Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

ATOFINA CHEMICALS, INC. v. SIERRA CHEMICAL COMPANY

United States District Court, E.D. Pennsylvania


April 5, 2004.

ATOFINA CHEMICALS, INC. Plaintiff, SIERRA CHEMICAL COMPANY, Defendant

The opinion of the court was delivered by: WILLIAM YOHN, JR., District Judge

Memorandum and Order

Atofina Chemicals Inc. ("Atofina") filed a breach of contract action against defendant Sierra Chemical Company ("Sierra") for failing to pay for goods delivered. Plaintiff subsequently filed an amended complaint, alleging that by breaching its contract with Atofina (Count I) and by refusing to make payment for goods received (Count II), defendant was unjustly enriched (Count III).

Currently pending before the court is defendant's motion to 1) dismiss the amended complaint pursuant to Federal Rule Civil Procedure 12(b)(2) for lack of personal jurisdiction. In the event that this court finds that personal jurisdiction is proper, defendant moves to 2) dismiss the action pursuant to Federal Rule Civil Procedure 12(b)(3) for improper venue; or alternatively, 3) transfer the case to the District of Nevada pursuant to § 1404(a); or 4) dismiss part of the action pursuant to Federal Rule Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.*fn1 The motion will be denied.

  Background

  Atofina, also known as Elf Atochem North America Inc., and Sierra entered into a distributorship agreement on March 27, 1996. Def.'s Orig. Mot. at 3 n. 2;*fn2 Amend. Compl. ¶ 4, Exhibit A. The agreement was effective as of January 1, 1996. Def.'s Orig. Mot. v. 15; Distributorship Agreement, see Amend. Compl., Exhibit A. Under the terms of the distributorship agreement, Sierra acted as distributor for plaintiff's products in Nevada, California, Utah, and Idaho. Distributorship Agreement ¶ 3. The parties' relationship lasted until 2001; however, the parties dispute whether the contract was still in effect beyond 1996. Under paragraph 14 of the distributorship agreement, the agreement was to "continue in effect for a period of one year." Def.'s Orig. Mot. at 3 n. 1, 9. Defendant argues that based on this language the contract terminated December 31, 1996. Def.'s Orig. Mot. ¶ 17. Plaintiff contends that the parties continued to operate in the same fashion under the contract until the end of June 2001. Pl.'s Reply at 2; Pl.'s Memo. at 1.

  The distributorship agreement provided for jurisdiction in Pennsylvania for disputes arising under the agreement: "[a]ny litigation arising hereunder or related to the relationship created herein shall be instituted by DISTRIBUTOR in the appropriate federal or state court located in Philadelphia County, Philadelphia. In the event [plaintiff] elects to institute any action in said courts, DISTRIBUTOR expressly consents to jurisdiction in said courts." Def.'s Orig. Memo. at 8 n. 3; Pl's Memo. at 1-2;*fn3 Distributorship Agreement ¶ 17.

  Sometime subsequent to the execution of the 1996 distributorship agreement, defendant allegedly sent plaintiff purchase orders containing a choice of law provision that stated that "[t]he Buyer and Seller agree that this Purchase Order is made and executed in the State of Nevada and shall be governed by the laws of the State of Nevada." Def's Memo. ¶ 11; Purchase Order ¶ 9, Def.'s Exhibit C.

  Throughout their relationship, plaintiff also allegedly sent defendant a series of invoices. Def.'s Orig. Memo. at 9; Pl's Memo. at 2. Each invoice provided that "[t]his contract shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. Any lawsuit brought by Buyer [Sierra] arising out of the transactions covered hereunder shall be instituted in the appropriate state or federal court located in Philadelphia County, Pennsylvania, and Buyer [Sierra] further submits itself to the jurisdiction of said courts in the event Seller [Atofina] elects to institute any action in said courts."*fn4 Def.'s Memo. ¶ 5; Pl's Memo. at 2; Invoice Terms & Conditions ¶ 14, see Amend. Compl., Exhibit C.

  Plaintiff brought this suit in the Eastern District of Pennsylvania pursuant to the forum selection clauses included in the distributorship agreement and the invoices. Amend. Compl. ¶¶ 5, 9.

 DISCUSSION

 I. Motion to Dismiss Pursuant to 12(b)(2) for Lack of Personal Jurisdiction

  A. Standard of Review

  Defendant contends that this court lacks personal jurisdiction and moves to dismiss the complaint pursuant to 12(b)(2). Def.'s Mot. ¶¶ 6-8. Once a defendant raises a jurisdictional defense, the burden shifts to the plaintiff to demonstrate that the relevant jurisdictional requirements are met. Mellon Bank (East) PSFS v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992). Plaintiff must support this burden through "sworn affidavits or other competent evidence." North Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d Cir. 1990) (citations omitted). Plaintiff meets its burden by making a prima facie showing that jurisdiction exists. Farino, 960 F.2d at 1223.

  B. Analysis

  Plaintiff contends that jurisdiction is proper because Sierra consented to jurisdiction in Philadelphia by signing the distributorship agreement and because of the terms and conditions printed on its invoices. Pl.'s Memo. at 1-2. Defendant does not dispute that it consented to personal jurisdiction by signing the distributorship agreement. Def.'s Orig. Memo at 8 n. 3. Instead, defendant argues that the agreement, signed in 1996, was terminated one year later, and as such the forum selection clause contained within no longer applies. Id.; Def.'s Orig. Mot. at 3 n. 1. In response, plaintiff maintains that the parties continued to operate under the contract — acting as if it had been renewed — until the end of June 2001. Pl.'s Reply at 2-3. "It was the intent that the terms of the Agreement, although written for one year period, would formalize an ongoing relationship between the Plaintiff and the Defendant. The parties continued to operate in the same fashion between 1996 and 2001." Pl.'s Memo. at 1 (citing affidavits of Kenneth Blackburn and Lawrence Farmer). Plaintiff also contends that the forum selection clause allows for jurisdiction because its language is purposefully broad and applies to all litigation "related to the relationships" formed under the agreement. Pl.'s Reply at 3.

  Because "a district court sitting in diversity applies the law of the forum state in determining whether personal jurisdiction is proper," I look to the laws of Pennsylvania to resolve this issue. Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Prods. Co., 75 F.3d 147, 150 (3d Cir. 1996). In Pennsylvania, a corporation is subject to general personal jurisdiction through one of three ways, namely incorporation under or qualification as foreign corporation under the laws of the Commonwealth, consent, or carrying on of a continuous and systematic part of its general business within the Commonwealth. 42 Pa. C.S.A. § 5301(a)(2).*fn5 When jurisdiction is premised on one of the aforementioned three traditional bases, such as consent, the due process requirements of personal jurisdiction are instantly satisfied because these bases are traditional for the very reason that they coincide with principles of constitutional due process. See Bane v. Netlink, Inc., 925 F.2d 637, 641 (3d Cir. 1991) (noting that consent is "a traditional basis for assertion of jurisdiction long upheld as constitutional" and thus forgoing a separate due process analysis). Under Pennsylvania law, a court has personal jurisdiction over a defendant corporation when the corporation consents to jurisdiction. 42 Pa.C.S.A. § 5301(a)(2)(ii).

  Defendant does not argue that personal jurisdiction may not be obtained by means of a contractual forum selection clause. Def.'s Orig. Mot. at 3 n. 1. Therefore, the issue before this court is whether the terms of the distributorship agreement govern this dispute either because of the breadth of the language or because the clause survived the contract's one-year expiration date.

  In the first instance, I find that the broad language of the distributorship agreement's forum selection clause provides for jurisdiction in this district. The clause applies to "[a]ny litigation arising hereunder or related to the relationship created herein." Distributorship Agreement ¶ 17 (emphasis added). As discussed below, plaintiff has demonstrated through the affidavits of Blackburn and Farmer that its claims are related to the relationship created by the distributorship agreement. Therefore, under the terms of the distributorship agreement, I conclude that jurisdiction is proper.

  Furthermore, I find that the terms of the distributorship agreement survived at least for purposes of the jurisdictional argument because there is sufficient evidence that the parties continued to act under the terms of the contract long after its expiration date. Pl's Reply at 2; Pl's Memo at 1. The Third Circuit has concluded that "when a contract lapses but the parties to the contract continue to act as if they are performing under a contract, the material terms of the prior contract will survive." Luden's Inc. v. Local Union No. 6, 28 F.3d 347, 355-56 (3d Cir. 1994). Plaintiff has shown through affidavits that after the one year period of the contract, the parties continued to operate under the terms of the contract for several years. Plaintiff points to the affidavits of Kenneth Blackburn, Atofina's business manager, and Lawrence Farmer, general manager and later president of Atoftna Portland, who both stated that the defendant "continuously and consistently acted as a distributor of the Plaintiffs products during the period 1997 through 2001." Pl's Memo. at 1; see affidavits attached to plaintiff's response to defendant's original motion to dismiss (Doc. # 7). Blackburn stated that the distributorship agreement was entered into to "formalize the ongoing business arrangements between the parties" and that "[t]he parties continued to operate in the same fashion as under the Distributor Agreement during this entire period." Id. Defendant has not disputed these affidavits.

  I find that the forum selection clause in the distributorship agreement governs plaintiff's claims because the claims are related to the relationship created by the agreement. Furthermore, in light of the parties' conduct, the termination date of December 31, 1996 has no effect for jurisdictional purposes because the parties continued to operate under the contract long after that date. Material terms of the contract survive "unless either one of the parties clearly and manifestly indicates, through words or through conduct, that it no longer wishes to continue to be bound thereby, or both parties mutually intend that the terms not survive." Luden's, 28 F.3d at 355-56. Defendant agrees that the forum selection clause is a material term of the contract. Def.'s Mot. ¶ 17. Defendant does not contend that it ever "manifestly indicated" that it no longer wished to be bound by the forum selection clause. Moreover, defendant's purchase orders do not provide for a new forum; instead, they provide that the parties agree that the purchase order "shall be governed by the laws of the State of Nevada." Def's Mot. ¶ 11. Defendant's clause is a choice of law provision, not a forum selection clause. Because defendant never gave any indication that it no longer wished to be bound by the contract, I find that under the terms of the agreement, the defendant has waived its right to assert lack of personal jurisdiction. The contractual consent manifested in the distributorship agreement vests this court with personal jurisdiction over the defendant.

  Therefore, I conclude that plaintiff has satisfied its burden of establishing a prima facie case of personal jurisdiction over the defendant, which defendant has not rebutted, and I will deny defendant's motion to dismiss for lack of personal jurisdiction.

 II. Motion to Dismiss for Improper Venue Pursuant to 12(b)(3)

  If a claim is brought in a district in which venue is improper, then that claim may be dismissed. 28 U.S.C. § 1406(a). Defendant argues that venue is improper for two reasons: 1) the one year agreement (and its forum selection clause) terminated before the action arose; and 2) under UCC § 2-207, defendant is not bound by the terms on the back of plaintiff's invoices because the invoices provide terms that are not in defendant's purchase order. Def.'s Memo. at 13-14.

  Defendant's first argument that venue is improper and should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(3) is meritless. Defendant states that it raised and briefed this issue in its previous motion to dismiss (see Doc. #5); however, in its earlier motion, defendant raised similar arguments only in conjunction with a F.R.C.P. 12(b)(6) motion to dismiss for failure to state a claim, not for improper venue. Presumably, defendant now argues that the terms of the distributorship agreement are no longer in effect, and that the forum selection clause therein has no applicability to this litigation. Def.'s Orig. Memo. at 9. Defendant notes that the distributorship agreement states: "The Agreement shall continue in effect for a period of one year." Id. Also, defendant asserts that the contract ended on December 31, 1996. Id. Even if defendant had cogently stated its argument, I would deny defendant's motion to dismiss for improper venue because the defendant is subject to personal jurisdiction in this district. In a diversity action, venue is proper in a district where the defendant resides. 28 U.S.C. § 1391(a)(1).*fn6 Within the meaning of the federal venue provision, a corporate defendant resides "in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 28 U.S.C. § 1391(c). Because defendant is subject to personal jurisdiction in this district, I conclude that venue is proper herein. See Mountbatten Sur. Co. Inc. v. Reagerharris Inc., 2000 U.S. Dist. LEXIS 333 at *27 (E.D. Pa. Jan. 19, 2000).

  Next defendant argues that UCC § 2-207 nullifies the terms of the invoices providing for jurisdiction in Philadelphia because the forum selection clause in plaintiff's invoices was a material term that was added, but not accepted, by the defendant. Under UCC § 2-207(2), additional terms are construed as proposals for additions to the contract. Between merchants,*fn7 such terms become part of the contract unless a) the offer expressly limits acceptance to the terms of the offer; b) they materially alter it; or c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. Defendant argues that its purchase order-constitutes an offer and that plaintiffs invoices constitute an acceptance. Defendant further contends that plaintiff's addition of a forum selection clause in its invoices is no more than a proposal for an addition to the contract. Defendant argues that the forum selection clause cannot be part of the contract under UCC § 2-207(2)(a) because defendant's purchase order expressly limited acceptance to the terms of the offer and noted that additions and changes must be approved in writing.*fn8 Defendant also argues that the addition of the forum selection clause does not become part of the contract because under UCC § 2-207(2)(b) it materially alters the contract.*fn9

  Defendant's arguments rely on the assumption that the forum selection clause of the distributorship agreement did not survive its 1996 termination date. I find defendant's argument unavailing because I have already found that the distributorship agreement was still in effect for purposes of establishing consent to personal jurisdiction. Thus, I conclude that venue is proper, and I will deny defendant's motion to dismiss pursuant to 12(b)(3).

 III. Motion to Transfer Venue Pursuant to § 1404(a)

  Next defendant argues that venue is inconvenient and that venue should be transferred to Nevada pursuant to § 1404(a). Def.'s Mot. at 16. According to the Third Circuit, "a forum selection clause is presumptively valid and will be enforced by the forum unless the party objecting to its enforcement establishes 1) that it is the result of fraud or overreaching, 2) that enforcement would violate a strong public policy of the forum, or 3) that enforcement would in the particular circumstances of the case result in litigation in a jurisdiction so seriously inconvenient as to be unreasonable. Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190, 202 (3d Cir. 1983).*fn10 Defendant has not alleged fraud nor does Sierra argue that enforcement of the clause would violate public policy. Instead, defendant argues that enforcement of the forum selection clause would be unreasonably inconvenient for the defendant.

  Under § 1404(a), a district court may transfer a civil case to another district or division where it might have been brought "for the convenience of parties and witnesses, in the interest of justice." 28 U.S.C. § 1404(a). "Section 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an `individualized, case-by-case consideration of convenience and fairness.'" Stewart Org. Inc. et al. v. Ricoh Corp. et al., 487 U.S. 22, 29 (1988). Plaintiff's choice of forum is entitled to great deference, and the burden is on the defendant to establish the forum's inconvenience. Bhatnagar v. Surrendra, 52 F.3d 1220, 1226 n. 4 (3d Cir. 1995); Lacey v. Cessna Aircraft Co., 932 F.2d 170, 180 (3d Cir. 1991).

  According to the Third Circuit, a forum selection clause is treated as "a manifestation of the parties' private preferences as to a convenient forum" and is among the relevant private interests courts consider when deciding whether to transfer venue. Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).*fn11 In deciding whether or not to transfer venue, the court must also consider a number of public factors*fn12 such that the parties' intentions is only one factor courts consider when determining whether venue is appropriate. Id. "Section 1404(a) directs a district court to take account of factors other than those that bear solely on the parties' private ordering of their affairs. The district court must also weigh in the balance the convenience of the witnesses and those public-interest factors of systematic integrity and fairness." Stewart, 487 U.S. at 30. "This court may only consider the inconvenience of lay witnesses to the extent that the witnesses may actually be unavailable for trial." Jumara, 55 F.3d at 879.

  Defendant argues that "it would be extremely inconvenient and burdensome to require Sierra's employees and/or representatives to travel half way across the country to defend itself in a forum in which it has no contacts." Def.'s Mot. at ¶ 31. Defendant also argues that this court would have to apply foreign law because the laws of Pennsylvania would not apply. Id. ¶ 32.

  In every respect, defendant has failed to meet its burden. Plaintiff is a Pennsylvania corporation with its principal place of business in Philadelphia. Amend. Compl. ¶ 1. Thus, plaintiff's choice is given great deference. The forum selection clause signed by both parties chose Philadelphia for the situs of litigation. Moreover, defendant has not offered any specific reasons why the inconvenience to the witnesses would outweigh plaintiff's choice of forum. Defendants have made only vague statements that their unnamed witnesses would be inconvenienced by traveling to Philadelphia. Defendants have not identified the specific witnesses who would be inconvenienced, their residences or office locations, and the nature of their testimony, or specified how these witnesses would be significantly more burdened by traveling to Philadelphia. Furthermore, defendant has provided no reason that a judgment in this district could not be enforced elsewhere or that this court cannot apply the laws of Nevada. There is no evidence that trial would be easier, more expeditious in the District of Nevada. Nor has defendant presented any evidence that the docket of the District of Nevada is significantly less congested. Also, weighing in favor of the plaintiff is the local interest in deciding local controversies at home. Defendant cannot claim forum non conveniens simply so that it may shift its burden onto the plaintiff. Thus, I find that defendant has not met its burden to establish that litigation should be transferred to the District of Nevada, and I will deny defendant's motion to transfer.

 IV. Motion to Dismiss Pursuant to 12(b)(6)

  Finally, defendant moves to dismiss the complaint for failure to state a claim in so far as it relies on the invoices addressed to Patterson West Chemical Company. Def.'s Mot. at 18.

 A. Standard of Review

  In ruling on a motion to dismiss for failure to state a claim upon which relief may be granted, the court must accept as true all well-pleaded allegations of fact, and any reasonable inferences that may be drawn therefrom, in the plaintiffs complaint and must determine whether "under any reasonable reading of the pleadings, the plaintiff may be entitled to relief." Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996) (citations omitted); Colburn v. Upper Darby Township, 838 F.2d 663, 665-66 (3d Cir. 1988), cert. denied, 489 U.S. 1065 (1989) (citations omitted). Although the court must construe the complaint in the light most favorable to the plaintiff, it need not accept as true legal conclusions or unwarranted factual inferences. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Claims should be dismissed under Rule 12(b)(6) only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief." Id.

 B. Analysis

  Defendant argues that twenty-three of the eighty-one invoices attached to plaintiff's complaint are for products delivered to and directed to the Patterson West Chemical Company. Def.'s Mot. at 18. Defendant asks this court to dismiss the part of plaintiff's amended complaint that relates to these invoices. Id.

  As plaintiff indicates, the invoices show that the goods were shipped to this company but were sold to the defendant. Pl's Reply at 4; Pl's Memo. at 18; Amend. Compl., Exhibit B. Furthermore, Sierra Chemical Company's name still appears on each of these invoices. I must accept the allegations in the complaint and all reasonable inferences therefrom for purposes of a motion to dismiss. Therefore, I will deny defendant's motion to dismiss plaintiff's claims related to the twenty-three invoices for products delivered to Patterson West Chemical Company. Conclusion

  I will deny defendant's 12(b)(2) motion to dismiss for lack of personal jurisdiction because defendant consented to jurisdiction in the Eastern District of Pennsylvania by signing the forum selection clause in the contract and by continuing to act under the terms of the contract long after its one-year expiration date. I will deny defendant's 12(b)(3) motion to dismiss for improper venue because defendant corporation is subject to personal jurisdiction in this district. I will deny defendant's motion to transfer venue pursuant to § 1404(a) because defendant has failed to meet its burden to establish forum non conveniens. I will deny defendant's 12(b)(6) motion to dismiss for failure to state a claim for twenty-three of the eighty-one invoices because plaintiff has alleged that those invoices were defendant's obligation even though the goods were delivered to a third party. An appropriate order follows. Order

  And now, this ___ day of April 2004, upon consideration of the defendant's motion to dismiss plaintiff's amended complaint (Doc. #13) and alternatively its motion to transfer venue (Doc. #14), and the plaintiff's opposition thereto (Doc. # 16), it is hereby ORDERED that the defendant's 12(b)(2) motion to dismiss for lack of personal jurisdiction is DENIED, defendant's 12(b)(3) motion to dismiss for improper venue is DENIED, and defendant's motion to transfer venue pursuant to § 1404(a) is DENIED. Defendant's 12(b)(6) motion to dismiss for failure to state a claim is also DENIED.

  The parties shall submit to the court by letter within ten (10) days of the date hereof their proposals for a new discovery deadline, dispositive motion deadline and trial date.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.