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Aldridge Electric, Inc v. American Municipal Power, Inc

United States District Court, W.D. Kentucky, Paducah Division

March 13, 2017

ALDRIDGE ELECTRIC, INC. PLAINTIFF
v.
AMERICAN MUNICIPAL POWER, INC. DEFENDANT

          MEMORANDUM OPINION AND ORDER

          Greg N. Stivers, Judge United States District Court.

         This matter comes before the Court on Defendant's Motion to Transfer pursuant to 28 U.S.C. § 1404(a) (DN 10). For the following reasons, the motion is GRANTED. Counts I, IV, and V are SEVERED and TRANSFERRED to the U.S. District Court for the Southern District of Ohio, and Counts II and III are STAYED in this Court.

         I. BACKGROUND

         This case involves a dispute between American Municipal Power, Inc., (“Defendant”) an Ohio corporation with its principal place of business in Ohio, and Aldridge Electric, Inc., (“Plaintiff”) a Delaware Corporation with its principal place of business in Illinois, regarding a construction project located in Kentucky. (Notice Removal Ex. A, ¶¶ 2-3, DN 1-1 [hereinafter Compl.]).

         In 2011, Defendant hired C.J. Mahan Construction Company (“Mahan”) to construct a hydroelectric facility known as Smithland Hydroelectric Project at the Smithland Locks and Dam located near Smithland, Kentucky. (Compl. ¶¶ 6-7). Mahan then entered into a subcontract (“Subcontract”) with Plaintiff to perform electrical services on the Smithland Hydroelectric Project. (Compl. ¶ 8). The Subcontract incorporated by reference the general conditions of the principal contract entered into by Mahan and Defendant. (Def.'s Ans. Ex. B, at 2, DN 7-2 [hereinafter Subcontract]). One of the conditions was a forum selection clause that provides:

Any suit, which may be brought to enforce any provision of this Contract or any remedy with respect hereto, shall be brought in the Common Pleas Court, Franklin County, Ohio or U.S. District Court-Southern District of Ohio, and each party hereby expressly consents to the jurisdiction of such court.

(Subcontract 18). The Subcontract was subsequently assigned to Defendant. (Def.'s Ans. Ex. C, at 1-4, DN 7-3).

         Plaintiff filed this action on September 21, 2016, in Livingston Circuit Court in the Commonwealth of Kentucky. The Complaint asserts claims against Defendant for declaratory judgment, breach of contract, and quantum meruit/unjust enrichment. (Compl. 11-22). The Complaint also asserts a claim to enforce a mechanics' lien pursuant to KRS 376.010, and a claim to enforce a public improvement mechanics' lien under KRS 376.210(1). (Compl. 13-21). Defendant timely removed the action to this Court on October 13, 2016. (Notice Removal, DN 1).

         Defendant seeks to transfer the case in its entirety to the U.S. District Court for the Southern District of Ohio pursuant to 28 U.S.C. § 1404(a). (Def.'s Mot. Transfer, DN 10 [hereinafter Def.'s Mot.]). Defendant contends that venue is improper in this Court because of a forum selection clause in the Subcontract. (Def.'s Mot. 5-10). In the alternative, Defendant seeks to transfer the substantive contract claims set forth in Counts I, IV, and V, and sever and stay the lien claims asserted in Counts II and III in this Court. (Def.'s Reply, DN 29).

         II. STANDARD OF REVIEW

         A motion to transfer pursuant to a contractual forum-selection clause is properly viewed as a motion to transfer venue under 28 U.S.C. § 1404(a). Atl. Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex., 134 S.Ct. 568, 575 (2013). Section 1404(a) provides that “[f]or 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 district court must first determine if the forum-selection clause is valid and enforceable by considering: “(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.” Wong v. PartyGaming Ltd., 589 F.3d 821, 828 (6th Cir. 2009) (citing Sec. Watch, Inc. v. Sentinel Sys., Inc., 176 F.3d 369, 375 (6th Cir. 1999)). “The party opposing the forum selection clause bears the burden of showing that the clause should not be enforced.” Id. (citing Shell v. R.W. Sturge, Ltd., 55 F.3d 1227, 1229 (6th Cir. 1995)). If the clause is found to be enforceable, it is the duty of the court to transfer the case unless “extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer.” Atl. Marine Constr. Co. Inc., 134 S.Ct. at 575.

         III. DISCUSSION

         A. Transfer of Contract Claims to the Southern District of Ohio First to be considered is whether the substantive contract claims should be transferred to the Southern District of Ohio. Plaintiffs argue that the forum selection clause should not be enforced because Kentucky has a strong public policy in having courts in Kentucky decide lawsuits that enforce the Kentucky Fairness in Construction Act (“KFCA”), KRS 371.400-.425. (Pl.'s Resp. Def.'s Mot. Transfer 2, DN 25 [hereinafter Pl.'s Resp.]).

         1. Enforceability of the ...


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