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C&S Outdoor Power Equipment, Inc. v. ODES Industries LLC

United States District Court, W.D. Tennessee, Eastern Division

September 4, 2019

C&S OUTDOOR POWER EQUIPMENT, INC., Plaintiff,
v.
ODES INDUSTRIES LLC, Defendant.

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND GRANTING DEFENDANT'S MOTION TO TRANSFER VENUE AND TRANSFERRING CASE TO THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, FORT WORTH DIVISION

          S. THOMAS ANDERSON CHIEF UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant's Motion to Dismiss, or alternatively to Transfer Venue, which was filed on March 21, 2019. (ECF No. 12.) Plaintiff responded in opposition (ECF No. 16), to which Defendant replied. (ECF No. 17.) For the reasons that follow, Defendant's Motion to Dismiss is DENIED, but its unopposed Motion to Transfer is GRANTED.

         BACKGROUND

         ODES Industries LLC (“ODES”) is a manufacturer of utility terrain vehicles and all-terrain vehicles. (ECF No. 12 at 2.) ODES is organized in and has its principal office in Texas. (Id.) C&S Outdoor Power Equipment, Inc. (“C&S”) is an outdoor power equipment dealership in Huntingdon, Tennessee. (Id.; ECF No. 16 at 2.) C&S became an authorized dealer of ODES's products in 2015. (ECF No. 16 at 2.) The parties voluntarily agreed to three consecutive dealer franchise agreements, which have since governed the terms of their relationship. (See Id. at 2, 4; ECF No. 12-2; ECF No. 12 at 2; ECF No. 16-2.)

         On February 14, 2019, Plaintiff filed suit in this Court pursuant to the Court's diversity jurisdiction. (ECF No. 1.) Plaintiff alleges that Defendant (1) breached the parties' dealer franchise agreement (“Agreement”), (2) violated the Tennessee Motorcycle and Off-Road Vehicle Dealer Fairness Act, and (3) engaged in unfair or deceptive business practices. (Id.)

         Because Plaintiff filed its suit in Tennessee-instead of Texas-Defendant asks the Court to enforce a mandatory forum-selection clause contained in the parties' Agreement by dismissing this action, pursuant to Federal Rule of Procedure (“FRCP”) 12(b)(6). (ECF No. 12 at 3-5.) Alternatively, Defendant asks the Court to transfer venue, pursuant to 28 U.S.C. § 1404(a), to the appropriate United States District Court in Texas. (Id. at 5-10.) The Court, therefore, first looks to the Agreement between the parties.

         In March of 2017, the parties signed and entered into their third Agreement, which is the contract at issue. (See ECF No. 12-2; ECF No. 12 at 2; ECF No. 16 at 2.) Within the General provisions of the Agreement, Paragraph H provides that:

This Agreement and any matters that relate to this Agreement or its performance shall be governed and construed in accordance with the laws of the State of Texas and the Parties mutually consent to the jurisdiction of the courts of the State of Texas and of the Federal District Court, Central District of Texas.[1] This agreement will be ONLY governed by the laws of the State of Texas.

(ECF No. 12-2 at ¶ H (emphasis in original).) As the basis for its Motion, Defendant specifically relies on a later portion of that paragraph, which dictates:

Each Party agrees that any legal action, litigation, or proceeding arising from or relating to this Agreement or its performance, shall exclusively be filed in a State or District court in (venue) Fort Worth, Texas, and each Party irrevocably and unconditionally submits to the exclusive jurisdiction of these courts.

(Id.) The forum-selection clause and Plaintiff's nonconforming filing in this Court is the subject of Defendant's Motion to Dismiss and alternative Motion to Transfer. (See ECF No. 12.)

         Plaintiff, however, contends that the Agreement's own terms allow Plaintiff's filing in this Court. (ECF No. 16 at 6-9.) Plaintiff begins by noting that two sentences after the clause on which Defendant relies, the Agreement provides that “[s]ome state laws will vary by state, [so] please check with your state on its applicable laws and regulations which might supersede this agreement and or be enforceable by that state.” (Id. (citing (ECF No. 12-2 at ¶ H).) Plaintiff also relies on paragraph C, which, too, is within the General provisions of the agreement. (Id. at 6 (citing ECF No. 12-2 at ¶ C).) Paragraph C provides:

If any provision herein contravenes the valid laws or regulations of any state or other jurisdiction wherein this Agreement is to be performed, or denied [sic] access to the procedures forums or remedies provided for such laws of [sic] regulations such provisions shall be deemed to be modified to conform to such laws or regulations, and all other terms and provisions shall remain full force and effect.

(ECF No. 12-2 at ¶ C.)

         Plaintiff asserts that these two provisions modify the Agreement so as to conform to state law in Tennessee, where Plaintiff is an authorized dealer of Defendant's products. (ECF No. 16 at 7.) According to Plaintiff, such a modification incorporates Tennessee state law, which forbids forum-selection clauses in matters such as these. (Id.) Specifically, Plaintiff points to the Tennessee Motorcycle and Off-Read Vehicle Dealer Fairness Act, which provides, in part, that “[a]ny contractual term restricting the procedural or substantive rights of a dealer under this part, including a choice of law or choice of forum clause, is void.” Tenn. Code. Ann. § 47-25- 1913(b). Plaintiff contends ...


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