Allianz Global Risks U.S. Insurance v. Ershigs, Inc.Allianz Global Risks U.S. Insurance v. Ershigs, Inc.
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
I. INTRODUCTION
This mаtter comes before the court on Defendant Ershigs, Inc.’s (“Ershigs”) motion to dismiss Plaintiff Allianz Global Risks U.S. Insurance Company’s (“Al-lianz”) complaint. (Mot. (Dkt. # 16).) In the alternative, Ershigs asks the court to compel arbitration pursuant to the governing contract’s arbitration provision. {Id.; see also Reply (Dkt. # 18).) Allianz opposes that motion. (Resp. (Dkt. # 17).) Having reviewed the submissions of the parties, the relevant pоrtions of the record, and the applicable law,
II. BACKGROUND
Prior to February 20, 2012, Ershigs entered into a contract with Vale Newfoundland & Labrador Ltd. (“Vale”). (Compl. (Dkt. # 1) ¶¶ 1, 6.) Ershigs agreed to provide Vale with five fiberglass-reinforced plastic tanks. {Id. ¶ 6.) When the tanks arrived in Long Harbour, Newfoundland and Labrador, Canada, on February 20, 2012, Vale discovered that at least two of the' tanks had suffered damage in transit. {Id. ¶ 8.) Vale paid in excess of $75,000.00 to repair the tanks and called upon Allianz, Vale’s insurer, to cover those losses. {Id. ¶¶ 9-10.) Allianz then filed suit as Vale’s subrogee against Ershigs, alleging gross negligence, negligence, and breach of cоntract. {Id. ¶¶ 11-18.)
Allianz first filed suit against Ershigs on November 14, 2013, making essentially the s.ame allegations as in this case.
•Ershigs seeks dismissal on fonm non conveniens grounds pursuant to the forum—selection clause in the general terms and conditions (“GTCs” or “GTC § [# ]”) governing Vale’s рurchase order (“PO”) with Ershigs.
The Purchase Order shall be interpreted and enforced in accordance with, and its administration and performance governed by, the laws of the Province оf Ontario, and subject to the terms of GTC 21 (Settlement of Disputes) the Parties hereby agree to submit to the exclusive jurisdiction of the courts of the Province of Ontario for the purpose of adjudicating any suits or claims arising from the Purchase Order. GTC § 25.1. In the alternative, Ershigs moves to compel arbitration pursuant to GTC § 21.5 (which is referenced in GTC § 25.1):
The parties herein agreе that- all Disputes relating to or arising from this Purchase Order including, without limitation, all proceedings to enforce the Purchase Order, shall be referred to and finally resolved by arbitration .., conducted in Toronto, Ontario and shall be subject to the substantive law of Ontario. The parties further agree that all arbitral awards shall be final and .bindipg on the parties and shall nоt be subject to any appeal or judicial review, save and except any proceedings initiated to obtain enforcement or recognition of arbitral awards made in arbitrations conducted pursuant to the provisions of this Purchase Order.
GTC § 21.5.
Allianz does not dispute that as Vale’s subrogee, the PO and GTCs apply to its relationship and dispute with Ershigs. (See generally Resp.) Instead, Allianz argues that Ershigs’s actions render these clauses unenforceable. (See id.)
III. ANALYSIS
Although the arguments Allianz mounts against granting forum non conveniens dismissal are opaque, the court understands two separate contentions: waiver of the right to seek forum non conveniens dismissal and invalidity of the forum-selection clause.'
A. Waiver of the Right to Seek Forum Non Conveniens Dismissal
Allianz contends that Ershigs waived its right to move for dismissal by failing to raise forum non conveniens as a defense in its answer, which it filed on September 9, 2014.
This presents the question of whether forum non conveniens constitutes an “avoidance or affirmative defense” that must be raised in a responsive pleading.
[Tjhere are sound logical reasons for not requiring a forum non conveniens motion to be made within the limited time period- allowed for a defendant to file an answer or to move to amend his answer .... This time is certainly adequate to check the venue statutes and determine whether they have been met. However, the factors of equity and convenience, such as the location of important witnesses and evidence, which control a forum non conveniens motion may not be apparent without time-consuming investigation and, frequently, discovery.
This rationale is less applicable, however, when the defendant seeks a forum non conveniens dismissal based on a contractual forum-selection clause.
Nevertheless, in light of the Supreme .Court’s admonition that “a forum selection clause be ‘given controlling weight in all but the most exceptional cases,’” the court is disinclined to find Ershigs’s forum non conveniens defense waived solely by virtue of Ershigs’s delay. Atl. Marine,
In this case, given the hypothetical nature of the prejudice and the strong presumption of enforceability of forum-sеlection clauses, the undue delay is insufficient to constitute waiver of the right to seek forum non conveniens dismissal. Ershigs did put Allianz on notice of its defense based on GTC § 21.5, and enforcement of that arbitration provision could have resulted in similar prejudice to that which Allianz seeks to avoid here—dismissal. (See Ans. at 4); Sparling v. Hoffman Constr. Co., Inc.,
B. Validity of the Forum-Selection Clause
Although Allianz’s argument is again vague, the court takes Allianz’s repeated references to prejudice caused by the forum-selection clause as an argument that the clause is invalid. (See Resp. at 4, 6.) The validity of a forum-selection clause is governed by federal law. Manetti-Farrow, Inc. v. Gucci Am., Inc.,
To show that a forum-selection clause is unreasonable, the challenging party must demonstrate: (1) its incorporation into the contract was the result of fraud, undue influence, or overweening bargaining power; (2) the selected forum is so inсonvenient that the complaining party will be practically deprived of its day in court; or (3) enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought. See id.; see also Murphy v. Schneider Natl., Inc.,
The argumеnt Allianz mounts against enforcing the forum-selection clause is unconvincing, in part because it is so indirect. Although Allianz recognizes that Ershigs “filed a Motion ‘tb dismiss the Allianz action under the doctrine of forum n'on conveniens” (Resp. at 2), all of Allianz’s counterarguments address compelled arbitration (see ' generally id.). Nonetheless, one of the arguments that Allianz makes in its response cаn be applied to the second prong of the Argueta standard.
Although Allianz correctly posits that dismissal might leave open an argument that the statute of limitations оn its. claims has expired, Allianz does no analysis of this potentiality. For instance, Allianz declines to evaluate what statute of limitations the Ontarian decision-maker would apply, when that period would begin and end, whether the Ontarian decision-maker would toll the statute of limitations for the period this action has pended, and other pertinent questions. (Id.) In the absence of such analysis, the court cannot conclude that Allianz has met the “heavy burden of proof’ to “clearly show that enforcement would be unreasonable or unjust.” Murphy,
C. Conditional Dismissal
Although the forum-selection clause is valid and Ershigs did not waive its forum non conveniens argument, the court is nonetheless entitled to condition the dismissal. See Leetsch v. Freedman,
There is unrefuted evidence that Ershigs caused such potential prejudice here. Ershigs stalled for almost a year before moving to dismiss on forum n'on conveniens grounds. (Compare Ans. uhth Mot.) This was despite having nоtice—by virtue of a prior suit and several unanswered emails from Allianz—that filing suit in the Western District of Washington contravened the express- GTCs. See Allianz Global Bisks U.S. Ins. Co. v. Ershigs, Inc., No. C13-2056RSM; (Fox Decl. ¶ 3, Ex. B at 1-3.) This raises the specter of bad faith behavior, which could prejudice Allianz’s ability to recover in arbitration or litigation in Ontario. (Resp. at 4, 6.) If this delay was in good faith, Ershigs should have no objection to allowing Al-lianz tо file this action in the appropriate forum without suffering prejudice from proceeding in this court.
The court thus finds it appropriate to dismiss the case on -the condition that Ershigs treat the statute .of limitations on Allianz’s claims as tolled while this case proceeded. The parties’ contractual tolling agreement began on April 4, 2014. (Tolling Agmt. at 2.) The parties áre to treat the statute of limitations as tolled from April 4, 2014, to 30 days after the filing of this order.
IV. CONCLUSION
Based on the foregoing analysis, the court GRANTS Ershigs’s motion to dismiss-on the basis of forum non conveniens (Dkt. # 16).
. The court can properly take judicial notiсe "of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue." Bias v. Moynihan,
. Although Ershigs filed the GTCs and the PO in one 57-page exhibit, the court refers to them separately. Citations herein to the GTCs refer to the first 32 pages of Exhibit A to Ershigs’s motion to dismiss, whereas citations to the PO refer to the final 25 pages of Exhibit A. (See GTCs (Dkt. # 16-2) at-1-3 2; • PO (Dkt. # 16-2) at 33-57.)
. Ershigs understandably construes Allianz’s sparse argument to rely on
. An alternative framing of the issue is whether Ershigs waived its contractual right to enforce the forum-selection clаuse. Federal courts have with some regularity deemed forum-selection clauses waived when not raised sufficiently early, but most of those decisions
. Citing to Local Rule 7(b)(2), Ershigs contends that "failure to respond to a motion is treated as an admission that the motion has merit,” and that this rationale also extends to individual arguments raised in a motion. (Reply at 2-3 (citing Local Rule W.D. Wash. LCR 7(b)(2).) It is true that this court has extended the presumption permitted by Local Rule 7(b)(2) to a party's failure to address a specific argument raised in an opponent's brief. See Bds. of Trs.' of the Cement Masons & Plasterers Health & Welfare Tr: v. Concreteman, Inc., No. C13-1698JLR,
Ershigs is correct that Allianz casts its arguments solely against compelling arbitration. (See, e.g., Resp. at 6 (“It is further unknown whether Ershigs would raise other jurisdictional, or forum non conveniens argumеnts in a Canadian arbitration.”).) However, the court also considers those arguments to the extent they apply to the Argueta standard for declaring a forum-selection clause "unreasonable under the, .circumstances,” and thus unenforceable. Argueta,
. Ershigs moved in the alternative for this court to compel arbitration in Ontario pursuant to the arbitration provision in GTC § 21.5. (Mot. at 8-12.) Allianz argues that Ershigs has waived its right to invoke the arbitration clause. (See Resp. at 5-6.) In GTC § 25.1, the parties agreed "to submit to the exclusive jurisdiction of the courts of the Province of Ontario for the purpose of adjudicating any suits or claims arising from the Purchase Order," except those topics covered by the arbitration provision in GTC § 21. (See GTC § 25,1.) To the extent Allianz wishes dispute in court the enforceability of GTC § 25.1, the analysis herein concludes that GTC § 21.5 renders the Western District of Washington the wrong court in which to do so. See supra Part III.A-B. This court's mechanism to enforce this conclusion is dismissal on forum non conveniens grounds. See Atl. Marine,
The parties have also stipulated to an extended expert disclosure deadline, and they ask the court to approve that scheduling change. See (Stip. at 1-2 (Dkt. # 19).) Because this order dismisses the case, the court DENIES that stipulated motion as moot.