United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
ROBERT M. DOW, Jr., District Judge.
This action arises from a contractual dispute in the context of a construction project located in Palatka, Florida. Plaintiff filed suit in the Circuit Court of Cook County, and Defendant removed the action to this Court on November 5, 2014. Pending before the Court are two motions filed by Defendant: a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and a motion to dismiss or to transfer venue pursuant to Rule 12(b)(3) or 28 U.S.C. § 1404(a). For the reasons set forth below, the Court grants in part and denies in part the motion to dismiss or to transfer venue , and denies as moot Defendant's Rule 12(b)(6) motion to dismiss . The Court declines to dismiss the complaint under Rule 12(b)(3) and instead exercises its discretion to transfer the case to the Middle District of Florida.
Plaintiff Roberts & Schaefer Company is a Delaware corporation engaged in engineering and construction work. [1-1], Compl. ¶ 1. Its principal place of business is in Illinois. Id. In March of 2011, Plaintiff entered into an Engineering, Procurement and Construction Contract with Seminole Electric Cooperative, Inc. ("Seminole") (the "EPC or SECI Contract"). Id. at ¶ 3. Plaintiff was to replace Seminole's wet bottom and economizer ash systems on two units located at the Seminole Generating Facility located in Palatka, Florida (the "Project"). Id.
Defendant Clyde Bergemann Delta Ducon, Inc. is a Pennsylvania corporation that supplied Plaintiff with certain equipment for the Project. See [1-1], Compl. ¶ 2. The parties entered into an initial purchase order in May of 2011 (the "First Purchase Order" or "First P.O."). See id. at ¶ 4. Under the Purchase Order, Plaintiff had the right to "backcharge" Defendant for various costs that it might incur "as a result of defective goods or services" provided by Defendant. See id. at ¶ 5 (quoting First P.O., § 18). Plaintiff alleges that the Purchase Order "expressly incorporates the EPC Contract." Id. at ¶ 7. In its memorandum in support of its Rule 12(b)(3) motion to dismiss, Defendant further explains that the First Purchase Order was replaced by a new purchase order on September 29, 2011 at Plaintiff's request (the "Second Purchase Order" or "Sec. P.O."). , Def.'s Mem. 2. The major differences between the First and Second Purchase Orders are additional "terms and conditions of purchases" that were included in the Second Purchase Order. Id.
Defendant contends that certain provisions of the EPC Contract with Seminole were incorporated into the Purchase Orders and "were intended to amend the applicable sections of [the] Purchase Order[s]." , Def.'s Mem. 3 (quoting First & Sec. P.O.s, § 23.10). Relevant here are certain forum selection clauses. In particular, the First Purchase Order states that disputes arising out of the agreement will be resolved in a court in Illinois, and in the complaint, Plaintiff alleges that Defendant "consented to jurisdiction and venue * * * in the Circuit Court of Cook County, " [1-1], Compl. ¶ 8 (citing First P.O., § 23.7). Defendant disputes that the Illinois forum selection clause is operative. Defendant first points out that the Second Purchase Order contains another, conflicting venue provision that requires the parties to submit any disputes to binding arbitration in Houston, Texas. See [8-1], Sec. P.O., § 27. Defendant next contends that neither the Illinois nor the Texas venue provisions apply, because Section 22 of the EPC Contract was incorporated into the Purchase Orders. That section designates Hillsborough County, Florida (located in the Middle District of Florida) as the forum "for any and all suits, claims, actions, arbitrations, causes of actions or other legal proceedings arising out of or relating to this Contract[.]" See id. at A.8, § 22. A separate section of the EPC Contract, Section 25, contains an arbitration provision, however, which states that disputes are to be resolved by arbitration in Hillsborough County, Florida, pursuant to the Commercial Arbitration Rules of the American Arbitration Association. See id. at A.8, § 25.
In Count I of the complaint, Plaintiff alleges that Defendant breached the Purchase Order "by failing to perform its obligations due and owing under the [agreement] * * * by otherwise failing to timely perform its obligations due and owing * * * [and] by providing defective materials due and owing[.]" [1-1], Compl. ¶ 12. Plaintiff alleges that it has been forced to incur substantial backcharges as a result but does not further specify the nature of the alleged breach. See id. at ¶ 13. In Count II, Plaintiff brings a tortious interference with contract claim with respect to the EPC Contract with Seminole. Specifically, Plaintiff alleges that-notwithstanding any dispute over backcharges-Defendant was required to perform all of its obligations under the Purchase Order. Id. at ¶ 21. Plaintiff contends that Defendant did not complete its work for Plaintiff and instead entered into a contract directly with Seminole for completion of its work on the Project "in direct circumvention of the Purchase Order." Id. at ¶¶ 22-24.
II. Legal Standard
Defendant requests that the Court dismiss the case under Federal Rule of Civil Procedure 12(b)(3). Rule 12(b)(3) allows a defendant to seek dismissal for "improper venue." The plaintiff bears the burden of establishing that the chosen venue is proper. See Int'l Travelers Cheque Co. v. BankAmerica Corp., 660 F.2d 215, 222 (7th Cir. 1981) (citing Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182, 1184 (7th Cir. 1970)). A court deciding a Rule 12(b)(3) motion must take the allegations in the complaint as true, unless contradicted by the defendant's affidavits. Nagel v. ADM Investor Servs., Inc., 995 F.Supp. 837, 843 (N.D. Ill. 1998). The court also may examine facts outside the complaint to determine if venue is proper. Id. If venue is improper, the court may either dismiss the suit or transfer it to a district in which the plaintiff could have filed the complaint initially. See 28 U.S.C. § 1406(a).
Defendant alternatively moves to transfer the action to the Middle District of Florida under 28 U.S.C. § 1404(a). This section "allow[s] a district court to transfer an action filed in a proper, though not necessarily convenient, venue to a more convenient district." Research Automation, Inc. v. Schrader-Bridgeport Int'l., Inc., 626 F.3d 973, 977 (7th Cir. 2010). Subsection (a) provides: "For the convenience of the 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."
Defendant provides three avenues by which the Court may dismiss the complaint or transfer the case to the Middle District of Florida. First, Defendant argues that Illinois is an improper venue under 28 U.S.C. §§ 1391 and 1406(a). If the Court does not find that venue is improper, Defendant next argues that the Court should find that the Florida forum selection clause in the EPC Contract is operative and transfer the case to the Middle District of Florida under the standard set forth in Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas, 134 S.Ct. 568 (2013). Finally, if the Court does not find that the Florida forum selection clause applies, Defendant argues that transfer to the Middle District of Florida is appropriate under 28 U.S.C. § 1404(a), because Florida is a more convenient forum than Illinois. Plaintiff responds largely by arguing that the Court should compel arbitration under Section 25 of the EPC Contract, if the Court agrees that the Florida forum selection clause applies. The Court addresses these issues below and concludes that the case should be transferred to the Middle District of Florida.
A. Arbitration in the Middle District of Florida
The Court first addresses Plaintiff's request that the Court compel arbitration. Plaintiff argues that if Section 22 of the EPC Contract applies (the Florida forum selection clause), then Section 25 of the Contract also must apply (the Florida arbitration clause). Plaintiff requests that the Court deny Defendant's motion to dismiss or to transfer the action, and instead compel arbitration in Hillsborough County, Florida pursuant to Section 25 of the EPC Contract. The Court respectfully declines to do so.
Even assuming that the Florida arbitration provision applies, the Court does not have the power to compel arbitration outside of the Northern District of ...