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Dunne v. Resource Converting, LLC

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

December 6, 2016

TOM DUNNE, JR., Plaintiff,
v.
RESOURCE CONVERTING, LLC, TIM DANLEY, RICK KERSEY, SEBRIGHT PRODUCTS, INC., GARY BRINKMANN, NEWWAY GLOBAL ENERGY, LLC, DAVID WOLF, JERRY FLICKINGER, and JWR, INC., Defendants.

          MEMORANDUM AND ORDER DENYING MOTION TO TRANSFER

          David D. Noce UNITED STATES MAGISTRATE JUDGE.

         This action is before the court on the motion of defendants Resource Converting, LLC, Tim Danley, and Rick Kersey to transfer this action to the United States District Court for the Southern District of Iowa. (ECF No. 55). Following the hearing held on November 30, 2016, the court denies defendants' motion to transfer the case.

         I. BACKGROUND

         In his judicial complaint plaintiff Tom Dunne alleges the following facts. In May 2015, defendant Gary Brinkmann contacted Dunne to sell him certain license agreements. (ECF No. 1, ¶ 16). These agreements would authorize and obligate plaintiff to acquire for resale "PAD systems" developed by defendants Resource Converting, LLC; Sebright Products, Inc.; and JWR, Inc., and sold by defendant New Way Global Energy, LLC. (Id. at ¶ 17). The PAD systems are devices that would purportedly convert municipal solid waste into renewable fuels. (Id. at ¶ 16). The systems were advertised to plaintiff as "using proven and tested technology to create a homogenous dried fuel stock that can be converted into different forms of energy." (Id. at ¶ 19). Defendant Jerry Flickinger gave plaintiff a "budgetary quote for a single line processing system to take municipal solid waste and prepare it for conversion to fuel, " stating a single system was "capable of processing 250 tons per day." (Id. at ¶ 20). Brinkmann and Flickinger allegedly assured plaintiff repeatedly of the PAD systems' proven function and the substantial value of the license agreements. (Mat¶21).

         Plaintiff alleges that defendants Brinkmann, Flickinger, Danley, and Kersey solicited payment from him for the PAD systems and license agreements, and that they employed high-pressure sales pitches. (Id. at ¶ 22). As a result of defendants' assurances and representations, plaintiff entered into license agreements with Resource Converting in August 2015 and made an initial payment of $400, 000 with an additional payment of $600, 000 to be made in November 2015. (Id. at ¶¶ 22-24). Between May and October 2015, plaintiff and defendants met with many individuals in Missouri to solicit the sale and purchase of the PAD Systems. (ECF No. 77, Ex. A, ¶ 6). Between August and November 2015, plaintiff insisted on seeing a demonstration of an operational PAD system. (ECF No. 1, ¶ 25). Brinkmann, Kersey, and Flickinger showed plaintiff a partially assembled piece of non-functioning equipment in a building located in Iowa, stating that it had previously been in operation but was being prepared for relocation. (Id. at ¶ 25). Defendants were never able to show plaintiff a working PAD system. (Id. at ¶¶ 28-30). On December 1, 2015, defendants demanded full payment of the remaining $600, 000 due from plaintiff. (Id. at ¶ 29). In June 2016, defendant Brinkmann stated to plaintiff that the PAD Systems never functioned as promised. (Id. at ¶ 30).

         The license agreements contain a section captioned, 12.5 Governing Law, that provides, "[t]he sole jurisdiction and venue for actions related to the subject matter hereof shall be the State of Iowa and U.S. Federal courts located in Iowa. Both parties consent to the jurisdiction of such courts . . . [.]" (Id., Ex. B. § 12.5). On June 20, 2016, counsel for plaintiff submitted a demand letter to Brinkmann, Resource Converting, Sebright, JWR, NewWay, Kersey, and Danley, demanding return of the $400, 000 paid by plaintiff and threatening legal action if the sum was not repaid by June 30, 2016. (ECF No. 77, Ex. E). Resource Converting filed a breach of contract claim against Dunne on June 30, 2016 in Iowa state court. (Id. at Ex. F). On August 19, 2016, Dunne removed that case to the United States District Court for the Southern District of Iowa and also commenced the instant action in this district court.

         II. MOTION TO TRANSFER

         Defendants Resource Converting, LLC, Tim Danley, and Rick Kersey move to transfer this action to the federal district court for the Southern District of Iowa pursuant to 28 U.S.C. § 1404 or, in the alternative, to transfer or dismiss the action for improper venue under Fed.R.Civ.P. 12(b)(3). (ECF No. 55). Defendants invoke the first-filed rule, the forum selection clause in the license agreements, and the equitable factors to be considered under § 1404.

         A. Legal Standard

         District courts determining whether to grant a motion to transfer under § 1404(a) must consider three statutory factors: "1) the convenience of the parties; 2) the convenience of the witnesses; and 3) the interest of justice." Dube v. Wyeth LLC, 943 F.Supp.2d 1004, 1007 (E.D. Mo. 2013). "In general, federal courts give considerable deference to a plaintiffs choice of forum and thus the party seeking a transfer under section 1404(a) typically bears the burden of proving that a transfer is warranted." Terra Int'l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 695 (8th Cir. 1997).

         B. Discussion

         The convenience of the parties, witnesses, and the interest of justice weigh in favor of keeping this case in this district, where plaintiff commenced it. While the license agreements at issue provide that "[t]he sole jurisdiction and venue for actions related to the subject matter hereof shall be [in Iowa], " (ECF No. 77, Ex. C. § 12.5), a forum selection clause is but one factor a court considers in deciding whether or not to transfer a case-albeit a significant factor. Terra Int'l, Inc., 119 F.3d at 696 (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1955)). The parties' contractual selection of the state of Iowa as the venue for dispute litigation relates primarily to the statutory prong of the "convenience of the parties:"

The other factors-the convenience of witnesses and the interest of justice-are third party or public interests that must be weighed by the district court; they cannot be automatically outweighed by the existence of a purely private agreement between the parties. Such an agreement does not obviate the need for an analysis of the factors set forth in ...

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