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Edwardsville Community Unit School District #7 v. K&S Associates

January 10, 2012


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


Pending before the Court is plaintiff's motion to remand (Doc. 11) and memorandum in support (Doc. 12). Defendant naturally opposes remand (Doc. 18). As the agreement forming the relevant relationship among the parties contains a valid forum selection clause, the Court grants plaintiff's motion.


The instant dispute arises from the parties' contractual relationship formed in September of 2007 (Doc. 2-1, p. 2). Plaintiff is a community unit school district located in Madison County, Illinois. Defendant is a Missouri corporation with its principal place of business in Missouri. In August 2007, plaintiff sought bids for the construction of two elementary school buildings (Doc. 12, p. 1). The $21,141,000.00 construction contract, ultimately awarded to defendant, contains a forum selection clause included as an amendment. The forum selection clause states:


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. 11-2, p. 10) (emphasis added).

The parties dispute the adequacy of defendant's performance under the contract. An unsuccessful attempt at dispute resolution through mediation ensued on March 29, 2009 (Doc. 12, p. 3). Thus, on July 13, 2011, defendant filed a breach of contract action against plaintiff in this Court, distinct from the instant dispute, on the basis of diversity. See K&S Assoc., Inc. v. Edwardsville Cmty. Unit School Dist. No. 7, No. 11-cv-598-DRH-DGW.*fn1 In response, plaintiff filed the instant complaint in the Third Judicial Circuit, Madison County, Illinois on August 3, 2011 (Doc. 2-1). Evident from the instant dispute, defendant removed to this Court on September 2, 2011 (Doc. 2). Accordingly, pursuant to the forum selection clause and 28 U.S.C. § 1447(c), plaintiff motioned to remand to Madison County on October 3, 2011 (Doc. 11). Plaintiff also seeks its attorneys' fees and costs associated with removal pursuant to Section 1447(c). As defendant responded on November 7, 2011, the motion is ripe for resolution (Doc. 18).


Plaintiff argues both procedural and substantive bases necessitate remand. Procedurally, plaintiff argues defendant did not meet the requirements of 28 U.S.C. § 1446(a), as it did not attach a "copy of all papers and pleadings that [had] been filed and served in the State Court Action," to its notice of removal (Doc. 12, p. 4). Defendant did not attach a copy of the relevant contract containing the forum selection clause to its notice of removal, despite its alleged attachment to the summons and complaint served on defendant. Plaintiff argues this significant defect in the removal procedure necessitates remand, irrespective of the forum selection clause (Doc. 12, p. 6).

Substantively, plaintiff argues the forum selection clause mandates Madison County as the proper forum for disputes arising under the contract. Plaintiff relies on the contractual language, as it states Madison County "shall" be the forum for "any" disputes arising from the contract (Doc. 12, p. 7) (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972); Paper Express Ltd. v. Pfankuch Maschinen, 972 F.2d 753, 755 (7th Cir. 1992)). Further, plaintiff argues the clause is valid and enforceable, as under Illinois law, "a forum selection clause is enforceable except in exceptional circumstances" (Doc. 12, p. 7) (citing Roberts & Schaefer Co. v. Merit Contracting, Inc., 99 F.3d 248, 252 (7th Cir. 1996)).

Plaintiff points to numerous factors in support of its contention that no exceptional circumstances warrant non-enforcement of the clause. As defendant is a corporation that negotiates contracts in the regular course of its business, plaintiff cites to the parties' relative bargaining power. Further, plaintiff argues defendant foresaw enforcement of the clause at the time of the $21,141,000.00 contract's acceptance. Moreover, plaintiff argues Madison County is a court of competent jurisdiction physically located less than twenty miles from this Court. Accordingly, plaintiff argues enforcement of the clause will not deprive defendant of its day in court (Doc. 12, pp. 9-10).

Additionally, plaintiff argues the fact the parties' agreement arose from a public bidding process does not render the clause unenforceable. As courts have rejected the contention that forum selection clauses within contracts of adhesion are unenforceable based on their "take-it-or-leave-it" nature alone, plaintiff states the clause at issue is similarly enforceable. Plaintiff argues as defendant freely entered into the contract, the fact it "was a publicly bid construction project and not negotiated," does not require the Court to hold it unenforceable (Doc. 12, p. 10) (citing Muzumdar v. Wellness Int'l Network, Ltd., 438 F.3d 759 (7th Cir. 2006)). Thus, as the parties are of similar bargaining power and the clause did not result from traditional contractual infirmities such as fraud or mistake, plaintiff argues it is valid and enforceable (Doc. 12, p. 8) (citing Bremen, 407 U.S. at 18-19; Roberts, 99 F.3d at 254; MAC Funding Corp. v. Five Star Laser, Inc., No. 10-cv-1743, 2010 WL 4386860, *3 (N.D. Ill. Oct. 28, 2010)).

In response to plaintiff's procedural argument, defendant argues inexplicably, the complaint plaintiff served on it did not have the relevant contract attached. Further, as a copy of the contract was previously before the Court pursuant to defendant's filing of K&S Assoc., Inc., No. 11-cv-598, defendant argues the contract's omission from the notice of removal constitutes a "minor irregularity of no consequence" (Doc. 18, pp. 3-4) (citing Riehl v. Nat'l Mut. Ins. Co., 374 F.2d 739, 741 (7th Cir. 1967)).

Substantively, defendant incorporates its arguments made in opposition to the motion to dismiss currently pending in K&S Assoc., Inc., No. 11-cv-598. Generally, defendant argues the Court should not enforce the forum selection clause, as it resulted from the unequal bargaining power of the parties (No. 11-cv-598, Doc. 21).

Plaintiff awarded defendant the relevant contract through a public bidding process. Specifically, defendant argues the Illinois School Code forbid it from negotiating the terms of the contract. Defendant 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" (No.11-cv-598, 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 ...

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