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SEECOMM NETWORK SERVICES CORP. v. COLT TELECOMMUNICATIONS

September 3, 2004.

SEECOMM NETWORK SERVICES CORPORATION, a Delaware Corporation, Plaintiff,
v.
COLT TELECOMMUNICATIONS, an unlimited English corporation; COLT TELECOM GROUP Plc, an unlimited English corporation; and DOES 1-100, Inclusive, Defendants.



The opinion of the court was delivered by: MARIA-ELENA JAMES, Magistrate Judge

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS FOR IMPROPER VENUE PURSUANT TO FED. R. CIV. P. 12(b)(3).
ORDER FOR CLERK OF COURT TO CLOSE FILE.
I. INTRODUCTION
Before the Court are Defendants' COLT Telecommunications' ("COLT") and COLT Telecom Group Plc's ("COLT Telecom") (collectively, "Defendants")*fn1 Motion to Dismiss for Improper Venue and Motion to Dismiss for Failure to State Facts Upon Which Relief Can be Granted, filed April 8, 2004. After careful consideration of the parties' papers, relevant statutory and case law authority, and Good Cause appearing, the Court hereby GRANTS Defendants' Motion for Improper Venue, pursuant to Federal Rule of Civil Procedure 12(b)(3). II. BACKGROUND

A. Factual Background

  COLT Telecom is the parent of Defendant COLT. COLT is a company that provides telecommunications network services for call origination and termination. After protracted negotiations, SeeComm Network Services ("Plaintiff") and COLT signed the European Master Services Agreement (hereinafter "EMSA"), a one-year contract, on May 21, 2002. The EMSA has a Forum Selection Clause at Section 30, which states:
This Agreement shall be governed by the laws of England and the parties submit to the exclusive jurisdiction of the Courts of England always provided that COLT and/or its Affiliates may commence proceedings in any jurisdiction in which Customer and/or its Affiliate is incorporated, domiciled or resident.
  On or about August 16, 2002, after services under the EMSA had commenced, COLT notified Plaintiff that it wished to revise the payment schedule to remedy a typographical error in setting prices for calls to and from France. The EMSA listed a rate of ? 0.0214. COLT claims that the rate should have read ? 0.214. Plaintiff asserts that phone rates needed to remain unchanged for the one year term of the EMSA, because Plaintiff negotiated contracts with their customers based on EMSA pricing. As a result of Plaintiff's refusal to revise the price for calls made to and from France, COLT terminated all services under the EMSA on August 21, 2002.

  Plaintiff previously sued COLT for specific performance of the EMSA and damages in England Plaintiff lost its application for a preliminary injunction ordering COLT to perform under the EMSA. Simultaneously, COLT counter-claimed for the value of services it had rendered under the EMSA. Plaintiff was ordered to pay COLT's costs associated with the preliminary injunction application and to post security of costs for the future litigation. Plaintiff failed to pay those costs, essentially abandoning its claims, thus Plaintiff's case was dismissed. Unsuccessful in England, Plaintiff filed a complaint in Superior Court of California, for the County of Marin for damages stemming from breach of contract, fraud, and interference with prospective business advantage. Defendants subsequently filed the current motion. B. Procedural Background

  On January 27, 2004, Plaintiff filed a Complaint in Superior Court of the State of California in and for the County of Marin.

  On April 1, 2004, Defendants filed a Notice of Removal, pursuant to 28 U.S.C. § 1441(b), in the United States District Court for the Northern District of California.

  On April 8, 2004, Defendants filed Motions to Dismiss for Improper Venue and for Failure to State Facts Upon Which Relief Can be Granted (hereinafter "the Motion"), as well as a Memorandum of Points and Authorities, the Declaration of Richard Stewart Norman, the Declaration of Dov. M. Grunschlag, and a Rule 44.1 Notice (notice to court of foreign law applicable) in support thereof.

  On April 29, 2004, Plaintiff filed an Opposition to the Motion, as well as a Memorandum of Points and Authorities and the Declaration of Martin Foster in support thereof.

  On May 6, 2004, Defendants filed a Reply in Support of the Motion, as well as the Supplemental Declaration of Dov. M. Grunschlag in support thereof.

  On July 1, 2004, the Court held a hearing on the matter. After the hearing, the Court issued an Order for Further Briefing addressing how much Plaintiff was required to post in security to proceed with its claim in the English Court, and whether this financial inconvenience was foreseeable at the time the contract was entered.

  On July 7, 2004, Defendants filed Further Briefing with the Court.

  On July 8, 2004, Plaintiff filed Further Briefing with the Court.

  III. DISCUSSION

  Defendants argue in the Motion that Plaintiff filed its complaint in an improper venue. According to Defendants, the Forum-Selection Clause in the EMSA requires Plaintiff to file lawsuits against COLT in England

  Plaintiff claims that venue is proper in the Northern District of California because the Forum-Selection Clause is invalid for several reasons. First, Plaintiff argues that COLT committed a unilateral mistake, so the entire EMSA, including the Forum Selection Clause, is invalid. Second, Plaintiff argues that COLT fraudulently-induced Plaintiff into the contract, making Plaintiff rely on COLT's promised price levels, invalidating the EMSA and the Forum-Selection Clause. Next, Plaintiff argues that it could not afford to have its day in court in England, and therefore has the right to bring its claim in this Court.

  For these reasons, Plaintiff argues that the Forum-Selection Clause is invalid and this court is the proper venue for the case.

  A. Legal Standard

  Federal Rule of Civil Procedure 12(b)(3)

  Federal Rule of Civil Procedure 12(b)(3) provides that if a party brings an action in the wrong court, a defendant can move to dismiss for improper venue. Fed.R. Civ. P. 12(b)(3). "Where the proper venue is located in a foreign country, federal courts lack authority to transfer the action and therefore must dismiss it for improper venue." Chateau Des Charmes Wines Ltd. v. Sabate USA, Inc., 2002 U.S. Dist. LEXIS 4406,*3 (N.D. ...


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