United States District Court, W.D. Wisconsin
OPINION AND ORDER
D. PETERSON DISTRICT JUDGE
case arises out of a contract between plaintiff Mule-Hide
Products Co., Inc. and Mod Panel Manufacturing, Ltd.
Mule-Hide contends that Mod Panel breached its agreement to
buy raw materials from Mule-Hide and pay Mule-Hide a
commission for sales it made. Mule-Hide is also suing
defendant Peter Kiss (Mod Panel's CEO) for fraud.
have moved to dismiss both of Mule-Hide's claims. Dkt.
10. As for the breach of contract claim, defendants say that
the case must be litigated in Canada under a forum-selection
clause and the doctrine of forum non conveniens. As
for the fraud claim, defendants say that it is barred by the
economic loss doctrine. For the reasons explained below, the
court concludes that the case was properly filed in this
district, but that Mule-Hide's fraud claim must be
court draws the basic facts from Mule-Hide's complaint,
Dkt. 1-1, and it will accept them as true for the purpose of
deciding the parts of defendants' motion brought under
Rule 12(b)(6). Parungao v. Comm. Health Sys., Inc.,
858 F.3d 452, 457 (7th Cir. 2017). In the analysis section,
the court can, and will, consider some additional facts and
evidence pertaining to whether this case is in the proper
Mule-Hide Products Co., Inc., is a Texas corporation that
maintains its principal place of business in Beloit,
Wisconsin. Mod Panel Manufacturing, Ltd., is a Canadian
corporation headquartered in Alberta that makes roofing
panels. Peter Kiss is a citizen and resident of Canada.
least 19 occasions between January 2016 and February 2017,
Mod Panel ordered raw materials from Mule-Hide. Mule-Hide
fulfilled all of these orders by supplying the requested
materials. At some point, Mod Panel stopped paying Mule-Hide.
Mod Panel also failed to pay Mule-Hide the commissions it was
obligated to pay on sales that Mod Panel made to a
third-party company in Canada. Mule-Hide alleges that Mod
Panel owes hundreds of thousands of dollars for raw materials
began seeking payment for its overdue invoices in October
2016. In response to Mule-Hide's efforts, Mod Panel CEO
Peter Kiss made “multiple false representations that
payment would be made in the near future” by letter and
text message. Dkt. 1-1, ¶ 15. In October 2017, Kiss
apologized for the delay and reassured Mule-Hide that he had
found a financial partner. He promised that, as soon as the
relevant papers were signed between him and the partner,
Mule-Hide would be paid. He continued making such promises
into January 2018, but Mod Panel never paid up. As a result
of Kiss's promises, Mule-Hide delayed its collection
efforts longer than it otherwise would have.
2018, Mule-Hide filed suit in Rock County Circuit Court.
Defendants removed the case to this court under 28 U.S.C.
§ 1441(b). Because there is diversity of citizenship
between Mule-Hide and defendants and the amount in
controversy is more than $75, 000, the court may exercise
jurisdiction under 28 U.S.C. § 1332.
Forum selection clause
contend that Mule-Hide's breach of contract claims must
be dismissed under a forum-selection clause in the
parties' purchasing agreement. See Dkt. 12-1. A
valid forum-selection clause would generally warrant transfer
under 28 U.S.C. § 1404 or the doctrine of forum non
conveniens. Atl. Marine Const. Co. v. U.S. Dist.
Court for W. Dist. of Texas, 571 U.S. 49, 62 (2013). But
in considering the appropriate forum, the court must consider
a range of factors, and thus it is not limited to the facts
alleged in the complaint. Id.
did not attach the purchasing agreement to its complaint, but
defendants have provided it. The forum-selection clause
provides, in relevant part:
With respect to Raw Materials sourced in Canada, the parties
hereby irrevocably consent and submit to the jurisdiction of
the courts of the Province of Alberta; agree that the sole
and exclusive venue for any cause of action (in law or
equity) based on this Agreement . . . will lie in the courts
of Alberta and waive all objections to venue and forum
With respect to Raw Materials sourced in the United States,
consent [sic] irrevocably consent and submit to the
jurisdiction of the courts of the State of Wisconsin; agree
that the sole and exclusive venue for any cause of action (in
law or equity) based on this agreement . . . will lie in the
courts of the State of Wisconsin and waive all objections to
venue and forum non conveniens.
12-1, at § 12.10. According to defendants, 96 percent of
the contract damages underlying the raw materials claim
concern raw materials sourced in Canada, making the suit
almost entirely subject to the forum-selection clause. (As
discussed in the next section, defendants ask that the claim
for the other 4 percent of the ...