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GKD-USA, Inc. v. Coast Machinery Movers

United States District Court, D. Maryland

August 27, 2015


          For GKD-USA, Inc., Plaintiff: William Wallace McAllister, Jr, LEAD ATTORNEY, Miles and Stockbridge PC, Cambridge, MD; Jessica A duHoffmann, Miles and Stockbridge PC, Baltimore, MD.

         For Coast Machinery Movers, Defendant: Marisa Anne Trasatti, LEAD ATTORNEY, Semmes Bowen and Semmes PC, Baltimore, MD.

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         William M. Nickerson, Senior United States District Judge.

         Before the Court is Defendant Coast Machinery Movers' " Motion to Dismiss in Favor of Arbitration, or in the Alternative to Dismiss for Improper Venue, for Lack of Personal Jurisdiction, or to Transfer Based on Forum Non Conveniens." ECF No. 13. Also pending is a Motion to Remand filed by Plaintiff GKD-USA, Inc. ECF No. 16. Upon a review of the papers filed and the relevant case law, the Court determines that no hearing is necessary, Local Rule 105.6, and that Defendant's motion should be denied, Plaintiff's motion should be granted, and that this case will be remanded to the Circuit Court for Dorchester County, Maryland.

         The relationship between Plaintiff and Defendant is potentially governed by three different agreements and each of those agreements contains a provision that differs as to the forum in which disputes between the parties should be resolved. At issue in the pending motions is which of

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those provisions govern the instant dispute. The relevant factual background follows.

         This dispute arises out of a construction project on a large wind tunnel located in Hawthorne, California (the Project). The tunnel is owned by Northrop Grumman Systems Corporation (Northrop) and is equipped with 7 flow conditioning screens which are approximately 37-feet in diameter and help to reduce wind turbulence during the testing of aircraft. The object of the Project was to remove and replace those screens. Defendant is the California based company hired by Northrop to lift, disassemble, and reassemble the tunnel. The 24-page Prime Contract between Northrop and Defendant dated April 23, 2014, provides that: " Either party may litigate any dispute arising under or relating to this order. Such litigation shall be brought and jurisdiction and venue shall be proper only in a state or federal district court in Los Angeles County." ECF No. 13-5 ¶ 13. The Prime Contract also provides that " [t]his Order and any dispute arising hereunder shall be governed by the substantive and procedural laws of the State of California, except, however, that California's Choice of Law provisions shall not apply." Id. ¶ 29.

         Defendant, in turn, hired Plaintiff, a Maryland based company, to manufacture and install the flow conditioning screens. The screens were actually manufactured in Germany by one of Plaintiff's affiliates and shipped directly to California but Plaintiff's personnel were in California for about three weeks to install the screens. The specifications for the screens and the scope of Plaintiff's installation duties are set out in a 29-page Subcontract Agreement, Subcontract No. 14-17240-050501-1, which is dated April 29, 2014. That Subcontract Agreement provides that:

If, at any time any controversy shall arise between CONTRACTOR and SUBCONTRACTOR regarding anything pertaining to this Agreement and which the parties hereto do not promptly adjust and determine . . . then . . . [t]he controversy shall be submitted to and determined by arbitration in the City first above named under the Construction Industry Arbitration Rules of the American Arbitration Association, then obtaining an AWARD, the parties hereto agree to be bound by the Award in such Arbitration.
In addition, SUBCONTRACTOR shall be bound to CONTRACTOR to the same extent CONTRACTOR is bound to OWNER, by all terms and provisions of the Prime Contract and be expressly bound by any provision thereunder to arbitrate.

ECF No. 13-6, Art. 27. The " city first named above" is South El Monte, California, which is where Defendant's administrative offices are located.

         According to Plaintiff, notwithstanding its proper installation of the screens, Defendant has refused to pay Plaintiff an outstanding balance of $155,904.09.[1] To recover that outstanding balance, Plaintiff filed this suit in the Circuit Court for Dorchester County, Maryland. Defendant timely removed the action to this Court asserting this Court's diversity jurisdiction under 28 U.S.C. ยง 1332. Defendant then filed the instant motion to dismiss arguing that the dispute must be submitted to arbitration under the arbitration provision in the Subcontract. In the alternative, Defendant argues that this action must be ...

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