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American Guard Services, Inc., A California Corporation v. Management Information Technology Corporation

July 21, 2011

AMERICAN GUARD SERVICES, INC., A CALIFORNIA CORPORATION, PLAINTIFF,
v.
MANAGEMENT INFORMATION TECHNOLOGY CORPORATION, A MARYLAND CORPORATION; AND DOES 1 THROUGH 10 INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Honorable Ronald S.W. Lew Senior, U.S. District Court Judge

ORDER Re: Defendant's Motion to Dismiss for Improper Forum [4]

Defendant Management Information Technology Corporation's Motion to Dismiss for Improper Forum was set for hearing on June 21, 2011 [4]. Having taken this matter under submission on June 16, 2011, and having reviewed all papers submitted pertaining to this Motion, the Court NOW FINDS AND RULES AS FOLLOWS:

Defendant Management Information Technology Corporation's Motion to Dismiss for Improper Forum is GRANTED IN PART AND DENIED IN PART.

Defendant Management Information Technology

Corporation ("Defendant") brings this present Motion to Dismiss for Improper Forum pursuant to Federal Rule of Civil Procedure 12(b)(3), arguing that this Case should be dismissed because there is a valid and enforceable forum selection clause between the Parties that mandates that this Action be litigated in Maryland. Moreover, Defendant requests that this Court award Defendant the attorneys' fees it has incurred in connection with bringing this present Motion.

A. Defendant Management Information Technology Corporation's Motion To Dismiss For Improper Forum Pursuant To Federal Rule Of Civil Procedure 12(b)(3)

The Court GRANTS Defendant's Motion to Dismiss for

Improper Forum pursuant to Federal Rule of Civil Procedure 12(b)(3).

Federal Rule of Civil Procedure 12(b)(3) enables a party to file a motion to dismiss for improper venue. Fed. R. Civ. Proc. 12(b)(3). A motion to dismiss that is based on the plaintiff's failure to initiate an action in the venue mandated by a forum selection clause is treated as a motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3). Argueta v. Banco Mexicano, 87 F.3d 320, 324 (9th Cir. 1996).

Federal law determines the validity and enforcement of a forum selection clause in a federal diversity case. Manetti-Farrow v. Gucci Am., 858 F.2d 509, 513 (9th Cir. 1988). The Supreme Court has held that forum selection clauses are presumptively valid. Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12-15 (1972). As such, these clauses should be enforced "absent some compelling and countervailing reason." Murphy v. Schneider Nat'l, 362 F.3d 1133, 1140 (9th Cir. 2004). The Court in Bremen v. Zapata Off-Shore Co. recognized three reasons that would make enforcement of a forum selection clause unreasonable: 1) the clause's incorporation into the contract was a result of fraud, undue influence, or overweening bargaining power; 2) enforcing the clause would be so difficult and inconvenient as to be the equivalent of depriving the non-moving party of his or her day in court; or 3) enforcement would contravene a strong public policy of the forum in which the suit is brought. Argueta, 87 F.3d at 325 (discussing Bremen, 407 U.S. at 12-13). The party challenging the clause bears a "heavy burden of proof" and must "clearly show" that enforcement of the clause would be unreasonable under one of these exceptions. Murphy, 362 F.3d at 1141.

When a party seeks to enforce a forum selection clause under Federal Rule of Civil Procedure 12(b)(3), a district court is not required to accept the pleadings as true and may consider facts outside of the pleadings. Id. In addition, the Court may draw all reasonable inferences in favor of the non-moving party. Id.

Defendant moves to dismiss this Case pursuant to Federal Rule of Civil Procedure 12(b)(3), arguing that the proper jurisdiction for this Action is Maryland. Specifically, Defendant asserts that the forum selection clause,*fn1 signed and agreed to by Plaintiff American Guard Services, Inc.'s ("Plaintiff") in all three of the agreements giving rise to this Action, mandates that the Parties litigate this Action in Maryland.*fn2

Both Parties concede that the forum selection clause is valid and applies to the claims at issue in this Action. Plaintiff instead asserts that the enforcement of the forum selection clause here would be unreasonable under the second and third exceptions set forth in Bremen. As such, the only issue ...


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