Rk Dixon Co. v. Dealer Marketing Services, Inc., 3:03-CV-40070.
| Court | United States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa |
| Writing for the Court | Gritzner |
| Citation | 284 F.Supp.2d 1204 |
| Parties | RK DIXON CO., Plaintiff, v. DEALER MARKETING SERVICES, INC., Defendant. |
| Docket Number | No. 3:03-CV-40070.,3:03-CV-40070. |
| Decision Date | 25 September 2003 |
v.
DEALER MARKETING SERVICES, INC., Defendant.
Page 1205
Peter C. Fieweger, Katz Huntoon & Fieweger PC, Rock Island, IL, for plaintiff.
Hector L. Lareau, Pappas & Schnell PC, Rock Island, IL, for defendant.
ORDER DENYING PLAINTIFF'S MOTION FOR REMAND AND DEFENDANT'S MOTION TO DISMISS, TRANSFER OR STAY
GRITZNER, District Judge.
This matter comes before the Court on Plaintiff's Motion for Remand (Clerk's No. 3) and Defendant's Motion to Dismiss, Transfer or Stay pursuant to 28 U.S.C. § 1404 and Federal Rule of Civil Procedure 12(b) (Clerk's No. 4). RK Dixon Co. ("RK Dixon") is represented by Peter C. Fieweger; Dealer Marketing Services, Inc. ("Dealer") is represented by Hector Lareau. Neither party has requested a hearing on these motions. For the reasons discussed herein, both RK Dixon's Motion for Remand and Dealer's Motion to Dismiss, Transfer or Stay will be denied.
Plaintiff RK Dixon filed its original petition seeking damages for breach of two contracts as well as repudiation of the second contract in the Iowa District Court for Scott County on July 2, 2003. On July 9, 2003, there being complete diversity and an adequate amount in controversy for diversity jurisdiction pursuant to 28 U.S.C. § 1332, Defendant Dealer removed this suit to the United States District Court for the Southern District of Iowa, Davenport Division. Removal by Dealer was both timely and without procedural defect under 28 U.S.C. §§ 1441 and 1446 and L.R. 81.1.
On July 2, 2003, at or near the same time as the petition was filed by RK Dixon in Scott County, Dealer instituted a parallel
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action1 in the United States District Court for the Central District of Illinois, Rock Island Division, for breach and rescission of the second contract between the parties. In that action, the role of the parties is the reverse of that in the present action before this court.2
Following removal of the Plaintiff's Scott County action to this Court, Dealer moved to dismiss, transfer or stay these proceedings. The motion prays for this Court to take one of the following actions: transfer for consolidation with the Illinois action pursuant to 28 U.S.C. § 1404; in the alternative, dismiss for improper venue under Rule 12(b)(3); or stay these proceedings until resolution of the Illinois action, which Dealer claims was filed first.
SUMMARY OF MATERIAL FACTS
RK Dixon is an Iowa corporation having its principal place of business in Davenport, Iowa; Dealer is an Illinois corporation with its principal office located in Rock Island, Illinois. RK Dixon sells office machines and also provides computer networking consulting services. Dealer is a software and service company serving the retail automobile industry.
On or about August 10, 2000, RK Dixon and Dealer entered into a Network Support Agreement. In accordance with the terms of the contract, RK Dixon provided network maintenance, consulting, and support services to Dealer from August 2000 until April 14, 2003. Dealer paid the charged amounts for these services until March 16, 2003. RK Dixon alleges that Dealer failed to pay charged amounts for consulting, maintenance, and support services provided to Dealer for the period between March 16, 2003, and April 14, 2003. RK Dixon further claims Dealer failed to pay for hardware and software supplied under the terms of the Network Support Agreement by RK Dixon to Dealer during this time period. RK Dixon maintains the failure to pay these charges, along with the fact that Dealer refused access to RK Dixon employees after April 14, 2003, constitutes a material breach of the Network Support Agreement. RK Dixon is seeking $47,773 plus interest from Dealer for breach of this contract.
In addition, on or about January 7, 2003, the parties entered into a Hot Site Disaster Recovery Services Agreement ["Hot Site Agreement"]. RK Dixon claims to have provided the back-up system and implemented the plan for the hot site disaster recovery services as set forth in the agreement. RK Dixon alleges that Dealer has repudiated this agreement by refusing to allow employees of RK Dixon to perform any contract services at Dealer's premises, by failure to pay monthly installments and the activation fee, and by informing RK Dixon that Dealer would no longer do business with it after April 14, 2003. RK Dixon seeks judgment in the amount of $236,700 for the repudiation and material breach of the Hot Site Agreement.
Meanwhile, Dealer brought an action in a federal court in Illinois for breach and rescission of the Hot Site Agreement, as well as for breach of fiduciary duties on the part of RK Dixon. Dealer alleges that RK Dixon breached the Hot Site Agreement by failing to perform its obligations in a good and workmanlike manner. Dealer's
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complaint in the Illinois action also includes claims of breach of fiduciary duty and breach of condition precedent to the Hot Site Agreement. Dealer, in its complaint filed in Illinois, seeks damages in excess of $75,000 and rescission of the Hot Site Agreement for approximately $275,000 in services. The Illinois complaint makes no mention of the Network Support Agreement entered into in August 2000, the alleged breach of which makes up part of RK Dixon's action in this court.
The Network Support Agreement contains a forum selection clause. Specifically, the contract states "[a]ny suit or other proceeding to enforce or construe this Agreement shall be brought in the District Court of Scott County." The contract further provides that "[t]he interpretation of the terms and provisions of the Agreement shall be governed by the laws of the State of Iowa." The Hot Site Agreement does not contain a forum selection clause.3
Both parties seek to have the case tried in the venue they have chosen, hence the apparent "race to the courthouse" and the resulting motions to have the case heard in the court of the movant's choosing. Both agree that allowing both suits to continue may result in inconsistent results and duplication of judicial effort, although, due to the unique nature of the Quad Cities area, including both Rock Island, Illinois, and Davenport, Iowa, the convenience of the parties and witnesses seems to be equal in the federal courts located in Rock Island, Illinois, and Davenport, Iowa,4 and in state court in Scott County, Iowa.
At issue before the Court are two pending motions. The Plaintiff has filed a motion to remand the case to the Iowa District Court in Scott County. This motion is based on a forum selection clause contained in one of the agreements at issue in this lawsuit. The Defendant has filed its own motion seeking a change of venue in the form of a motion to dismiss, transfer or stay the action currently pending before this Court, while a parallel lawsuit filed by the Defendant against the Plaintiff in a United States District Court located in Illinois proceeds. This motion is based primarily on the federal transfer statute5 and the "first-filed" rule found in the case law discussing this statute. In the alternative, the Defendant seeks to have this lawsuit either stayed pending the outcome of the case in Illinois or dismissed in its entirety. The unusual procedural and circumstantial nature of this case requires a complex legal analysis.
A. Plaintiff RK Dixon's Motion to Remand.
RK Dixon has filed a motion to remand this action to the Iowa District Court located in Scott County where the lawsuit was originally filed prior to being removed by Dealer. The basis for Plaintiff's motion is the existence of a forum selection clause
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in one of the parties' agreements at issue in this case. The Court must first determine whether a valid forum selection clause can form a proper ground for remand of an action removed to federal court on the basis of diversity jurisdiction. See Foster v. Chesapeake Ins. Co., 933 F.2d 1207, 1214 (3d Cir.1991). If this power exists, the Court must then determine the validity and enforceability of the forum selection clause in the Network Support Agreement. Finally, the Court must decide whether remand is proper under the unique circumstances of this case.
1. Remand based on forum selection clause.
The decision whether to enforce a forum selection clause is determined by federal law.6 Wilkinson Co. v. Krups N. Am., Inc., 48 F.Supp.2d 816, 818 (N.D.Ill. 1999) (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 32, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988)). While the Eighth Circuit has not directly addressed the issue of whether remand is available as a way to enforce a forum selection clause, several other federal courts have discussed the issue, and their reasoning and decisions are helpful in resolving this issue.
Following the Supreme Court decision in Carnegie-Mellon University v. Cohill, some courts have "acknowledge[d] the district court's inherent power to remand a removed case when appropriate to enforce a forum selection clause." See Snapper, Inc. v. Redan, 171 F.3d 1249, 1263 n. 26 (11th Cir.1999) (discussing the decision in Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988), and the resulting decisions that 28 U.S.C. § 1447(c) did not state the exclusive grounds for remand); Foster, 933 F.2d at 1214-16 (finding remand based on a forum selection clause was lawful even though not specifically authorized by § 1447(c)); McDermott Int'l, Inc. v. Lloyds Underwriters, 944 F.2d 1199, 1203 (5th Cir.1991) (noting remand was appropriate in a case involving a forum selection clause). See also Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711-12, 116 S.Ct. 1712, 1718, 135 L.Ed.2d 1 (1996) (holding remand based on the non-statutory grounds — not specified by § 1447(c) — of abstention was lawful).
The decision to remand can turn on whether there has been a...
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Medicap Pharmacies, Inc. v. Faidley, 4:05 CV 00586.
...1207, 1219 (3d Cir.1991) (quoting M/S Bremen, 407 U.S. at 18, 92 S.Ct. at 1917); see also RK Dixon Co. v. Dealer Mktg. Servs., Inc., 284 F.Supp.2d 1204, 1209 (S.D.Iowa 2003). The Court cannot say that Defendants have presented any evidence that Iowa would be such an inconvenient forum that ......
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Taylor v. L&P Bldg. Supply of Las Cruces, Inc., CIV 14-0989 JB/CG
...of certain claims is inappropriate when removal jurisdiction is based onPage 26 diversity."); RK Dixon Co. v. Dealer Mktg. Servs., 284 F. Supp. 2d 1204, 1212-13 (S.D. Iowa 2003)(Gritzner, J.)(concluding that "a federal court cannot resort to a partial remand of an action that is properly be......
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Foreign Candy Co. v. Promotion in Motion, Inc., 12–CV–4107–DEO.
...is that the first-filed rule should apply in the absence of compelling circumstances. See RK Dixon Co. v. Dealer Mktg. Servs., Inc., 284 F.Supp.2d 1204, 1213–14 (S.D.Iowa 2003). No firm list of what factors constitute compelling circumstances exists, but in Northwest Airlines, Inc. v. Ameri......
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Lyngholm v. FedEx Ground Package Sys., Inc., 3:10–cv–00068–JEG.
...that may permissibly raise a venue challenge under Rule 12(b)(3). 2. Plaintiffs suggest that RK Dixon Co. v. Dealer Marketing Services, 284 F.Supp.2d 1204 (S.D.Iowa 2003), a case that was previously before this Court, is remarkably similar to the present case and urge the Court to similarly......
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Medicap Pharmacies, Inc. v. Faidley, 4:05 CV 00586.
...1207, 1219 (3d Cir.1991) (quoting M/S Bremen, 407 U.S. at 18, 92 S.Ct. at 1917); see also RK Dixon Co. v. Dealer Mktg. Servs., Inc., 284 F.Supp.2d 1204, 1209 (S.D.Iowa 2003). The Court cannot say that Defendants have presented any evidence that Iowa would be such an inconvenient forum that ......
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Taylor v. L&P Bldg. Supply of Las Cruces, Inc., CIV 14-0989 JB/CG
...of certain claims is inappropriate when removal jurisdiction is based onPage 26 diversity."); RK Dixon Co. v. Dealer Mktg. Servs., 284 F. Supp. 2d 1204, 1212-13 (S.D. Iowa 2003)(Gritzner, J.)(concluding that "a federal court cannot resort to a partial remand of an action that is properly be......
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Foreign Candy Co. v. Promotion in Motion, Inc., 12–CV–4107–DEO.
...is that the first-filed rule should apply in the absence of compelling circumstances. See RK Dixon Co. v. Dealer Mktg. Servs., Inc., 284 F.Supp.2d 1204, 1213–14 (S.D.Iowa 2003). No firm list of what factors constitute compelling circumstances exists, but in Northwest Airlines, Inc. v. Ameri......
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Lyngholm v. FedEx Ground Package Sys., Inc., 3:10–cv–00068–JEG.
...that may permissibly raise a venue challenge under Rule 12(b)(3). 2. Plaintiffs suggest that RK Dixon Co. v. Dealer Marketing Services, 284 F.Supp.2d 1204 (S.D.Iowa 2003), a case that was previously before this Court, is remarkably similar to the present case and urge the Court to similarly......