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Joy Global Conveyors Inc. v. Richard Goettle, Inc.

United States District Court, W.D. Louisiana, Shreveport Division

March 9, 2018




          Mark L. Hornsby, U.S. Magistrate Judge. [1]


         Joy Global Conveyors, Inc. (“JGCI”) contracted with Richard Goettle, Inc. to perform work in connection with a construction project in north Louisiana. Part of the project handled by Goettle failed, and JGCI refused to pay Goettle more than $300, 000 that had not yet been paid under their contract. Goettle filed a breach of contract suit in Ohio, and JGCI filed this similar suit the next day.

         Before the court is Goettle's Motion to Transfer Venue (Doc. 10) that invokes the first-to-file rule. Goettle asks the court to transfer this case to the federal court in Ohio, where its first-filed suit is pending. For the reasons that follow, the court will instead stay this civil action pending a ruling by the Ohio court on JGCI's motion to dismiss the Ohio suit for lack of personal jurisdiction or, in the alternative, transfer venue of that action to this court.

         Relevant Facts

         The owner of the Dolet Hills lignite mining operation contracted with JGCI's sister company to build an overland conveyor and truck dump at the mine in DeSoto Parish, Louisiana. JGCI participated in the project and contracted with Goettle, an Ohio company, to design and build a retaining wall structure that was part of the project. Goettle was to receive approximately $2, 000, 000 under its contract.

         Goettle completed its work and requested final payment. JGCI refused to pay the final invoice, which exceeded $300, 000, and claimed that the retaining wall was defective and had failed. The failure allegedly caused a work stoppage, delays in the overall project, and required JGCI and its sister company to spend over $1, 000, 000 for a temporary conveying system. JGCI claims that Goettle's design and construction were defective in various ways. Goettle responds that the fault lies with JGCMI for not using specified fill material and allowing dump trucks to drive on a portion of the project before it was appropriate to do so.

         The parties engaged in negotiations for a resolution, and JGCI sent a letter that allowed Goettle until September 4, 2017 to submit an agreeable plan to rebuild the wall. Goettle instead filed suit in an Ohio state court on September 5, 2017, one day after the deadline, for breach of contract and unjust enrichment. JGCI filed this civil action the next day, apparently unaware of the Ohio suit. JGCI's complaint in this case sets forth claims for breach of contract and negligence. It prays for an award of damages and the return of all monies paid to Goettle under their contract.

         JGCI removed the Ohio action to federal court based on diversity jurisdiction. It is pending in the Southern District of Ohio (Cincinnati) as No. 1:17-CV-0613. JGCI quickly filed a motion to dismiss to challenge the Ohio court's ability to exercise personal jurisdiction over JGCI. It prayed, in the alternative, that the Ohio court transfer venue to this Louisiana court based on 28 U.S.C. § 1404(a). Goettle filed a motion that asked the Ohio court to stay its proceedings pending the outcome of Goettle's motion to transfer that is now before this Louisiana court. The Ohio court has not yet acted on either of those motions or a motion for permission to conduct jurisdictional discovery that JGCI filed in that court.

         First-To-File Rule

         “Under the first-to-file rule, when related cases are pending before two federal courts, the court in which the case was last filed may refuse to hear it if the issues raised by the cases substantially overlap.” Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 603 (5th Cir. 1999). “The concern manifestly is to avoid the waste of duplication, to avoid rulings which may trench upon the authority of sister courts, and to avoid piecemeal resolution of issues that call for a uniform result.” West Gulf Maritime Ass'n v. ILA Deep Sea Local 24, 751 F.2d 721, 729 (5th Cir. 1985).

         When a party moves to transfer under the first-to-file rule, the second-filed court must examine the two pending cases to see if the subject matter “might substantially overlap.” Cadle Co., 174 F.3d at 606. The cases do not have to be identical. The rule is applicable if there is a “substantial overlap” in issues and parties. Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 950 (5th Cir. 1997).

         If the likelihood of substantial overlap exists, the proper course of action is ordinarily for the second-filed court to transfer the case to the first-filed court. Id. The first-filed court can then decide whether the second suit filed must be dismissed, stayed, or transferred and consolidated. Cadle Co., 174 F.3d at 606; Sutter Corp. v. P&P Indus., Inc., 125 F.3d 914, 920 (5th Cir. 1997). A party can avoid application of the first-to-file rule by demonstrating the presence of “compelling circumstances” that caution against the transfer. Gateway Mortg. Grp., ...

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