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Allen & Co., LLC v. Sanford USD Medical Center

December 18, 2008

ALLEN & COMPANY, LLC, PLAINTIFF,
v.
SANFORD USD MEDICAL CENTER FORMERLY KNOWN AS SIOUX VALLEY HOSPITAL AND USD MEDICAL CENTER, DEFENDANT.



The opinion of the court was delivered by: Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Plaintiff Allen & Company, LLC, brought the underlying action as a two-count complaint in the Circuit Court of the Eighteenth Judicial Circuit, DuPage County, Illinois. Defendant Sanford Medical Center removed the action to this court pursuant to 28 U.S.C. § 1441(b) and now moves for abstention under the Colorado River doctrine. Plaintiff has not responded to defendant's motion, but instead has moved to remand to the state court for lack of subject matter jurisdiction pursuant to 28 U.S.C. § 1447(c). For the reasons discussed herein, plaintiff's motion to remand is denied and defendant's motion to stay is granted.

FACTS

On August 30, 2004, defendant Sanford Medical Center, located in Sioux Falls, Minnehaha County, South Dakota, entered into a 60- month license agreement (the "Agreement") with Biosafe Medical Technologies, Inc. ("BioSafe"). Under the terms of the Agreement, Biosafe licensed various cholesterol testing technologies to defendant and defendant agreed to pay a monthly fee of $1,250 for the first year and $6,250 per month for the remainder of the term. In addition, under Addendum 1 of the Agreement, Biosafe guaranteed defendant that defendant would receive $22,500 in gross revenues from the cholesterol determinations in the first year and $27,000 in gross revenues for each calendar quarter beginning September 1, 2005, or Biosafe would pay defendant the shortfall of these revenues.

With defendant's knowledge, Biosafe assigned the right to the monthly fees due under the Agreement from defendant to First Commercial Capital Corp. ("First Commercial"). Thereafter, First Commercial assigned its right to the monthly payments to plaintiff.*fn1

Defendant made the required monthly payments through January 31, 2008, but allegedly still owes plaintiff $111,641.99. Defendant discontinued payments because BioSafe allegedly failed to refer cholesterol determinations to defendant and did not pay defendant the guaranteed quarterly revenues totaling $259,938.99.

On February 22, 2008, defendant filed a complaint in the Circuit Court of the Second Judicial Circuit, Minnehaha County, South Dakota, alleging claims for breach of contract (Count I) and declaratory judgment against BioSafe, Delphi, and First Commercial (Count II). Defendant amended its complaint substituting plaintiff for Delphi and First Commercial and adding a new claim against BioSafe and plaintiff for civil conspiracy and unjust enrichment (Count III).

On July 11, 2008, plaintiff filed the instant complaint in the Circuit Court of the Eighteenth Judicial Circuit, Chancery Division, DuPage County, Illinois, alleging claims for declaratory judgment (Count I) and breach of contract (Count II). Defendant removed the instant action pursuant to 28 U.S.C. § 1441(b), from the state court. Plaintiff has moved to remand, pursuant to 28 U.S.C. §§ 1441, 1446, and § 1447(c), for lack of jurisdiction, and defendant has moved to stay the action.

DISCUSSION

Motion to Remand

Removal of a state claim to federal court is proper only when the claim could have been filed in a federal court with original subject matter jurisdiction. Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) (citing 28 U.S.C. § 1441(a)). Absent jurisdiction, the case must be remanded to the state court. 28 U.S.C. § 1447(c).

Federal district courts have original subject matter jurisdiction when there is complete diversity of citizenship and the amount in controversy exceeds $75,000, or when the claim raises a federal question. Chirico v. Ceramic Tile Layers Union, Local 67, 13 F.Supp.2d 798, 799 (N.D.Ill. 1998) (citing 28 U.S.C. §§ 1331-1332). Here, the parties agree that diversity of citizenship is satisfied because plaintiff is based in Illinois, defendant is located in South Dakota, and the amount in controversy is $111,641.99. Further, there is no dispute that defendant's notice of removal was timely filed. 28 U.S.C. § 1332(a). The parties also do not dispute that the forum selection clause is valid and enforceable.*fn2

Plaintiff bases its motion to remand on paragraph 16 of the Agreement, which provides: LESSEE WAIVES TRIAL BY JURY AND SUBMITS TO THE JURISDICTION OF THE FEDERAL COURTS OF COMPETENT JURISDICTION OR ANY STATE COURT WITHIN THE STATE OF ILLINOIS AND WAIVES ANY RIGHT TO ASSERT THAT ANY ACTION INSTITUTED BY LESSOR IN ANY SUCH COURT IS IN THE IMPROPER VENUE OR SHOULD BE TRANSFERRED TO A MORE CONVENIENT FORUM.

Plaintiff claims that paragraph 16 waived defendant's right to object to venue in the Circuit Court of DuPage County or to assert that venue should be transferred. Plaintiff argues that this court lacks subject matter jurisdiction over the instant case because the forum selection clause is mandatory. Defendant counters that under its plain language paragraph 16 is permissive, not mandatory and that ...


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