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Allred v. Innovative Brokerage Network

United States District Court, D. Maryland

November 1, 2017

PAUL H. ALLRED et al., Plaintiffs,



         This case arises from claims for breach of contract and unjust enrichment. ECF 2 (Complaint), ¶¶ 3-4.[1] Plaintiffs Paul H. Allred and “American Health and Finance” (“AHF”)[2]allege that they entered into a distribution contract in September 2014 with defendant Innovative Brokerage Network (“IBN”), a Missouri Corporation, to sell insurance in exchange for sales commissions. Id. ¶¶ 3-4; see also ECF 13-1 (“Distributor Agreement”). According to plaintiffs, after about a year of doing business, IBN stopped payment of accrued commissions on plaintiffs' insurance sales. ECF 2, ¶¶ 6-8. This suit followed. Defendant answered the Complaint and counterclaimed against plaintiffs for breach of contract. ECF 7 at 3-4.

         Now pending is defendant's motion to transfer the case to the U.S. District Court for the Eastern District of Missouri, under 28 U.S.C. § 1404(a). ECF 8. The motion is supported by a memorandum. ECF 8-1 (collectively, “Motion”). In support of the transfer, IBN alleges that Allred signed a contract, a copy of which is attached to the Motion (ECF 8-2, the “Letter”), that contains a forum selection clause in which he “irrevocably consents to personal jurisdiction and venue in the state and federal courts located in St. Louis, Missouri, with respect to any actions, claims, or proceedings arising out of or in connection with [the] Letter.” ECF 8-2 at 2.

         Plaintiffs oppose the Motion, arguing that the Letter and its forum selection clause do not apply to the case at hand. ECF 12 (Response); ECF 13 (Memorandum) (collectively, “Opposition”). Rather, plaintiffs allege that the Distributor Agreement, a copy of which is attached to the Opposition (ECF 13-1), is the only contract applicable to this case, and it does not contain a forum selection clause. ECF 13 at 2. Defendant has replied. ECF 17 (“Reply”).

         No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I shall deny the Motion.

         I. Legal Standards

         In Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, __U.S.__, 134 S.Ct. 568, 580 (2013), the Supreme Court determined that “§ 1404(a) and the forum non conveniens doctrine provide appropriate enforcement mechanisms” for forum selection clauses. Section 1404(a) of Title 28 provides: “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.”

         In addressing a motion to transfer under § 1404(a), the district court must “weigh in the balance a number of case-specific factors.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). These include: “(1) the weight accorded to plaintiff's choice of venue; (2) witness convenience and access; (3) convenience of the parties; and (4) the interest of justice.” Tr. of the Plumbers and Pipefitters Nat. Pension Fund v. Plumbing Servs., Inc., 791 F.3d 436, 444 (4th Cir. 2015); see also, e.g., Mamani v. Bustamante, 547 F.Supp.2d 465, 469 (D. Md. 2008); Cross v. Fleet Reserve Ass'n Pension Plan, 383 F.Supp.2d 852, 856 (D. Md. 2005); Lynch, 237 F.Supp.2d at 617. Other factors include the “local interest in having localized controversies settled at home” and the “appropriateness in having a trial of a diversity case in a forum that is at home with the state law that must govern the action.” Stratagene v. Parsons Behle & Latimer, 315 F.Supp.2d 765, 771 (D. Md. 2004).

         In a motion to transfer venue pursuant to § 1404(a), the moving party bears the burden of showing, by a preponderance of the evidence, that transfer to another venue is proper. See Gilbert v. Freshbikes, LLC, 32 F.Supp.3d 594, 607 (D. Md. 2014); CoStar Realty Info., Inc. v. Meissner, 604 F.Supp.2d 757, 770 (D. Md. 2009); Lynch v. Vanderhoef Builders, 237 F.Supp.2d 615, 617 (D. Md. 2002). “In order to carry this burden, the movant should submit, for example, affidavits from witnesses and parties explaining the hardships they would suffer if the case were heard in the plaintiff's chosen forum.” Dow v. Jones, 232 F.Supp.2d 491, 499 (D. Md. 2002) (citing Helsel v. Tishman Realty & Constr. Co., 198 F.Supp.2d 710, 712 (D. Md. 2002)). As Judge Blake observed in Dow, 232 F.Supp.2d at 713, where the movant only provides “[m]ere assertions of inconvenience or hardship, ” it will not have met its burden.

         In most cases, the plaintiff's choice of forum is presumptively convenient, and “‘should rarely be disturbed.'” Mamani, 547 F.Supp.2d at 469 (quoting Collins v. Straight Inc., 748 F.2d 916, 921 (4th Cir. 1984)); see also SAS Inst., Inc. v. World Programming Ltd., 468 F. App'x 264, 266 (4th Cir. 2012). And, “[a] district court has discretion to decide motions to transfer based on ‘an individualized, case-by-case consideration of convenience and fairness.'” United States ex rel. Salomon v. Wolff, RWT-06-1970, 2017 WL 3129418, at *2 (D. Md. July 24, 2017) (quoting Stewart, 487 U.S. at 29) (internal quotation marks and citation omitted).

         However, the Supreme Court said in Atlantic Marine, 134 S.Ct. at 581 (citation omitted), that “[t]he calculus changes . . . when the parties' contract contains a valid forum-selection clause, which “represents the parties' agreement as to the most proper forum.” In that circumstance, “‘a valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases.'” Id. (alteration in original) (quoting Stewart, 487 U.S. at 33).

         “The presence of a valid forum-selection clause requires district courts to adjust their usual § 1404(a) analysis in three ways.” Id. “First, the plaintiff's choice of forum merits no weight.” Id. Second, the court “should not consider arguments about the parties' private interests.” Id. at 582. Third, where the plaintiff's original choice of venue contravenes the forum selection clause, transfer to the proper venue “will not carry with it the original venue's choice-of-law rules.” Id.

         Notably, however, only a “valid” forum selection clause is given controlling weight. Id. at 581. “Forum selection clauses are enforced only when they encompass the claim at issue.” Light v. Taylor, 317 F. App'x 82, 83 (2d Cir. 2009) (citation omitted). Where a forum selection clause does not apply to the dispute in a case, a motion to transfer is evaluated under the conventional § 1404(a) factors. See, e.g., Steinmetz v. McGraw-Hill Glob. Educ. Holdings, LLC, 220 F.Supp.3d 596, 606 (E.D. Pa. 2016).

         In interpreting a forum selection clause, federal common law generally applies. This is because a forum selection agreement “implicate[s] the appropriate venue of a court, ” which is a procedural matter governed by federal rule and statutes. Albemarle Corp. v. AstraZeneca UK Ltd., 28 F.3d 643');">628 F.3d 643, 650 (4th Cir. 2010). See also Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir. 1988) (“[B]ecause enforcement of a forum clause necessarily entails interpretation of the clause before it can be enforced, federal law also applies to interpretation of forum selection clauses.”). But see Abbott Labs. v. Takeda Pharm. Co., 476 F.3d 421, 423 (7th Cir. 2007) (stating that the law of the jurisdiction “whose law governs the rest of the contract” determines the validity of a forum selection clause).

         The parties do not address what law should apply to the interpretation of the documents presented. However, the Letter clearly states that “this Letter shall be governed by and construed in accordance with the laws of the State of Missouri.” ECF 8-2 at 2. “The guiding principle of contract interpretation under Missouri law is that a court will seek to ascertain the intent of the parties and to give effect to that intent.” Triarch Indus., Inc. v. Crabtree, 158 S.W.3d 772, 776 (Mo. 2005) (en banc). “‘The intent of the parties is presumed to be expressed by the natural and ordinary meaning of the language in the contract.'” Campus Lodge of Columbia, Ltd. v. Jacobson, 319 S.W.3d 549, 552 (Mo.Ct.App. 2010) (quoting Parker v. Pulitzer Pub. Co., 882 S.W.2d 245, 249 (Mo.Ct.App. 1994)).

         If a contract is unambiguous, neither parol nor extrinsic evidence may be considered. Allison v. Flexway Trucking, Inc., 28 F.3d 64, 67 (8th Cir. 1994). Rather, extrinsic evidence may be used to aid interpretation only if a contract is ambiguous. Press Machinery Corp. v. Smith R.P.M. Corp., 727 F.2d 781, 784 (8th Cir. 1984). “‘An ambiguity exists when there is more than one reasonable interpretation which can be gleaned from the ...

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