Marpor Corp. v. Dfo
| Decision Date | 02 December 2010 |
| Docket Number | CIV. NO. 10-1312 (PG) |
| Parties | MARPOR CORPORATION, Plaintiff, v. DFO, LLC AND DENNY'S, INC., ET AL. Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Plaintiff MARPOR Corporation ("MARPOR" or "Plaintiff") filed a civil action in the Puerto Rico Court of First Instance against DFO, LLC and Denny's, Inc. ("Defendants") on March 18, 2010. (Docket No. 6). Said action requested declaratory judgment as to MARPOR's exclusive right to operate and develop Denny's restaurants in Puerto Rico. (Docket No. 6). MARPOR further requested a preliminary injunction and the return of MARPOR's exclusive right to operate and develop Denny's restaurants alleging that Defendants unjustifiably deprived MARPOR of its exclusivity. On April 15, 2010, Defendants removed the instant case and voluntarily consented to the jurisdiction of the Court. (Docket No. 1). Subsequently, Defendants filed a Motion to Dismiss on April 26, 2010. (Docket No. 11). Before the Court are Defendants' Motion to Dismiss (Docket No. 11) pursuant to Fed. R. Civ. P. 12(b)(6) or alternatively 28 U.S.C. 1404(a) ("Section 1404(a)"), as well as Plaintiff's Opposition (Docket No. 15), Defendant's Response thereto (Docket No. 18), Plaintiff's Surreply (Docket No. 20), and Defendants' Informative Motion regarding recent caselaw (Docket No. 24). For the reasons set forth below, the Court GRANTS Defendants' Motion to Dismiss.
The Court draws the following facts from parties' motions and takes them as true for purposes of resolving Defendants' Motion to Dismiss.
Plaintiff is a local corporation organized under the laws of the Commonwealth of Puerto Rico that employs approximately 688 people in its Denny's restaurants. (Docket No. 6). MARPOR has had exclusive use of the Denny's franchise in the Puerto Rico territory since 2007. (Docket No. 6). Defendants are corporations organized under the state of Delaware and their main business offices are located in South Carolina. DFO, LLC and Denny's, Inc. are the principals of the Denny's restaurant franchise.
On July 11, 1995, Denny's, Inc. and DEN-CARIBBEAN, LLC ("DEN-CARIBBEAN") executed a contract for the exclusive operation and development of Denny's restaurants in the territory of Puerto Rico and the United States Virgin Islands. On November 2, 1999, Denny's, Inc. assigned the contract to DFO, LLC. The expiration date of the contract was July 11, 2005, but DFO, LLC and DEN-CARIBBEAN extended it by five years. On August 28, 2003 DEN-CARIBBEAN filed for bankruptcy and MARPOR subsequently acquired DEN-CARIBBEAN's rights at public auction. DFO, LLC and MARPOR executed an assignment agreement on March 8, 2007. In said agreement, MARPOR acquired all the rights and privileges under the original contract to develop and operate Denny's restaurants exclusively in Puerto Rico. It is of particular importance that the agreement between Denny's, Inc. and DEN-CARIBBEAN, LLC contained a forum selection clause that stated, "[a]ny litigation based hereon, or arising out of, under, or in connection with, this Agreement, or any course of conduct, course of dealing, statements (whether verbal or written) or actions of Licensor or Licensee shall be brought and maintained exclusively in the Courts of the State of South Carolina or in the United States District Court for the District of South Carolina..." (Docket No. 1, Exhibit 1). The agreement further states that the contract "shall be governed by and construed in accordance with the internal laws of the State of South Carolina (U.S.A.), without regard to such state's choice of law and conflict of law provisions." (Docket No. 1, Exhibit 1).
The parties agreed to a schedule, which outlined the timetable within which MARPOR had to open new Denny's restaurants in Puerto Rico.
As a result of the economic recession that deeply affected Puerto Rico and the United States mainland, Mr. Nelson Marchioli, president and CEO of Denny's, Inc., extended the period to open new Denny's restaurants and remodel existing ones. (Docket No. 1, Exhibit 6). MARPOR subsequently requested a longer extension of time to open a new Denny's restaurant in Puerto Rico. (Docket No. 1, Exhibit 6). On June 12, 2009, Denny's, Inc. informed MARPOR that it was withdrawing its exclusivity agreement because it seemed that MARPOR would be unable to comply with the calendar to open new restaurants in their contract. (Docket No. 1, Exhibit 8). MARPOR proceeded to open a new Denny's restaurant in Los Paseos Mall in Rio Piedras, Puerto Rico (Docket No. 1, Exhibit 14-16), which it alleges satisfies the conditions outlined in its agreement with Defendants. Defendants replied via letter on February 3, 2010, in which they informed MARPOR of their intention to rescind MARPOR's exclusivity to develop Denny's restaurants in Puerto Rico. (Docket No. 1, Exhibit 18).
Plaintiff brought suit against Defendants in the Court of First Instance of Puerto Rico on March 18, 2010. Plaintiff alleged a violation of the Dealer's Contracts Act of June 24, 1964, No. 75 ("Law 75"). P.R. Laws Ann. tit. 10, §§ 278 et seq.1 (Docket No. 6). MARPOR further alleged a breach of contract claim against Defendants. In its lawsuit, MARPOR requested declaratory and injunctive relief against Defendants because MARPOR had been deprived of its exclusivity in operating and developing Denny's restaurants in Puerto Rico.
Defendants removed to this Court on April 15, 2010, pursuant to diversity jurisdiction under 28 U.S.C. 1332. (Docket No. 1). In their Notice of Removal, Defendants consented to the removal of this case and the jurisdiction of the Court. (Docket No. 1). On April 26, 2010, Defendants submitted a Motion to Dismiss, requesting the dismissal of the case pursuant to the forum selection clause between the parties or in the alternative to transfer the case to the United States District Court of South Carolina pursuant to 28 U.S.C. 1404(a). For the reasons that follow the Court GRANTS Defendants' Motion to Dismiss.
The standard of review applied to a motion to dismiss pursuant to Fed. R. Civ. P. Rule 12(b)(6) establishes that a complaint may not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." D.I.P.R. Mfg. Inc. v. Perry Ellis Int.l, Inc., 472 F.Supp.2d 151, 153 (D.P.R. 2007). Moreover, "even under the liberal pleading standard of Federal Rule of Civil Procedure 8, the Supreme Court has...held that to survive a motion to dismiss, a complaint must allege a plausible entitlement to relief." Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 95 (1st Cir. 2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 553 (2007)).
"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)(citing Twombly, 550 U.S. at 556). That is, "[f]actual allegations must be enough to raise a right to relief above the speculative level... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)...." Twombly, 550 U.S. at 555 (internal citations and quotation marks omitted).
"[D]etermining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 12 9 S. Ct. at 1950. "Yet [the Court] need not accept as true legal conclusions from the complaint or naked assertions devoid of further factual enhancement." Maldonado v. Fontanes, 568 F.3d 263, 266 (1st Cir. 2009) (quoting Twombly, 550 U.S. at 557). Although a complaint attacked by a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) "does not need detailed factual allegations,... a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal citations and quotation marks omitted). Lastly, "[u]nder Rule 12(b)(6), the district court may properly consider only facts and documents that are part of or incorporated into the complaint; if matters outside the pleadings are considered, the motion must be decided under the more stringent standards applicable to a Rule 56 motion for summary judgment." Trans-Spec Truck Serv., Inc. v. Caterpillar, Inc., 524 F.3d 315, 321 (1st Cir. 2008).
Contracting parties often agree to adjudicate their disputes in a specific location. The utility of forum selection clauses in business contracting may not be understated as it increases convenience and predictability for business actors. The general rule is that forum selection clauses are prima facie valid. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). Forum selection clauses are enforced via a motion to dismiss under Fed. R. Civ. P. 12(b)(6) or a transfer petition pursuant to 28 U.S.C. 1404(a). 28 U.S.C. 1404(a); Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988); Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009); Silva v. Encyclopedia Britannica, Inc., 239 F.3d 385, 387 (1st Cir. 2001); Antilles Cement Corp. v. Aalborg Portland A/S, 526 F. Supp. 2d 205, 207 (D.P.R. 2007). The type of motion that a party utilizes to enforce a forum selection clause is determinative of the standard that the Court will rely on when deciding upon the motion. Outek Caribbean Dist. Inc. v. Echo, Inc., 206 F.Supp.2d 266 (D.P.R. 2002). In other words, if the motion is to dismiss, the Court will apply the Bremen criteria, but if the motion is to transfer pursuant to Section 1404(a) then the Court will apply the Stewart rationale. Id. In this case, Defendants have made both a motion to dismiss and...
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