JOHN R. KOLB, JR. Plaintiff,
ACRA CONTROL, LTD., d/b/a ACRA CONTROL, INC., et al., Defendants.
PAUL W. GRIMM, District Judge.
This Memorandum Opinion addresses the Motion to Dismiss, or, in the Alternative, for Summary Judgment, ECF No. 7, that Defendants ACRA Control, Ltd., ACRA Control, Inc. and Curtiss-Wright Controls, Inc. filed; Plaintiff John R. Kolb, Jr.'s Opposition, ECF No. 14; and Defendants' Reply, ECF No. 18. Having reviewed the filings, I find that a hearing is unnecessary in this case. See Loc. R. 105.6. For the reasons stated herein, Defendants' Motion to Dismiss the Complaint under Fed.R.Civ.P. 12(b)(3) is DENIED, without prejudice. Defendants' Motion for Summary Judgment as to Defendant Curtiss-Wright Controls, Inc. is GRANTED, and Defendants' Fed.R.Civ.P. 12(b)(6) Motion to Dismiss the claim against ACRA Control, Inc. is GRANTED. Remaining Defendant ACRA Control, Ltd. is not precluded from re-raising its arguments as to venue in a renewed motion at the conclusion of discovery.
Plaintiff brought this case, sounding in breach of contract, against "ACRA Control, Ltd. dba ACRA Control, Inc." and "Curtiss-Wright Controls, Inc." Compl. 1, ECF No. 1. ACRA Control, Inc. ("ACRA U.S.A.") was formed as a Maryland corporation and subsidiary of ACRA Control Ltd. ("ACRA Ireland"), an Irish company. Id. ¶ 2. ACRA Ireland and its subsidiary are companies that "suppl[y] airborne data acquisition networks and recording systems and real-time data processing ground stations to the aerospace industry." Id .; see Fergal Bonner Aff. ¶ 2, Def.'s Mem. Ex. 1, ECF No. 7-3. According to Plaintiff, Defendant Curtiss-Wright Controls, Inc. ("Curtiss-Wright U.S.A."), a Delaware corporation, acquired ACRA Ireland in 2011. Compl. ¶¶ 2-3.
Plaintiff and ACRA Ireland entered into an Employment Agreement and a Performance Incentive Compensation Plan ("PICP") when ACRA Ireland hired Plaintiff to be ACRA U.S.A's president in 1999. Id. ¶ 6. The PICP is the contract at issue in this case. It provides, inter alia, that, "for a minimum of five (5) years during the period of employment unless mutually agreed in writing, " Plaintiff could purchase shares in ACRA Ireland "when the average turnover (ATO) of the company due to U.S. sales, as defined, exceeds one million ($1, 000, 000) dollars." PICP 1, Compl. Ex. A, ECF No. 1-1 (emphasis removed). Plaintiff alleges that Defendants breached the PICP because, although Plaintiff worked for ACRA Ireland until 2011 and the ATO from U.S. sales exceeded one million dollars for fiscal years 2004-2010, he was not granted the option to purchase shares for any of those years. Compl. ¶¶ 11 & 13. He maintains that, if he had been granted the options he was promised, he would have acquired a five percent interest in the company, which he claims "was the intent of both parties." Id. ¶ 15.
Defendants moved to dismiss Plaintiff's Complaint for improper venue pursuant to Fed.R.Civ.P. 12(b)(3), or, alternatively, to dismiss or enter summary judgment on the claims against Curtiss-Wright U.S.A. and ACRA U.S.A. Defs.' Mem. 9.
Defendants contend that, in 2003 and again in 2010, Plaintiff and ACRA Ireland executed Option Agreements for Plaintiff to purchase shares of ACRA Ireland. Defs.' Mem. 5-7. They state that the 2010 Option Agreement contained a forum selection clause in which "the parties... submit[ted] to the exclusive jurisdiction of the Irish courts." 2010 Agr. § 1.4, Defs.' Mem. Ex. 12, ECF No. 7-14. The 2003 Option Agreement contained the same clause. 2003 Agr. § 1.4, Defs.' Mem. Ex. 8, ECF No. 7-10. Defendants also argue that Plaintiff signed a Notice of Option Exercise ("Notice"), which includes a forum selection clause. Defs.' Mem. 6-7 & Ex. 13, ECF No. 7-15. In the Notice, Plaintiff exercised his right to purchase shares of ACRA Ireland at the time of its acquisition by Curtiss-Wright Controls (UK) Limited ("Curtiss-Wright UK"), Notice ¶¶ 1 & 4;stated that "apart from the Option and the 100 Shares of which I am the legal and beneficial owner, I have no other rights or entitlements in respect of Shares, " id. ¶ 6; "agree[d] that this Notice of Option Exercise shall be governed by and construed in accordance with Irish law"; and "confirm[ed] [his] irrevocable submission to the exclusive jurisdiction of the courts of Ireland in respect to any action, suit or proceeding arising out of or in connection with this Notice of Option Exercise, " id. ¶ 7.
Additionally, Defendants argue that Plaintiff, as a shareholder of ACRA Ireland, was party to the 2011 Share Purchase Agreement ("SPA") between Curtiss-Wright UK and ACRA Ireland's shareholders, and the SPA also contains a forum selection clause. Defs.' Mem. 7-8 & Ex. 14, ECF No. 7-16. The SPA provided that the shareholders, including Plaintiff, "irrevocably waive[d] any claims against [ACRA Ireland] its agents, or employees, " SPA 19, § 5.6, and warranted that "there is no agreement, arrangement or obligation in force which calls for the present or future allotment, issue or transfer of, or the grant to any person of the right... to call for the allotment, issue or transfer of, any share" of ACRA Ireland, id. at 46, Sched. A, § 3.1. Moreover, in the SPA, the parties "irrevocably agree[d] that the courts of Ireland are to have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement and, for such purposes, irrevocably submit[ted] to the exclusive jurisdiction of such courts." Id. at 33, § 14.14. Thus, Defendants argue that, after entering into his initial employment agreement and PICP with ACRA Ireland, Plaintiff signed "multiple, subsequent employment agreements" and other documents concerning stock options, in which "he expressly waived and released any claim to an option under the 1999 PICP and warranted that no such claim exists." Defs.' Mem. 5 & 9. In Defendants' view, "these documents, not the PICP, now control Plaintiff's relationship with Defendants." Id. at 9.
Plaintiff does not dispute that the later documents had forum selection clauses, but rather counters that "the venue clauses from the completely unrelated... SPA and the 2010 Notice of Option Exercise have no bearing on this dispute." Pl.'s Opp'n 2. In Plaintiff's view, "venue is proper in this court because a substantial part of the events or omissions giving rise to the claim occurred in Maryland" and "at least one defendant is a Maryland corporation, namely ACRA Controls, Inc[.]" Id.
As Defendants note, insofar as their motion to dismiss is based on two forum selection clauses, it is a Rule 12(b)(3) motion to dismiss for improper venue. Sucampo Pharms., Inc. v. Astellas Pharma, Inc., 471 F.3d 544, 550 (4th Cir. 2006); CSS Antenna, Inc. v. Amphenol-Tuchel Electronics, GmbH, 764 F.Supp.2d 745, 751 (D. Md. 2011). "Treating a motion to dismiss based on a forum selection clause under 12(b)(3) allows the court to freely consider evidence outside the pleadings.'" CSS Antenna, 764 F.Supp.2d at 751 (quoting Sucampo Pharm., 471 F.3d at 549-50). In reviewing a motion to dismiss for improper venue, the Court views the facts and draws all inferences in the light most favorable to the non-moving party. Rihani v. Team Express Distributing, LLC, 711 F.Supp.2d 557, 558 (D. Md. 2010).
Because the validity of the forum selection clauses in the later agreements is undisputed, the issue is whether those clauses govern the forum for resolution of the breach of contract action pending before this Court, when the contract at issue, the PICP, does not have a forum selection clause. Alliance Solutions, Inc. v. Quest Software, Inc., No. ELH-11-2115, 2012 WL 692883 (D. Md. Mar. 1, 2012), is informative. There, the plaintiff erroneously attached a 2006 contract to its complaint for breach of contract, rather than the 2003 contract that it claimed the defendant breached. Id. at *1. The defendant moved to dismiss for improper venue, based on the forum selection clause in the 2006 contract. Id. The court allowed the plaintiff to amend to refer to and attach the 2003 contract and denied the defendant's motion to dismiss as moot, reasoning that "[b]ecause Alliance no longer seeks to enforce the 2006 Contract, that agreement's forum selection clause is not controlling." Id. at *11. The court noted that "[i]t may be that Quest ultimately will prevail in its contention that the 2006 Contract superseded the 2003 Contract. However, in my view, that determination cannot be made without affording the parties an opportunity for discovery." Id. at *11 n.20.
A review of Sucampo Pharmaceuticals, 471 F.3d 544, also is instructive. There, as in the case before this Court, the plaintiff did not "dispute the validity of the forum-selection agreement, " which was contained in an Amended Basic License Agreement. Id. at 545 & 550. Instead, it "argue[d] that the instant case [wa]s not governed by the clause because the dispute [arose] under the Safety Agreement, " which did not contain a forum-selection clause, and the Safety Agreement was "not incidental to the Amended Basic License Agreement." Id. The Fourth Circuit observed that "[t]he Safety Agreement explicitly note[d] that it was executed under the Basic Agreement, ' with a term concurrent with the Basic Agreement, " and that "[t]here is no dispute that the Amended Basic License Agreement is a successor agreement to the Basic Agreement, " such that the Safety Agreement "had no independent validity apart from the continued validity of the Basic Agreement" and was "subordinate to the Amended Basic License Agreement." Id. at 550. The ...