K & V Scientific v. Bayerische Motoren Werke

• Decision Date: 06 September 2001
• Docket Number: No. CIV. 00-1615 BB/DJS.,CIV. 00-1615 BB/DJS.
• Citation: 164 F.Supp.2d 1260
• Parties: K & V SCIENTIFIC CO., INC., a New Mexico Corporation, Plaintiff, v. BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT ("BMW"), a corporation organized and existing under the laws of Germany, Defendant.
• Court: U.S. District Court — District of New Mexico

Page 1260

164 F.Supp.2d 1260

K & V SCIENTIFIC CO., INC., a New Mexico Corporation, Plaintiff, v. BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT ("BMW"), a corporation organized and existing under the laws of Germany, Defendant.

No. CIV. 00-1615 BB/DJS.

United States District Court, D. New Mexico.

September 6, 2001.

John W. Boyd, David A. Freedman, Freedman Boyd Daniels Hollander Goldberg & Cline, Albuquerque, NM, William H. Bright, Jr., Patrick F. Caruso, Cummings & Lockwood, Hartford, CT, for Plaintiffs.

Travis R. Collier, Charles K. Purcell, James P. Bieg, Rodey Dickason Sloan Akin & Robb, Albuquerque, NM, for Defendants.

OPINION

BLACK, District Judge.

THIS MATTER comes before the Court on Defendant's Motion to Dismiss (Doc. 13), filed February 13, 2001. The Court has examined the parties' submissions and the relevant authorities, and, for the reasons set forth below, finds that Defendant's motion should be GRANTED.

I. BACKGROUND

Plaintiff K & V Scientific Company, Inc. ("K & V") brings this suit for breach of contract based on the alleged appropriation of trade secrets by Defendant Bayerische Motoren Werke Aktiengesellschaft, the German manufacturer of BMW automobiles. BMW removed this action pursuant to 28 U.S.C. § 1441(a) and it is now properly before this Court.

K & V is a two-person corporation located in Los Alamos, New Mexico, owned by Mr. Alan Kammerman and his wife Rosalie. Mr. Kammerman is a talented engineer and scientist who specializes in marrying differing technologies. Specifically, Mr. Kammerman has focused on the application of semiconductor bridge technology to automobile airbag ignition, a process designed to make the discharge of airbags safer and more reliable. Semiconductor bridge technology was developed at Sandia National Laboratories for defense purposes and was a "tech transfer" to SCB Technologies ("SCBT"), a local corporation acquired in 1995 by Ensign-Bickford Company. Ensign-Bickford and SCBT were unsuccessful in applying the semiconductor bridge to automobile airbags and, as a result, developed a relationship with K & V. SCBT encouraged K & V's research and executed a series of confidentiality agreements designed to protect K & V's work and facilitate K & V's communications with the auto industry.

At some point during 1996, Mr. Kammerman was introduced to Josef Mahalek, BMW's engineering manager. Mr. Mahalek expressed enthusiasm for K & V's research and discussed working with K & V to adapt the new airbag technology to BMW's existing system. In July 1996, Mr. Kammerman submitted a confidentiality agreement to BMW which provided for the protection of trade secrets exchanged between the parties ("1996 Agreement"). The agreement, which contained no provision regarding proper venue or choice of law, was signed by representatives of BMW in Munich. BMW later decided K & V's confidentiality agreement was unacceptable, and, in January 1997, Mr. Mahalek submitted a second contract to Mr. Kammerman ("1997 Agreement"). This agreement contained the following forum selection clause, which forms the heart of the parties' present dispute: "Jurisdiction for all and any dispute arising out of or in connection with this agreement is Munich. All and any dispute arising out of or in connection with this agreement are [sic] subject to the laws of the Federal Republic of Germany." The new confidentiality agreement was signed and returned by K & V without discussion.

Following the execution of the parties' initial 1996 agreement, Mr. Mahalek sent BMW's confidential airbag igniter specifications to K & V. K & V alleges that, based on BMW's assurances that a development contract was forthcoming, Mr. Kammerman commenced research and development of the airbag igniter project without compensation. Over the following months K & V completed the engineering milestones set by BMW, and BMW sent continuous requests that K & V perform more work on the project. At BMW's behest, Mr. Kammerman traveled to Munich in the spring of 1997 to educate BMW regarding K & V's new technology; BMW again allegedly assured Mr. Kammerman there would be no difficulty agreeing on a contract, including compensation for the work already performed, and informed Mr. Kammerman that the contract should include production as well as development. K & V enlisted Ensign-Bickford and SCBT as its production partners in the project. Mr. Kammerman continued to press forward on the project without a contract on faithful belief that, with the confidentiality agreements in place, neither Ensign-Bickford nor BMW could benefit from his research without justly compensating K & V. As the complaint alleges, "K & V and Kammerman were confident that BMW intended to strike a commercially reasonable and fair level of compensation" as "under the confidentiality agreement, BMW was legally powerless to proceed without K & V's consent."

At some point after Ensign-Bickford joined the airbag ignition project, it is alleged that BMW and Ensign-Bickford agreed K & V's services were no longer necessary. Mr. Kammerman, oblivious to the larger corporations' intentions, continued to prepare for an upcoming meeting among the participants. In turn, BMW allegedly continued to assure Mr. Kammerman that K & V's role in the project, as well as compensation issues, would be resolved. At that meeting, which took place in New Mexico in August 1997, BMW first insisted on a private consultation with Ensign-Bickford and SCBT. When Mr. Kammerman later met with representatives of BMW he was informed that BMW would neither contract with K & V nor compensate K & V for the development work Mr. Kammerman had performed.

It is undisputed that BMW has entered into a development contract with SCBT and Ensign-Bickford.¹ Although BMW maintains it has not violated its confidentiality agreements with K & V, K & V claims that the airbag ignition project employs the technology developed so arduously by Mr. Kammerman. K & V also asserts that, because Mr. Kammerman devoted virtually all of his time and resources to BMW, the company is now deep in debt and devoid of all assets. Per Mr. Kammerman's estimate, he has invested over $1,000,000 in resources and labor to the project. K & V therefore brings this suit based on BMW's alleged violation of the companies' confidentiality agreements.

BMW has filed a motion to dismiss on the grounds that the forum selection clause in the 1997 Agreement divests this Court of jurisdiction, or, in the alternative, that this Court lacks personal jurisdiction. Because the Court finds the forum selection clause to be valid and enforceable, we do not reach the question of personal jurisdiction.

II. DISCUSSION

A. Effect of 1997 Agreement

Initially, the Court must determine the effect of the parties' successive confidentiality agreements. K & V's complaint alleges that BMW breached both the 1996 and 1997 Agreements, and K & V argues that, because the 1996 Agreement contains no forum selection clause, venue is proper in this Court under that contract.

Standard principles of contract law, however, dictate otherwise. When two parties execute a second contract that deals with the same subject matter as the first, the two contracts must be interpreted together; insofar as the contracts are inconsistent, the later one prevails. 6 Arthur L. Corbin, Corbin on Contracts, §§ 1293 and 1296 (1962); see also Restatement (Second) of Contracts § 279 and cmt. a.² This rule is best summarized by Corbin:

The new agreement may make no reference to the previous contract or claim; and yet it may operate as a substituted contract. If the new agreement contains terms that are clearly inconsistent with the previously existing contract or claim, the fact of inconsistency is itself a sufficient indication of intention to abrogate the old and substitute the new. The inconsistency may exist as to the whole of the former contract or claim or only as to a part. It operates as a discharge by substitution only so far as the inconsistency extends.

Corbin on Contracts at § 1296. Here, the 1997 Agreement was substituted for the 1996 Agreement. Both contracts address the fundamental subject matter of trade secret protection but the second carries explicit supplemental terms: specifically, the 1997 Agreement designates both a choice of law and a choice of forum while the original agreement is silent as to both.³ It is immaterial that the successive contract makes no reference to the original. Because the inconsistent terms of the later, substituted contract prevail, the forum selection clause is applicable to both Agreements.

Furthermore, the Court finds that all of K & V's claims against BMW, including those claims in tort and quasi-contract, are governed by the forum selection clause contained in the 1997 Agreement. The general rule is that when an action arises from a contract or contractual relationship between two parties the choice of forum clause in that contract governs the parties' tort as well as contract claims. Terra Int'l, Inc. v. Mississippi Chemical Corp., 119 F.3d 688, 693-95 (8th Cir.1997); Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 514 (9th Cir.1988); Crescent Int'l, Inc. v. Avatar Communities, Inc., 857 F.2d 943, 944-45 (3d Cir.1988); Allied Sound, Inc. v. Dukane Corp., 934 F.Supp. 272, 276 (M.D.Tenn.1996); Vijuk Equipment Inc. v. Otto Hohner KG, 728 F.Supp. 1368, 1371 (N.D.Ill.1990). Here, the parties' forum selection clause applies to "all and any dispute arising out of or in connection with" the 1997 Agreement. The Court finds, and K & V does not contest, that each of K & V's tort claims arises in connection with the parties' contract.⁴

B. Forum Selection Clause

BMW properly characterizes its motion to dismiss based on the forum selection clause as a motion to dismiss for improper venue under Fed.R.Civ.P. 12(b)(3). Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 956 (10th Cir.1992); see also 17 James W. Moore et. al., Moore's Federal...