Enter. Info. Mgmt., Inc. v. Superletter.com, Inc.

• Decision Date: 07 November 2013
• Docket Number: Civil Action No. DKC 13-2131
• Parties: ENTERPRISE INFORMATION MANAGEMENT, INC., et al. v. SUPERLETTER.COM, INC.
• Court: U.S. District Court — District of Maryland

ENTERPRISE INFORMATION MANAGEMENT, INC., et al. v. SUPERLETTER.COM, INC.

Civil Action No. DKC 13-2131

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

Dated: November 7, 2013

MEMORANDUM OPINION

Presently pending and ready for review in this breach of contract action is Defendant's motion to dismiss, or in the alternative, for summary judgment. (ECF No. 8). For the following reasons, an evidentiary hearing will be held on the issue of whether Attachment A is part of the Subcontract Agreement.

I. Background

This case arises out of a contract dispute between Plaintiffs, Enterprise Information Management, Inc. ("EIM") and Enterprise Information Management Europe Limited, Inc. ("EIM Europe Limited") with SuperLetter.com, Inc. ("SuperLetter" or "Defendant"). EIM is a Virginia corporation with its principal place of business in Arlington, Virginia. EIM Europe Limited is EIM's wholly-owned subsidiary and a United Kingdom corporation with its principal place of business also in Arlington, Virginia. EIM and its subsidiary, EIM Europe Limited, deliverinformation technology consulting, design, planning, and implementation services for organizations. (ECF No. 2 ¶¶ 8-9). SuperLetter, a commercial hybrid mail service that links distant locations around the globe with an overnight/next day mail service, is a Florida corporation with its principal place of business in Ormond Beach, Florida. (Id. ¶¶ 1-3, 7).¹

On February 28, 2012, SuperLetter entered into a Subcontract Agreement with EIM Europe Limited "to develop an application and perform services as directed in the relevant Statement(s) of Work (SOW) in support of Defendant's Prime Contract with the UK Ministry of Defense - British Forces Post Office ("BFPO" [or "Authority"])." (Id. ¶ 10).² This Prime Contract between SuperLetter and BFPO was designed to allow SuperLetter's mail services to reach British military personnel serving in locations around the globe. The Subcontract Agreement between EIM Europe Limited and SuperLetter, designed to provide services to support the Prime Contract, was "accepted and agreed to" by Roy Walker, the Chief Executive Officer ofSuperLetter.Com, and Chloe A. Maxent, Vice President, Global Business Support of EIM Inc. (ECF No. 2-1, at 12).³ Ms. Maxent signed the contract on behalf of EIM, but the Subcontract Agreement identifies "EIM Europe Limited" and "SuperLetter" as the only parties to the contract. The Subcontract Agreement provides that it shall last for "a period of 8 years, 7 months and 22 days, i.e., until 31^st March 2020 subject to [BFPO's] right of earlier termination under other Conditions of Contract." (Id., at 3).

The following terms in the Subcontract Agreement are also relevant here. Section 1.6 provides that "General terms and conditions provisions of the UK Ministry of Defence are attached as exhibit: CTT DOC 24 SCHED 2 TERMS AND CONDITIONS. Compliance with these terms and conditions is required by the Subcontractor." (Id. at 4). This referenced document, which is Attachment A, includes "general and special" contract terms and conditions from Defendant's Prime Contract with BFPO. Specifically, it includes a table of contents enumerating multiple DEFCONS, which is a term used for UK Ministry ofDefence Conditions.⁴ DEFCON 529 includes a forum-selection clause and choice-of-law provision. It states:

1. The Contract shall be considered as a contract made in England and subject to English Law.

2. Subject to DEFCON 530 and without prejudice to the dispute resolution process set out in that Condition, each party hereby irrevocably submits and agrees to the exclusive jurisdiction of the Courts of England to resolve, and the laws of England to govern, any actions, proceedings, controversy or claim of whatever nature arising out of or relating to the Contract or breach thereof.

3. Other jurisdictions may apply solely for the purpose of giving effect to this Condition and for the enforcement of any judgment, order or award given under English law.

(ECF No. 8-5). DEFCON 530 includes an arbitration provision and states as follows:

1. The parties will attempt in good faith to resolve any dispute or claim arising out of or relating to this Contract through negotiations between the respective representatives of the parties having authority to settle the matter, which attempts may include the use of any Alternative Dispute Resolution (ADR) procedure on which the parties may agree.

2. In the event that the dispute or claim is not resolved by negotiation, or where the parties have agreed to use an ADR procedure,by the use of such procedure, the dispute shall . . . be referred to arbitration.

(ECF No. 8-6).

This dispute arose out of Defendant's early termination of the contract because Plaintiffs closed their London office and continued operations in the United States. (See ECF No. 2 ¶¶ 15-17). Specifically, Plaintiffs allege that "[EIM Europe Limited] closed its London office . . . on January 31, 2013," (ECF No. 2 ¶ 15), but continued to perform its obligations under the contract. Plaintiffs assert that "Defendant wrongfully terminated the Contract citing that Plaintiff [EIM Europe Limited] was in breach of contract for closing its London office." (Id. ¶ 17). Section 11.1 of the Subcontract Agreement provides that "Subcontractor will obtain the prior agreement of Contractor and the Authority to store or process such personal data at sites outside the United Kingdom." (ECF No. 2-1, at 7). The parties disagree about whether the Subcontract Agreement required EIM Europe Limited to maintain a London office as a condition of the contract.

Plaintiffs filed a breach of contract action in the Circuit Court for Montgomery County in Maryland on June 26, 2013. (ECF No. 1 ¶ 1). In their five-count complaint, Plaintiffs seek judgment of approximately $1,085,641.86 based on a breach of contract theory. Specifically, Plaintiffs assert that Defendantbreached the Subcontract Agreement "when the Defendant withheld 10% of the final Contract invoice, terminated maintenance support payments as required by the Contract, and withheld payments for the margin on software revenue as required by the Contract." (ECF No. 2 ¶ 19). Furthermore, Plaintiffs state that Defendant breached the Subcontract Agreement by failing to notify their designated representative regarding Defendant's termination of the Contract, (id. ¶ 43), and by recruiting and hiring two of EIM Europe Limited's former employees without obtaining the company's prior consent "in accordance with the one (1) year waiting period requirement post termination of such employee's employment contract with Plaintiff" (id. ¶¶ 48-49).

On July 23, 2013, Defendant removed the action to this court on the basis of diversity jurisdiction. (ECF No. 1). Three days later, on July 26, 2013, Defendant filed the instant motion to dismiss, or in the alternative, for summary judgment. (ECF No. 8). Defendant raises several grounds for dismissal: (1) lack of standing because EIM is not a party to the Subcontract Agreement; (2) improper venue; (3) forum non conveniens; and (4) binding arbitration provision incorporated into the Subcontract Agreement. Plaintiffs filed an opposition on August 12, 2013 (ECF No. 11), and Defendant replied on August 29, 2013 (ECF No. 13).

II. Standard of Review⁵

Although no Federal Rule of Civil Procedure expressly addresses motions to dismiss or stay pending arbitration, the United States Supreme Court has described arbitration clauses as "a specialized kind of forum-selection clause that posits not only the situs of suit but also the procedure to be used in resolving the dispute." Scherk v. Alberto-Culver Co., 417 U.S.506, 519 (1974). In Sucampo Pharmaceuticals, Inc. v. Astellas Pharma, Inc., 471 F.3d 544 (4^th Cir. 2006), the United States Court of Appeals for the Fourth Circuit held that a motion to dismiss based on a forum-selection clause should be treated as a motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3). Id. at 550. The Fourth Circuit has since cited Sucampo with approval in considering under Rule 12(b)(3) a motion to dismiss based on an arbitration provision. See Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 365-66 & n.9 (4^th Cir. 2012). Under Rule 12(b)(3), "a court is free to look at matters outside of the pleadings, however, the court still must draw all reasonable inferences in the light most favorable to the plaintiff." Costar Realty Information, Inc. v. Field, 612 F.Supp.2d 660, 672 (D.Md. 2009). As Judge Hollander recently discussed in Whiting-Turner Contracting Co. v. Liberty Mut. Ins. Co., 912 F.Supp.2d 321, 332 (D.Md. 2012):

[A] motion to dismiss for improper venue, filed under Rule 12(b)(3), "allows the court to freely consider evidence outside the pleadings, unlike under a 12(b)(6) motion." Sucampo, supra, 471 F.3d at 550; accord Aggarao, supra, 675 F.3d at 365-66. However, unless an evidentiary hearing is held with respect to the motion, the plaintiff is obliged "to make only a prima facie showing of proper venue in order to survive a motion to dismiss." Aggarao, 675 F.3d at 366. In assessing a Rule 12(b)(3) motion on the basis of the papers, the court must "view the facts in the light most favorable to the plaintiff." Id.; see Estate of Myhra v.Royal Caribbean Cruises, Ltd., 695 F.3d 1233, 1239 (11th Cir.2012) ("When the parties submit conflicting affidavits, the court, in the absence of an evidentiary hearing" on a Rule 12(b)(3) motion, must " 'give greater weight to the plaintiff's version of the jurisdictional facts and ... construe such facts in the light most favorable to the plaintiff.'") (emphasis added) (citation omitted); Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1140 (9th Cir. 2004) ("Upon holding an evidentiary hearing to resolve material disputed facts, the district court may weigh evidence, assess credibility, and make findings of fact that are dispositive on the Rule 12(b)(3) motion."); accord Continental Cas. Co. v. Am.

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