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Coastal Mechanics Co., Inc. v. Defense Acquisition Program Administration

United States District Court, E.D. Virginia, Alexandria Division

January 13, 2015

COASTAL MECHANICS CO., INC., Plaintiff,
v.
DEFENSE ACQUISITION PROGRAM ADMINISTRATION, Defendant

For Coastal Mechanics Co., Inc., Plaintiff: John Chapman Petersen, LEAD ATTORNEY, Surovell Isaacs Petersen & Levy PLC, Fairfax, VA.

For Defense Acquisition Program Administration, Defendant: Robert Thomas Hicks, LEAD ATTORNEY, Holland & Knight LLP, McLean, VA.

Page 607

MEMORANDUM OPINION

James C. Cacheris, UNITED STATES DISTRICT JUDGE.

This matter is before the Court on Defendant Defense Acquisition Program Administration's (" DAPA" ) Motion to Dismiss for Improper Venue. [Dkt. 9.] For the

Page 608

following reasons, the Court will grant the motion.

I. Background

Coastal Mechanics, Co., Inc. (" Coastal Mechanics" ) is an aerospace and defense manufacturing services company specializing in the manufacture of legacy support systems for foreign militaries. (Compl. [Dkt. 1] ¶ 4.) According to Plaintiff, DAPA is a South Korean " company" focused on providing national defense services and supplying military and defense products. ( Id. ¶ 10.) DAPA contends that it is an agency of the Republic of Korea (" ROK" or " South Korea" ) tasked with, among other things, procuring parts and supplies for the ROK military. (Def.'s Reply [Dkt. 13] at 3; Def.'s Reply [Dkt. 13], Ex. A, ¶ 4 [hereinafter " Choi Decl." ].) Coastal Mechanics supplied spare parts for military helicopters to DAPA. (Compl. ¶ 12.)[1]

In 2009, problems arose in the relationship between Coastal Mechanics and DAPA. The complaint alleges that in a November 20, 2009 DAPA " decided to cancel all the pertinent contracts with Coastal Mechanics[.]" ( Id. ¶ 27.) The complaint further alleges that " [u]ltimately, DAPA cancelled all its contracts with Coastal Mechanics without justification." ( Id. ¶ 28.) Paragraph 20 of the Complaint identifies " at least seven contracts" that were entered into by the parties. ( Id. ¶ 20.) Coastal Mechanics makes specific allegations about two of the contracts -- KFX-DAPA-61AD07E16 (" E16 contract" ) and KFX-DAPA-61AD07C72 (" C72 contract." ) ( Id. ¶ ¶ 21, 24.)[2] As to the E16 contract, Coastal Mechanics alleges DAPA falsely claimed non-performance of certain contract terms. ( Id. ¶ 21.) Coastal Mechanics claims the C72 contract was also breached by DAPA because DAPA impermissibly " seized the performance bond for the contract." ( Id. ¶ 24.) Both contracts have identical choice-of-law and forum-selection clauses that read as follows:

25. Governing Law: The formation, validity and the performance of this Contract shall be governed by the laws of the Republic of Korea. Nothing in this Contract shall be interpreted against the " Act on Contract to which the State is a Party."
26. Jurisdiction: In the event of disputes, controversies, or disagreements between Seller and Buyer arising in connection with this Contract (" the Dispute" ), the parties shall negotiate in good faith for at least thirty (30) days from the date of the occurrence. However, if the parties fail to reach settlement or resolution after thirty days, any Dispute shall be finally settled by litigation in Seoul Central District Court, Republic of Korea.

(Def.'s Mem. in Supp. [Dkt. 9], Exs. 1 & 2, ¶ ¶ 25, 26.)

Coastal Mechanics filed a one-count complaint in this Court alleging breach of contract. [Dkt. 1.] DAPA timely filed the instant motion, alleging that venue is improper under Federal Rule of Civil Procedure 12(b)(3) because the contracts at issue contain a forum-selection clause that mandates this action must be litigated in South Korea. (Def.'s Mot. [Dkt. 8] at 1.) Having been fully briefed and argued, this motion is ripe for disposition.

Page 609

II. Analysis


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