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Intertran Corp. v. Railquip

August 22, 2008

INTERTRAN CORPORATION, PLAINTIFF
v.
RAILQUIP, INC., DEFENDANT



The opinion of the court was delivered by: William W. Caldwell United States District Judge

MEMORANDUM

I. Introduction

We are considering a motion to dismiss (doc. 10) filed by the Defendant, Railquip, Inc. Plaintiff, Intertran Corporation, a sales agent for rail industry equipment manufacturers, commenced this breach of contract action seeking damages for commissions it alleges it is owed from Railquip. Intertran also seeks a declaratory judgment allowing it to compete against Railquip. Having reviewed the complaint and the briefs, we will deny the motion to dismiss for lack of subject matter jurisdiction. We will, however, grant the motion to dismiss for improper venue and transfer this case to the Northern District of Georgia. II. Background

Intertran, a Delaware corporation with an office in York, Pennsylvania, represents rail industry equipment manufacturers as an independent sales agent. (doc. 1, ¶ 1). Railquip, based in Atlanta, Georgia, provides rail products to the railroad and rail transit industries. Id. ¶ 2. In February 1999, Hans Von Lange, who later formed Intertran, entered into a contract with Railquip to serve as its independent sales agent. Id. ¶ 5. Von Lange's sales region included eleven northeastern and mid-Atlantic states along with Washington, D.C. and northern Virginia. Id. When Von Lange formed Intertran, the parties amended the contract to reflect its creation. Id. ¶ 6.

The contract granted Intertran the exclusive right to sell Railquip's products to rail companies within the sales region. Id. ¶ 7. Under the contract, neither Railquip nor Intertran had a right to control the activities and operations of the other. Id. ¶ 8. Additionally, the contract did not place restrictions on Intertran's sales accounts, except that accounts with other manufacturers could not include items or products in Railquip's product line. Id. ¶ 9. If Intertran wanted to sell competing product lines to customers it serviced for Railquip, it was required to offer Railquip a right of first refusal. Id. ¶ 10. Intertran also could not sell Railquip's products to its competitors without first receiving Railquip's permission. Id. ¶ 11. The parties could terminate the contract for any reason with sixty days' written notice, or immediately upon breach of the contract by one of the parties. Id. ¶ 12.

With respect to compensation, Railquip agreed to pay Intertran a ten percent commission on the net value of any products shipped to customers within Intertran's sales region. Id. ¶ 13. Under the contract, Intertran would receive a commission for shipments of products within its sales region regardless of whether Intertran itself made the sale. Id. ¶ 15. Upon termination of the contract, Intertran was entitled to a commission for all shipments on orders received from the sales region within twelve months of the termination date. Id. ¶ 14. Upon termination of the contract, Intertran was not precluded from conducting business with former Railquip customers, serving as a sales agent for Railquip's competitors, or competing against Railquip. Id. ¶ 16.

Intertran served as Railquip's sales agent from 1999 through March 18, 2008. Id. ¶ 17. On that date, Railquip provided written notice of its immediate termination of the contract based on its belief that Intertran was conducting business with Railquip's competitors. Id. ¶¶ 18, 19. Railquip claimed that Intertran was serving as a sales representative for Schoerling-Brock GmbH, a Railquip competitor, and had started negotiations with Pfaff Silberblau, another competitor. Id. ¶¶ 20, 25. On March 24, 2008, Intertran responded to Railquip's termination letter, disputing its rationale and seeking further discussions between the parties. Id. ¶ 28. Counsel for Railquip replied on March 28, 2008, explaining that it had terminated the contract and, therefore, "no further debate is necessary." Id. ¶ 29.

Intertran seeks damages based on commissions it is or will be owed for sales of Railquip products prior to or after the termination of the contract on March 18, 2008. Before that date, a purchaser in New York entered into an agreement to buy $3,409,260.00 in Railquip products. Id. ¶ 30. Based on this purchase agreement, Intertran contends that it "will be entitled" to approximately $340,926.00 as its commission for the order when it ships. Id. Second, Intertran claims that at the time Railquip terminated the contract, there were several other orders which would have yielded approximately $8,000.00 in commissions. Id. ¶ 31. Third, Intertran contends that it is entitled to commissions for additional orders from its sales region during the twelve months following the termination of the contract. Id. ¶ 32. Intertran argues that Railquip will refuse to pay the commissions for these future orders, in violation of the terms of the contract. Id. ¶ 34.

According to Intertran, Railquip also solicited orders from Intertran's customers without notifying Intertran. Id. ¶ 35. Intertran claims that it is entitled to commissions from the receipt of these orders as well. Id. ¶ 36. Specifically, the complaint alleges that Railquip had a secret dealing with an Intertran customer in Philadelphia. Id. ¶ 35.

Finally, Intertran contends that Railquip improperly calculated its commissions. Id. ¶ 37. The contract provided for the ten percent commission to be calculated from the net value of Railquip's products after deducting, among other things, shipping costs. Id. ¶ 13; doc. 1, ex. A. According to Intertran, Railquip improperly deducted a seven percent amount from the total value of all shipments to cover shipping costs prior to calculating Intertran's commission. Id. ¶ 37. Intertran alleges that the seven percent reduction was greater than Railquip's actual shipping costs and seeks damages based on the difference. Id. ¶ 38.

In addition to the breach of contract claim, Intertran seeks a declaratory judgment allowing it to solicit business from former customers, compete against Railquip, contact Railquip's competitors, and serve as a sales agent for Railquip's competitors. Id. ¶ 73. Intertran argues that a declaratory judgment is necessary because Railquip has threatened to take legal action to prevent Intertran from competing against Railquip in the future. Id. ¶ 45.

III. Discussion

Railquip's motion raises a number of arguments in support of dismissing or transferring this case. Railquip argues that we lack subject matter jurisdiction because Intertran's claim does not meet the amount-in-controversy requirement for diversity cases. See Fed. R. Civ. P. 12(b)(1). Second, pursuant to Rule 12(b)(6), Railquip argues that Intertran has failed to state a claim upon which relief may be granted. Third, according to Railquip, a declaratory judgment would be premature as there is no case or controversy ripe for judicial disposition. Fourth, Railquip argues that the Middle District of Pennsylvania is an improper venue for Intertran's case. See Fed. R. Civ. P. 12(b)(3). Alternatively, Railquip argues that the case should be transferred to the Northern District of Georgia based on the doctrine of forum non conveniens. Having reviewed the parties' briefs, we conclude that the Middle District ...


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