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Liquid Magnetix Corp. v. Therma-Stor LLC

United States District Court, D. Colorado

April 9, 2014



WILLIAM J. MARTÍNEZ, District Judge.

Plaintiff Liquid Magnetix Corp. ("Plaintiff") brings this breach of contract action against Therma-Stor LLC ("Defendant"). (ECF No. 3.) Before the Court is Defendant's Motion for Transfer under 28 U.S.C. § 1404(a) ("Motion") asking the Court to transfer this action to the Western District of Wisconsin based on a forum-selection clause in a document posted on Defendant's website. (ECF No. 18.) For the reasons set forth below, the Motion is granted.


"For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). The party seeking to transfer a case pursuant to § 1404(a) bears the burden of establishing that the existing forum is inconvenient. See Chrysler Credit Corp. v. Cnty. Chrysler, Inc., 928 F.2d 1509, 1515 (10th Cir. 1991). In ruling on a motion to transfer venue, district courts must assess two issues: (1) whether the case might have been brought in the proposed transferee district, and (2) whether the "competing equities" weigh in favor of adjudicating the case in that district. See Hustler Magazine, Inc. v. U.S. Dist. Ct. for the Dist. of Wyo., 790 F.2d 69, 71 (10th Cir. 1986). The competing equities include the following factors:

(1) plaintiff's choice of forum; (2) the accessibility of witnesses and other sources of proof, including the availability of compulsory process to insure attendance of witnesses; (3) the cost of making the necessary proof; (4) questions as to the enforceability of a judgment if one is obtained; (5) relative advantages and obstacles to a fair trial; (6) difficulties that may arise from congested dockets; (7) the possibility of the existence of questions arising in the area of conflict of laws; (8) the advantage of having a local court determine questions of local law; and (9) all other considerations of a practical nature that make a trial easy, expeditious and economical.

Chrysler Credit Corp., 928 F.2d at 1516 (quoting Tex. Gulf Sulphur Co. v. Ritter, 371 F.2d 145, 147 (10th Cir. 1967)). However, the decision to transfer venue lies in the sole discretion of the district court and should be based on an "individualized, case-by-case consideration of convenience and fairness." Tex. E. Transmission Corp. v. Marine Office-Appleton & Cox Corp., 579 F.2d 561, 567 (10th Cir. 1978); Stewart Org. v. Ricoh Corp., 487 U.S. 22, 29 (1988).


Plaintiff Liquid Magnetix is a Colorado corporation that manufactures and sells environmental products, including switches and pumps used in dehumidifiers. (Complaint (ECF No. 3) ¶ 4.) Defendant Therma-Stor is a Wisconsin corporation that manufactures and sells commercial and residential dehumidifiers. ( Id. ¶ 5; ECF No. 1.) Defendant has been a long time customer of Plaintiff, having ordered custom-made switches and pumps for use in its products. ( Id. ¶ 6.) The parties developed a course of dealing for their business transactions. ( Id. ¶ 8.) Defendant would send Plaintiff a Purchase Order requesting a certain number of products at a certain price, along with a requested arrival date. ( Id. ¶ 9.) Plaintiff would confirm an expected ship date, and then ship the products to Defendant with an invoice seeking payment within 30 days. ( Id. )

Between May 24, 2012 and May 24, 2013, Defendant submitted twelve Purchase Orders, which were handled per the parties' course of dealing. ( Id. ¶¶ 10-54.) Plaintiff filled the orders and shipped the goods. ( Id. ) Defendant accepted the goods for nine of the orders, and attempted to reject three orders. ( Id. ) Despite Plaintiff's alleged performance under the contracts, Defendant has failed to pay the amount due under any of these orders, which totals $208.589.52. ( Id. ¶ 56.)

On these facts, Plaintiff brings claims for breach of contract, promissory estoppel, unjust enrichment, and quantum meruit. ( Id. ¶¶ 55-76.) Plaintiff originally filed this action in District Court for San Miguel County, Colorado, but Defendant removed the case to this Court based on the complete diversity between the parties. (ECF No. 1.) Defendant then filed the instant Motion. (ECF No. 18.)


"In the typical case not involving a forum-selection clause, a district court considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both the convenience of the parties and various public-interest considerations." Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 134 S.Ct. 568, 581 (2013). Ordinarily, the district court would weigh the relevant factors and decide whether, on balance, a transfer would serve "the convenience of parties and witnesses" and otherwise promote "the interest of justice." Id. (citing § 1404(a)). The calculus changes, however, when the parties' contract contains a valid forum-selection clause, which "represents the parties' agreement as to the most proper forum." Id. (quoting Stewart Org., 487 U.S. at 31). "[A] valid forum-selection clause should be given controlling weight in all but the most exceptional cases." Id. (internal citation omitted).

Thus, the Court's analysis is driven by whether there is a valid forum-selection clause incorporated into the contracts at issue in this case. The contracts formed between the parties here do not appear in one document; rather, the parties had a course of dealing which involved Defendant submitting a Purchase Order, which was then filled by Plaintiff when it shipped the goods, along with an invoice. Thus, Defendant's Purchase Orders constitute the offers to contract, while Plaintiff's shipment of the goods constitutes acceptance. See Colo. Rev. Stat. § 4-2-206 (outlining what constitutes offer and acceptance under Colorado law). The disputed forum-selection clause does not directly appear in either the offer or the acceptance of the contract. Instead, Defendant argues that language in its Purchase Orders incorporates the forum-selection clause by reference.

"Pursuant to general contract law, for an incorporation by reference to be effective, it must be clear that the parties to the agreement had knowledge of and assented to the incorporated terms.'" Taubman Cherry Creek Shopping Ctr., LLC v. Neiman-Marcus Grp., Inc., 251 P.3d 1091, 1095 (Colo.App. 2010) (quoting 11 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 30.25, at 234 (4th ed. 1999)). "So long as it is clear what document is being referred to and that the parties intended for it to be a part of the ...

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