LORVEN TECHNOLOGIES, INC. v. INSIGHT TECHNOLOGIES, INC.
3:16-cv-07397
D.N.J.Jun 21, 2017Background
- Lorven Technologies (NJ) contracted with Insight Technologies (CA) to provide a consultant (Krishna) to perform software work on a CalTrans project in California under a Statement of Work/Independent Contractor Services Agreement.
- Krishna performed the consulting services in California; Insight (CA) allegedly failed to pay invoices totaling $96,480.00.
- Lorven's president, Bala Shan (in New Jersey), negotiated by phone with Mark Fukui (Insight/CA) and signed a copy of the Agreement in New Jersey; Insight/Fukui signed in California.
- Lorven sued in New Jersey state court asserting breach of contract, quantum meruit, book account, breach of good faith and fair dealing, conversion, and fraud; Fukui removed to federal court (D.N.J.).
- Fukui moved to dismiss and alternatively to transfer venue to the Eastern District of California; the court concluded venue in New Jersey was improper and granted transfer under 28 U.S.C. § 1406, denying dismissal without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether venue in D.N.J. is proper under 28 U.S.C. § 1391(b)(2) (substantial events occurred in NJ) | Negotiations and plaintiff’s signing occurred in New Jersey; harm felt in New Jersey | Performance and breach (nonpayment) occurred in California where services were rendered | Venue improper in New Jersey; transfer to Eastern District of California granted under § 1406 |
| Where locus of breach of contract lies (negotiation/execution v. performance/breach) | Execution and negotiations in NJ make venue proper here | Performance and breach occurred in CA; those are the substantial events | Locus is CA; breach claim venue not proper in NJ |
| Venue for equitable claims (quantum meruit, book account, good faith) | Related to contract and plaintiff located in NJ so venue proper | These claims arise from performance/payment in CA where services were rendered and not paid | Venue improper in NJ for these claims; CA is proper forum |
| Venue for tort claims (conversion, fraud) | Plaintiff felt harm in NJ; misrepresentations / conversion affected plaintiff in NJ | Alleged misrepresentations and refusal to return funds occurred in CA | Substantial events (misrepresentation/omission) occurred in CA; venue improper in NJ |
Key Cases Cited
- Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) (distinguishes §1406 and §1404(a) venue transfer standards and factors)
- Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291 (3d Cir. 1994) (substantiality test for §1391(b)(2) and preference for defendant in venue disputes)
- Iwanowa v. Ford Motor Co., 67 F. Supp. 2d 424 (D.N.J. 1999) (quantum meruit described as recovery for reasonable value of services; analyze where performance occurred)
- McNulty v. J.H. Miles & Co., 913 F. Supp. 2d 112 (D.N.J. 2012) (locus of nonpayment is where defendant failed to pay, not where plaintiff felt the result)
- Hershey Foods Corp. v. Ralph Chapek, Inc., 828 F.2d 989 (3d Cir. 1987) (quantum meruit is quasi-contractual and inapplicable where an express contract governs)