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RELCO Locomotives, Inc. v. AllRail, Inc.

United States District Court, S.D. Iowa, Central Division

March 5, 2014

ALLRAIL, INC., Defendant

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For RELCO Locomotives, Inc., Plaintiff: Deborah M Tharnish, DAVIS BROWN LAW FIRM, DES MOINES, IA; Debra Rectenbaugh Pettit, DAVIS BROWN LAW FIRM (WDM), West Des Moines, IA.




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Before the Court is AllRail, Inc.'s (" Defendant" or " AllRail" ) Motion to Dismiss or, in the Alternative, to Stay (" Motion" ), filed November 18, 2013. Clerk's No. 7. RELCO Locomotives, Inc. (" Plaintiff" or " RELCO" ) resisted the Motion on December 5, 2013. Clerk's No. 12. Defendant replied on December 16, 2013 (" Reply" ). Clerk's No. 20. The Motion is fully submitted.


Defendant is a Quebec corporation providing rail-related services. Decl. of Isaac Haboucha in Supp. of Def.'s Mot. (" Haboucha Decl. I" ) (Clerk's No. 7-2) ¶ 2. Plaintiff is an Illinois corporation that leases and sells locomotives. Aff. of Douglas Bachman (" Bachman Aff." ) (Clerk's No. 12-1) ¶ 3. Plaintiff operates a facility in Albia, Iowa (" Iowa Facility" ), where it " rebuilds, remanufactures, and refurbishes" locomotives for its customers. Id. ¶ ¶ 3-4.

In 2010, Defendant agreed to provide locomotives to RioTinto Fer et Titane (" QIT" ) for use in mining operations. Haboucha Decl. I ¶ 5. Defendant subcontracted with Plaintiff to rebuild two locomotives to QIT's specifications. Id. ¶ 6. Between February 2011 and April 2011, the parties negotiated a contract, primarily through email and telephone communications. Id. ¶ 7. During their email correspondence, Defendant forwarded to Plaintiff the General Conditions of the agreement between Defendant and QIT, titled " Schedule A" . Id. ¶ 9. Schedule A's provisions included a " Governing Law" clause designating that the laws of Quebec governed the agreement, and a " Forum" clause designating Quebec as the " non-exclusive jurisdiction of and venue" for resolving disputes under the agreement. Def.'s Ex. C (Clerk's No. 7-4) ¶ ¶ 25.8, 25.9. When Plaintiff received Schedule A fro Defendant, it recommended changes to some of Schedule A's provisions, but did not mention the governing law or forum provisions. See Def.'s Ex. D (Clerk's No. 7-5). During the email correspondence regarding Schedule A, Defendant referred to " a back to back on the contract with QIT" ; Plaintiff responded by expressing unfamiliarity with the term " back to back." Def.'s Ex. (Clerk's No. 20-3) at 1. Defendant called Plaintiff to explain that " back to back" meant " the terms of the contract between RELCO and AllRail would be the same as the terms of [Schedule A]." Haboucha Decl. I ¶ 8. Also during negotiations, Plaintiff sent an email stating that " FOB is Albia" and that Defendant would take " [possession] of the locomotive at the time of acceptance." Def.'s Ex. D.

The parties' email negotiations culminated in Defendant submitting two purchase orders to Plaintiff, one for each rebuilt locomotive. Bachman Aff. ¶ ¶ 14, 16.

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These purchase orders list Plaintiff's Iowa Facility as the locomotive supplier and specify that the " final agreement from QIT will form an integral part of this PO [purchase order] in regards to all warranties and indemnities." See Pl.'s Ex. 1 (Clerk's No. 12-2); Pl.'s Ex. 2 (Clerk's No. 12-3) (collectively " Purchase Orders" ) (capitalization modified from original). Defendant did not attach Schedule A to either purchase order. Bachman Aff. ¶ 18.

Plaintiff completed the rebuilt locomotives in December 2012, and Defendant inspected them at the Iowa Facility. Id. ¶ ¶ 29-30. Defendant submitted a " Certificate of Acceptance" on December 17, 2012, which stated that the parties " hereby acknowledge and confirm that the following locomotives have been completed per the terms of their agreement and accepted by AllRail." Pl.'s Ex. 3 (Clerk's No. 12-4). Defendant then arranged for a third party to transport the locomotives from the Iowa Facility to Quebec, where they arrived in February 2013. Haboucha Decl. I ¶ 17.

During the course of Plaintiff's work in rebuilding the locomotives, Defendant sent representatives to the Iowa Facility on " many" occasions to check on Plaintiff's progress and to inspect the locomotives. Bachman Aff. ¶ 25. Plaintiff also sent representatives to Canada on two occasions related to its agreement with Defendant. Id. ¶ ¶ 26-27. Since the Defendant's submission of the Certificate of Acceptance, the parties have become involved in a legal dispute pertaining to each party's dissatisfaction with the other's performance of the agreement. See id. ¶ 44; Haboucha Decl. I ¶ 22. Plaintiff filed a suit against Defendant in this Court on September 13, 2013 (" Iowa Action" ), alleging a breach of contract and promissory estoppel, and seeking compensation for an unpaid installment totaling $298,855.54 that was due upon Defendant's acceptance of the locomotives. Compl. (Clerk's No. 1) ¶ ¶ 25-40. Defendant was served with the summons in the Iowa Action on October 7, 2013. Bachman Aff. ¶ 45. Defendant initiated legal proceedings against Plaintiff in Montreal on September 18, 2013 (" Quebec Action" ), seeking to compel Plaintiff to repair defects in the locomotives and to recover damages for costs incurred from the repairs Defendant had made to the locomotives. Def.'s Br. in Supp. of Its Mot. (" Def.'s Brief" ) (Clerk's No. 7-1) at 4. Plaintiff was served with a copy of the Quebec Action on September 19, 2013. Haboucha Decl. I ¶ 22.


Defendant seeks to dismiss Plaintiff's complaint for lack of personal jurisdiction or, in the alternative, under the doctrine of forum non conveniens. Mot. ¶ ¶ 1-2. Should the Court decline to dismiss Plaintiff's complaint on either of these two grounds, Defendant requests that the Court stay these proceedings under principles of international comity or pursuant to Colorado River Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) (" the Colorado River doctrine" ), pending the outcome of the Quebec Action. Id. ¶ 3.

A. Personal Jurisdiction

When a defendant moves to dismiss a lawsuit for a lack of personal jurisdiction, the plaintiff--not the defendant--bears the burden of proof. Dairy Farmers of Am. v. Bassett & Walker Int'l, Inc., No. 5:11-cv-6052, 2012 WL 601232, at *2 (W.D. Mo. Feb. 23, 2012). The plaintiff is entitled to the benefit of all factual disputes. Id. To conclude that it has personal jurisdiction over a non-resident defendant, a court must determine both that the requirements of the forum state's long-arm statute are met and that asserting personal jurisdiction over the defendant comports

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with due process. Digi-Tel Holdings, Inc. v. Proteq Telecomm., Ltd., 89 F.3d 519, 522 (8th Cir. 1996). Asserting personal jurisdiction over a defendant comports with due process if the defendant has purposefully established minimum contacts with the forum state, and if the court's exercise of jurisdiction is consistent with traditional notions of fair play and substantial justice. Asahi Metal Indus. Co. v. S.Ct. of Cal., 480 U.S. 102, 108-09, 113, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (internal citations and quotation marks omitted). " [In other words,] it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (internal citations and quotation marks omitted). " This 'purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts . . . or the unilateral activity of another party or a third person . . . ." Id. (internal citations and quotation marks omitted). " [Personal] [j]urisdiction is proper . . . [only] where the contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State." Id. (internal citations omitted). Physical presence within the forum state is, however, not required. Id. at 476.

In addition to these basic due process principles, courts in the Eighth Circuit analyze the following five factors in deciding whether asserting personal jurisdiction over a non-resident defendant violates due process: " (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum; (3) the relation of the cause of action to these contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties." Digi-Tel Holdings, Inc., 89 F.3d at 522-23 (internal citations ...

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