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Excentus Corporation v. Giant Eagle, Inc.

United States District Court, Third Circuit

November 26, 2013

EXCENTUS CORPORATION, Plaintiff,
v.
GIANT EAGLE, INC. DAVID SHAPIRA, DANIEL SHAPIRA, Defendants.

MEMORANDUM OPINION

JOY FLOWERS CONTI, Chief District Judge.

I. Introduction

The issue before the court is whether this court is the proper forum for a proposed counterclaim asserted by counterclaim plaintiff Giant Eagle, Inc. ("Giant Eagle") in light of a forum selection clause bargained for and agreed to by Giant Eagle with counterclaim defendant Excentus Corporation ("Excentus").

On August 7, 2013, Excentus filed a first amended complaint against Giant Eagle, David Shapira, and Daniel Shapira (with David Shapira, the "Shapira defendants"). (ECF No. 84.) On August 21, 2013, Giant Eagle filed an amended answer and counterclaims against Excentus. (ECF No. 89.) On October 24, 2013, Giant Eagle filed a motion for leave to file an amended answer and counterclaims, which included a new counterclaim for declaratory judgment against Excentus with respect to rights provided to Giant Eagle in two stock purchase agreements entered into by Giant Eagle and Excentus. (ECF No. 106.) On the same day, Giant Eagle filed a motion for preliminary injunction against Excentus based upon the proposed counterclaim and a brief in support of the motion. (ECF Nos. 107, 108.) On November 12, 2013, Giant Eagle filed a motion to consolidate the preliminary injunction hearing with the trial on the merits and a brief in support of the motion. (ECF Nos. 110, 111.)

On November 18, 2013, Excentus filed a response in opposition to Giant Eagle's motion for leave to file an amended answer and counterclaims and a brief in support of the motion arguing this court is not the proper forum for Giant Eagle's new proposed counterclaim. (ECF Nos. 115, 116.) On the same day, Excentus filed a response in opposition to Giant Eagle's motion for preliminary injunction and a brief in support of the motion. (ECF Nos. 117, 118.) On November 20, 2013, Giant Eagle filed a reply brief with respect to its motions for leave and preliminary injunction. (ECF No. 121.) On the same day, Excentus filed a response in opposition to Giant Eagle's motion to consolidate and a brief in support of the motion. (ECF Nos. 121, 122.) On November 22, 2013, Excentus filed a motion for leave to file a sur-reply brief with respect to Giant Eagle's motions for leave and preliminary injunction. (ECF No. 124.)

On November 25, 2013, the court held a hearing with respect to Giant Eagle's motion for leave and other pending motions in this case.[1] For the reasons set forth on the record at the hearing and summarized below, Giant Eagle's motion for leave to file an amended answer and counterclaims will be denied because the proposed amendment would be futile; this court is not the proper forum in which to assert the new proposed counterclaim. Giant Eagle's motion for preliminary injunction and motion to consolidate, which are based upon Giant Eagle's proposed counterclaim, will be denied as moot.

II. Standard of Review

Excentus argues the court should deny Giant Eagle's motion for leave to amend because this court is not the proper forum to adjudicate the new proposed counterclaim, i.e., granting leave to amend would be futile. The standards for granting leave to amend and Federal Rule of Civil Procedure 12(b)(3) are set forth below.

The court may grant a plaintiff leave to amend a complaint under Federal Rule of Civil Procedure 15, which provides: "The court should freely give leave [to amend] when justice so requires." FED. R. CIV. P. 15. Rule 15, however, "does not permit amendment when it would be futile. Futility "means that the complaint, as amended, would fail to state a claim upon which relief could be granted.'" Kenny v. United States, No. 10-4432, 2012 WL 2945683, at *4 (3d Cir. July 19, 2012) (citing Burtch v. Millberg Factors, Inc. , 662 F.3d 212, 231 (3d Cir. 2011)). "The standard for deciding whether claims are futile for the purpose of granting leave to amend a complaint is the same as a motion to dismiss." Markert v. PNC Financial Servs. Group, Inc. , 828 F.Supp.2d 765, 771 (E.D. Pa. 2011). "[I]f the court determines that plaintiff has had multiple opportunities to state a claim but has failed to do so, leave to amend may be denied." See 6 CHARLES A. WRIGHT, ARTHUS R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1487 (2d ed. 2010).

The issue of proper venue under Rule 12(b)(3) "is not whether the court has authority to hear the case but simply where the case may be tried." Myers v. Am. Dental Ass'n , 695 F.2d 716, 724 (3d Cir. 1982). "[T]he movant bears the burden of proving the impropriety of the venue in the judicial district selected by [the party asserting the claim or counterclaim]." PPG Industries Inc. v. Shell Chemical LP, 2010 WL 331863, at *3 (W.D. Pa. Jan. 28, 2010) (citing Myers , 695 F.2d at 724). As the court noted in Heft v. AAI Corp. , 355 F.Supp.2d 757, 762 (M.D. Pa. 2005):

The parties may submit affidavits in support of their positions, and may stipulate as to certain facts, but the plaintiff is entitled to rely on the allegations of the complaint absent evidentiary challenge. Carteret Sav. Bank, F.A. v. Shushan , 954 F.2d 141, 142 & n. 1 (3d Cir.1992); Myers , 695 F.2d at 724. Whatever the nature of the parties' submissions, the court is bound to view the facts in the light most favorable to the plaintiff. Carteret , 954 F.2d at 142 & n. 1; Myers , 695 F.2d at 724.

Id.

III. Discussion

In the new proposed counterclaim asserted by Giant Eagle, Giant Eagle alleges that pursuant to stock purchase agreements entered into by Giant Eagle and Excentus, Excentus is required to obtain Giant Eagle's consent prior to repurchasing any of Excentus' shares in an amount in excess of $250, 000. (ECF No. 106-1 at 57.) Giant Eagle alleges that "Excentus has entered into [a] Repurchase Agreement with [Alliance Data Systems, Inc. ("ADS")], which gives Excentus the option to purchase ADS' 96, 688 shares of Series C Preferred Common Stock for a price equal to $7, 999, 965.12." (Id. ¶ 204.) Giant Eagle "seeks a declaratory judgment that Section 5.2 of the SP Agreements does require Excentus to obtain Giant Eagle's consent prior to exercising its option under the Repurchase Agreement to purchase of all of ADS' Series C Preferred Stock." (Id. ¶ 208.) Excentus argues this court is not the proper forum for the declaratory judgment action proposed by Giant Eagle because it is a permissive counterclaim, and pursuant to a forum selection clause in the stock purchase agreements, the counterclaim must be ...


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