrease.
. . . .
What role EVI can play under this current situation is something which must be discussed. However, as a Time Trend employee must assume the position of lead sales person in Indiana, EVI's role must be substantially different from the old Subcontract Agreement.
Pl. Ex. D (letter from Upton to Storrs). The next day, on July 25, 2002, EVI filed this suit alleging breach of contract, promissory estoppel, and unjust enrichment.
Upon a proper objection to a federal district court's venue in a civil case, a court should dismiss the case or transfer the case to a proper venue. 28 U.S.C. § 1406. Even where venue is proper, a court may transfer a case for the "convenience of parties and witnesses, in the interest of justice" to any district where the case could have been brought. 28 U.S.C. § 1404(a).
When a defendant moves to dismiss for improper venue pursuant to Rule 12(b)(3), the plaintiff bears the burden of proving that venue is proper. Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182, 1184 (7th Cir. 1969); Moore v. AT&T Latin America Corp., 177 F. Supp.2d 785, 788 (N.D.Ill. 2001). In evaluating a Rule 12(b)(3) motion, a court may consider facts beyond the complaint. Moore, 177 F. Supp.2d at 788. Neither side has asked for an evidentiary hearing on the facts relevant to venue. Accordingly, in ruling on Time Trend's motion to dismiss, the court accepts plaintiff's allegations as true unless controverted by defendant's factual submissions, and the court resolves any factual conflicts in the parties' submissions in the plaintiff's favor. Id. Cf. Szabo v. Bridgeport Machines, Inc., 249 F.3d 672, 676-77 (7th Cir. 2001) ().
Defendant Time Trend bases its motion on the forum selection clause in the old Subcontract Agreement between the parties. Each side is trying to walk a relatively fine line. Time Trend itself asserts that the Subcontract Agreement between the parties expired, and it takes the position on the merits that it has no binding contract of any kind to include EVI in the new 2002 Indiana computer contract. Time Trend seeks to pin EVI on the horns of dilemma, however, arguing that EVI has pled that the parties agreed "to...
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