P.M. Enterprises v. Color Works, Inc.

Decision Date13 November 1996
Docket NumberCivil Action No. 2:96-0540.
CourtU.S. District Court — Southern District of West Virginia
PartiesP.M. ENTERPRISES, Plaintiff, v. COLOR WORKS, INC., et al., Defendants.

James M. Sturgeon, Jr. and Thomas H. Vanderford, IV, Pauley, Curry, Sturgeon & Vanderford, Charleston, WV, for plaintiff.

Christopher P. Bastien, Bastien & Gerwig, Charleston, WV, for defendants.

MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Pending are Defendants' motions to dismiss for improper venue and, in the alternative, for transfer of venue to the United States District Court for the Northern District of Alabama. After careful consideration, the Court DENIES Defendants' motion to dismiss and GRANTS Defendants' motion for transfer of venue.

I. FACTUAL BACKGROUND

Plaintiff P.M. Enterprises, a West Virginia corporation operating near Charleston, received an order from Montgomery Ward on April 21, 1995 for the manufacture and delivery of a quantity of sweatshirts. On April 24, 1995, representatives of Defendant Tennessee River, Inc. ("Tennessee River") and Defendant Color Works, Inc. ("Color Works"), both Alabama corporations, traveled to West Virginia to solicit from P.M. Enterprises the subcontract to manufacture the sweatshirts.

On May 2, 1995, P.M. Enterprises faxed Tennessee River sales representative George Tutino purchase order 24136 for nearly 119,000 sweatshirts. On May 4, 1995, P.M. Enterprises' vice president Michael Hughes received a fax transmission of purchase order CW-2837 from Tennessee River's Denise Higdon. Hughes signed the order and returned it to Tennessee River. According to Plaintiff, purchase order CW-2837 consisted of a single sheet of paper and did not contain a forum-selection clause. Manker aff. para. 7. Defendants do not appear to contest this assertion.

P.M. Enterprises acknowledges, however, that it signed three additional purchase orders, denominated CW-482, CW-483, and CW-2837, thereby confirming the orders. Manker aff. para. 7. The reverse of these documents contains the following language:

Buyer agrees that it has sufficient contacts with the State of Alabama in connection with the purchase order to give Alabama Courts jurisdiction over buyer. Buyer agrees that the negotiation and acceptance of this Purchase Order have taken place in the State of Alabama and that by entering this Purchase Order, Buyer hereby consents to the jurisdiction of any Federal or State Courts located in the State of Alabama, for all actions arising out of the Purchase Order and designates the County of Lauderdale[,] [Alabama,] as the proper venue for any such action.

Parties' stipulation exh. A and B.

According to Plaintiff, the sweatshirts were defective and not merchantable when delivered. Plaintiff then brought this action on May 3, 1996 in the Circuit Court of Kanawha County, West Virginia, seeking a declaratory judgment concerning the parties' contract rights and damages for breach of seller's implied warranty of merchantability. On June 3, 1996, Defendants removed to this Court pursuant to 28 U.S.C. § 1441(a) on grounds of this Court's diversity jurisdiction, 28 U.S.C. § 1332(a).1

II. LAW

Defendants assert two alternative grounds in support of the motion to dismiss for improper venue pursuant to 28 U.S.C. § 1406(a). First, Defendants argue this action does not meet the statutory venue requirements under 28 U.S.C. § 1391(a). Second, they claim a forum-selection clause contained in the parties' contract requires litigation of this dispute in Alabama. In the alternative, Defendants move for transfer of venue, 28 U.S.C. § 1404(a), to the United States District Court for the Northern District of Alabama. The Court addresses each motion below.

A. Improper venue under 28 U.S.C. § 1391

Defendants argue this action does not meet the statutory requirements for venue in this district because Defendants are incorporated in Alabama and have their principal place of business in that state. Apparently, Defendants have confused the residency requirements under the federal diversity jurisdiction statute, 28 U.S.C. § 1332,2 with the residency requirements of the federal venue statute, 28 U.S.C. § 1391. The venue statute provides, in pertinent part, "a civil action wherein jurisdiction is founded only on diversity of citizenship may ... be brought only in ... a judicial district where any defendant resides, if all defendants reside in the same state...." 28 U.S.C. § 1391(a). Under § 1391(c), for purposes of establishing proper venue, a corporate defendant "reside[s] in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced...." Therefore, our venue inquiry must focus on whether Defendants are subject to personal jurisdiction in this district.

Determining the propriety of personal jurisdiction is a two step process. First, we inquire whether the applicable long-arm statute, W.Va.Code § 56-3-33, authorizes the exercise of jurisdiction in these circumstances. Second, we determine if the exercise of jurisdiction in those circumstances comports with constitutional notions of due process. Bashaw v. Belz Hotel Mgmt., 872 F.Supp. 323, 326 (S.D.W.Va.1995) (Haden, C.J.) (citing Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1199 (4th Cir.1993) (additional citations omitted).

Since West Virginia's long-arm statute extends to the limits of due process, Bashaw, 872 F.Supp. at 325 (citing Pittsburgh Terminal Corp. v. Mid Allegheny Corp., 831 F.2d 522, 525 (4th Cir.1987)), our analysis "proceeds directly to determine whether it is constitutionally permissible to require Defendants to defend this suit in this Court," Bashaw, 872 F.Supp. at 325 (citing Clark v. Milam, 830 F.Supp. 316, 319 n. 3 (S.D.W.Va.1993)).

Our Court of Appeals states the test for determining the constitutional reach of personal jurisdiction as whether:

(1) the defendant has created a substantial connection to the forum state by actions purposefully directed toward the forum state or otherwise invoking the benefits and protections of the laws of the state; and (2) the exercise of jurisdiction based on those minimum contacts would not offend traditional notions of fair play and substantial justice, taking into account such factors as (a) the burden on the defendant, (b) the interests of the forum state, (c) the plaintiff's interest in obtaining relief, (d) the efficient resolution of controversies as between states, and (e) the shared interests of the several states in furthering fundamental substantive social policies.

Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 945-46 (4th Cir.1994) (additional citations omitted).

Applying this test to the facts presented here, the Court concludes that it may exercise personal jurisdiction over Defendants. Plaintiff offers uncontroverted evidence that representatives of both Defendants traveled to West Virginia in April 1995 to solicit the subcontract from Plaintiff to manufacture the sweatshirts for Montgomery Ward. Manker aff. para. 6. Among these representatives was George Tutino, whom Plaintiff identifies as "a sales representative of [Tennessee River] who regularly calls on [P.M. Enterprises] in West Virginia." Id. Defendants later obtained the subcontract, which obligated them to manufacture the sweatshirts and deliver them to Plaintiff in West Virginia. Because these contacts suffice to establish personal jurisdiction over Defendants in this district,3 this action meets the statutory requirements for venue here.

B. Improper venue based on the contract forum-selection clause

Defendants further argue for dismissal pursuant to 28 U.S.C. § 1406(a) on the grounds that a contract forum-selection clause renders venue improper in this district.4 Section 1406 dismissal, however, is not the correct procedural vehicle for enforcing a forum-selection clause. As the United States Supreme Court has implied, and as other courts who have confronted the issue have held, the propriety of venue rests upon whether an action satisfies the federal venue statute, 28 U.S.C. § 1391, not upon the provisions of the litigants' private contractual agreements. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 28 n. 9, 108 S.Ct. 2239, 2244 n. 9, 101 L.Ed.2d 22 (1988); Southern Distrib. Co., Inc. v. E. & J. Gallo Winery, 718 F.Supp. 1264, 1267 (W.D.N.C.1989); Haskel v. FPR Registry, 862 F.Supp. 909, 916 (E.D.N.Y.1994). Because dismissal is not the appropriate means of enforcing the contract forum-selection clause in this case does not mean, however, it is not proper in others. For example, where a forum-selection clause requires litigation of disputes in a foreign court, see Allen v. Lloyd's of London, 94 F.3d 923 (4th Cir.1996), Manetti-Farrow, Inc. v. Gucci Am., 858 F.2d 509 (9th Cir. 1988), or a state court, see International Software Systems, Inc. v. Amplicon, Inc., 77 F.3d 112 (5th Cir.1996), Jones v. Weibrecht, 901 F.2d 17 (2d Cir.1990), § 1406 dismissal is warranted because federal courts lack statutory power to transfer actions to those forums.

As stated in Part II.A. above, this action meets the requirements of the federal venue statute, 28 U.S.C. § 1391. Accordingly, the Court denies Defendants' motion to dismiss for improper venue.

C. Transfer of venue

Defendants also raise the transfer of venue statute, 28 U.S.C. § 1404(a), in urging the Court to transfer this action to the Northern District of Alabama.

A district court may transfer, for the convenience of the parties and witnesses, any civil action to any other district or division where it might have been brought. AFA Enters., Inc. v. American States Ins. Co., 842 F.Supp. 902, 908 (S.D.W.Va.1994) (Haden, C.J.) (citing 28 U.S.C. § 1404(a); Alpha Welding & Fabricating, Inc. v. Todd Heller, Inc., 837 F.Supp. 172, 175 (S.D.W.Va.1993) (Haden, C.J.)). Decisions to transfer an action to another district court are committed to the transferring court's sound discretion. AFA...

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