Hurtt Fabricating Corp. v. RN'G Constr.

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HURTT FABRICATING CORP., Plaintiff, v. RN'G CONSTRUCTION, INC., and SPECIALTY SERVICE CONTRACTORS, INC., Defendants.

No. 4:23-CV-01405-SPM

United States District Court, E.D. Missouri, Eastern Division

May 8, 2024

MEMORANDUM AND ORDER

SHIRLEY PADMORE MENSAH, UNITED STATES MAGISTRATE JUDGE

This matter is before the Court on Defendants' Joint Motion to Transfer to Proper Venue (ECF No. 10) and Plaintiff's Motion to Enforce Forum Clause and Remand (ECF No. 22). The time for Plaintiff to respond to Defendants' motion expired without a response from Plaintiff. Defendants have filed a response to Plaintiff's motion, and the time for Plaintiff to file a reply has expired. The parties have consented to the jurisdiction of the undersigned United States Magistrate Judge pursuant to pursuant to 28 U.S.C.§ 636(c)(1). ECF No. 27. For the following reasons, both motions will be denied, and the parties will be directed to provide the Court with supplemental briefing regarding this Court's subject matter jurisdiction over this action.

I. Background

ORDER

On September 29, 2023, Plaintiff Hurtt Fabricating Corp. filed this breach of contract action in the Circuit Court of St Louis County, State of Missouri. Pet'n, ECF No. 13. Plaintiff alleges that it is a Missouri corporation, with its principal place of business in Missouri, that is in the business of fabricating sign structures and other materials for use on highway construction projects in Missouri and across the country. It alleges that Defendants RNG Construction, Inc. (“RNG”) and Specialty Services Contractors, Inc. (“SSCI”) are engaged in the roadway construction business, including as installers of highway signs and other materials on highway construction projects. Plaintiff alleges that it had a written agreement for an ongoing business relationship with each defendant, each with similar terms. Following establishment of each agreement, Plaintiff and each defendant's ongoing business relationship took on a procedure wherein a defendant would request that Plaintiff quote a price for a particular project, Plaintiff would submit a written proposal with a quote or bid, and then the defendant would sign and return the proposal if it wished to accept Plaintiff's terms and contract with Plaintiff as the defendant's supplier on a given project. Under the terms and conditions of the written agreement, each defendant agreed to pay Plaintiff “15 Days after Payment by Owner or 60 Day Net after receipt of Materials.” Pet'n ¶ 13. Additionally, “Invoices past 60 days after receipt of materials will be subject to a 1½% monthly finance charge.” Pet'n ¶ 14.

Plaintiff alleges that several of its proposals were signed and executed by Defendants and that Plaintiff performed in accordance with the terms of each project by supplying the agreed-upon materials. Plaintiff alleges that each defendant breached the agreements and failed to perform by failing to pay Plaintiff within 60 days of receiving the materials supplied and failing to pay finance charges it owed under the terms of the agreement. Plaintiff alleges that Defendant SSCI owes Plaintiff $206,321.26 in finance charges and $12,759.42 in unpaid invoices, for a total of $219,080.68, plus interest, attorneys' fees, and costs allowed under the contract. Pet'n ¶ 43. Plaintiff alleges that Defendant RN'G owes Plaintiff $53,750.79 in finance charges and $8,024.85 in unpaid invoices, for a total of $61,775.64, plus interest, attorneys' fees, and costs allowed under the contract. Id. ¶ 54.

Defendants removed the case to this Court based on diversity of citizenship pursuant to 28 U.S.C. § 1441, asserting that this Court has original jurisdiction based on the parties' diversity of citizenship under 28 U.S.C. § 1332 and an amount in controversy that exceeds $75,000. In the Notice of Removal, Defendants allege that RN'G Construction, Inc., is a Maryland corporation with its principal place of business in Maryland and is therefore a citizen of Maryland; that SSCI is a Maryland corporation with its principal place of business in Maryland and is therefore a citizen of Maryland; and that Plaintiff is a Missouri corporation with its principal place of business in Missouri and is therefore a citizen of Missouri. Defendants point out that Plaintiff seeks well over $200,000 from Defendant SSCI. Defendants also point out that Plaintiff seeks $61,775.64, plus attorneys' fees, costs, and interest from Defendant RN'G.

At the same time as they filed the Notice of Removal, Defendants filed a Joint Motion to Transfer to Proper Venue pursuant to 28 U.S.C. § 1406, asking the Court to transfer this matter to the United States District Court for the District of Maryland, Northern Division. In the memorandum in support of the motion, Defendants argue that venue is proper in Maryland. They also inform the Court that several months prior to Plaintiff's filing of the instant cause of action, Defendant RN'G filed suit against Plaintiff in the District of Maryland (Case Number 1:23-CV-00329-JKB), asserting claims of breach of contract and promissory estoppel and alleging that after RNG accepted Plaintiff's offer to supply signage and related materials and equipment for several roadway construction projects in Maryland, Plaintiff notified RN'G that Plaintiff did not intend to perform work on any of the projects and denied that any binding agreements existed between Plaintiff and RN'G for the projects.

Plaintiff did not file a response to Defendants' motion to transfer. Instead, Plaintiff filed a Motion to Enforce Forum Clause and Remand, asking the Court to remand this case to state court based on the presence of a forum selection clause in the parties' agreement that states:

The applicant understands that all past due balances will be subject to a 1½% per month finance charge. The applicant further agrees to pay all collection charges in the event of default, if the account is placed with a collection agency or attorney and in the event of litigation agree that venue be in St. Louis County, MO.

Pl.'s Mem. Ex. A & Ex. B, ECF Nos. 23-1 & 23-2, at 2 (emphasis added). Defendants filed an opposition to the Motion to Enforce Forum Clause and Remand.

II. Discussion

A. Plaintiff's Motion to Enforce Forum Clause and Remand

Under 28 U.S.C. § 1441, generally, a defendant in a civil case filed in state court may remove the case to a federal district court if the case could have been brought there originally. Following removal, 28 U.S.C. § 1447(c) allows a plaintiff to file a motion to remand the case to state court if subject matter jurisdiction is lacking or if some other defect makes removal improper.^[1]“Courts who have considered the issue, including the Eighth Circuit, have concluded that removal in the face of a valid forum selection clause fixing venue in the state courts is the sort of defect that qualifies a case for remand.” City of Springfield, Missouri v. T-Mobile Cent. LLC, No. 4:18CV2015 HEA, 2019 WL 2525617, at *1 (E.D. Mo. June 19, 2019) (citing iNet Directories, LLC v. Developershed, Inc., 394 F.3d 1081, 1082 (8th Cir. 2005)).

Plaintiff's sole argument is that this case should be remanded based on the forum selection clause in the agreements that states, “The applicant further agrees to pay all collection charges in the event of default, if the account is placed with a collection agency or attorney and in the event of litigation agree that venue be in St. Louis County, MO.” Plaintiff argues that this is a mandatory forum selection clause that requires any judicial proceedings to be filed in St. Louis County. Plaintiff further argues that because the only court “in St. Louis County” with jurisdiction is the Circuit Court of St. Louis County, Missouri,^[2]Defendants agreed to waive their right to remove the case to this Court.

The Eighth Circuit recognizes both mandatory and permissive forum selection clauses. See Dunne v. Libbra, 330 F.3d 1062, 1063 (8th Cir. 2003); Bond v. Century Support Servs., LLC, No. 4:23-CV-800-RWS, 2023 WL 5275055, at *1 (E.D. Mo. Aug. 16, 2023). “Mandatory forumselection clauses require a case to be brought in an identified venue based on specific language indicating the parties' intent to make jurisdiction exclusive.” Bond, 2023 WL 5275055, at *1 (quoting High Plains Const., Inc. v Gay, 831 F.Supp.2d 1089, 1102 (S.D. Iowa 2011)). On the other hand, “permissive clauses constitute nothing more than a consent to jurisdiction and venue in the named forum and do not exclude jurisdiction or venue in any other forum.” MRP Trading I A, LLC v. Eberhart, 526 F.Supp.3d 470, 476 (D. Minn. 2021) (quoting Best Buy Stores, L.P. v. Devs. Diversified Realty Corp., No. 05-cv-2310 (DSD/JJG), 2006 WL 3544956, at *3 (D. Minn. Dec. 8, 2006)). The use of words such as “exclusive,” “only,” “must,” “shall,” or other terms that suggest exclusivity suggest that a clause is mandatory, and the absence of such terms suggests that a clause is permissive. See Dunne, 330 F.3d at 1064 (finding forum clause permissive where it did “not employ the term ‘shall'” and did “not use the words ‘exclusive,' ‘only,' ‘must,' or any other terms that might suggest exclusivity”); Wahrmund v. Buschman, No. 4:16-CV-000137-KGB, 2017 WL 5661340, at *4 (E.D. Ark. Mar. 28, 2017) (finding clause stating, “[s]hould there be any form of litigation between Cattle Connections, LLC and any parties, it is understood that the litigations [sic] will take place in the county of residence of Cattle Connections, LLC” was permissive and not mandatory because it “lacks mandatory words such as shall, must, sole, only, or exclusive”); OHM Hotel Grp., LLC v. Dewberry Consultants, LLC, No. 4:15-CV-1705 CAS, 2016 WL 427959, at *4 (E.D. Mo. Feb. 4, 2016) (“A forum selection clause is deemed to be mandatory...