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Halifax Linen Services, Inc. v. Tidelife, LLC

United States District Court, E.D. North Carolina, Eastern Division

July 2, 2019

HALF AX LINEN SERVICE, INC., Plaintiff,
v.
TIDELIFE, LLC, Defendant.

          ORDER

          James C. Dever III United States District Judge.

         On March 4, 2019, Halifax Linen Service, Inc. ("Halifax Linen" or "plaintiff") filed a complaint in Halifax County Superior Court against Tidelife, LLC d/b/a Tidelife Vacation Rentals ("Tidelife" or "defendant") alleging breach of contract [D.E. 1-1]. On April 10, 2019, Tidelife removed the action to this court [D.E. 1]. On April 17, 2019, Tidelife moved to dismiss Halifax Linen's complaint [D.E. 7] and filed a memorandum in support [D.E. 8]. On April 24, 2019, Halifax Linen moved to remand the action to the Halifax County Superior Court [D.E. 12] and filed a memorandum in support [D.E. 13]. On May 15, 2019, Tidelife responded in opposition [D.E. 16]. On May 29, 2019, Halifax Linen replied [D.E. 17]. On April 25, 2019, the court extended the time by which Halifax Linen may respond to Tidelife's motion to dismiss until ten days after the court rules on Halifax Linen's motion to remand [D.E. 15]. As explained below, the court denies Halifax Linen's motion to remand.

         I.

         Halifax Linen operates a garment and linen rental and cleaning business in Halifax County, North Carolina. See [D.E. 8] 1. Tidelife "is a small, family-owned business that owns and operates vacation rental properties" in Pawleys Island, South Carolina. Id. On August 28, 2018, Halifax Linen entered into a 36-month contract with Tidelife. See Compl. [D.E. 1-1] ¶¶ 6, 10; Ex. A [D.E.1-1] 6-9. Halifax Linen agreed to provide goods and services for Tidelife, including "rental and cleaning of various linen products and other goods and rental items." Compl. [D.E. 1-1] ¶ 6. The contract specified that Tidelife would pay weekly base charges that "serve[d] as minimum billing requirements and function[ed] independent of actual usage." Id. ¶ 7; see Ex. A [D.E. 1-1] ¶ 6. The contract also specified the consequences of failing to timely pay and provided for liquidated damages if Tidelife breached. See Compl. [D.E. 1-1] ¶¶ 8, 13; Ex. A [D.E. 1-1] ¶¶ 6, 9. Finally, the contract contained choice-of-law and forum-selection clauses:

This Agreement shall be in effect when signed by [Tidelife] and shall be governed by and interpreted and performed in accordance with the laws of the State of North Carolina, without consideration of choice of law rules. Venue for any action arising out of the Agreement shall be in the General Court of Justice in Halifax County, North Carolina.

Ex. A [D.E. 1-1] ¶ 15.

         Halifax Linen alleges that it provided goods and services under the terms of the contract to Tidelife. See Compl. [D.E. 1-1] ¶ 9. Halifax Linen alleges that Tidelife, however, "failed to pay outstanding invoices" due under the terms of the contract. Id. ¶ 11. On October 29, 2018, Halifax Linen alleges that Tidelife "gave verbal notice of its intent to terminate" the contract. Id. ¶ 12. At the time, 154 weeks remained on the contract. See Id. ¶ 15. Halifax Linen claims that Tidelife owes it $283, 772.72 under the contract. See id, ¶¶ 13, 15.[1]

         On April 10, 2019, Tidelife removed the action to this court under 28 U.S.C. §§ 1332, 1441, 1446 [D.E. 1]. On April 24, 2019, Halifax Linen moved to remand the case to Halifax County Superior Court based on the forum-selection clause and pursuant to 28 U.S.C. § 1447(c) [D.E. 12].

         II

         Halifax Linen argues that, because the contract between Halifax Linen and Tidelife contains a forum-selection clause, Tidelife waived the right to remove this case to federal court under 28 U.S.C. § 1441. See[D.E. 13] 2-6. Tidelife responds mat me forum-selection clause is permissive, not mandatory, under North Carolina law. Thus, Tidelife argues that it did not waive its right to remove this action. See [D.E. 16] 5-7.

         "[F]ederal courts, unlike most state courts, are courts of limited jurisdiction, created by Congress with specified jurisdictional requirements and limitations." Strawn v. AT & T Mobility LLC., 530 F.3d 293, 296 (4th Cir. 2008); see, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Vick v. Nash Hosps., Inc., 756 F.Supp.2d 690, 692 (E.D. N.C. 2010). "Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction[] may be removed by the defendant" to the district court "for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a); see, e.g., Lontz v. Tharp, 413 F.3d 435, 439 (4th Cir. 2005). Federal courts "construe removal statutes narrowly," and any "doubts concerning removal [are] resolved in favor of state court jurisdiction." Barbour v. Int'l Union, 640 F.3d 599, 613 (4th Cir. 2011 ¶ abrogated on other grounds by 28 U.S.C. § 1446(b)(2)(B). The party who removed the action must establish federal subject-matter jurisdiction. See Hoschar v. Appalachian Power Co., 739 F.3d 163, 169 (4th Cir. 2014); Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994). "Because removal jurisdiction raises significant federalism concerns, the court must strictly construe removal jurisdiction, and resolve all doubts in favor of remand." Korzinski v. Jackson, 326 F.Supp.2d 704, 706 (E.D. N.C. 2004); see Mulcahey v. 29 F.3d at 151.

         "A defendant may waive its right to remove an action to federal court via a valid and enforceable forum-selection clause that mandates a state court as the forum for a case." Abbington SPE, LLC v. U.S. Bank Nat'l Ass'n, 352 F.Supp.3d 508, 514 (E.D. N.C. 2016) (quotation omitted) (collecting cases), aff'd, 698 Fed.Appx. 750 (4th Cir. 2017) (per curiam) (unpublished); see Bartels ex rel. Bartels v. Saber Healthcare Grp., LLC, 880 F.3d 668, 674-75 (4th Cir. 2018); FindWhere Holdings. Inc. v. Svs. Env't Optimigation, LLC, 626 F.3d 752, 754-56 (4th Cir. 2010); Basu v. Robson Woese, Inc., No. 1:03CV98, 2003 WL 1937119, at *3 (M.D. N.C. Apr. 22, 2003) (unpublished); cf. Alt. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 63 (2013). Where a contract contains both a choice-of-law and a forum-selection clause, courts distinguish between the interpretation and the enforceability of the forum-selection clause. See Martinez v. Bloomberg LP, 740 F.3d 211, 217 (2d Cir. 2014). Federal law governs whether the forum-selection clause is enforceable. See id.

         "As a general matter, courts enforce forum selection clauses unless it would be unreasonable to do so." BAE Sys. Tech. Sol. & Servs., Inc. v. Republic of Korea's Def. Acquisition Program Admin., 884 F.3d 463, 470 (4th Cir. 2018), cert. denied, 139 S.Ct. 209 (2018); see M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15-16 (1972); Martinez, 740 F.3d at 217. "This presumption of enforceability, however, only applies if the forum selection clause is mandatory rather than permissive." BAE Sys., 884 F.3d at 470; see Albemarle Corp. v. AstraZeneca UK Ltd., 628 F.3d 643, 650-51 (4th Cir. 2010). "A mandatory clause requires litigation to occur in a specified forum; a permissive clause permits litigation to occur in a specified forum but does not bar litigation elsewhere." BAE Svs., 884 F.3d at 470; IntraComm, Inc. v. Bajaj, 492 F.3d 285, 290 (4th Cir. 2007).

         "The body of law selected in an otherwise valid choice-of-law clause governs the interpretation of a forum-selection clause." Queen City Pastry. LLC v. Bakery Tech. Enters., LLC, No. 5:14-CV-143, 2015 WL 3932722, at *3 (W.D. N.C. June 26, 2015) (unpublished) (quotation omitted); see Cnllins v Mary Kay, Inc.,874 F.3d 176, 181-83 (3d Cir. 2017); Martinez, 740 F.3d at 218-21; Vault LLC v. Dell Inc., No. 1:18-CV-633, 2019 WL 113726, at *5 n.7 (M.D. N.C. Jan. 4, 2019) (unpublished); Generation Cos., LLC v. Holiday Hosp. Franchising. LLC., No. 5:15-CV-220-FL, 2015 WL 7306448, at *4 (E.D. N.C. Nov. 19, 2015) (unpublished). Thus, if a court has to decide whether a forum-selection clause is mandatory or permissive or whether a forum-selection clause encompasses the claims or parties involved in a certain action, a court applies "the law contractually selected by the parties." Martinez, 740 F.3d at 218. "Distinguishing between the ...


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