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J3 Engineering Group LLC v. Mack Industries of Kalamazoo LLC

United States District Court, E.D. Wisconsin

July 1, 2019

J3 ENGINEERING GROUP, LLC, Plaintiff,
v.
MACK INDUSTRIES OF KALAMAZOO, LLC, f/k/a STRESS-CON INDUSTRIES, INC., and MACK INDUSTRIES, INC., Defendants.

          DECISION

          LYNN ADELMAN, DISTRICT JUDGE.

         On August 13, 2018, Defendants (“Mack”) filed a motion to transfer this case to the U.S. District Court for the Northern District of Ohio, citing 28 U.S.C. §§ 1404 and 1406 and Mack's status as the “true plaintiffs” in the dispute. On August 31, 2018, Plaintiff (“J3”) filed a motion to remand, citing 28 U.S.C. §§ 1447, to the state circuit court in Ozaukee County on the basis of forum selection clauses that require dispute resolution there. Mack claims that these forum selection and choice of law clauses are void under applicable state law, and that Ohio law mandates the resolution of the parties' Ohio-based project dispute be resolved there.

         I. BACKGROUND

         The case at hand is a dispute regarding four contracts between the parties for various projects across the Midwest; one project in Ohio, one project in Illinois, one project in Wisconsin, and one project in Indiana. J3 Engineering claims that Mack owes it “at least $120, 449.07” for breaching these agreements. ECF No. 1-1 at 7. Mack claims that J3 Engineering owes it “at least $247, 815.35” for errors and omissions with respect to these contracts. ECF No. 6 at 4.

         A. Illinois Tollway project

         In December 2013, the parties entered into an agreement for J3 to provide engineering and structural design for soundwall segments on the Illinois Tollway. ECF No. 8-2. J3 claims that Mack owes J3 “at least $76, 777.50 related to this project, ” a project that ultimately ended prematurely upon Mack's failure to obtain proper certification in the state of Illinois to perform this work. ECF No. 10 at 5-6. Mack claims that it informed J3 of these issues regarding certification and instructed J3 to abstain from performing work on the project until certification was resolved, but that J3 ignored this instruction and allegedly performed work anyway. ECF No. 8 at 12-13. Therefore, Mack argues, J3's expenses on this project were at ¶ 3's own risk and Mack owes J3 nothing with respect to this agreement. Id. The agreement for the Illinois project contains no forum selection or choice of law clause. See ECF No. 8-2 at 10.

         B. Wisconsin project

         In January 2014, the parties entered into an agreement for J3 to provide engineering and drafting services related to a Wisconsin Department Transportation project on the Hoan Bridge in Milwaukee that Mack was involved in. ECF No. 12-2. J3 claims that it performed work for Mack until July 2014, when it stopped work because Mack had not yet paid J3 for the Illinois Tollway project that was stopped in February 2014 and that Mack was not current on the amounts that it owed J3 Engineering for its work on the Hoan Bridge project up to that point. ECF No. 1-1; ECF No. 10 at 6. J3 claims that Mack still owes them at least $12, 610.07 related to this project. ECF No. 10 at 6. Mack claims that it performed all of its obligations under the agreement and that it was J3 which breached the agreement in providing an erroneous design. ECF No. 8 at 14. That erroneous design was rejected by the project owner, the state of Wisconsin, and its project engineer, resulting in a back charge applied to Mack for non-conforming work. Id. As a result, Mack claims that J3 owes Mack $223, 955.35, the amount that was back charged. Id. The agreement for the Wisconsin project contains no forum selection or choice of law clause. See ECF No. 12-2 at 10.

         C. Ohio project

         In May 2017, the parties entered into an agreement for engineering services related to an apartment project in the Little Italy neighborhood in Cleveland. ECF No. 12-1. J3 claims that Mack owes J3 “at least $3, 687.50” for work done on this project. ECF No. 10 at 7. Mack, in return, argues that it fulfilled its own obligations and that the agreement required J3 to maintain certain minimum insurance coverage for the duration of the project, coverage which lapsed midway through and thus constituted a breach of the agreement on J3's part. ECF No. 8 at 13. Mack alleges an unspecified amount[1] in monetary damages to be determined at trial. Id.

         The Ohio project agreement includes the following forum selection clause:

Dispute Resolution: With the exception of invoiced amounts due to Consultant, any claims or disputes between the Customer and Consultant arising out of the services to be provided by Consultant or out of this Agreement shall be submitted to nonbinding mediation. The Customer and Consultant agree to include a similar mediation agreement with all contractors, subconsultants, subcontractors, suppliers, and fabricators, providing for mediation as the primary method for dispute resolution among all parties. Any dispute that cannot be successfully negotiated as contemplated in this agreement, including the failure of either party to respond to a request for mediation within 7 days, shall be resolved by initiation of formal judicial proceedings brought before a court of competent jurisdiction in Ozaukee County, Wisconsin.

ECF No. 12-1 at 5 (emphasis added). The Ohio agreement also contains a choice of law clause. ECF 12-1 at 6 (“This contract is governed by the laws of the State of Wisconsin.”).

         D. ...


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