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Marathon Resource Management Group, LLC v. C. Cornell, Inc.

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

October 25, 2019



          M. Hannah Lauck, United States District Judge.

         This matter comes before the Court on Marathon Resource Management Group, LLC's ("Marathon") Motion to Remand. (ECF No. 6.) Marathon seeks remand of this case to the Circuit Court for the City of Richmond (the "Richmond Circuit Court"). Defendant C. Cornell, Inc. d/b/a CertaPro Painters of College Station ("CCI") opposed the remand. (ECF No. 7.) Marathon filed a Reply. (ECF No. 10.) The Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process.[1] The matter is ripe for disposition.

         The Court exercises jurisdiction pursuant to 28 U.S.C. § 1332(a)(1).[2] For the reasons that follow, the Court will deny the Motion to Remand.[3]

         I. Procedural and Factual Background

         Central to the dispute lies a choice-of-law provision in a contract between Marathon and CCI. To understand the dispute, the Court offers a summary of the case at bar and of prior relevant dealings between the Parties.

         A. Underlying Texas Litigation

         The current litigation arises from a default judgment that CCI obtained against Marathon in the District Court of Brazos County, Texas (the "Texas court" or the "Texas state court"). In the Texas suit, CCI alleged that in May 2017, Marathon and CCI entered into two separate contracts for CCI to paint and clean rooms in a building located in College Station, Texas. (CCI 1st Am. Pet. 3, ECF No. 1-2 Ex. B.) CCI completed the work and submitted two invoices to Marathon: on August 22, 2017, CCI sent Marathon an invoice for $29, 578.00 for the painting services; and, on September 11, 2017, CCI sent an invoice for $11, 280.00 for the cleaning services. (Id.) Marathon did not pay the invoices. (Id. A.) CCI filed a breach of contract suit in the Texas state court.

         Marathon did not make an appearance in the Texas court or otherwise respond to the allegations against it. (Default J. 1, ECF No. 1-2 Ex. C.) In March 2018, after holding a hearing on the matter, the Texas court entered a default judgment against Marathon. The Texas court found that Marathon "failed to promptly pay [CCI] as required" by Texas law and awarded CCI $40, 263.00 in damages.[4] (Default J. 1-2.)

         B. Current Virginia Court Litigation

         Marathon brings a breach of contract suit against CCI based on CCI's alleged violation of a "Master Subcontract Agreement" (the "MSA"). According to Marathon, it sent the MSA to CCI on September 22, 2017-well after CCI performed and billed for its painting and cleaning services.[5] (Mot. Remand ¶ 6.) Marathon contends that CCI signed the MSA on the same day.[6] (Mot. Remand ¶ 9.)

         The parties declined to provide insight, or even mention, two critical sections of the MSA that speak to forum selection. Because the Court finds these sections more pertinent to forum selection than those briefed by the parties, they will be discussed first. The parties do not mention Section 28 in their briefings, although Marathon discusses Section 28.3 in its Complaint filed in the Richmond Circuit Court. (Compl. ¶ 8, ECF No. 1-1.) Two provisions contained in Section 28, entitled "Dispute Resolution," address venue. (MSA § 28.) First, Section 28.1 provides that if a dispute arises relating to any term or condition of the MSA, Marathon "can elect, at its own discretion, to engage in mediation, engage in arbitration... or pursue resolution in the County of Hanover, Virginia Circuit or General District Court." (MSA § 28.1.) Second, Section 28.3 states: "the parties hereby agree that exclusive jurisdiction of any dispute arising from this Master Subcontract or the prosecution of the Work will be found in the Commonwealth of Virginia." (Id.) Section 28.3 also provides that any proceeding that Marathon initiates "will be held in the City of Richmond, Virginia unless otherwise agreed upon by the parties." (Id.) Thus, Section 28.1 allows Marathon to bring suit in the County of Hanover, Virginia, while Section 28.3 confusingly requires Marathon to seek relief of any kind in Richmond, Virginia.

         Rather than speak to the MSA provisions addressing the potential conflict between the provisions, the Parties argue that Section 30-the "Choice-of-law/Forum" provision-should guide this Court's analysis. The "Choice-of-law/Forum" provision reads in full: "The validity, construction, interpretation, performance, and jurisdictional venue pertaining to this Master Subcontract shall be governed and construed in accordance with the laws of Virginia." (Mot. Remand ¶ 6-11; Reply at 3; Notice Removal Ex. A "MSA" § 30, ECF. 1-2.) According to Marathon, this provision binds the Parties to dispute claims exclusively in Virginia state courts, meaning CCI violated the terms of the MSA when it filed suit in the Texas court, rather than in Virginia. (Compl. ¶¶ 18-22, ECF No. 1-2 Ex. B.) This forms the basis of Count I of Marathon's Complaint.[7] The Court now turns to this argument.

         C. Procedural Background and Removal to This Court

         Marathon filed this breach of contract suit against CCI in the Richmond Circuit Court, bringing two claims against CCI for alleged violations of the MSA and seeking $115, 236.00 in damages, plus interest, attorney's fees, and costs. (Notice Removal ¶ 1, ECF No. 1; Compl. ¶ 3.) CCI specially appeared in the Richmond Circuit Court and filed a Motion to Dismiss for Lack of Personal Jurisdiction.[8] (ECF No. 1 Ex. C.) CCI then timely removed the action from the Richmond Circuit Court, asserting diversity jurisdiction under 28 U.S.C. § 1332(a). (Notice Removal ¶¶ 5-8.)

         Marathon petitions this Court to remand the case to the Richmond Circuit Court for improper venue. (Mot. Remand ¶¶ 11-13.) Marathon argues that the "Choice-of-law/Forum" provision of the MSA precludes CCI from removing the case to this federal court. In opposition, CCI raises two arguments: (1) it did not sign the MSA; and, (2) even assuming the validity of the MSA, the provision is a choice-of-law, not a forum selection clause. (Resp. Mot. Remand. 2.) CCI contends that, considering Marathon "expressly concedes" the existence of diversity jurisdiction, the Court should deny the Motion for Remand. (Id.)

         II. Legal Standard for Removal and Remand

         Under 28 U.S.C. § 1441(a), [9] a defendant may remove a civil action to a federal district court if the plaintiff could have originally brought the action in federal court. 28 U.S.C. § 1441(a). Section 1446 delineates the procedure for removal, including the requirement that the defendant file a notice of removal in the federal district court and the state court. See 28 U.S.C. §§ 1446(a), (d). The state court loses jurisdiction upon the removal of an action to federal court. 28 U.S.C. § 1446(d) ("[T]he State court shall proceed no further unless and until the case is remanded."). The removability of a case "depends upon the state of the pleadings and the record at the time of the application for removal" Ala. Great S. Ry. Co. v. Thompson, 200 U.S. 206, 216 (1906); see also Pullman Co. v. Jenkins, 305 U.S. 534, 537 (1939) ("the right to remove ... [is] determined according to the plaintiffs' pleading at the time of the petition for removal.").

         "The party seeking removal bears the initial burden of establishing federal jurisdiction." Abraham v. Cracker Barrel Old Country Store, Inc., No. 3:11cv182, 2011 WL 1790168, at *1 (E.D. Va. May 9, 2011) (citing Mulcahey v. Columbia Organic Chem. Co., 29 F.3d 148, 151 (4th Cir. 1994)). No. presumption favoring the existence of federal subject matter jurisdiction exists because federal courts have limited, not general, jurisdiction. Id. (citing Pinkley Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999)). In deference to federalism concerns, courts must construe removal jurisdiction strictly. Id. (citing Mulcahey, 29 F.3d at 151). "If federal jurisdiction is doubtful, a remand is necessary." Id. (quoting Mulcahey, 29 F.3d at 151).

         A federal district court has diversity jurisdiction over "all civil actions where the matter in controversy exceeds ... $75, 000 ... and is between... [c]itizens of different states." 28 U.S.C. § 1332(a)(1). When diversity of citizenship provides the grounds for removal, then "the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy...." 28 U.S.C. § 1446(c)(2).

         An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal. 28 U.S.C. § 1447(c). The standard for awarding fees is reasonableness of the removal. Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). Courts may award attorney fees under § 1447(c) only "where the removing party lacked an objectively reasonable basis for removal." Id.

         III. Analysis

         A. This Action Satisfies the Requirements of ...

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