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Harding Materials, Inc. v. Reliable Asphalt Products, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

February 6, 2017




         This matter is before the Court on Defendant's Motion to Dismiss. [Dkt. 8.] For the following reasons, the Magistrate Judge recommends that the Court DENY Defendant's Motion.

         I. Background

         This diversity case arises out of a dispute over a contract (the “Contract”) to renovate Plaintiff's asphalt plant and expand its production capacity. [Dkt. 1-1.] Plaintiff alleges that Defendant poorly designed and installed the upgrades to Plaintiff's plant, causing frequent shut downs and loss of business. [Id.] Plaintiff, an Indiana citizen, brought suit in Indiana state court, alleging breach of contract, breach of warranties, and professional negligence. [Id.] Defendant, a Kentucky citizen, removed the matter to this Court [Dkt. 1] and filed the instant motion to dismiss [Dkt. 8], citing the Contract's forum-selection clause which provides (in all capital letters) that “any litigation arising hereunder shall be filed in a court of law or equity in Jefferson County, Louisville, Kentucky” [Dkt. 1-1 at 48.] The Contract also contains a choice-of-law clause (also in all capital letters), providing that the Contract is “deemed to be made in Kentucky and governed by Kentucky law.” [Dkt. 1-1 at 47.]

         II. Discussion

         Defendant initially filed the instant Motion in reliance upon Federal Rule of Civil Procedure 12(b)(3), which permits a party to move to dismiss an action for improper venue. As Plaintiff explained in response, however, Rule 12(b)(3) only countenances a motion to dismiss where the venue contravenes the federal venue statute-not where the venue contravenes a private forum-selection clause. See Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for the W. Dist. Of Tex., 134 S.Ct. 568 (2013).

         Nonetheless, Plaintiff proceeded to address Defendant's Motion on its merits and contends that Indiana's anti-venue statute, Ind. Code § 32-28-3-17, voids both the forum selection and choice-of-law clauses. Plaintiff maintains in the alternative that the anti-venue statute expresses a “strong public policy” of this forum, such that enforcement of the clauses would be inappropriate. [Dkt. 14 at 7.]

         In reply, Defendant acknowledges that Atlantic Marine precludes a motion for dismissal under Rule 12(b)(3) on the basis of the forum-selection clause. Defendant, however, asks the Court to treat its Motion as a motion for dismissal for forum non conveniens. Defendant expressly disavows any interpretation of its Motion as one for transfer pursuant to 28 U.S.C. § 1404(a), arguing instead that dismissal rather than transfer is appropriate because the forum selection clause contemplates only a state-court forum.[1]

         Despite its clear representation that the forum selection clause does not allow this matter to be maintained in a federal court in Kentucky, Defendant repeatedly asks the Court to treat its Motion “as one made pursuant to [28 U.S.C.] § 1404(a), ” which is the federal change of venue statute. [Dkt. 20 at 1.] Section 1404(a) permits transfer of cases, not dismissal, and is a partial codification of the common law forum non conveniens doctrine. A federal court may transfer a matter under § 1404(a) only to another federal judicial district. Section 1404(a) does not allow a federal court to transfer a case to a state court. In light of Defendant's representations that the Contract's forum-selection clause only allows this case to be brought in a state court in Jefferson County, Kentucky [e.g. Dkt. 9 at 6-7; Dkt. 20 at 4-5], § 1404(a) cannot provide Defendant any relief in this case.

         The “residual doctrine” of forum non conveniens persists of its own accord, though it generally requires “the same balancing-of-interests” test as § 1404(a). Atl. Marine, 134 S.Ct. at 580. Because the response and reply briefs fully develop arguments on the relevant issues, the Court finds it appropriate to treat Defendant's Motion as a motion for dismissal for forum non conveniens.

         If Plaintiff is correct that the anti-venue statute applies or that the forum-selection clause is otherwise unenforceable, then Defendant's Motion must be denied because Plaintiff makes no other argument in support of dismissal. The Court therefore first addresses whether state law or federal law applies. Second, the Court addresses whether the forum-selection clause is enforceable under applicable law. Finally, the Court addresses whether dismissal is appropriate for forum non conveniens.

         A. Applicable Law

         Plaintiff argues that Indiana Code section 32-28-3-17 voids the forum selection and choice of law clauses. In the alternative, Plaintiff argues that enforcement of the clauses would contravene Indiana's public policy. Defendant, in reply, responds that section 32-28-3-17 does not affect the result in this case because federal law applies to determine the validity of a forum-selection clause.

         Thus, the first issue to resolve is whether federal or state law applies in determining whether the forum-selection clause is valid and enforceable. Defendant's argument relies upon a tandem of Supreme Court cases addressing forum-selection clauses: Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988), and Atlantic Marine, 134 S.Ct. 568 (2013). The more recent case, Atlantic Marine, held that the factors a court must consider in ruling on motions pursuant to § 1404(a) or forum non conveniens change dramatically “when the parties' contract contains a valid forum-selection clause.” 134 S.Ct. at 581 (emphasis added). In fact, the entire Atlantic Marine “analysis presupposes a contractually valid forum-selection clause.” Id. at 581 n.5 ...

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