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Schmitt v. Lewis-Goetz & Company, Inc.

United States District Court, D. South Carolina, Columbia Division

October 31, 2017

Michael S. Schmitt; Jeffrey D. Nyman; Scott D. Roberts; and James S. Schmidt, Plaintiff,
Lewis-Goetz and Company, Inc., Defendant.


         Plaintiffs Michael S. Schmitt, Jeffrey D. Nyman, Scott D. Roberts and James S. Schmidt (collectively “Plaintiffs”) filed the instant action against Defendant Lewis-Goetz and Company, Inc. (“Defendant”) seeking “declaratory relief, specific performance, and injunctive relief” for Defendant's alleged failure to comply with its obligations under a Membership Interest Purchase Agreement (“MIPA”) and an escrow agreement. (ECF No. 18 at 2 ¶ 6)

         This matter is before the court pursuant to Defendant's Motion to Transfer Venue to the United States District Court for the Southern District of New York pursuant to 28 U.S.C. § 1404(a).[1] (ECF No. 21 at 1.) In the alternative, Defendant moves for dismissal of “Count III of the Amended Complaint for failure to state a claim upon which relief may be granted.” (Id.) Plaintiffs oppose Defendant's Motions in their entirety. (ECF No. 24.) For the reasons set forth below, the court GRANTS Defendant's Motion to Transfer Venue.


         Plaintiffs allege that they had an ownership interest in Action Industrial Group, LLC (“AIG”) “which Plaintiffs desired to sell and [Defendant] Lewis-Goetz desired to purchase.” (ECF No. 18 at 2 ¶ 10.) Plaintiffs allege that on or about April 1, 2015, they entered into the MIPA with Defendant and others for “All Issued and Outstanding Membership Interest” of AIG. (Id. at 3 ¶ 11 (referencing ECF No. 18-1).) The MIPA allegedly required Plaintiffs to indemnify Defendant “from certain losses resulting from or related to breaches of Plaintiffs' representations, warrants, and covenants in the Purchase Agreement.” (Id. at 4 ¶ 17.) Furthermore, because the MIPA required “certain portions of the purchase price . . . to be placed into an escrow account, ” Defendant entered into an escrow agreement with JPMorgan Chase Bank N.A. (“Chase Bank”) and Plaintiffs. (Id. ¶¶ 14-15.)

         In accordance with the foregoing, the parties closed the MIPA on April 8, 2015, and funds were placed in an escrow account at Chase Bank. (Id. at 5 ¶¶ 22-23.) On September 28, 2016, Plaintiffs allege that they were provided notice of a claim by Defendant who also communicated to Chase Bank that Defendant “would not execute joint written instructions for the release of any portion of the Escrow Funds until its alleged claim was resolved.” (Id. ¶¶ 26- 27.) Thereafter, Plaintiffs allege that they attempted to determine the nature of the claim being made by Defendant, but were unsuccessful. (See id. at 6 ¶ 30-8 ¶ 41.) On April 7, 2017, Plaintiffs allege that they asked Defendant to “execute joint written authorizations to Chase Bank allowing it to release Plaintiffs' Escrow Funds within ten (10) days.” (Id. at 8 ¶ 42.) Plaintiffs further allege that Defendant ignored this demand. (Id. ¶ 43.)

         On June 14, 2017, Plaintiffs filed a Complaint against Defendant in this court alleging a claim for breach of contract and requesting injunctive relief. (ECF No. 1 at 5 ¶ 37-6 ¶ 44.) In response to Plaintiffs' Complaint, Defendant filed an Answer (ECF No. 15) and Motions to Transfer Venue or to Dismiss (ECF No. 12) on August 7, 2017. Plaintiffs timely filed an Amended Complaint on August 28, 2017, alleging claims for declaratory judgment, breach of contract and breach of the covenant of good faith and fair dealing. (ECF No. 18 at 8 ¶ 45-11 ¶ 63.) Thereafter, on August 31, 2017, Defendant filed the instant Motion to Transfer Venue or to Dismiss. (ECF No. 21.)


         The court has subject matter jurisdiction over this action, pursuant to 28 U.S.C. § 1332, based on Plaintiffs' allegations that the parties are citizens of different states and the amount in controversy exceeds $75, 000.00. Plaintiffs allege that Schmitt, Schmidt and Nyman are citizens and residents of South Carolina while Roberts is a citizen and resident of Georgia. (ECF No. 18 at 1 ¶¶ 1-4.) Plaintiffs further allege that Defendant “is a corporation existing under and by virtue of the laws of the State of Pennsylvania with its principal place of business in Pittsburgh, Pennsylvania.” (Id. ¶ 5.) Moreover, the court is satisfied that the amount in controversy exceeds $75, 000.00. (Id. at 2 ¶ 7 & 5 ¶ 25.)


         28 U.S.C. § 1404(a) provides that “[f]or the convenience of 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 or to any district or division to which all parties have consented.” Id. “The appropriate venue of an action is a procedural matter that is governed by federal rule and statutes.” Albemarle Corp. v. AstraZeneca UK Ltd., 628 F.3d 643, 651 (4th Cir. 2010) (citing Fed.R.Civ.P. 12(b)(3); 28 U.S.C. § 1391; 28 U.S.C. § 1406(a)). “Whether a case should be transferred to an alternative venue rests within the sound discretion of the district court.” Sw. Equip., Inc. v. Stoner & Co., Inc., C/A No. 6:10-1765-HMH, 2010 WL 4484012, at *2 (D.S.C. Nov. 1, 2010) (citing In re Ralston Purina Co., 726 F.2d 1002, 1005 (4th Cir. 1984)).

         “In the typical case not involving a forum-selection clause, a district court considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both the convenience of the parties and various public-interest considerations.”[2] Atl. Marine Constr. Co. v. U.S. Dist. Ct. W.D. Tex., 134 S.Ct. 568, 581 (2013). However, “[w]hen the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause.” Id. “[A] valid forum-selection clause, which ‘represents the parties' agreement as to the most proper forum[, ]'” should be “‘given controlling weight in all but the most exceptional cases.'” Id. (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31 & 33 (1988)).

         A court conducts a two-part analysis in deciding whether to enforce a forum selection clause. First, the court determines whether the forum-selection clause is valid and enforceable. Atl. Marine, 134 S.Ct. at 581. A forum-selection clause is “prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable' under the circumstances.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). A forum-selection clause may be considered unreasonable if “(1) [its] formation was induced by fraud or over-reaching; (2) the complaining party “will for all practical purposes be deprived of his day in court” because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law may deprive the plaintiff of a remedy; or (4)[its] enforcement would contravene a strong public policy of the forum state.” Albemarle Corp., 628 F.3d at 651 (quoting Allen v. Lloyd's of London, 94 F.3d 923, 928 (4th Cir. 1996)).

         Second, the court must consider whether “extraordinary circumstances” would hinder the enforcement of the forum-selection clause. Atl. Marine, 134 S.Ct. at 581. In considering whether extraordinary circumstances are present to avoid enforcement of a valid forum selection clause, a court may consider “arguments about public-interest factors only.”[3] Id. at 581-82.

         IV. ...

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