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Flambeau, Inc. v. GDL Brokerage, Inc.

United States District Court, W.D. Wisconsin

December 17, 2019

FLAMBEAU, INC., Plaintiff,
v.
GDL BROKERAGE, INC., Defendant.

          OPINION AND ORDER

          JAMES D. PETERSON DISTRICT JUDGE

         Plaintiff Flambeau, Inc. asserts breach-of-contract and tort claims against its former business partner, defendant GDL Brokerage, Inc. Flambeau's claims arise out of two allegations: (1) GDL refused to return its security deposit after Flambeau ceased leasing GDL's warehouse in Laredo, Texas; and (2) GDL failed transport a shipment of Flambeau products. GDL has moved to dismiss the case for lack of personal jurisdiction, or, in the alternative, to transfer the case to the United States District Court for the Southern District of Texas. Dkt. 10 and Dkt. 28.

         The court will deny both parts of GDL's motion. GDL had extensive contacts with Wisconsin over the course of its business relationship with Flambeau. These contacts are sufficiently related to Flambeau's claims in this case to allow the court to exercise personal jurisdiction over GDL in Wisconsin. And GDL hasn't shown that considerations of convenience or the interests of justice favor litigating this case in Texas, so the court will not transfer the case.

         BACKGROUND

         The court draws the following facts from the allegations in Flambeau's amended complaint, Dkt. 24, as well as the parties' evidentiary submissions, Dkt. 12; Dkt. 17; Dkt. 34; Dkt. 35, which the court may consider in deciding a motion to dismiss on jurisdictional grounds. Felland v. Clifton, 682 F.3d 665, 672 (7th Cir. 2012).

         Flambeau is a Wisconsin corporation with its principal place of business in Baraboo, Wisconsin. GDL is a Texas logistics corporation with its principal place of business in Laredo, Texas. The parties' business relationship began in 2006, although neither party provides details about their dealings with each other in the initial years of that relationship. Starting in 2012, Flambeau and GDL entered into multiple agreements relevant to this case.

         A. Lease agreement

         In December 2012, Flambeau and GDL entered an agreement under which GDL agreed to lease space to Flambeau in GDL's Laredo warehouse for $21, 120 per month. See Dkt. 24-1. As part of that agreement, Flambeau paid GDL a security deposit of $42, 240, the equivalent of two months' rent.

         A year later, Flambeau and GDL entered into a separate contract for distribution services, under which GDL agreed to ship Flambeau's products to Flambeau's customers. See Dkt. 24-2. Flambeau agreed to pay GDL an additional $18, 000 per month, and committed to sign a new three-year lease for the warehouse space. That same day, the parties executed the lease, under which Flambeau agreed to pay $22, 000 per month for the warehouse space. See Dkt. 24-3. As with the 2012 lease agreement, the 2013 lease agreement required Flambeau to pay a two-month security deposit. Flambeau says that the security deposit it paid under the 2012 lease agreement carried over to the 2013 agreement, so it didn't pay any additional deposit.

         The 2013 lease and distribution agreements were set to terminate three years later, on December 26, 2016. On December 22, 2016, Flambeau and GDL agreed to extend the lease and distribution agreements on a month-to-month basis, with slightly modified terms. Flambeau would continue to lease the warehouse space from GDL for $22, 000 per month; GDL would continue to provide distribution services for a reduced fee of $8, 333.33 per month. See Dkt. 24-4.

         In February 2018, Flambeau notified GDL that it intended to terminate the month-to-month agreement as of June 30, 2018. In April, Flambeau reiterated its intent to terminate the agreement and asked for the return of its security deposit. When GDL failed to return the deposit after the agreement terminated on June 30, Flambeau made additional follow-up requests. GDL has refused to return the security deposit.

         In March 2019, counsel for GDL sent Flambeau a letter accusing Flambeau of breaching its agreement with GDL and demanding $362, 333.39 for unpaid invoices. See Dkt. 24-5, at 2. Included with the demand letter were copies of invoices from January 2017 through June 2018, which listed distribution service charges in the amount of $18, 000 per month rather than the reduced $8, 333.33 amount that the companies had previously negotiated. See Dkt. 24-5, at 4- 21.

         B. Freight forwarding agreement

         In addition to storage and distribution services, GDL and Flambeau contracted for freight forwarding services. Under the companies' freight forwarding agreement, GDL was responsible for shipping Flambeau's products from a Flambeau facility in Saltillo, Mexico to Flambeau's warehouse in Laredo, Texas. In January 2019, GDL was supposed to transport a shipment of Flambeau products valued at $11, 488.39. GDL charged Flambeau $650 for freight and drayage, which Flambeau paid. Flambeau alleges that the ...


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