Kamtel, Inc. v. Bore Tech Constr., LLC, 16-cv-633-bbc
| Decision Date | 09 February 2017 |
| Docket Number | 16-cv-633-bbc |
| Parties | KAMTEL, INC., Plaintiff, v. BORE TECH CONSTRUCTION, LLC, Defendant. |
| Court | U.S. District Court — Western District of Wisconsin |
Plaintiff Kamtel, Inc. is suing defendant Bore Tech Construction, LLC for breach of contract and tortious interference with existing and prospective contracts relating to a subcontract under which Bore Tech agreed to provide construction services to Kamtel on several of its projects. Kamtel is relying on diversity of citizenship, 28 U.S.C. § 1332 as a basis for subject matter jurisdiction, and a forum selection clause in the parties' agreement as a basis for personal jurisdiction. Dkt. #1.
Four months before Kamtel filed this case, Bore Tech filed its own breach of contract action in a state court in Texas. After filing both an answer in the Texas action and its complaint in this court, Kamtel sought to enforce the forum selection clause by asking the state court to transfer its case to this court, or in the alternative, dismiss the Texas lawsuit. The state court denied both motions.
Before the court are Bore Tech's motions to dismiss this case under Fed. R. Civ. P. 12(b)(1)-(3) and (6) for improper venue, lack of personal and subject matter jurisdiction and failure to state a claim upon which relief can be granted on the ground that the forum selection clause is invalid and the parties' dispute is being litigated in state court. Dkt. ##11-13. Alternatively, Bore Tech asks the court to "abate" or stay this case pending the outcome of the Texas case, dkt. #11, or transfer the case to the United States District Court for the Southern District of Texas pursuant to 28 U.S.C. § 1404 or § 1406(a). Dkt. #14.
For the reasons stated below, I conclude that Bore Tech has failed to show that dismissal is warranted under any subsection of Fed. R. Civ. P. 12(b). However, in light of the ongoing litigation in Texas involving the same contract, Kamtel's delay in asserting the forum selection clause in that case and general concerns with judicial administration, I will grant Bore Tech's motion to stay proceedings in this case pending a final judgment in the Texas lawsuit. Because I am granting a stay, it is unnecessary to consider Bore Tech's motion to transfer this case to the Southern District of Texas, which it made only in the alternative to its request for a stay.
The following facts are drawn from Kamtel's complaint and the parties' subcontract. I also refer to the parties' filings in the Texas case and the order entered by the state court.
Plaintiff Kamtel, Inc. is a Wisconsin corporation with its principal place of business in Wisconsin Rapids, Wisconsin. It is a general contractor for telecommunications providers and its services include the placement and repair of buried and aerial cables across the Unites States. Defendant Bore Tech Construction, LLC is a Texas limited liability company that provides general construction contracting services. Bore Tech has its principal place of business in Houston, Texas, and only one member, Stacia George, a citizen of Texas.
For approximately thirty years, Kamtel has contracted with AT&T Inc. and its predecessors and affiliates to perform outside plant engineering, construction management, right of way acquisition and cable splicing, installation, and repair throughout the United States. Dkt. #1 at ¶ 7. In early 2014, Bore Tech approached Kamtel and proposed that Kamtel hire Bore Tech as its subcontractor on jobs for AT&T. Id. at ¶ 9. On June 14, 2014, Kamtel and Bore Tech entered into a written agreement under which Bore Tech would serve as a subcontractor on Kamtel's AT&T projects, supplying labor, equipment and materials for cable placement. Id. at ¶ 11; dkt. #15, exh. #6. The agreement contained a Wisconsin choice of law provision and a forum selection clause, which provides that any lawsuit arising from the parties' contractual relationship would be litigated exclusively in the State of Wisconsin. Dkt. #15, exh. #6 at ¶ 20.
Beginning in the fall of 2015, Kamtel became dissatisfied with Bore Tech's performance. The parties failed to repair their relationship, and Kamtel terminated the subcontract in March 2016. Dkt. #1 at ¶¶ 15-30. This action led to a small cascade of court filings.
On May 16, 2016, Bore Tech filed suit in the state district court for Harris County, Texas, alleging claims of breach of contract, unjust enrichment and quantum merit against Kamtel. Dkt. #15, exh. #1. AT&T filed an interpleader claim and deposited funds in the state court's registry. Dkt. #18, exh. #1. See also Heggy v. American Trading Employee Retirement Account Plan, 123 S.W.3d 770, 775 (Tex. App. 2003) (). In addition, two other companies intervened in the lawsuit to collect funds owed to them by either Kamtel or Bore Tech, depending on who was found liable for the invoices under the parties' agreement. Dkt. #18, exh. ##2-3. Kamtel filed an answer and general denial on July 1, 2016, but it did not assertany counterclaims or mention the forum selection clause in its pleading. Dkt. #15, exh. #2.
On September 16, 2016, Kamtel filed its lawsuit in this court, alleging claims against Bore Tech for breach of contract and tortious interference with existing and prospective contracts. Dkt. #1. Three days later, Kamtel filed a motion in the Texas state court to transfer Bore Tech's case to Wisconsin based on the forum selection clause in the parties' agreement or, in the alternative, dismiss the case. The Texas court denied Kamtel's motion as "not meritorious" in a one-sentence order. Dkt. #15, exh. #5. At a hearing on the motion, the state court explained that there was no authority for a district court in Texas to transfer a case to a federal district court in Wisconsin. Hrg. Tr. (Oct. 21, 2016), dkt. #18, exh. #4 at p. 6. The state court also made the following finding:
I understand you have [a] forum selection clause. I don't think it is unreasonable to litigate this case in Texas in this court because it would be unreasonable to require [the intervening] parties to be dismissed and have to file separate lawsuits.OPINION
Bore Tech has moved to dismiss this case for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1), lack of personal jurisdiction under Rule 12(b)(2), improper venue under Rule 12(b)(3) and failure to state a claim under Rule 12(b)(6). Because Bore Tech mentions 12(b)(6) only in a footnote, dkt. #15 at 2 n. 1, and fails to advance any argument about why Kamtel's complaint fails to state a claim upon which relief may be granted, it has waived the argument. Wehrs v. Wells, 688 F.3d 886, 891 n. 2 (7th Cir. 2012) (); Puffer v. Allstate Insurance Co., 675 F.3d 709, 718 (7th Cir. 2012) (). Bore Tech makes a similarly conclusory statement that this case should be dismissed for lack of subject matter jurisdiction, but does not challenge Kamtel's assertion of subject matter jurisdiction on the basis of diversity of citizenship under 28 U.S.C. § 1332, and no defect is apparent. § 1332 ( ); Johnson v. Wattenbarger, 361 F.3d 991, 992 (7th Cir. 2004) (). Accordingly, I will deny Bore Tech's motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction and motion to dismiss under Rule 12(b)(6) for failure to state a claim.
With respect to Bore Tech's Rule 12(b)(2) and (3) motions, the parties agree that the only possible basis for personal jurisdiction over Bore Tech and for venue in this court is the forum selection clause in their subcontract agreement. Although the brief that Bore Tech filed in support of its motions is convoluted and contains scattershot arguments that are not fully developed in many instances, I understand Bore Tech toassert that the forum selection clause is either invalid or unenforceable for the following reasons:
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