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Pro Drive Outboards, LLC v. Cruzani, Inc.

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

August 23, 2019


          JUNEAU, JUDGE.



         Pending before the Court is the Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) [Rec. Doc. 16], filed by the defendant, U.S. Highland, Inc. ("Highland"). Plaintiff Pro-Drive Outboards, LLC ("Pro-Drive") filed an opposition brief [Rec. Doc. 23]; Highland filed a reply brief [Rec. Doc. 36], and the plaintiff filed a sur-reply brief [Rec. Doc. 39]. After considering the applicable law and the briefs of the parties, the Court will grant the motion to transfer.

         I. Factual Background

         This action arises out of a business deal between Pro-Drive and Highland. Pro-Drive is a Louisiana limited liability company, while Highland (now known as Cruzani, Inc), is a Nevada corporation. At the time of the event giving rise to this litigation, however, Highland was an Oklahoma corporation. Pro-Drive is the manufacturer of the first ever shallow water outboard motor built for hunting, fishing, and commercial purposes. R. 1, at ¶9. According to the Complaint, Pro- Drive outboard motors utilize air-cooled engines because air-cooled engines allow the outboard motors to be more efficiently operated and/or less subject to breakdown when the outboard motors are operated in very shallow water and in swampy conditions. Id., at ¶10. Pro-Drive utilizes air-cooled engines supplied by third-party manufacturers. Accordingly, in September 2009, Pro-Drive contacted Highland, operating at that time in Sweden, about purchasing Highland engines for use on Pro-Drive products. Id., at ¶13.

         Negotiations between the two parties continued until November 2009, when Highland sent Pro-Drive a proposal for a prototyping and licensing agreement between Pro-Drive and Highland. Id., at ¶25. The prototyping proposal was for the creation of a platform for a Highland engine and a hydraulic system. Id. The prototyping fee was quoted at $126, 000.00 and the licensing fee was quoted as $200, 000.00. Id. On January 12, 2010, Pro-Drive and Highland signed an Exclusive Distribution Agreement for Shallow Water Marine Applications ("the Distribution Agreement"). Id., at ¶30. In the Distribution Agreement, Highland represented itself as an Oklahoma corporation and a subsidiary of Highland Group AP, a Swedish company. Id. On January 12, 2010, Pro-Drive transferred $126, 000.00 from its bank account into Highland's bank account. Four payments of $50, 000.00 each followed, one each of the following months. Id., at ¶31

         The Distribution Agreement contains the following language:

Governing Law: Venue: Arbitration. This agreement shall be governed by, and construed according with, the laws of the State of Oklahoma. Actions and proceedings litigated in connection with this Agreement, if any, shall be conducted exclusively in the state and federal courts located in the State of Oklahoma.[1]

         Over the next two years, the parties discussed, planned, and tested various engines and platforms, none of which met the specifications that were initially agreed upon, and none of which resulted in an engine that could be used by Pro-Drive in its watercraft. During that time period, the three Highland principals that Pro-Drive had been dealing were killed in a helicopter accident, and Highland relocated its business venture with new principals. Id., at ¶42. Despite having paid $326, 000.00 up front, Pro-Drive alleges it never received the engine for which it contracted with Highland.

         On September 21, 2018, Pro-Drive filed the instant matter in this Court, alleging claims for breach of contract, detrimental reliance, and bad faith on the part of Highland. In its complaint, Pro-Drive sued Highland and John R. Fitzpatrick, III, who became CEO of Highland after the initial principals died. Pro-Drive alleges that venue is proper in this district because all or a substantial part of the activities in the complaint were carried out in this district and because the defendants transacted business in this district.

         On March 3, 2019, Highland filed the instant motion to transfer venue, as well as a Motion to Dismiss for Failure to State a Claim [Rec. Doc. 17], which argues that, under Oklahoma law, the plaintiffs claims are time-barred. The Court first considers the motion to transfer, and because it concludes that the motion should be granted, the motion to dismiss is not addressed in this Ruling.

         II. Law and Analysis

         A. Standard for Change of Venue under 28 U.S.C. § 1404(a)

         Under 28 U.S.C. § 1404(a), "[f]or the convenience of the parties and witnesses [and] in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." 28 U.S.C. §1404(a). A defendant seeking a transfer of venue must demonstrate that the plaintiff could have originally brought the action in the transferee court. In re Volkswagen AG, 371F.3d 201, 203 (5th Cir.2004) ("Volkswagen I") ("In applying the provisions of § 1404(a), we have suggested that the first determination to be made is whether the judicial district to which transfer is sought would have been a district in which the claim could have been filed."). After this initial showing has been made, the defendant must then demonstrate "good cause" why the case should be transferred. See In re Volkswagen of Am., Inc., 545 F.3d 304, 315 (5th Cir.2008) (" Volkswagen II"). A defendant can carry this burden by showing, through the relevant private and public interest factors enunciated in Gulf Oil Corp. v. Gilbert, 330 U.S. 505, 508 (1947), that the transferee district is a more convenient venue. Volkswagen II, 545 F.3d at 315.

         The private interest factors to be considered are: (1) the relative ease of access to sources of proof; (2) the cost of attendance for willing witnesses; and (3) all other practical problems that make trial of a case easy, expeditious and inexpensive. Volkswagen I, 371 F.3d at 203. The relevant public interest factors are: (1) the administrative difficulties created by court congestion; and (2) the interest in having localized controversies decided at home. Id. The ...

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