Karl W. Schmidt & Assocs., Inc. v. Action Enviornmental Solutions, LLC
| Decision Date | 21 November 2014 |
| Docket Number | Civil Action No 14-cv-00907-RBJ |
| Parties | KARL W. SCHMIDT & ASSOCIATES, INC., Plaintiff, v. ACTION ENVIORNMENTAL SOLUTIONS, LLC, Defendant. |
| Court | U.S. District Court — District of Colorado |
ORDER
This case is before the Court on defendant Action Environmental Solutions, LLC's Motion to Dismiss Due to Improper Venue or in the Alternative Motion to Transfer to the Southern District of New York [ECF No. 11]. For the reasons explained below, the motion is now denied.
The present dispute began with a contract between plaintiff Karl W. Schmidt & Associates, Inc. ("KWS") and defendant Action Environmental Solutions, LLC ("Action"). See ECF No. 4 at ¶ 8. KWS, a Colorado corporation headquartered in Commerce City, Colorado, manufactures and sells conveyor belts, sorters, and other system components for use in waste management and recycling facilities. ECF No. 4 at ¶¶ 1, 6. Action is a limited liability company with its principal place of business in either Newark, New Jersey or Bronx, New York that sortsrecyclable commodities for resale and performs other waste collection functions. See ECF No. 4 at ¶¶ 2, 7; Affidavit of Frank A. Blandino, ECF No. 11-1, at ¶ 6. Under the contract, Action hired KWS to manufacture, deliver, and install a Commercial Single Stream System ("the System"), a complex system designed to sort recyclable materials. ECF No. 4 at ¶ 8.
According to the complaint, plaintiff delivered and installed the System but has not been fully paid. ECF No. 4 at ¶¶ 16, 18. In the contract, Action agreed to pay KWS $9,587,970 in installments, with the final payment due 30 days after the System became operational. ECF No. 4 at ¶¶ 16, 18. Action allegedly paid the first seven installments, but not the final two, despite the system's becoming operational in June of 2013. ECF No. 4 at ¶¶ 11, 12. Plaintiff alleges that the defendant now owes KWS $973,497. ECF No. 4 at ¶ 13.
Several facts about the contract's geographic ties are relevant here. Action initially contacted KWS employees at their offices in Colorado. Affidavit of Karl W. Schmidt, ECF No. 18-1, at ¶ 4. The parties executed the contract either in Bronx, New York or at defendant's former headquarters in Newark, New Jersey, although the contract itself states that "[a]ny contract with the Buyer [here, Action] shall be deemed to have been made in the state of Colorado." Affidavit of Frank A. Blandino, ECF No. 11-1, at ¶ 6; Contract, ECF No. 4 Ex. A, at 10, ¶ 16. The contract also includes a choice of law provision and forum selection clause: "[This contract] shall be governed by the laws of the State of Colorado, and any legal action connected with [this] contract may be brought in the City and County of Denver." Contract, ECF No. 4 Ex. A, at 10, ¶ 16. After the contract was executed, KWS employees designed and manufactured the System in KWS's Colorado manufacturing facility (although some of the parts delivered to Action's facility came directly from various locations in Europe). See Affidavit of Karl W.Schmidt, ECF No. 18-1, at ¶¶ 4, 10, 12. The components of the system were then shipped from Colorado to Action's New York facility, where KWS employees installed them. Id. at ¶ 11. Later on, parts of the System were repaired and replaced at the same facility, where the system is presently located. Affidavit of Frank A. Blandino, ECF No. 11-1, at ¶ 8, 9. Finally, payments made to KWS from Action apparently originated in New York but were received by plaintiff in Colorado. See id. at ¶ 11; Contract, ECF No. 4 Ex. A, at 9, ¶ 2.
The plaintiff initially filed this action in Colorado state court. ECF No. 4. The defendant removed to federal court, ECF No. 1, and now seeks dismissal or transfer.
Defendant seeks two alternative actions in its motion. First, defendant moves for dismissal for improper venue. Second, defendant seeks the transfer of this action to the Southern District of New York. The Court will address each in turn.
"Once venue is attacked, the plaintiff bears the burden to show proper venue." Ervin & Associates, Inc. v. Cisneros, 939 F. Supp. 793, 796 (D. Colo. 1996). However, the plaintiff need only make a prima facie showing that venue is proper. JD Parker Constr., Inc. v. E. Equity Partners, L.L.C., No. CIV.A. 08-CV-01392LT, 2009 WL 151491, at *3 (D. Colo. Jan. 22, 2009). In reviewing a Rule 12(b)(3) motion to dismiss for improper venue, the Court may examine facts outside the complaint,1 and it must draw all reasonable inferences and resolve all factualconflicts in favor of the plaintiff. Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248, 1260-61 (10th Cir. 2012) (quoting 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1352, at 324 (2004)). Specifically, the Court must accept the well-pleaded allegations of the complaint as true to the extent that they are uncontested by the defendant's affidavits. Id. "If the parties present conflicting affidavits, all factual disputes are resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party." H&H Transformer, Inc. v. Battelle Energy Alliance, L.L.C., No. CIVA09-CV-00442WYDBNB, 2009 WL 3530370, at *3 (D. Colo. Oct. 23, 2009).
Under 28 U.S.C. §1406(a), "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." To determine if venue is proper where an action was filed, courts look to 28 U.S.C. §1391(b), which provides that:
28 U.S.C. §1391(b). The plaintiff argues that venue is proper in Colorado under both §1391(b)(1) and §1391(b)(2). The Court finds that venue is proper under §1391(b)(2) and thus does not reach the question of whether it is also proper pursuant to §1391(b)(1).
The Court here focuses on the analysis of where "a substantial part of the events or omissions giving rise to the claim occurred" under §1391(b)(2). As an initial matter, "venue is not limited to the district with the most substantial events or omissions," but rather it can be appropriate in any district where a substantial part of the events giving rise to the claim occurred. Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1165-66 (10th Cir. 2010) (). The Tenth Circuit applies a two-part test in reviewing challenges to venue under §1391(b)(2). Id. at 1166. First, a court should Id.
Beginning with the first step, plaintiff's claim centers on the contract for the System that defendant allegedly breached. See ECF No. 4 at ¶¶ 8, 13. The acts and omissions underlying the claim took place in Colorado, New York, and possibly New Jersey. Action contacted the owner and CEO of KWS at his offices in Colorado to request that KWS manufacture the System. Affidavit of Karl W. Schmidt, ECF No. 18-1, at ¶ 4. The parties then executed the contract either in Bronx, New York or at defendant's former headquarters in Newark, New Jersey.2 Affidavit of Frank A. Blandino, ECF No. 11-1, at ¶ 6. After the contract was executed, KWSemployees designed and manufactured the System in KWS's Colorado manufacturing facility. See Affidavit of Karl W. Schmidt, ECF No. 18-1, at ¶¶ 4, 10. The components of the system were then shipped to Action's New York facility, where KWS employees installed them.3 Id. at ¶ 11. Parts of the System were later repaired and replaced at the same facility, where the system is presently located. Affidavit of Frank A. Blandino, ECF No. 11-1, at ¶ 8, 9. Finally, payments made to KWS from Action apparently originated in New York but were received by plaintiff in Colorado.4 See id. at ¶ 11 Contract, ECF No. 4 Ex. A, at 9, ¶ 2.
Turning now to the second step of the §1391(b)(2) analysis, the Court must determine whether substantial events material to plaintiff's claim occurred in Colorado. Considering the entire sequence of events discussed in the first step above, see Employers Mut. Cas. Co., 618 F.3d at 1166, the Court concludes that plaintiff has made a prima facie showing sufficient to satisfy this standard. Discussions leading up to the execution of the contract took place with the plaintiff's employees in Colorado, and much of the plaintiff's performance under the contract—designing and manufacturing the System—occurred in Colorado as well. Finally, plaintiff received payments under the contract in Colorado. These are substantial events material to plaintiff's breach of contract claim, and thus the court finds that venue is proper under 28 U.S.C. §1391(b)(2). Because the plaintiff has made a prima facie showing that venue is proper in Colorado, the Court declines to dismiss its claim under Rule 12(b)(3) and 28 U.S.C. §1406(a).
Defendant argues in the alternative that the Court should transfer this action to the Southern District of New York under either 28 U.S.C. §1404(a) or 28 U.S.C. §1406(a). Because the Court...
To continue reading
Request your trial