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K & S Associates, Inc v. Edwardsville Community Unit School District No. 7

January 10, 2012

K & S ASSOCIATES, INC., PLAINTIFF,
v.
EDWARDSVILLE COMMUNITY UNIT SCHOOL DISTRICT NO. 7, DEFENDANT.



The opinion of the court was delivered by: Herndon, Chief Judge:

MEMORANDUM AND ORDER

Pending before the Court are defendant Edwardsville Community Unit School District No. 7's motion to dismiss (Doc. 7)*fn1 and memorandum in support (Doc. 8) and plaintiff K&S Associates, Inc.'s motion to consolidate (Doc. 16). As the agreement forming the relevant relationship among the parties contains a valid forum selection clause, the Court GRANTS defendant's motion to dismiss. Accordingly, the Court renders plaintiff's motion to consolidate MOOT.

I. INTRODUCTION

The instant dispute arises from the parties' contractual relationship formed in September of 2007 (Doc. 2, p. 2). Plaintiff is a Missouri corporation with its principal place of business in Missouri. Defendant is a community unit school district located in Madison County, Illinois. Defendant awarded plaintiff a publicly bid contract for the construction of two elementary schools (Doc. 2, p. 2). The $21,141,000.00 construction contract contains a forum selection clause included as an amendment. The forum selection clause states:

DISPUTE RESOLUTION.

All references to arbitration are hereby deemed deleted. If a controversy or claim involving Contractor and either or both of Owner and Architect is not settled by means of negotiation, then the controversy or claim shall be resolved in accordance with the Dispute Resolution subject to procedures of Article 7 of the agreement between Architect and Owner, which calls for non-binding mediation followed by proceedings in court if mediation is not successful in resolving the controversy or claim. The parties agree that the forum for any judicial proceedings, if any, shall be the Madison County Circuit Court. A copy of the above-referenced Article 7 is hereto [sic] as "Amendment to Contract No. 1. (Doc. 9, p. 9) (emphasis added).

For purposes of clarity, the Court must relate the convoluted procedural history of the instant dispute and its connection to a related action currently pending before the Court. Generally, the parties dispute the adequacy of plaintiff's performance under the contract. Specifically, plaintiff alleges defendant owes it $357,601.00 under the terms of the contract (Doc. 2, p. 2). Thus, on July 13, 2011, plaintiff filed the instant breach of contract action based on diversity (Doc. 2). In response, defendant filed a related breach of contract action in the Third Judicial Circuit, Madison County, Illinois on August 3, 2011, pursuant to the forum selection clause. Plaintiff removed defendant's related action to this Court on September 2, 2011. See Edwardsville Cmty. Unit School Dist. # 7 v. K & S Assoc., Inc., No. 11-cv-806-DRH-DGW. Accordingly, defendant filed a motion to remand its action to Madison County based on the forum selection clause on October 3, 2011 (No. 11-cv-806, Doc. 11).*fn2

Turning to the instant dispute, defendant filed a motion to dismiss based on reasoning identical to its motion to remand Edwardsville Cmty. Unit School Dist. # 7 v. K & S Assoc., Inc., No. 11-cv-806, on August 26, 2011 (Doc. 7). Notably, plaintiff filed a motion to consolidate Edwardsville Cmty. Unit School Dist. # 7 v. K & S Assoc., Inc., No. 11-cv-806, with the instant action on September 8, 2011, due to the similarity of issues and parties (Doc. 16).*fn3 As plaintiff responded to defendant's motion to dismiss on September 26, 2011, it is ripe for resolution (Doc. 21).

II. ARGUMENTS

Defendant argues the forum selection clause mandates Madison County as the proper forum for disputes arising under the contract. Defendant relies on the contractual language, as it states Madison County "shall" be the forum for "any" disputes arising from the contract (Doc. 8, p. 4) (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 20 (1972)). Further, defendant argues the clause is valid and enforceable, as under Illinois law, "a forum selection clause is enforceable except in exceptional circumstances" (Doc. 8, p. 4) (citing Roberts & Schaefer Co. v. Merit Contracting, Inc., 99 F.3d 248, 252 (7th Cir. 1996)).

Defendant points to numerous factors in support of its contention that exceptional circumstances do not exist warranting non-enforcement of the clause. As plaintiff is a corporation that negotiates contracts in the regular course of its business, defendant cites to the parties' relative bargaining power. Further, defendant argues plaintiff foresaw enforcement of the clause at the time of the $21,141,000.00 contract's acceptance. Moreover, defendant argues Madison County is a court of competent jurisdiction physically located less than twenty miles from this Court. Accordingly, defendant argues enforcement of the clause will not deprive plaintiff of its day in court. Therefore, defendant seeks dismissal for improper venue pursuant to FED. R. CIV. PRO. 12(b)(3) (Doc. 8, pp. 4-6).

In response, plaintiff generally argues the Court should not enforce the forum selection clause, as it resulted from the unequal bargaining power of the parties (Doc. 21). Defendant awarded plaintiff the relevant contract through a public bidding process. Specifically, plaintiff argues the Illinois School Code forbid it from negotiating the terms of the contract.

Plaintiff relies on 105 ILL. COMP. STAT. 5/10-20.21 (2010), which requires school boards "[t]o award all contracts for purchases of supplies, materials or work . . . involving an expenditure in excess of $25,000 or a lower amount as required by board policy to the lowest responsible bidder, considering conformity with specifications, terms of delivery, quality and serviceability, after due advertisement" (Doc. 21, p. 2). Moreover, 105 ILL. COMP. STAT. 5/10-20.21 also states, "[a]ll competitive bids for contracts involving an expenditure in excess of $25,000 or a lower amount as required by board policy must be sealed by the bidder and be opened by a member or employee of the school board at a public bid opening at which the contents of the bids must be announced." Plaintiff cites to this statute in support of its contention that negotiation of the terms of the bid would have made the contract's award to plaintiff "illegal" (Doc. 21, p. 2).

Further, plaintiff argues the "bid package" submitted to all bidders included a document labeled "Instructions to Bidders," which stated, "the general contract will be awarded to the lowest responsible and eligible general bidder complying with the conditions and requirements provided in these instructions, the bid forms and other bid documents" (Doc. 21, p. 2). Accordingly, citing to Illinois case law holding, "bids must conform to the advertised requirements of the invitation to bid," plaintiff argues negotiation of the contract's terms was legally ...


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