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V-Soft Consulting Group, Inc. v. Logic Corp.

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

March 31, 2017

V-SOFT CONSULTING GROUP, INC., Plaintiff,
v.
LOGIC CORPORATION, Defendant.

          MEMORANDUM OPINION AND ORDER

          David J. Hale, Judge United States District Court

         Plaintiff V-Soft Consulting and Defendant Logic Corporation entered into a consulting agreement. (Docket No. 4-1, PageID # 38) When a dispute arose over the agreement, V-Soft filed suit against Logic in Jefferson County, Kentucky Circuit Court. (D.N. 1) After Logic removed the case to this Court, Logic filed a motion to dismiss, asserting that it is not subject to personal jurisdiction in Kentucky. (D.N. 4-1, PageID # 38-41) Because the Court finds that Logic's conduct does not fall under Kentucky's long-arm statute, the Court will grant the motion to dismiss.

         I.BACKGROUND

         V-Soft Consulting “provides professional IT consulting services to third parties by the temporary assignment of its employees to various client locations all across the United States.” (D.N. 5-1, PageID # 54) V-Soft is a Texas corporation that is headquartered in Louisville, Kentucky. (Id.; D.N. 4-1, PageID # 40) Defendant Logic is a “global information technology recruiting . . . and consulting firm.” Logic is a Florida corporation with its principal place of business in Florida. (D.N. 4-1, PageID # 37)

         On October 13, 2015, V-Soft and Logic entered into a consulting agreement that called for V-Soft to provide on-site consulting services to Logic's client, Bloomberg LP, in New York. (Id., PageID # 38) V-Soft filed suit in Jefferson County, Kentucky Circuit Court, alleging that Logic breached the contract by failing to pay V-Soft for these services, misrepresented its relationship with Bloomberg, was unjustly enriched from its failure to pay, and committed theft in violation of Ky. Rev. Stat. § 514.070. (D.N. 1-2, PageID # 9-12; D.N. 5-1, PageID # 54) Logic removed the case to this Court and filed a motion to dismiss, arguing that it is not subject to personal jurisdiction in Kentucky. (D.N. 4-1, PageID # 38-41) Logic claims that it is not subject to Kentucky's long-arm statute because it does not transact business in Kentucky. (Id., PageID # 39-40) In support, Logic states that it is not registered with the Kentucky Secretary of State; it does not have a physical presence in Kentucky; no Logic representative traveled to Kentucky to negotiate the agreement; and the agreement was not performed in Kentucky. (Id.) According to Logic, its only connection to Kentucky is its consulting agreement with V-Soft. (Id.)

         In response, V-Soft argues that because it executed a contract with a party located in Louisville, Kentucky, Logic transacted business in the Commonwealth under Kentucky's long-arm statute. (D.N. 5-1, PageID # 56) V-Soft then asserts that Logic has sufficient minimum contacts with Kentucky for the following reasons: (1) the agreement referenced V-Soft's location in Kentucky; (2) the employee assigned to Bloomberg was in the United States on a visa and the employee's immigration issues were handled in Louisville; (3) Logic had “significant oral and written communications” with V-Soft employees in Louisville; and (4) the payments were to go to V-Soft's headquarters in Louisville. (Id., PageID # 54-55) Alternatively, V-Soft claims that Logic's alleged failure to pay constitutes theft, which would be considered a “criminal act occurring within the Commonwealth of Kentucky.” (Id., PageID # 58) According to V-Soft, “[t]hose criminal actions alone should satisfy the minimal contacts requirement of the 14th amendment.” (Id., PageID # 58-59)

         Logic also asserts that the action should be dismissed because of the forum-selection clause contained in the parties' consulting agreement. (D.N. 4-1, PageID # 41-42) The agreement states:

This Agreement shall be governed by the laws of the state of Florida without regard to choice of law principals, regardless of where Contractor's work is performed. Company and Contractor hereby irrevocably submit to the jurisdiction of any court (state or federal) located within the state of Florida in any action, suit, or proceeding brought against or relating to or in connection with this Agreement or any transaction contemplated thereby, and to the extent permitted by applicable law, each party hereby waives and agrees not to assert by way of motion, as a defense or otherwise, in any such suit, action or proceeding, any claim that either he is not personally subject to the jurisdiction of such courts, that the suit, action, or proceeding is brought in an inconvenient forum, that the venue of the suit, action, or proceeding is improper, or that this Agreement or any instrument, agreement or document referred to herein or the subject matter hereof may not be litigated in or by such courts.

(Id., PageID # 41; D.N. 1-2, PageID # 23) Logic claims that this forum-selection clause is valid and should be enforced. (D.N. 4-1, PageID # 41-42)

         V-Soft responds that the forum-selection clause does not mandate dismissal of the complaint. (D.N. 5-1, PageID # 59-60) According to V-Soft, the clause indicates that V-Soft will submit to personal jurisdiction in Florida but does not establish Florida as the exclusive jurisdiction for bringing suit. (Id.) Alternatively, V-Soft argues that the agreement was terminated when Logic breached it by failing to pay V-Soft and thus is no longer valid. (Id.)

         Next, V-Soft claims that the agreement was procured by fraud and misrepresentation because Logic misrepresented its relationship with Bloomberg. (Id.) Finally, V-Soft asserts that it has claims that are independent of the agreement and that those claims “may be pursued in any appropriate forum.” (Id.)

         II. DISCUSSION

         A. Forum-Selection Clause

         V-Soft first argues that the clause at issue does not establish Florida as the exclusive jurisdiction for suits arising from the parties' agreement. (Id.) The Court agrees.

         Interpretation of a forum-selection clause is governed by federal common law. See Wong v. PartyGaming Ltd., 589 F.3d 821, 827-28 (6th Cir. 2009). “Under federal common law, forum selection clauses are to be interpreted by reference to ordinary contract principles” and “should be upheld absent a strong showing that [they] should be set aside.” Crown Labs., Inc. v. Se. Commercial Fin., LLC, No. 2:11-CV-185, 2012 WL 2126945, at *2 (E.D. Tenn. Apr. 30, 2012) (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991); In re Delta Am. Re Ins. Co., 900 F.2d 890, 892 (6th Cir. 1990)).

         “A forum selection clause may be either ‘mandatory' or ‘permissive' in nature.” Id. (quoting Cornett v. Carrithers, 465 F. App'x 841, 843 (11th Cir. 2012)). “A mandatory clause prescribes a specific forum in which litigation regarding the contracted-to subject matter must be brought; a permissive clause, by contrast, identifies a forum in which such litigation permissibly may be brought, but on a non-exclusive basis.” Cornett, 465 F. App'x at 843; see also Gen. Elec. Co. v. G. Siempelkamp GmbH & Co., 29 F.3d 1095, 1099 (6th Cir. 1994).

         The Tenth Circuit has explained that

[g]enerally speaking, the circuits that have addressed the issue are in agreement that “where venue is specified in a forum selection clause with mandatory or obligatory language, the clause will be enforced; where only jurisdiction is specified in a forum selection clause, the clause will generally not be enforced unless there is some further language indicating the parties' intent to make venue exclusive.”

K & V Sci. Co. v. Bayerische Motoren Werke Aktiengesellschaft, 314 F.3d 494, 499 (10th Cir. 2002) (alterations omitted) (quoting Paper Express, Ltd. v. Pfankuch Maschinen GmbH, 972 F.2d 753, 757 (7th Cir. 1992)); see also Travelers Prop. Cas. Co. of Am. v. Centimark, Corp., No. 2:04-CV-0916, 2005 WL 1038842, at *3 (S.D. Ohio May 3, 2005). “An agreement conferring jurisdiction in one forum will not be interpreted as excluding jurisdiction elsewhere unless it contains specific language of exclusion . . . or it leaves it in the control of one party with power to force on its own terms the appropriate forum.” GMAC Commercial Mortg. Corp. v. LaSalle Bank Nat'l Ass'n, 242 F.Supp.2d 279, 282 (S.D.N.Y. 2002) (quoting City of New York v. Pullman, 477 F.Supp. 438, 442 n.11 (S.D.N.Y. 1979)); see also IntraComm, Inc. v. Bajaj, 492 F.3d 285, 290 (4th Cir. 2007). “The normal construction of the jurisdiction rules includes a presumption that, where jurisdiction exists, it cannot be ousted or waived absent a clear indication of such a purpose.” Id. (quoting Pullman, 477 F.Supp. at 443).

         For example, in Blanco v. Banco Industrial de Venezuela, the forum-selection clause read:

[The parties agree] that any legal action or proceedings arising out of or in connection with this Agreement may be brought in the High Court of Justice in England, the Courts of the State of New York, the Courts of the United States of America in New York or the Courts of the City of Caracas, ...

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