Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-5_06-cv-05175/USCOURTS-arwd-5_06-cv-05175-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

R & R PACKAGING, INC. PLAINTIFF

v. Civil No. 06-5175

GAP ROOFING, INC.; and

OMEGA PACKAGING, INC. DEFENDANTS

O R D E R

Now on this 18th day of January, 2007, come on for

consideration the following motions:

* defendant GAP Roofing, Inc.'s, Motion To Dismiss

Plaintiff's Complaint For Lack Of Subject Matter And

Personal Jurisdiction (document #5);

* GAP's Motion To Dismiss Plaintiff's Amended & Substituted

Complaint For Lack of Subject Matter And Personal

Jurisdiction And/Or Improper Venue Or, In The

Alternative, To Transfer To Another Jurisdiction

(document #19); and

* GAP Roofing Inc.'s Partial Withdrawal Of Its Motion To

Dismiss For Lack Of Personal And Subject Matter

Jurisdiction (document #27),

and from said motions, and the response thereto, the Court finds

and orders as follows:

1. In this diversity case, plaintiff's Amended And

Substituted Complaint alleges that GAP Roofing, Inc. ("GAP")

breached a contract whereby plaintiff was to acquire, deliver and

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install a custom-made shrink-wrapping machine to GAP's facility in

Pryor, Oklahoma, for which GAP was to pay the sum of $80,345.00.

Defendant Omega Packaging, Inc. ("Omega") was the supplier of the

machine. It is alleged that a dispute arose when the machine was

being installed, between an Omega employee who took one or more

photos of the facility with his camera phone and GAP's president,

who was upset about the photos. Plaintiff alleges that as a result

of the dispute, GAP removed the machine from the building where it

was being installed, deposited it in the parking lot, and sought to

rescind the contract.

Plaintiff seeks to recover the value of the contract, and also

seeks a declaratory judgment that the contract is enforceable, and

that neither plaintiff nor Omega has done anything to justify

rescission. Alternatively, plaintiff seeks contribution or

indemnity from Omega to offset the unpaid balance on the machine.

2. While GAP initially contested both subject matter and

personal jurisdiction, as well as venue, it now seeks to withdraw

its contention that the Court lacks personal jurisdiction over it,

and that motion will be granted. The issues as to subject matter

jurisdiction and venue remain for disposition.

3. The subject matter jurisdiction argument is based on the

amount in controversy requirement of 28 U.S.C. §1332(a). GAP

contends that less than $75,000 is in controversy. It relies on

the Affidavit of Glen Passmore, its president, who avers that the

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final invoice price of the shrink-wrapping machine was $80,3345.00,

and that GAP had made a down payment of $25,428.33. GAP reasons

that the difference between the invoice price and the down payment

is less than $75,000.00, and therefore the requisite amount is not

in controversy.

Plaintiff counters this argument with the Declaration of John

Rambadt, its president, to the effect that on August 29, 2006, an

attorney representing GAP notified plaintiff by letter that it was

rescinding the contract for the shrink-wrapping machine, and

demanding a return of its down payment. Thus, the full purchase

price of the machine was in issue when the Complaint was filed on

September 22, 2006. Plaintiff also points out that because its

claim sounds in contract, attorney's fees may be awarded if it

prevails, pursuant to A.C.A. §16-22-308. Attorney's fees are

included in the calculation of the amount in controversy. Capitol

Indemnity Corp. v. Miles, 978 F.2d 437, 438 (8th Cir. 1992). 

The rule with regard to amount in controversy is that

[g]enerally, a complaint that alleges the jurisdictional amount in

good faith will suffice to confer jurisdiction, but the complaint

will be dismissed if it appear[s] to a legal certainty that the

claim is really for less than the jurisdictional amount." Larkin

v. Brown, 41 F.3d 387, 388 (8th Cir. 1994)(internal quotation marks

and citation omitted). In the case at bar, it does not "appear to

a legal certainty" that the claim is for less than $75,000, and the

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motion to dismiss for lack of subject matter jurisdiction will,

therefore, be denied.

4. The venue argument is based on 28 U.S.C. §1391, which

provides that

[a] civil action wherein jurisdiction is founded only on

diversity of citizenship may, except as otherwise

provided by law, be brought only in (1) a judicial

district where any defendant resides, if all defendants

reside in the same State, (2) a judicial district in

which a substantial part of the events or omissions

giving rise to the claim occurred, or a substantial part

of the property that is the subject of the action is

situated, or (3) a judicial district in which any

defendant is subject to personal jurisdiction at the time

the action is commenced, if there is no district in which

the action may otherwise be brought.

GAP reasons that because it is an Oklahoma corporation and

Omega is a Missouri corporation, all defendants do not reside in

the same state and thus subsection (1) is not applicable. It

contends that "[a]ll of the events giving rise to the current

dispute occurred in Oklahoma and the Shrink Wrapper is located in

Oklahoma," so subsection (2) makes the Northern District of

Oklahoma the proper venue. Finally, it contends that there is a

district other than the Western District of Arkansas in which the

action may be brought, and thus subsection (3) does not apply, even

though it concedes that it is subject to personal jurisdiction

here.

Plaintiff counters by pointing out that for venue purposes,

"a corporation shall be deemed to reside in any judicial district

in which it is subject to personal jurisdiction at the time the

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Although Omega denied that it is subject to personal jurisdiction in its Answer 1

to the Amended And Substituted Complaint, it also counterclaimed therein for the

remainder of the purchase price of the machine, an action inconsistent with the intent

to contest personal jurisdiction. See, e.g., Schnabel v. Lui, 302 F.3d 1023, fn.5 (9th

Cir. 2002).

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action is commenced." GAP concedes personal jurisdiction in this

district, and at the time suit was filed, GAP was the only

defendant. Thus, at the time of filing, all defendants resided in 1

this district, and subsection (1) applied. Since venue is

determined as of the time of filing, Technograph Printed Circuits,

Limited v. Packard Bell Electronics Corp., 290 F.Supp. 308, 326

(C.D. Cal. 1968), the Court concludes that venue is properly laid.

5. The motion for transfer is based on 28 U.S.C. §1404(a),

which 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." GAP contends that the action might

have been brought in the Northern District of Oklahoma, where its

Pryor facility is located, and moves for a change of venue to that

district.

The party moving for a change of venue has the burden of proving

that its alternative forum of choice is more convenient than the forum

chosen by the plaintiff, and the court must give deference to the

plaintiff's choice of forum. Terra International, Inc. v. Mississippi

Chemical Corp., 119 F.3d 688, 695 (8th Cir. 1997). "Merely shifting the

inconvenience from one side to the other is not a permissible reason for

change of venue." Knapp v. Fooshee, 2006 WL 2381886 (E.D. Ark. 2006).

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GAP's argument for changing venue is that 

* all of its employees, and all of Omega's employees, who were

involved in the transaction work in Oklahoma;

* "the unlawful acts occurred at GAP's Oklahoma plant";

* Omega has an office in Tulsa, Oklahoma; and

* "the individual that R&R asserts committed the unlawful acts

resides in Tulsa, Oklahoma."

Plaintiff responds with the Declaration of Robert Kugler, the Omega

employee who is alleged to have taken the photos in question, to the

effect that Omega does not have an office in Oklahoma, and that he lives

in Missouri, not in Oklahoma. Plaintiff's employees involved in the

sale of the machine work -- and presumably live -- in Arkansas.

Where a motion for change of venue rests on the convenience of

witnesses, "[r]elevant considerations include the number of essential

non-party witnesses, their location, and the preference of courts for

live testimony as opposed to depositions." Id. Here, the witnesses

shown to be affiliated with the parties reside in three different

states, making this factor basically a "wash." 

Nor does any party suggest that justice will be better served in

one forum than another. Thus, when the Court considers the deference

that must be accorded the plaintiff's choice of forum, and the fact that

the burden of proof on this issue rests with GAP, it finds that the

motion for a transfer of venue should be denied.

IT IS THEREFORE ORDERED that defendant GAP Roofing, Inc.'s,

Motion To Dismiss Plaintiff's Complaint For Lack Of Subject Matter

And Personal Jurisdiction (document #5) is denied.

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IT IS FURTHER ORDERED that GAP's Motion To Dismiss Plaintiff's

Amended & Substituted Complaint For Lack of Subject Matter And

Personal Jurisdiction And/or Improper Venue Or, In The Alternative,

To Transfer To Another Jurisdiction (document #19) is denied.

IT IS FURTHER ORDERED that GAP Roofing Inc.'s Partial

Withdrawal Of Its Motion To Dismiss For Lack Of Personal And

Subject Matter Jurisdiction (document #27) is granted in part and

denied in part. The motion is granted insofar as it seeks to

withdraw GAP's motion to dismiss for lack of personal jurisdiction,

and denied in all other respects.

IT IS SO ORDERED.

 /s/ Jimm Larry Hendren 

JIMM LARRY HENDREN

UNITED STATES DISTRICT JUDGE

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