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Bio Town Ag Inc. v. Livestock Water Recycling Inc.

United States District Court, N.D. Indiana, Hammond Division, Lafayette

January 10, 2020

BIO TOWN AG INC., Plaintiff,
v.
LIVESTOCK WATER RECYCLING INC., Defendant.

          OPINION AND ORDER

          JAMES T. MOODY JUDGE

         This matter is before the court on defendant's motion to dismiss on grounds of forum non conveniens. (DE # 15.) For the reasons identified below, the motion is denied.

         I. BACKGROUND

         Plaintiff Bio Town Ag, Inc. (“Bio Town”) filed the present breach of contract suit against defendant Livestock Water Recycling, Inc. (“LWR”), alleging that a manure treatment and water reclamation system it purchased from LWR failed to operate as promised. (DE # 1.) In response, LWR filed a motion to dismiss, arguing that the parties' contract contained a forum-selection clause that mandates that this matter be litigated in Alberta, Canada. (DE # 15.) Bio Town disputes that the forum-selection clause was part of the parties' agreement. The following facts are undisputed, for purposes of resolving the pending motion to dismiss.

         In January 2013, Bio Town contacted LWR for information on its manure treatment and water reclamation systems. (DE # 1 at 3.) On January 14, 2013, LWR provided Bio Town with a document entitled, “Proposal for the Supply of a Digestate Treatment System for 30 Million Gallons Annually” (“the Proposal”). (Id.) In the Proposal, LWR offered a refurbished treatment system for $753, 000. (Id. at 4.) The Proposal also stated that Bio Town's cost for operation of the water treatment system could be as high as $0.02 per gallon, with a chemical cost of up to $0.018 per gallon. (Id. at 3-4.)

         The Proposal contained LWR's “Standard Terms and Conditions of Sale” (“Standard Terms”). (DE # 1-1 at 12-13.).[1] Clause 1 of the Standard Terms stated that the Standard Terms would apply to any contract concluded with any purchaser, to the exclusion of all other inconsistent terms and conditions. (Id. at 12.) Clause 2 of the Standard Terms stated that the Standard Terms would apply whether the contract for sale was concluded by LWR's acceptance of the purchaser's purchase order, or by acceptance by the purchasers of LWR's Proposal. (Id.) The Standard Terms also stated that the Standard Terms could only be modified upon written agreement by LWR. (Id.) Finally, the Standard Terms contained a forum-selection clause, mandating that any litigation between the parties be brought and maintained exclusively in the courts of Alberta, Canada. (Id. at 13.)

         A representative from Bio Town expressed interest in purchasing a LWR water reclamation system, but on terms different than those contained in the Proposal. (DE # 1 at 4.) On March 1, 2013, representatives of Bio Town and LWR reached an oral agreement that was memorialized in an email (“the Email”) later the same day. (DE # 1 at 4.) The subject-line of the email was: Verbal Go Ahead. (DE # 1-2.)

         The terms the parties ultimately agreed to, as memorialized in the Email, were different than those contained in the Proposal in three material respects. First, the Proposal offered a refurbished water reclamation system for $753, 000, but the parties ultimately agreed that Bio Town would purchase the system for $735, 000. (Id.) The Proposal stated that Bio Town's on-going chemical cost would be as high as $0.018 per gallon, but the parties ultimately agreed that this cost would be $0.015 per gallon. (Id.) Finally, Bio Town argues that on March 1st the parties agreed to a warranty that was different than the warranty contained in the Proposal.

         Bio Town made two deposit payments to LWR in March 2013. (DE # 1 at 5.) On April 19, 2013, around the time that the LWR system was delivered, LWR provided Bio Town with a document for Bio Town to sign. (DE # 1 at 5; DE # 1-3.) Bio Town characterizes the document as a “draft written agreement.”[2] (DE # 1 at 4.) Bio Town objected to signing the Draft Agreement on the basis that it incorporated by reference the Proposal, which contained terms that the parties had not agreed to, and that contradicted the terms of the parties' March 1st agreement; specifically, the warranty and cost provisions that the parties agreed to on March 1st. (Id. at 6.) LWR's position is that Bio Town accepted the terms of its Proposal when it reached an agreement on March 1st and the Draft Agreement merely formalized the terms to which the parties had already agreed. (DE # 16 at 6-7.) Despite Bio Town's refusal to sign the Draft Agreement, the parties proceeded with their relationship. (DE # 1 at 6.)

         Bio Town subsequently brought the present lawsuit, alleging that LWR's water reclamation system failed to function in the manner guaranteed by LWR. (DE # 1.) LWR filed a motion to dismiss based on forum non conveniens. (DE # 15.) This matter is fully briefed and is ripe for ruling.

         II. ANALYSIS

         Bio Town, as the party resisting application of the forum-selection clause, bears the burden of establishing that transfer to Alberta is unwarranted. Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 571 U.S. 49, 63 (2013) (“[T]he plaintiff must bear the burden of showing why the court should not transfer the case to the forum to which the parties agreed.”). This raises a predicate question, however, of whether the parties agreed to the forum-selection clause. Bio Town contends that it did not. Thus, the court must first determine whether the forum-selection clause was part of the parties' agreement.

         Contractual interpretation is a substantive matter governed by state law. Coplay Cement Co. v. Willis & Paul Grp., 983 F.2d 1435, 1438 (7th Cir. 1993). The burden of proof on a matter of state law, is governed by state law. See James River Ins. Co. v. Kemper Cas. Ins. Co., 585 F.3d 382, 384-85 (7th Cir. 2009); Roberts & Schaefer Co. v. Merit Contracting, Inc., 99 F.3d 248, n. 2 (7th Cir. 1996).

         Under Indiana law, a party seeking to enforce a term of a contract bears the burden of establishing the existence of the term in the parties' agreement. See e.g., Gabriel v. Windsor, Inc., 843 N.E.2d 29, 45 (Ind.Ct.App. 2006) (“The party seeking rescission of a contract bears the burden of proving his right to rescind and his ability to return any property received under the contract.”); Sanford v. Castleton Health Care Ctr., LLC, 813 N.E.2d 411, 416 (Ind.Ct.App. 2004) (“[U]nder Indiana contract law, the party seeking to compel arbitration has the burden of demonstrating the existence of an enforceable ...


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