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Titus Capital I, Lllp v. Signco

United States District Court, Seventh Circuit

October 30, 2013

TITUS CAPITAL I, LLLP, Plaintiff,
v.
SIGNCO, Defendant.

MEMORANDUM & ORDER

WILLIAM D. STIEHL, District Judge.

Before the Court is defendant SignCo's motion to transfer this action to the United States District Court for the District of Nebraska pursuant to 28 U.S.C. ยง 1404(a) (Doc. 12) and brief in support (Doc. 13). Plaintiff Titus Capital I, LLLP ("Titus") filed a memorandum in opposition to defendant's motion to transfer venue (Doc. 16), and defendant filed a reply (Doc. 19). Plaintiff also filed a motion for leave to file supplemental authority (Doc. 25), to which defendant did not file a response.

BACKGROUND

The plaintiff is a Florida limited liability limited partnership with its principal place of business in Madison County, Illinois. Defendant is a Nebraska corporation with its principal place of business in Nebraska.[1]

On or about May 16, 2012, the defendant entered into an Asset Purchase Agreement with one of the plaintiff's subsidiaries, Titus Capital Partners, LLC, in order to sell substantially all of defendant's business assets. SignCo is in the business of selling and servicing advertising and display systems, scoring systems, and scoring tables. (Doc. 17). Titus Capital Partners, LLC subsequently assigned this Asset Purchase Agreement to the plaintiff. Plaintiff alleges it instructed the defendant not to issue any purchase orders without the plaintiff's approval. Despite this, the defendant apparently issued a purchase order in the amount of approximately $346, 432.00 to Leyard Opto-Electronic Co. ("Leyard"). The plaintiff alleges that the defendant represented that the purchase order for EV-10 Silan tiles was critical to the immediate future of the business. Subsequently, an employee of defendant's business allegedly informed plaintiff that Leyard had committed to providing warranty tiles at no cost, and that plaintiff, after purchasing the defendant's business, would be allowed to keep these replacement warranty tiles at no cost.

Plaintiff alleges that these representations induced plaintiff to purchase defendant's business by artificially inflating defendant's expected revenue producing work from which it would benefit following the closing on its purchase of defendant's business. Plaintiff further claims that these alleged intentional concealments and intentionally false statements were completed only days before the scheduled closing of plaintiff's purchase of defendant's business and at a time when the defendant allegedly knew the plaintiff was debating the actual profitability of defendant's business and whether or not to go through with the purchase.

This action arises out of defendant's alleged intentional concealment and misrepresentation of material facts as to (1) the warranty relating to Leyard's product, and (2) the revenue producing work from which plaintiff would benefit following its purchase of defendant's business. Plaintiff seeks (1) damages exceeding $500, 000.00 in order to fairly compensate it for the diminished value of the business purchased from the defendant, (2) reasonable attorneys' fees and costs of suit, and (3) punitive damages.

Defendant has filed a counterclaim, alleging that plaintiff breached the Asset Purchase Agreement by failing to pay post-closing commissions to defendant. (Doc. 14 at 8). Defendant seeks judgment against plaintiff in an amount to be determined at trial, and reasonable attorney's fees and costs of suit.

Defendant, in its motion to transfer venue, seeks to transfer this action to the United States District Court for the District of Nebraska based on convenience of the parties and the interest of justice (Doc. 12). Subsequent to responding to defendant's motion, plaintiff filed a motion for leave to file supplemental authority (Doc. 25). The plaintiff seeks to introduce an order from a Nebraska state case, RS Electronics v. SignCo, Inc., No. CI-13-1540 (Aug. 19, 2013). In that order, the Nebraska state court held that the defendant's third-party complaint against the plaintiff was dismissed because of the mandatory forum selection clause in the Asset Purchase Agreement.

ANALYSIS

I. MOTION FOR LEAVE TO FILE SUPPLEMENTAL AUTHORITY

The Court will first consider plaintiff's motion for leave to file supplemental authority, as the supplemental authority potentially bears on whether or not the motion to transfer venue will be granted. If a party believes it is necessary to supplement its brief with new authority "due to a change in the law or the facts that occurred after the filing of its brief, the party must seek leave of court to file a supplemental brief." Local Rule 7.1(g).

The authority the plaintiff seeks to bring to the Court's attention is an order from the County Court of Lancaster County, Nebraska, from a case entitled RS Electronics v. SignCo, Inc., No. CI-13-1540. Titus was named a third-party defendant, and SignCo was a third-party plaintiff. This particular order relates to Titus' motion to dismiss SignCo's third-party complaint. SignCo filed this third-party complaint in Nebraska alleging breach of contract, indemnification and contribution, and, in the alternative, quantum meruit and conversion. These claims all arose out of Titus' purchase of SignCo's business and the alleged breach of the Asset Purchase Agreement between the parties. Titus claimed that the third-party complaint against it was brought in an improper forum and venue pursuant to the forum selection clause in the Asset Purchase Agreement and moved to dismiss. The forum selection clause designated Madison County, Illinois as the proper forum. The Nebraska court found that the mandatory forum selection clause required dismissal, and noted that "[t]his court cannot use one party's present convenience as a reason to rewrite its contract with the other party." (Doc. 25-1 at 4) (internal quotations and citations removed). Plaintiff asserts that the findings of the Nebraska state court support its argument in opposition to defendant's motion to transfer.

This Court FINDS that plaintiff's proposed supplemental authority is helpful in determining whether transfer is proper, as it directly discusses the factual circumstances surrounding whether the transfer is clearly convenient. Therefore, plaintiff's unopposed motion for leave to file supplemental authority (Doc. 25) is GRANTED, and the Court ...


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