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Dailey v. Berkowitz

United States District Court, N.D. Alabama, Southern Division

January 9, 2020

STEVE DAILEY, individually and d/b/a Z DUST GROUP, INC., Plaintiff,
v.
JAN BERKOWITZ, individually and d/b/a DMC ENERGY, LLC, [1]Defendant.

          MEMORANDUM OPINION

          GRAY M. BORDEN UNITED STATES MAGISTRATE JUDGE.

         Pursuant to 28 U.S.C. § 636(c), the parties have consented to the jurisdiction of a United States Magistrate Judge. Pending before the court are Defendant Jan Berkowitz's Motion to Dismiss for Improper Venue (Doc. 15), Plaintiff Steve Dailey's Request for Transfer (Doc. 16 at 3), and Berkowitz's Motion to Dismiss for Lack of Subject Matter Jurisdiction. Doc. 36. After careful consideration of the parties' filings and the relevant law, and for the reasons stated below, the court concludes that the motions to dismiss (Docs. 15 & 36) are due to be denied, but that the motion to transfer (Doc. 16) is due to be granted and the action transferred to the Middle District of Florida, Orlando Division.

         I. JURISDICTION AND VENUE

         The court has subject matter jurisdiction over the claims in this lawsuit pursuant to 28 U.S.C. § 1332, [2] but the parties dispute whether venue is proper in the Northern District of Alabama or the Middle District of Florida.

         II. FACTUAL AND PROCEDURAL BACKGROUND

         The facts are as alleged in the complaint. Dailey filed suit against Berkowitz-who does business as DMC Energy, LLC (“DMC”)-asserting claims for breach of contract, conversion, breach of fiduciary duty, and fraud. Doc. 35. Dailey does business as Z Dust Group, Inc. (“Z Dust”). Doc. 35 at 1. Both Z Dust and DMC are in the business of reselling coal. See generally Doc. 35.

         In August 2017, Dailey agreed to purchase Anthracite coal from Berkowitz. Doc. 35 at 2. Dailey sent a deposit of $1, 000, 000 to Berkowitz. Doc. 35 at 2. As a condition of the agreement, Berkowitz was required to have the Anthracite coal tested in Egypt. Doc. 35 at 2. Berkowitz represented that the sample tested well, but that he could not meet the negotiated price. Doc. 35 at 2. In response, Dailey asked for a lab visit for testing the coal and a site visit to the mine. Doc. 35 at 2. When Dailey arrived in Atlanta, Georgia for the lab visit, he discovered that the lab was inadequate for its intended purpose. Doc. 35 at 3. Berkowitz did not show up for the lab visit and he refused to allow a site visit. Doc. 35 at 2.

         Berkowitz then offered to sell coal to Dailey from mines in Pennsylvania and the surrounding areas. Doc. 35 at 3. Dailey visited the mine sites in Pennsylvania and learned that Berkowitz was attempting to be paid for property he did not own or control. Doc. 35 at 3.

         The parties met in Baltimore, Maryland in October 2017. Doc. 35 at 3. During the meeting, Berkowitz agreed that he would acquire $1, 000, 000 worth of steam coal from a company called E & I Holdings. Doc. 35 at 3. Dailey could then provide the coal to a Berkowitz customer in Egypt. Doc. 35 at 3. A problem arose in the transportation of the steam coal, during which Berkowitz falsified an email from Norfolk Southern Rail and forced the cancellation of the shipment. Doc. 35 at 3. E & I Holdings then returned $1, 300, 000 to Berkowitz that was intended to be repaid to Dailey, but Berkowitz never returned any money to Dailey. Doc. 35 at 3. On May 16, 2018, the parties signed a termination agreement ending their original contract for the sale of Anthracite coal. Doc. 35 at 3.

         Pursuant to the termination agreement, Berkowitz was to refund $1, 300, 000 to Dailey. Doc. 5 at 20. The agreement included the following choice of law and forum selection clause:

This Agreement shall be construed in accordance with the laws of the State of Florida. Further, the parties irrevocably agree that venue for the resolution of any dispute arising out of this Agreement shall be the state or federal courts located in Orange County, Florida. The parties further agree and forever waive any objection to the venue and the jurisdiction of the state and federal courts located in Orange County, Florida.

Doc. 5 at 21. Despite this provision, Dailey filed this action in the Northern District of Alabama. Doc. 1. In light of the forum selection clause, Berkowitz moves to dismiss the action pursuant to Rule 12(b)(3). Doc. 15. In the alternative, Berkowitz seeks leave to file a motion to transfer pursuant to 28 U.S.C. § 1404(a). Doc. 19 at 1. In his response, Dailey requests that the court either deny the motion to dismiss or transfer the matter to the federal court located in Orange County, Florida. Doc. 16 at 3. The court construed this request as a motion to transfer this action to the Middle District of Florida, Orland Division, the federal district and division encompassing Orange County. Doc. 30. Berkowitz does not oppose a transfer. Doc. 31 at 1.

         III. STANDARD OF REVIEW

         A forum selection cannot be enforced by a motion to dismiss under Rule 12(b)(3). Atl. Marine Const. Co. v. U.S.D.C. for W.D. Tex., 571 U.S. 49, 52 (2013); see also Hisey v. Qualtek USA, LLC, 753 Fed.Appx. 698, 793 (11th Cir. 2018) (“If a suit has been filed in a forum that satisfies the federal venue requirements . . . a party may not enforce a forum selection clause by seeking dismissal under either § 1406(a) or Rule 12(b)(3).”). “Instead, a forum-selection clause may be enforced by a motion to transfer under 28 U.S.C. § 1404(a).” Atl. Marine Const. Co., 571 U.S. at 52. “When a [party] files such a ...


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