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Emerald International Corporation v. Wwmv, LLC

United States District Court, E.D. Kentucky, Northern Division, Covington

December 23, 2014

EMERALD INTERNATIONAL CORPORATION, Plaintiff,
v.
WWMV, LLC, Defendant.

MEMORANDUM OPINION AND ORDER

DAVID L. BUNNING, District Judge.

Plaintiff Emerald International Corporation ("Emerald") moves for partial summary judgment with respect to its breach of contract claim against Defendant WWMV, LLC. ("WWMV"). Because WWMV has failed to supply any amount of coal in accordance with the parties' executed purchase order, Emerald requests that its $500, 000 prepayment be returned in full. Emerald also seeks reimbursement of related attorneys' fees. The Court has jurisdiction over this removed action pursuant to 18 U.S.C. § 1332.

I. Factual and Procedural Background

Emerald is an Ohio corporation that buys and sells coal products. (Doc. # 1-2 at 2, ¶ 1). Its principal place of business is located in Florence, Kentucky. ( Id. ) WWMV is a coal mining company headquartered in Charleston, West Virginia. ( Id. at 2, ¶ 1). On May 2, 2013, the parties executed a purchase order ("P.O.") wherein Emerald agreed to purchase, and WWMV agreed to sell, approximately 600, 000 net tons of "U.S. Steam coal." ( Id. at 8). The terms of this exchange are contained in the P.O.'s "guaranteed specifications, " which provide that WWMV will supply roughly 30, 000 net tons of coal every month from June 2013 through June 2015. ( Id. ) In return, Emerald would pay $58.85 for each net ton received. ( Id. ) The guaranteed specifications also contain terms regarding the coal's required moisture, ash, sulfur, BTU and size. ( Id. )

Below the guaranteed specifications, just before the parties' signatures, the P.O. includes a single paragraph, which states as follows:

Upon acceptance of this PO and the PO Terms by you, Emerald will wire $500, 000 to an account designated in writing by you as pre-payment on the coal described in this PO, and you (and your agents and representatives) shall cease all discussions with any third parties (other than Patriot Coal Corporation) regarding the acquisition of rights to sublease or mine the Wildcat mine. Additionally, you agree that Emerald shall have the exclusive and first right, but not the obligation to purchase approximately 600, 000 tons of coal of similar quality at the same price from the Wildcat mine when such rights are acquired by you.

( Id. ) On the back of the P.O., there are numerous other terms and conditions, including a section entitled "Governing Law; Venue, " which contains a forum selection clause that identifies the United States District Court for the Eastern District of Kentucky as having exclusive jurisdiction over any federal lawsuit arising from the parties' agreement. ( Id. at 9). This section also states that "[i]n any action where Buyer is the successful party, Buyer shall be awarded reasonable attorney's fees and costs." ( Id. )

The parties stipulate that after the P.O. was executed, Emerald made a $500, 000 payment to WWMV. (Doc. # 6 at 1, ¶ 5). The parties further agree that WWMV has yet to supply Emerald with any coal. (Doc. # 10 at 1; Doc. # 8-1 at 2-3). WWMV explains that it attempted to deliver some amount of coal in June 2014 (after this lawsuit was filed), but insists that Emerald rejected this offer. (Doc. # 10 at 2-3). WWMV also maintains that it has fully complied with its promise not to negotiate the Wildcat mine with any third parties. ( Id. at 2).

Despite Emerald's request, WWMV has refused to return the $500, 000 payment. (Doc. # 6 at 2, ¶ 9). As a result, Emerald filed suit on May 19, 2014 in Boone County, Kentucky, alleging claims against WWMV for breach of contract, breach of good faith and fair dealing, promissory estoppel and unjust enrichment. (Doc. # 1-2 at 4-6). With respect to each claim, Emerald asks for damages of no less than $500, 000 plus attorney's fees. ( Id. at 6-7). WWMV promptly removed the action to this Court and filed its answer on June 16, 2014. (Doc. # 6).

II. Analysis

1. Applicable Law

Federal courts sitting in diversity apply federal procedural law. Hanna v. Plumer, 380 U.S. 460, 465 (1965). The substantive law of the forum state governs the claims asserted. Erie R. Co. v. Tompkins, 304 U.S. 64 (1938); Moore v. Coffey, 992 F.2d 1439 (6th Cir. 1993); Gafford v. Gen. Elec. Co., 997 F.2d 150, 165 (6th Cir. 1993). Therefore, the Court will evaluate this Motion in accordance with the Federal Rules of Civil Procedure, while applying Kentucky substantive law to the various causes of action.

The Kentucky Uniform Commercial Code ("UCC") applies to transactions in goods. KRS § 355.2-102. However, "[u]nless displaced by the particular provisions of the Uniform Commercial Code, the principles of law and equity... supplement its provisions." KRS § 355.1-103. Although the case at hand involves a contract to purchase to coal, most of the pertinent legal issues are not covered by the Kentucky UCC.[1] As a result, the Court relied primarily on principles of common law in resolving Emerald's claims.

2. Standard of Review

Summary judgment is appropriate when there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). If there is a dispute over facts that might affect the outcome of the case under governing law, then entry of summary judgment is precluded. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party has the ultimate burden of persuading the court that there are no disputed material facts and that he is entitled to judgment as a matter of law. Id. Once a party files a properly supported motion for summary judgment by either affirmatively negating an essential element of the non-moving party's claim or establishing an affirmative defense, "the adverse party must set forth specific facts showing that there is a genuine issue for trial." Id. at 250. "The mere existence of a scintilla of evidence in support of the [non-moving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party]." Id. at 252.

3. Procedural Issues

a. This Court has jurisdiction over WWMV.

The great weight of authority suggests that a valid forum selection clause precludes a party to the contract from challenging personal jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 490 n.14 (1985) (explaining that where forum selection clauses "have been obtained through freely negotiated' agreements... their enforcement does not offend due process."); Preferred Capital, Inc. v. Associates in Urology, 453 F.3d 718, 721 (6th Cir. 2006) ("A forum selection clause is one way in which contracting parties may agree in advance to submit to the jurisdiction of a particular court."); KFC Corp. v. Wagstaff, 502 B.R. 484, 489 (W.D. Ky. 2013) ("A party to a contract may waive its right to challenge personal jurisdiction by consenting to personal jurisdiction through a forum selection clause." (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 11 (1972)).

A forum selection clause will be upheld "absent a strong showing that it should be set aside." Wong v. PartyGaming Ltd., 589 F.3d 821, 828 (6th Cir. 2009). In assessing whether to enforce a forum selection clause, courts look to the following factors: "(1) whether the clause was obtained by fraud, duress, or other unconscionable means; (2) whether the designated forum would ineffectively or unfairly handle the suit; and (3) whether the designated forum would be so seriously inconvenient such that requiring the plaintiff to bring suit there would be unjust." Id. The burden of contesting a forum selection clause rests with the party opposing it. Id.

WWMV contends that this Court lacks personal jurisdiction over it, emphasizing that it "took no action in Kentucky with respect to the alleged transaction, " that "[e]very meeting of the parties... occurred in Charleston, West Virginia, " and that the P.O. was sent to Emerald's attorneys in Ohio, not Kentucky. (Doc. # 10 at 1; Doc. # 6 at 3-4). In response, Emerald points to the forum selection clause in the parties' executed contract, ...


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