United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
RONNIE L. WHITE, District Judge.
This matter is before the Court on Plaintiff XTRA Lease LLC's Motion to Remand and to Stay all Proceedings Pending Resolution of the Motion to Remand (ECF No. 14). Also pending are Defendant E.L. Hollingsworth & Co.'s Motion to Dismiss for Improper Venue, or, in the Alternative, Motion to Transfer Venue (ECF No. 12) and Defendant EJ Madison, LLC's Motion to Transfer Venue (ECF No. 24). The motions are fully briefed and ready for disposition. Upon review of the motions and related memoranda, the Court will grant Plaintiffs Motion to Remand and deny Defendants' motions.
Viewing the facts in the light most favorable to the non-moving party, the Court sets forth the following facts:
XTRA Lease LLC ("XTRA Lease"), a Delaware corporation with its principal place of business in St. Louis, Missouri, rents and leases trailers to various companies. (Pet. ¶¶ 1, 6, ECF No. 4) XTRA Lease and Defendant EJ Madison, LLC ("EJ Madison") entered into at least one Equipment Lease Agreement and one Equipment Rental Agreement, wherein XTRA Lease agreed to rent trailers to EJ Madison in exchange for a promise to pay rental and other charges in accordance with the terms of the Agreements. ( Id. at ¶¶ 5-7) However, XTRA Lease contends that EJ Madison failed to make such payments. ( Id. at ¶ 9)
XTRA Lease further avers that, upon information and belief, Defendant E.L. Hollingsworth & Co. ("Hollingsworth") purchased EJ Madison in 2014 and purported to assign itself EJ Madison's right to possess and use the equipment, as well as use the equipment in the course of business. ( Id. at ¶¶ 10-12) The Agreement provided that any right or interest in the equipment may not be assigned without prior written consent of XTRA Lease and that an assignment occurs where there is a change in the control of the Lessee. ( Id. at ¶¶ 14-15) XTRA Lease never gave written consent or authorization for Hollingsworth to use the equipment. ( Id. at ¶¶ 16-17) EJ Madison defaulted on its obligations, and XTRA Lease demanded the immediate return of the equipment pursuant to the Agreement provisions. ( Id. at ¶¶ 18-21) At the time XTRA Lease filed its Petition in state court, EJ Madison and/or Hollingsworth still possessed 18 trailers. ( Id. at ¶¶ 22-25)
On September 25, 2014, XTRA Lease filed a Petition in the Circuit Court of St. Louis County, Missouri, alleging Breach of Contract against Defendant EJ Madison (Count I); Action on Account against Defendant EJ Madison (Count II); Conversion against Hollingsworth (Count III); Unjust Enrichment against Hollingsworth (Count IV); Tortious Interference against No. 4:09CV2059 TIA, 2010 WL 2835565, at *2 (E.D. Mo. July 16, 2010) (citing Caterpillar Inc. v. Williams, 482 U.S. 386. 392 (1987)). Hollingsworth (Count V); for Injunctive Relief against both Defendants (Count VI); or alternatively for Replevin against both Defendants (Count VII). On November 11, 2014, Defendant Hollingsworth filed a Motion to Dismiss for Improper Venue or, in the Alternative, Motion to Transfer Venue. Defendant EJ Madison filed a similar Motion to Transfer Venue on December 15, 2014. Plaintiff filed a Motion to Remand and Stay all Proceedings Pending Resolution of the Motion to Remand on November 18, 2014. Because all three motions pertain to the proper venue in this case, the Court will address each of the motions.
A. Plaintiff's Motion to Remand
In addressing a motion to remand based on a forum selection clause, "it is settled... that parties to a contract may agree in advance to submit to the jurisdiction of a given court...." Nat'l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 315-16 (1964). "Forum selection clauses are prima facie valid and are enforced unless they are unjust or unreasonable or invalid for reasons such as fraud or overreaching." M.B. Rests., Inc. v. CKE Rests., Inc., 183 F.3d 750, 752 (8th Cir. 1999) (citation omitted). Further, "the party resisting enforcement of the clause bears a heavy burden in convincing the Court that it should not be held to its bargain." Midwest Mech. Contractors, Inc. v. Tampa Constructors, Inc., 659 F.Supp. 526, 530 (W.D. Mo. 1987) (citation omitted). "[M]ere inconvenience to a party is an insufficient basis to defeat an otherwise enforceable forum selection clause.'" Servewell Plumbing, LLC v. Fed. Ins. Co., 429 F.3d 786, 790 (8th Cir. 2006) (citing M.B. Rests., 183 F.3d at 753).
At the outset, the Court finds that the choice of law provision contained in the agreement is valid and obligates XTRA Lease and EJ Madison to adjudicate this action in the Circuit Court of St. Louis County. See Xtra Lease LLC v. Century Carriers, Inc., No. 4:09CV2041, 2010 WL 431787 (remanding XTRA Lease's lawsuit to the Circuit Court of St. Louis County pursuant to a forum selection clause identical to the clause in the present case). Indeed, EJ Madison does not argue that the forum selection clause is invalid, but merely asserts that interests of justice compel transfer to the Western District of Texas.
The issue now before the Court is whether Defendant Hollingsworth is bound by the forum selection clause as well, as an assignee to the contract or by virtue of a close relationship. When the alleged conduct of a non-party to a contract is so closely related to the contractual relationship, the forum selection clause applies to all defendants. Gilbane Fed. v. United Infrastructure Projects FZCO, Case No. 14-cv-03254-VC, 2014 WL 4950011, at *4 (N.D. Cal. Sept. 24, 2014); see also Marano Enters. of Kansas v. Z-Teca Rest., L.P., 254 F.3d 753, 757 (8th Cir. 2001) (finding a party closely related to the disputes arising out of the agreements was properly bound by the forum selection provisions).
Here, the Court finds that Plaintiff has sufficiently pied a close relationship by virtue of Hollingsworth's alleged acquisition of EJ Madison in the Spring of 2014. According to the Complaint, Hollingsworth purchased EJ Madison and then assigned to itself EJ Madison's right to possess and use the equipment under the agreements. (Pet. ¶¶ 10-17, ECF No. 4) In its Motion to Remand, Plaintiff asserts that this constitutes a close relationship sufficient to bind Hollingsworth to the terms of the Agreement, including the forum selection clause. Hollingsworth argues that it is not bound to the terms and conditions of the contract between Plaintiff and EJ Madison because the Court need not accept Plaintiffs allegations as true, and Plaintiff has failed to provide evidence supporting its contention of a close relationship. However, viewing the facts in the light most favorable to the Plaintiff, Hollingsworth possessed and used Plaintiff's equipment as a result of Hollingsworth's acquisition of EJ Madison. The Standard Terms and Conditions state that a change in control of lessee's business by, inter alia, merger or sale constitutes an assignment of the lease. (Pet. ¶ 15, ECF No. 4; Standard Terms and Conditions § 19, ECF No. 1-4 p. 50) Further, "[n]otwithstanding anything to the contrary contained herein, the Lease and the Standard Terms and Conditions shall inure to the benefit and be binding upon the parties, their heirs, successors, administrators, executors, and assigns." (Standard Terms and Conditions§ 19, ECF No. 1-4 p. 52) The terms and conditions that Plaintiff seeks to enforce states that "Lessee and XTRA Lease each herby submit to the jurisdiction of the Circuit Court of St. Louis County, Missouri for purposes of adjudicating any action arising out of or related to the Lease...." ( Id. at § 31)
The Court finds that Plaintiffs allegations of EJ Madison's assignment of the lease to Hollingsworth stemming from the purchase of the business, as well as Hollingsworth's use of the equipment, is sufficient to bind Hollingsworth to the Standard Terms and Conditions, including the choice of law provision. As stated above, "a third party may be bound by a forum selection clause where it is so closely related to the dispute such that it becomes foreseeable that it will be bound." TLC Vision (USA) Corp. v. Freeman, No. 4:12CV01855ERW, 2013 WL 230254, at *11 (E.D. Mo. Jan. 22, 2013) (citation omitted). In making this determination, the inquiry is "whether, the third party reasonably [should] foresee being bound by the forum selection clause because of its relationships to the cause of action and the signatory to the forum selection clause.'" Id. (quoting Meditronic, Inc. v. Endologix, Inc., 530 F.Supp.2d 1054, 1057 (D. Minn. 2008)). Other than the general denials contained in the Answer, Hollingsworth does not deny the allegations that it purchased EJ Madison and used the equipment at issue. Indeed, Hollingsworth's motion to dismiss is based on improper venue under Rule 12(b)(3), not failure to state a claim under Rule 12(b)(6). In its response, Hollingsworth asserts that Plaintiff has not provided sufficient evidence of a close relationship. However, Plaintiff need not prove the close relationship. Viewing the facts in the light most favorable to the Plaintiff, the Court finds that Plaintiff has sufficiently pied the requisite relationship. Use of the equipment leased by EJ Madison would allow a third person to foresee being bound by the forum selection clause. Although Hollingsworth argues that a motion to remand is not the proper vehicle for enforcing a forum ...