Columbia Aircraft Sales, Inc. v. Piper Aircraft, Inc.

COLUMBIA AIRCRAFT SALES, INC., Plaintiff, v. PIPER AIRCRAFT, INC., Defendant.

No. 3:20-cv-00701 (JAM)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

October 6, 2020

ORDER GRANTING MOTION TO TRANSFER

This case involves a dispute about the non-renewal of a commercial dealership agreement. The plaintiff is a dealer for the defendant aircraft company. When the defendant decided not to renew the parties' dealer agreement, the plaintiff filed this action seeking relief. The defendant now moves pursuant to 28 U.S.C. § 1404 to transfer the action to the Southern District of Florida in accordance with a forum-selection clause within the parties' dealer agreement. Because I conclude that all of plaintiff's claims are within the scope of the forum-selection clause and that it would not be unreasonable or unjust to enforce the parties' agreement to the forum-selection clause, I will grant the motion to transfer.

BACKGROUND

Defendant Piper Aircraft, Inc. ("Piper") is a manufacturer of general aviation aircraft and sells its products nationwide through licensed dealers. Doc. #33 at 5 (¶ 14). Plaintiff Columbia Aircraft Sales, Inc. ("Columbia") has been the exclusive dealer for Piper's products in the northeastern region of the United States for over 30 years. Id. at 5 (¶ 16). Throughout this time, Columbia and Piper have operated their relationship through a succession of term-limited dealer agreements. Id. at 5 (¶ 18).

The parties entered into their most recent dealer agreement on January 1, 2016 ("Dealer Agreement"). Id. at 6 (¶ 19). Section 2.2 of the Dealer Agreement provides that it would run for a period of four years, and that it would automatically renew unless either party delivered a written non-renewal notice at least one year prior to the end of the term. Id. at 6 (¶ 21). Upon delivery of such a non-renewal notice, Section 2.2 required that the parties nonetheless "negotiate in good faith and attempt to agree upon mutually acceptable terms and conditions for a Renewal Term." Id. at 6 (¶ 22). Piper had previously complied with this procedure during the course of the parties' relationship, resulting in the parties' most recent Dealer Agreement in 2016. Id. at 7 (¶ 23).

During a conference call on October 16, 2018, Piper told Columbia and other dealer principals that Piper was going to issue a non-renewal notice. Id. at 20 (¶ 70). Piper stated that the notice was a "formality" and was issued "only because Piper sought to simplify its dealer agreements." Ibid.

On November 26, 2018, Piper sent Columbia the non-renewal notice. Id. at 19 (¶ 67). The notice stated that Piper would "evaluate all existing Agreements and will discuss with you our future business strategies and plans," emphasizing that the process would be "collaborative." Doc. #33, Ex. 1. Piper added that the new dealer agreements would be distributed to future dealer partners in the third quarter of 2019. Ibid.

But on May 29, 2019, Piper told Columbia that Piper had decided not to renew the Dealer Agreement, and later sent Columbia a letter confirming Piper's position. Doc. #33 at 22 (¶¶ 78, 81). Columbia alleges that Piper led it to believe that a renewal agreement would be forthcoming but had no intention to renew. Id. at 20-23 (¶¶ 69-72, 82).

Columbia has filed this action alleging contract claims (for breach of contract and breach of the implied covenant of good faith and fair dealing), as well as additional common law claims (for promissory estoppel, fraudulent inducement, fraud, and negligent misrepresentation) and additional statutory claims (under the Connecticut Franchise Act ("CFA") and the Connecticut Unfair Trade Practices Act ("CUTPA")). Doc. #33. On the basis of a forum-selection clause within the Dealer Agreement, Piper has moved to transfer this action to the Southern District of Florida. Doc. #36.

DISCUSSION

Piper relies on a forum-selection clause contained within the Dealer Agreement. That clause states:

The parties irrevocably and unconditionally submit to the exclusive jurisdiction of the courts of the State of Florida, located in Palm Beach County or in the United States District Court for the Southern District of Florida for the purposes of any suit, action or other proceeding arising out of this Agreement or the subject matter hereof brought by any party hereto.

Doc. #36-1 at 8.

On the basis of this forum-selection clause, Piper moves to transfer to the Southern District of Florida pursuant to 28 U.S.C. § 1404(a). That statute 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." 28 U.S.C. § 1404(a).

A forum-selection clause may be enforced through a motion to transfer under § 1404(a). See Atlantic Marine Constr. Co., Inc. v. U.S. Dist. Court for the W. Dist. of Texas, 571 U.S. 49, 59 (2013). Because the enforcement of a valid forum-selection clause "bargained for by the parties, protects their legitimate expectations and furthers vital interests of the justice system," and because the "overarching consideration under § 1404(a) is whether a transfer would promote'the interest of justice,'" such a clause should be given controlling weight "in all but the most exceptional cases." Id. at 63 (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring)).

For cases involving a section 1404 motion to transfer due to a valid forum-selection clause, the Supreme Court has instructed that courts should alter the usual analysis for a section 1404 motion in three ways. Id. at 63. First, courts should afford no weight at all to the plaintiff's initial choice of forum if it differs from the agreed-upon forum. Instead, the plaintiff bears the burden of establishing why the case should not be transferred to the agreed-upon forum. Id. at 63-64. Second, courts should not consider arguments about the parties' private interests and convenience because, in deference to the parties' agreement, a court "must deem the private-interest factors to weigh entirely in favor of the preselected forum." Id. at 64. Third, "when a party bound by a forum-selection clause flouts its contractual obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue's choice-of-law rules—a factor that in some circumstances may affect public-interest considerations." Ibid.

To determine whether a forum-selection clause is enforceable, a court must resolve the following three issues: "(1) whether the clause was reasonably communicated to the party resisting enforcement; (2) whether the clause is mandatory or permissive . . . ; and (3) whether the claims and parties involved in the suit are subject to the forum-selection clause." Martinez v. Bloomberg LP, 740 F.3d 211, 217 (2d Cir. 2014) (quoting Phillips v. Audio Active Ltd., 494 F.3d 378, 383 (2d Cir. 2007)). If the forum-selection clause meets all three requirements, it is presumptively enforceable. Ibid. This presumption can only be overcome by "making asufficiently strong showing that enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching." Ibid.

Columbia does not dispute that the forum-selection clause was reasonably communicated to Columbia in the Dealer Agreement. Nor does Columbia dispute that the forum-selection agreement has mandatory terms; it requires the parties to "irrevocably and unconditionally submit to the exclusive jurisdiction of . . . the Southern District of Florida." Columbia instead focuses on the third requirement, arguing that the forum-selection clause is narrow and does not encompass its non-contract claims.

To evaluate the scope of the forum-selection clause, I must apply the law chosen by the parties. See Martinez, 740 F.3d at 217-18. The Dealer Agreement's choice-of-law clause provides that it "shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to principles of conflict of laws." Doc. #37-1 at 11.

The forum-selection clause applies in relevant part to "any suit, action or other proceeding arising out of this Agreement or the subject matter hereof brought by any party hereto." Under Florida law, a court must assess whether a forum-selection clause is narrow or broad in scope. See Inspired Capital, LLC v. Condé Nast, 225 So.3d 980, 982 (Fla. 3d Dist. Ct. App. 2017). Forum-selection clauses that are limited to disputes "arising out of" the parties' contract are considered to be narrow in scope, while those using language such as "arising out of or relating to" are considered to be broad in scope. Ibid. (citing Jackson v. Shakespeare Found., Inc., 108 So.3d 587, 593 (Fla. 2013)).

For a narrow-scope clause that is limited only to those claims "arising from" the parties' contract, Florida law provides that its scope is limited only "to those claims that have a direct relationship to a contract's terms and provisions." Ibid. By contrast, for a broader-scope clausethat applies to those claims "relating to" the parties' contract, its scope extends to any claims that have "a 'significant relationship' to the contract—regardless of whether the claim is founded in tort or contract law." Ibid. Such a significant relationship exists if "there is a 'contractual nexus' between the claim and the contract." Ibid.

Columbia argues that the forum-selection clause is narrow because it does not include the "relating to" language that is most commonly associated with broad-scope clauses. Doc. #39 at 11-14. But Florida law does not limit the category of broad-scope clauses only to those clauses that use the words "relating to." The most that can be said is that Florida law recognizes a distinction between narrower and broader clauses in general. See Inspired Capital, 225 So.3d at 982 (describing...