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Malibu Boats, LLC v. Marine Power Holding, LLC

United States District Court, E.D. Tennessee, Knoxville

June 9, 2015

MALIBU BOATS, LLC, Plaintiff,
v.
MARINE POWER HOLDING, LLC, Defendant.

MEMORANDUM OPINION

Plaintiff, Malibu Boats, LLC, manufactures boats used for water sports. Defendant Marine Power Holding, LLC, builds engines utilized in sport boats. In 2013, the parties entered into a business relationship whereby Marine supplied engines for installation in boats manufactured by Malibu. The business relationship between the parties did not go well and was ultimately terminated. Malibu filed the instant litigation; Marine filed a similar action in Louisiana; and later, Marine filed a second action in Louisiana. This matter is before the court on various motions filed by the parties: (1) Malibu’s motion to enjoin Marine from maintaining the later-filed lawsuit in the Eastern District of Louisiana [R. 4]; (2) Marine’s motion to dismiss for improper venue or in the alternative, to transfer the instant suit to the Eastern District of Louisiana [R. 15]; (3) Malibu’s motion to amend/revise complaint [R. 41]; (4) Marine’s motion to withdraw or stay the court’s scheduling order [R. 48]; and (5) Malibu’s motion for oral argument [R. 49].

The court has thoroughly considered the arguments of the parties, the voluminous record produced by the parties, and the controlling law. For the reasons which follow, Malibu’s motion to enjoin Marine from maintaining the later-filed lawsuit in the Eastern District of Louisiana will be denied; and Marine’s motion to dismiss the instant suit will be granted.

I. Background

Malibu is a Tennessee and Delaware company that manufactures and sells sport boats. Marine is a Louisiana company that designs, manufactures, and sells engines for sport boats. In 2013, Malibu and Marine entered into an agreement for Malibu to purchase engines for its boats from Marine.

There are currently three lawsuits pending between Malibu and Marine. The first two lawsuits concern a purchase order (557 PO) for 571 engines, and the third lawsuit concerns a warranty on LS3 engines. The 557 PO was not for LS3 engines.

On April 15, 2014, Malibu filed the instant action against Marine, seeking a declaratory judgment that its purported cancellation of the 557 PO was proper. Then, on April 22, 2014, Marine filed an action against Malibu in the Eastern District of Louisiana for breach of contract, bad faith breach of contract, and detrimental reliance. Both of these lawsuits concern the 557 PO. District Judge Africk of the Eastern District of Louisiana transferred the Louisiana case to this court under the “first to file” rule. He found that the two cases might substantially overlap, requiring transfer. He also noted that he expressed no opinion as to which case should proceed or as to where venue was proper, leaving the issue of venue for this court to decide.

Marine filed the third lawsuit in the Eastern District of Louisiana concerning a warranty on LS3 engines. Dealers of Malibu’s boats contacted Marine about the failure of eight LS3 engines. Marine believes that the engines failed due to a design defect in Malibu’s boats. Malibu disagrees and claims that it has no responsibility for the failure of the LS3 engines. Malibu moved to dismiss the third lawsuit or transfer it to this court. District Judge Feldman found that the two sets of cases did not arise out of the same transaction or occurrence, nor did the cases raise the same legal or factual issues. The issues raised in the third action are whether the cause of the failures of the LS3 engines is a design defect by Marine Power as to the engines, or by Malibu as to the design of the boats, and whether Marine’s warranty covers the failure of the engines. Judge Feldman noted that the issues in the cases pending in Tennessee are whether Marine or Malibu breached the 557 PO and whether Malibu acted properly in cancelling that purchase order. Judge Feldman denied Malibu’s motion to dismiss the third action or to transfer the action to Tennessee.

On October 29, 2014, Malibu moved to amend its complaint to include assertions concerning the LS3 warranty at issue in the Louisiana litigation.

Malibu moves the court to enjoin Marine from pursuing a lawsuit concerning the 557 PO in the Eastern District of Louisiana. Malibu states that the actions involve the same parties, the same subject matter, and issues relating to the 557 PO. Malibu asserts that no basis exists for avoiding the application of the first-to-file rule; therefore, Marine should be enjoined from pursuing its later-filed lawsuit in the Eastern District of Louisiana.

Marine responds this court should decline to exercise jurisdiction over this action under the Declaratory Judgment Act because Malibu’s complaint is merely a preemptive, anticipatory proceeding, and there is a parallel proceeding, with all necessary claims and parties, pending in a more appropriate forum, the Eastern District of Louisiana.

The court will first address Malibu’s motion to enjoin Marine from maintaining a later-filed lawsuit in the Eastern District of Louisiana and Marine’s motion to dismiss for improper venue.

II. Analysis

A. First-To-File Doctrine

Malibu argues that the first-to-file rule favors this court exercising jurisdiction over its declaratory judgment action, while Marine contends that this matter falls within an exception ...


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