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Mule-Hide Products Co., Inc. v. Mod Panel Manufacturing, Ltd.

United States District Court, W.D. Wisconsin

April 26, 2019

MULE-HIDE PRODUCTS CO., INC., Plaintiff,
v.
MOD PANEL MANUFACTURING, LTD. and PETER KISS, Defendant.

          OPINION AND ORDER

          JAMES D. PETERSON DISTRICT JUDGE

         This 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.

         Defendants 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 dismissed.

         ALLEGATIONS OF FACT

         The 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 forum.

         Plaintiff 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.

         On at 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 and commissions.

         Mule-Hide 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.

         In May 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.

         ANALYSIS

         A. Forum selection clause

         Defendants 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.

         Mule-Hide 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 non conveniens.
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.

         Dkt. 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 ...


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