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Maaco Franchising, Inc. v. Tainter

United States District Court, Third Circuit

June 6, 2013

MAACO FRANCHISING, INC., Plaintiff,
v.
RICHARD O. TAINTER and DIANE E. TAINTER, Defendants.

MEMORANDUM OPINION

GENE E.K. PRATTER, District Judge.

I. Introduction

Maaco Franchising, Inc. ("Maaco") filed an action against Richard and Diane Tainter, asserting various contractual breaches of a February 2, 2004 Maaco Enterprises, Inc. Franchise Agreement (the "Agreement"). Compl. Ex. 1 [Docket No. 3-1]. The Agreement is governed expressly by Pennsylvania law and contains a forum selection clause providing that any and all actions arising out of or relating to the Agreement shall be brought and litigated in a state or federal court of general jurisdiction in Pennsylvania. The Tainters now challenge the enforceability of the forum selection clause, and move to transfer the case pursuant to 28 U.S.C. § 1404 to the Northern District of California, where they reside. For the reasons set forth below, the Court will deny the Motion to Transfer Venue [Docket No. 2].[1]

II. Factual and Procedural Background

Maaco Franchising, Inc. is a Delaware corporation with its principal place of business in North Carolina. It is the successor-in-interest to Maaco Enterprises, Inc., which was a Pennsylvania corporation that had its principal offices in King of Prussia, Pennsylvania. In 2004, Maaco entered into a Franchise Agreement with Richard and Diane Tainter, under which the Tainters opened a Maaco automotive painting and body repair shop in Palo Alto, California. In exchange for the use of the Maaco name and logo, training and access to Maaco's methods and procedures, and participation in Maaco's established network of vehicle painting and auto body repair shops, the Agreement required the Tainters to pay Maaco a weekly franchise fee equal to 9% of the shop's gross receipts and a weekly advertising fee of $850, and provide accurate weekly business reports of the shop's sales. Maaco contends that the Tainters breached the Agreement by failing to pay franchise and advertising fees, as well as by failing to comply with an audit. Maaco alleges that, as of the date of the filing of this action in September 2012, that the Tainters owed $112, 402.77 in unpaid fees and other costs.

The Franchise Agreement includes both a choice-of-law provision stating that the Agreement shall be interpreted and construed under the laws of the Commonwealth of Pennsylvania, Compl. Ex. 1 § 24(A), and a forum selection clause providing that "any action arising out of or relating to this Agreement shall be commenced, litigated and concluded only in a state or federal court of general jurisdiction in the Commonwealth of Pennsylvania." Compl. Ex. 1 § 24(B). Section 24(B) of the Agreement further states: "Franchisee [the Tainters] irrevocably submits to the jurisdiction of such court and irrevocably waives any objection he may have to either the jurisdiction or venue of such court. Franchisee further irrevocably agrees not to argue that Pennsylvania is an inconvenient forum or to request transfer of any such action to any other court."[2]

The Agreement also contains an integration clause, which reads:

This Agreement, the documents referred to herein, and the attachments hereto, if any, constitute the entire, full and complete agreement between Maaco and Franchisee concerning the subject matter hereof, and supersede all prior agreements, no other representations having induced Franchisee to execute this Agreement. No representations, inducements, promises or agreements, oral or otherwise, not embodied herein or attached hereto (unless of subsequent date) are made by either party, and none shall be of any force or effect with reference to this Agreement or otherwise. No amendment, change or variance from this Agreement shall be binding on either party unless mutually agreed to by the parties and executed by their authorized officers or agents in writing.

Compl. Ex. 1 § 22.

The parties do not dispute that, "prior to purchase of [his] franchise, " Richard Tainter also received a 2004 Maaco Franchise Disclosure Document ("FDD") containing as Item 17 the following language: "The following states have statutes that might supersede the Franchise Agreement in your relationship with us, including the areas of termination and renewal of your franchise... CALIFORNIA [Bus. & Prof. Code Sections 20000-20043]...." Tainter Aff. ¶ 6.[3]

Despite the indisputable clarity of the Agreement's language quoted above, the Tainters now argue that the forum selection clause is invalid because the parties did not "reach a meeting of the minds, " and therefore "never agreed to a forum outside California, " or if there was agreement, the forum selection clause should not be enforced because it contravenes California's "strong public policy" disfavoring the enforcement of out-of-state forum selection clauses, pursuant to California Business & Professions Code § 20040.5, which voids such provisions. Finally, the Tainters argue that, even if the forum selection clause is valid and enforceable, other factors weigh in favor of transferring this action to the Northern District of California.

III. Legal Standard

A district court may decide "[f]or the convenience of parties and witnesses, in the interest of justice, " to transfer any civil action to any other district or division where the action might have been brought. 28 U.S.C. § 1404(a).[4] "Section 1404(a) is intended to place discretion in the district court to adjudicate motions to transfer according to an individualized, case-by-case consideration of convenience and fairness." Stewart Org., Inc v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quotation omitted). Nevertheless, the moving party - here, the Tainters - bears the burden of establishing that the transfer is necessary. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).

In Jumara, the Third Circuit enumerated many factors, private and public, courts have considered when determining whether to transfer an action pursuant to § 1404(a). Private interests considered include: "plaintiff's forum preference as manifested in the original choice; the defendant's preference; whether the claim arose elsewhere; the convenience of the parties as indicated by their relative physical and financial condition; the convenience of the witnesses - but only to the extent that the witnesses may actually be unavailable for trial in one of the fora; and the location of books and records...." Jumara, 55 F.3d at 879 (citations omitted). Public interests may include: "the enforceability of the judgment; practical considerations that could make the trial easy, expeditious, or inexpensive; the relative administrative difficulty in the two fora resulting from court congestion; the local interest in deciding local controversies at home; the public policies of the fora; and the familiarity of the trial judge with the applicable state law in diversity cases." Id. at 879-880 (citations omitted). "Within this framework, a forum selection clause is treated as a manifestation of the parties' preferences as to a convenient forum." Id. at 880. The ...


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