Court Opinion

ID: 2667226
Source: CourtListenerOpinion
Date Created: 2014-04-04 13:25:30.806081+00
Date Added: 2024-06-11T08:38:08.222891
License: Public Domain

UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF COLUMBIA

______________________________
CYNERGY SYSTEMS, INC.,         :
                               :
          Plaintiff,           :
     v.                        :     Civil Action No. 09-1079 (GK)
                               :
BRIGHT SCHOOL, INC., and       :
JOSEPH PUTHUR,                 :
                               :
          Defendants.          :
______________________________:

                          MEMORANDUM OPINION

     Plaintiff Cynergy Systems, Inc. brings this action pursuant to

28 U.S.C. § 1332 against Defendants Bright School, Inc. (BSI) and

Joseph Puthur. This matter is before the Court on Defendants’

Motion to Dismiss for Improper Venue or, In the Alternative, to

Transfer [Dkt. No. #5].

I. Background

     Plaintiff is a Virginia corporation, with its principal place

of business in the District of Columbia, that develops and supplies

computer software. Compl. ¶ 1. Defendant BSI is a San Francisco-

based California corporation “formed for the purpose of providing

software products in the educational arena.” Def.’s Mot. 3-4.

Defendant Puthur is the founder, president, and principal of BSI

and currently resides in the State of Florida. Puthur Decl. ¶¶ 1,

3, 6. Plaintiff alleges that Puthur is the sole owner of BSI, and

that BSI is now insolvent and not actively engaged in business.

Pl.’s Opp’n 2.
     The Complaint alleges that Cynergy entered into a contract in

January of 2008 with BSI to provide computer software design and

development services. Compl. ¶ 7. Cynergy claims BSI breached its

contract, alleging a failure to pay Cynergy an amount owed of

$524,000 for services rendered. Id. ¶¶ 1-20. Puthur, allegedly

acting on his own behalf and on behalf of BSI, is accused of

misrepresenting to Cynergy the level of funding secured by BSI,

thereby fraudulently inducing Cynergy to enter into their contract.

Id. ¶¶ 21-38. Without answering Cynergy’s Complaint, Defendants

moved   to   dismiss    the   action   for      improper   venue   or,   in   the

alternative,    to     transfer   venue    to    the   Northern    District   of

California.

II. Analysis

     As an initial matter, dismissal for improper venue under Fed.

R. Civ. P. 12(b)(3) would be inappropriate in this case, given the

disadvantage that would be imposed on Plaintiff and the possibility

of transfer. In addition, it bears emphasis that Defendants’ Motion

does not argue that venue in this Court is improper or make a forum

non conveniens argument, pursuant to 28 U.S.C. § 1404(a). In fact,

as Defendants themselves observe in the Reply, the only argument

they make in support of the Motion is that Section 16 of the

contract between Cynergy and BSI, which contains a forum selection

clause, requires that suit be brought in California. Def.’s Reply

2.

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      A plaintiff’s choice of forum is entitled to deference, and

the   moving   party     carries   the   burden   of   demonstrating        that   a

transfer is warranted. Schmidt v. American Institute of Physics,

322 F.Supp.2d 28, 33 (D.D.C. 2004); Montgomery v. STG Int'l, Inc.,

532   F.Supp.2d    29,    32   (D.D.C.   2008).   However,   a   case       may    be

transferred to another venue “[f]or the convenience of parties and

witnesses, in the interest of justice[.]” 28 U.S.C. § 1404(a). See

also Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253 (1981). In a

diversity case such as this one, a forum selection clause does

carry a presumption of enforceability. Worldwide Network Services,

LLC v. DynCorp Intern., 496 F.Supp.2d 59, 62 (D.D.C. 2007).

      Section 16 of the contract between Cynergy and BSI reads in

part:

      The parties shall submit to the jurisdiction of, and
      accept that venue is proper in, the State of [sic]
      Federal Courts of the State of California in any legal
      action or proceeding.

Ex. A to Compl.

      In Byrd v. Admiral Moving and Storage, Inc., 355 F.Supp.2d 234

(D.D.C.   2005),    Judge      Huvelle   distinguished     between      a    “non-

mandatory” forum selection clause, which requires language clearly

establishing exclusive jurisdiction and venue, and a permissive

clause, which only provides that jurisdiction and venue will be

proper in a given forum. In Byrd, the forum selection clause

provided that “the parties specifically agree that venue shall lie

in Broward County, Florida.” As Judge Huvelle emphasized, “[j]ust

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because the contract establishes that venue lies in Florida does

not mean that it cannot also lie elsewhere, as is the case here. .

. . [The clause] does not state that venue “shall ONLY lie” in

Broward County, Florida.” Id. at 238-39 (emphasis in original).

     The Ninth Circuit’s decision in Hunt Wesson Foods, Inc. v.

Supreme Oil Co., 817 F.2d 75 (9th Cir. 1987), makes the same point.

There, the court was presented with a forum selection clause that

stated that “the courts of California, County of Orange, shall have

jurisdiction over the parties in any action at law relating to the

subject matter or the interpretation of this contract.” Id. at 76.

The court held that:

     Although the word ‘shall’ is a mandatory term, here it
     mandates nothing more than that the Orange County courts
     have jurisdiction. . . . Such consent to jurisdiction,
     however, does not mean that the same subject matter
     cannot be litigated in any other court.

Id. at 77. See also John Boutari and Son, Wines and Spirits, S.A.

v. Attiki Importers and Distributors, Inc., 22 F.3d 51 (2d Cir.

1994) (finding forum selection clause, in the absence of terms

conferring   exclusive   jurisdiction   on   specific   courts,   to   be

permissive); Keaty v. Freeport Indonesia, Inc., 503 F.2d 955 (5th

Cir. 1974) (finding permissive a forum selection clause stating

that “the parties submit to the jurisdiction of the courts of New

York”).

     Similar to those in Byrd and Hunt Wesson Foods, Inc., the

forum selection clause in this case mandates only that the parties

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“shall submit” to jurisdiction and agree that venue is proper in

California if suit should be brought there. Section 16 fails to

include any language conferring exclusive venue in the Federal or

State courts in California, and as such is more properly read as

a permissive clause that does not prevent venue from lying in this

Court. As such, and in the absence of any argument that venue in

this Court is improper, Cynergy’s choice of forum is entitled to

deference.

III. Conclusion

      In light of the language used by the parties in Section 16,

this Court concludes that the forum selection clause is permissive

and   not,   as   Defendants   argue,    mandatory.   Therefore,   the

Defendants’ Motion to Dismiss for Improper Venue or, In the

Alternative, to Transfer is denied.

                                               /s/
September 22, 2009                      Gladys Kessler
                                        United States District Judge

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