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DFW LLC v. Mansfield Heliflight, Inc.

United States District Court, W.D. Texas

September 24, 2019

DFW LLC F/K/A RED AVIATION LLC, Plaintiff
v.
MANSFIELD HELIFLIGHT, INC. Defendant

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          SUSAN HIGHTOWER, UNITED STATES MAGISTRATE JUDGE

         TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

         Before this Court are Defendant’s Motion to Dismiss Plaintiff’s Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(3) and 12(b)(6), filed on May 30, 2019 (Dkt. No. 6); Plaintiff’s Memorandum in Opposition to Defendant’s Motion to Dismiss, filed on June 27, 2019 (Dkt. No. 10); and Defendant’s Response to Plaintiff’s Memorandum in Opposition to Defendant’s Motion to Dismiss, filed on July 5, 2019 (Dkt. No. 11). On July 9, 2019, the District Court referred the above motion to the undersigned Magistrate Judge for Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B), Federal Rule of Civil Procedure 72 and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas (“Local Rules”).

         I. BACKGROUND

         On August 28, 2018, DFW Aviation, LLC f/k/a Red Aviation, LLC (“DFW”), a Delaware corporation with its principal place of business in Addison, Texas, and Mansfield Heliflight, Inc. (“Mansfield”), a Vermont corporation with its principal place of business in Milton, Vermont, entered into an Aircraft Engine Purchase Agreement (the “Agreement”) in which Mansfield agreed to purchase two used Rolls Royce BR710-700 aircraft engines (MSN 12456 and MSN 12114) from DFW for the purchase price of $3.6 million. See Exh. A. to Dkt. No. 1. The Agreement further provided that DFW would loan Mansfield certain parts and equipment for the purposes of installing the engines for a period of 60 days “free of charge in [sic] an as-is basis, after which time the parts and equipment were to be returned to DFW at Mansfield’s sole expense and risk.” Dkt. No. 1 at ¶ 8. In the event the parts and equipment were not returned within 60 days, Mansfield agreed to pay DFW daily rent in an amount set forth in Schedule 1 of the Agreement. Id. at ¶ 9. If the parts and equipment were not returned within 120 days, Mansfield agreed to purchase the parts and equipment and pay DFW the “Outright Value” of the same as provided for in the Agreement. Id. at ¶ 10. The Agreement further provided that a failure by Mansfield to make any of the required payments or observe any other covenant or obligation of the Agreement would constitute default. Id. at ¶ 11.

         DFW alleges that it provided all the necessary parts and equipment to Mansfield “per the parties’ Agreement.” Id. at ¶ 14. DFW alleges that Mansfield accepted the delivery of the parts and equipment, “and has utilized the same for its own use and benefit.” Id. at ¶ 16. DFW alleges that although more than 120 days have passed since it delivered the parts and equipment to Mansfield, “Mansfield has failed to return the loaned parts and equipment, failed to make any payment of daily rent due under the Agreement and subsequent agreements between the parties, and failed to provide payment to DFW for the purchase of the parts and equipment as required by the Agreement and subsequent agreements between the parties.” Id. at ¶ 19. DFW alleges that “Mansfield’s non-payment of daily lease fees and purchase price payments, as well as its wrongful and continuing possession of the equipment and parts, has rendered it in breach under the parties’ Agreement and subsequent agreements between the parties.” Id. at ¶ 20.

         On May 3, 2019, DFW filed the instant lawsuit against Mansfield in the Western District of Texas, on the basis of diversity jurisdiction under 28 U.S.C. § 1332(a), alleging breach of contract, unjust enrichment, conversion, replevin, promissory estoppel, and foreclosure of lien under § 70.300 of the Texas Property Code. DFW alleges that it has been damaged “in an amount in excess of $75, 000 to be determined at trial.” Id. at ¶ 25. DFW’s Complaint alleges that “[j]urisdiction and venue are also proper pursuant to the parties’ Aircraft Engine Purchase Agreement which underlies this dispute and provides that each party consents to the jurisdiction of any court in the state of Texas.” Id. at ¶ 4.

         On May 30, 2019, Mansfield filed the instant Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3), arguing that this case should dismissed because “venue for this action is not proper in the Western District of Texas.” Dkt. No. 6 at p. 1. Mansfield argues that it never agreed to venue in the Western District of Texas. Mansfield further argues that venue in the Western District is improper under the general venue statute, 28 U.S.C. § 1391(b). Alternatively, Mansfield moves to dismiss DFW’s claims for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

         In response, DFW argues that Mansfield’s Motion to Dismiss under Rule 12(b)(3) should be denied because “Mansfield affirmatively waived its right to challenge venue in the Western District of Texas by consenting to the jurisdiction of Texas courts as part of the Forum Selection Clause in the Agreement.” Dkt. No. 10 at p. 8. DFW further argues that Mansfield’s Motion to Dismiss under Rule 12(b)(6) should be denied because it has alleged plausible claims for relief.

         II. LEGAL STANDARD

         A party may move to dismiss a claim for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3). For all civil actions that invoke the Court’s diversity jurisdiction pursuant to 28 U.S.C. § 1332, venue is proper in:

(1) a judicial district in which any defendant resides, if all the defendants are residents of the State in which the district is located;
(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 subject of the action is situated; or
(3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action.

28 U.S.C. § 1391(B)-(3). If the case falls within one of these provisions, venue is proper; if it does not, venue is improper, “and the case must be dismissed or transferred under [28 U.S.C.] § 1406(a).” Atlantic Marine Const. Co. v. U.S. Dist. Court for Western Dist. of Texas, 571 U.S. 49, 56 (2013). Like personal jurisdiction, venue is “designed to protect the defendant against the risk that a plaintiff will select an unfair or inconvenient place of trial.” Leroy v. Great W. United Corp., 443 U.S. 173, 183–84 (1979).

         Once a defendant challenges venue, the plaintiff has the burden to prove that the chosen venue is proper. Zurich Am. Ins. Co. v. Tejas Concrete & Materials Inc., 982 F.Supp.2d 714, 719 (W.D. Tex. 2013). The general rule is that venue must be established for each separate cause of action alleged in the complaint. Asevedo v. NBCUniversal Media, LLC, 921 F.Supp.2d 573, 589 (E.D. La. 2013) (citing McCaskey v. Cont’l Airlines, Inc., 133 F.Supp.2d 514, 523 (S.D. Tex. 2001) (“[I]t is well established that in a case involving multiple defendants and multiple claims, the plaintiff bears the burden of showing that venue is appropriate as to each claim and as to each defendant.”).

         On a Rule 12(b)(3) motion to dismiss for improper venue, the court must view all the facts in a light most favorable to the plaintiff. Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 237-38 (5th Cir. 2009). “Thus, a plaintiff may show that venue is proper by ‘setting forth facts that taken as true would establish venue.’” Zurich Am. Ins. Co., 982 F.Supp.2d at 719; see also Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994). Unlike a Rule 12(b)(6) motion, the court may consider extrinsic evidence, including affidavits and other evidentiary materials, in determining whether venue is proper. Ambraco, 570 F.3d at 238. As noted, if the district court finds that venue is improper, ...


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