Engineered Floors, LLC v. Lakeshore Equipment Company

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

ENGINEERED FLOORS, LLC,

Plaintiff

v. CIVIL ACTION NO.

4:20-cv-00169-JPB

LAKESHORE EQUIPMENT

COMPANY d/b/a LAKESHORE

LEARNING MATERIALS,

Defendant.

ORDER

Before the Court is Lakeshore Equipment Company d/b/a Lakeshore

Learning Materials’ (“Lakeshore”) Motion to Transfer Venue or, Alternatively, to

Dismiss (“Motion”). ECF No. 5. Having reviewed and fully considered the

papers1 filed therewith, the Court finds as follows:

1 Both parties submitted extrinsic evidence for the Court’s consideration. The

Court may consider such evidence on a motion to dismiss on jurisdictional

grounds. See Diamond Crystal Brands, Inc. v. Food Movers Int’l, Inc., 593 F.3d

1249, 1257 (11th Cir. 2010) (“Where . . . the defendant challenges jurisdiction by

submitting affidavit evidence in support of its position, the burden traditionally

shifts back to the plaintiff to produce evidence supporting jurisdiction.”) (internal

punctuation omitted).

I. BACKGROUND

Plaintiff Engineered Floors, LLC (“Engineered Floors”) filed a complaint

against Lakeshore for its alleged failure to pay invoices for carpeting Engineered

Floors sold to Lakeshore.

Lakeshore and the Beaulieu Group, LLC (“Beaulieu”) entered into Pricing

Agreements dated August 28, 2017, and February 10, 2017, governing Lakeshore’s

purchase of carpeting from Beaulieu (“the Pricing Agreements”). The Pricing

Agreements provided that they were “governed by the laws of the State of

California . . . without regard to or application of California’s principles or laws

regarding conflict of laws” and set forth agreed upon pricing and other terms for

the identified products.

Lakeshore thereafter purchased carpeting from Beaulieu through numerous

purchase orders issued pursuant to the Pricing Agreements. Like the Pricing

Agreements, the purchase orders stated that California law governed the orders.

Beaulieu accepted and fulfilled the purchase orders.

The invoices Beaulieu issued to Lakeshore as a result of the purchase orders

contained the following notice: “The terms and conditions for the transaction on

this invoice are governed by Beaulieu’s Terms and Conditions of Sale, dated

10/07/14, located at www.beaulieugroup.com/notices/terms.htm which are

incorporated herein by reference. The Purchaser has read and agrees to these

Terms and Conditions.” The Beaulieu Terms and Conditions of Sale (the

“Beaulieu Terms”) provided that “[e]ach party [agreed to] submit[] to the exclusive

jurisdiction of the courts of the State of Georgia and the United States District

Court for the Northern District of Georgia” and “expressly waive[d] any and all

objections . . . to venue, including, without limitation, the inconvenience of such

forum, in any such courts.” Lakeshore paid the invoices without objection.

On July 16, 2017, Beaulieu filed a voluntary petition for bankruptcy relief in

the Bankruptcy Court for the Northern District of Georgia (“Bankruptcy Court”).2

These proceedings culminated in Engineered Floors’ agreement to purchase

substantially all of Beaulieu’s assets. The sale was approved by the Bankruptcy

Court on November 1, 2017. From the inception of the Pricing Agreements

through November 3, 2017, Beaulieu issued 145 invoices totaling approximately

$1.6 million to Lakeshore for carpeting purchased.

After the approval of the bankruptcy sale, Engineered Floors continued

Beaulieu’s operations, and Lakeshore continued to issue purchase orders to

2 The Court may take judicial notice of pleadings filed in another case on a motion

to dismiss. See Lozman v. City of Riviera Beach, 713 F.3d 1066, 1076 n.9 (11th

Cir. 2013); Fed. R. Evid. 201(b). This does not require the Court to convert the

motion to dismiss into one for summary judgment. See Universal Express, Inc. v.

U.S. Sec. & Exch. Comm’n, 177 F. App’x 52, 53 (11th Cir. 2006).

Engineered Floors. The purchase orders contained the California choice of law

provision.

Engineered Floors fulfilled the purchase orders and issued twenty-three

respective invoices to Lakeshore reflecting the price set forth in the Pricing

Agreements. The total value of the Engineered Floors invoices was almost

$400,000, and all, except one, referenced the Beaulieu Terms. The combined

value of the invoices generated by Beaulieu and Engineered Floors over the course

of the relationship with Lakeshore totaled nearly $2 million.

In February 2018, Lakeshore returned carpeting valued at over $22,000 to

Engineered Floors for alleged defects, and Engineered Floors in turn issued credits

to Lakeshore. Lakeshore stopped paying Engineered Floors’ invoices that same

month. Lakeshore’s unpaid balance with Engineered Floors was approximately

$140,000.

In August 2018, Lakeshore filed a complaint in California state court against

Engineered Floors related to its sale of the allegedly defective carpeting (the “First

California Action”). Engineered Floors removed the case to federal court and

thereafter filed an adversary proceeding in the Bankruptcy Court seeking to enjoin

the First California Action and to resolve Lakeshore’s claims in the Bankruptcy

Court.

On October 31, 2018, Lakeshore and Engineered Floors entered into a joint

stipulation to dismiss the First California Action without prejudice to allow the

Bankruptcy Court to rule on whether Lakeshore’s claims against Engineered

Floors should be decided in that court.

On June 12, 2020, although the Bankruptcy Court action was still pending,

Engineered Floors filed the instant action in Georgia state court, and Lakeshore

removed it to this Court.

On July 7, 2020, Lakeshore filed its own (new) action in California federal

court (the “Second California Action”). The instant action and the First and

Second California Actions concern the same claims and relate to the same

purchase orders and invoices. Engineered Floors moved to dismiss the Second

California Action or to transfer it to this Court on various grounds, including that

the instant action was filed first.

On November 16, 2020, the Bankruptcy Court resolved certain claims

among Lakeshore, Engineered Floors and the bankruptcy estate, and on November

23, 2020, the court severed the remaining claims between Lakeshore and

Engineered Floors from the bankruptcy proceedings.

On December 11, 2020, the court in the Second California Action stayed the

matter “given the uncertainty of the outcome of the issues” in this Court.

In this case, Lakeshore argues that the Court lacks personal jurisdiction over

it and seeks to transfer the matter to the Central District of California where the

Second California Action is pending. Lakeshore also argues that transfer is proper

under 28 U.S.C. § 1404(a) even if the Court finds it has personal jurisdiction over

Lakeshore.

II. ANALYSIS

The Court first turns to Lakeshore’s request to transfer this action to the

Central District of California and need not resolve the personal jurisdiction

question in order to conduct this analysis. See Roofing & Sheet Metal Servs., Inc.

v. La Quinta Motor Inns, Inc., 689 F.2d 982, 992 n.16 (11th Cir. 1982) (stating that

“[i]n this Circuit, a court lacking personal jurisdiction of the defendant may

transfer the case under either [§] 1404(a) or [§] 1406(a)”); Koehring Co. v. Hyde

Const. Co., 324 F.2d 295, 298 (5th Cir. 1963) (finding that the court was

authorized to transfer the action under § 1404(a) “whether or not [it] had personal

jurisdiction over the defendant”).

“The question of whether to transfer venue is a two-pronged inquiry.”

Merswin v. Williams Cos., Inc., No. 1:08-cv-2177, 2009 WL 249340, at *5 (N.D.

Ga. Jan. 30, 2009). First, the transferee venue must be one in which the action

could originally have been brought by the plaintiff, which means that the transferee

court must have venue and both subject-matter and personal jurisdiction. See

Regenicin, Inc. v. Lonza Walkersville, Inc., No. 1:13-cv-3596, 2014 WL 11930591,

at *2 (N.D. Ga. May 1, 2014). Given that Lakeshore and Engineered Floors are

currently parties to an action in the Central District of California regarding the

claims raised here, and Engineered Floors has not disputed that court’s jurisdiction

over the action, the Court finds that the first prong is satisfied.

Next, the court balances “three broad interests: the convenience of the

parties, the convenience of the witnesses, and the interests of justice.” Regenicin,

2014 WL 11930591, at *2. Within these interests, courts deem the following

factors relevant:

(1) the convenience of the witnesses; (2) the location of relevant

documents and the relative ease of access to sources of proof; (3) the

convenience of the parties; (4) the locus of operative facts; (5) the

availability of process to compel the attendance of unwilling

witnesses; (6) the relative means of the parties; (7) a forum’s

familiarity with the governing law; (8) the weight accorded a

plaintiff’s choice of forum; and (9) trial efficiency and the interests of

justice, based on the totality of the circumstances.

Manuel v. Convergys Corp., 430 F.3d 1132, 1135 n.1 (11th Cir. 2005). “But

unless the balance is strongly in favor of the defendant, the plaintiff’s choice of

forum should rarely be disturbed.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508,

(1947). The Court addresses these factors in turn.

The Convenience of the Witnesses and Parties; the Availability of

Process to Compel the Attendance of Unwilling Witnesses

Lakeshore argues that all of the key witnesses in this action are located in

California, including Lakeshore’s and Engineered Floors’ fact and expert witnesses

and third parties. Lakeshore’s list of California witnesses includes:

Lakeshore Employees

• Tina Lopez-Dryer (Domestic Manager): determined that the carpeting

was defective, reported the defects to Engineered Floors and met with

Engineered Floors employees to inspect the carpeting at Lakeshore’s

Carson, California facility.

• Jeff Champlin (Director of Vendor Relations): managed the defect

issue and is knowledgeable about the costs associated with replacing

the carpeting and the resulting damages.

Engineered Floors Employees

• Steve Cvitanovich (Territory Sales Manager): responded to

Lakeshore’s complaints regarding the defective products and

allegedly admitted that Engineered Floors had breached its obligations

to Lakeshore.

Third Party Witnesses

• Aaron Tennyson (Beaulieu’s Regional Vice President): wrote several

emails relating to the alleged issues with the carpeting.

• Marc Robb (Abstract): owner of Abstract, a third-party company that

received, inspected and observed the alleged defects.

Expert Witnesses

• Kenneth Newson (Lakeshore’s carpeting expert)

• Irfan Murtaza (Engineered Floors’ carpeting expert)

Engineered Floors devotes only one paragraph in its response brief to the

analysis of the § 1404(a) factors. With respect to the convenience of the witnesses,

Engineered Floors merely states that it has “witnesses in Georgia.” In its argument

for personal jurisdiction over Lakeshore, Engineered Floors refers to Dale Davis,

its Corporate Credit Manager, and “the machinery and personnel who made the

carpeting” as Georgia-based employees. However, it does not explain how these

employees relate to the dispute. Engineered Floors also states that it has engaged

an expert witness in Kentucky (in addition to its California expert witness), and it

hired Professional Testing Laboratory located in Georgia, in conjunction with

Lakeshore, to provide testing services related to the alleged defects.

The convenience of the witnesses is of great importance to the

decision to transfer venue from one forum to another, and the focus of

the Court should be on the convenience of “key witnesses.”

Additionally, there is a distinction between party witnesses and non-

party witnesses. Party witnesses are the parties themselves and those

closely aligned with a party, and they are presumed to be more willing

to testify in a different forum, while there is no such presumption as to

non-party witnesses. Given the fact that, when possible, live

testimony is preferred over other means of presenting evidence, the

convenience of the non-party witnesses weighs most heavily on the

[c]ourt in deciding on a motion to transfer venue.

Ramsey v. Fox News Network, LLC, 323 F. Supp. 2d 1352, 1356 (N.D. Ga. 2004).

Here, the record supports Lakeshore’s contention that key witnesses

involved in the relevant transactions or who are knowledgeable about the alleged

defects, including third parties, are located in California. Therefore, Lakeshore

would not have the means to compel their attendance at trial in Georgia.

By comparison, the Georgia witnesses identified by Engineered Floors are

party witnesses or retained experts who have a pecuniary interest to appear at trial

in another forum. Moreover, because Engineered Floors has not provided any

information regarding the role these witnesses played in the dispute, it is not clear

that they are key to the resolution of the issues.

For these reasons, the Court finds that the convenience of the witnesses and

parties and the availability of process to compel the attendance of unwilling

witnesses weigh strongly in favor of transfer to California.

The Location of Relevant Documents and the Relative Ease of Access to

Sources of Proof; the Locus of Operative Facts

Lakeshore contends that “all sources of proof” in this case are located in

California, including 3,580 rolls of defective carpeting. It asserts that it anticipates

inspecting these rolls prior to trial and making some rolls available for jury

inspection. Lakeshore also argues that the locus of operative facts is in California

because the sale of the carpeting, communications between Lakeshore and

Engineered Floors staff and the identification and inspection of the alleged defects

all occurred in California.

Engineered Floors does not respond directly to this point but states

elsewhere in its brief that Lakeshore “is storing a large portion of the carpeting it

claims is defective in Kentucky (not just in California).”

When “significant documentary evidence” is located in the transferee forum,

and “[t]he trial will be facilitated by having the forum in close proximity to such

evidence,” courts will find that this factor weighs in favor of transfer. See, e.g., id.

at 1357 (stating that transfer was prudent where the jury’s inspection of evidence

would have been impossible in the transferor forum).

In this case, Lakeshore’s unrebutted assertion that key and unwieldy

evidence (3,580 rolls of carpeting) located in California is central to the case

weighs strongly in favor transfer—as does evidence that discovery of the alleged

defects, inspection of the carpeting and substantial communications among

Engineered Floors and Lakeshore employees or representatives occurred in

California.

The Relative Means of the Parties

Given that both Lakeshore and Engineered Floors are corporate entities with

millions of dollars in annual output (the transactions between Lakeshore and

Engineered Floors alone totaled almost $2 million), the Court agrees with

Lakeshore, and Engineered Floors does not dispute, that the relative means of the

parties is a neutral factor.

The Forum’s Familiarity with the Governing Law

The choice of law question is a significant issue in this case. Lakeshore

contends that California law applies based on the choice of law provision in the

Pricing Agreements and the purchase orders issued pursuant to them. It explains

that California law governs because Engineered Floors accepted, fulfilled and

accepted payment under various purchase orders that flowed from the Pricing

Agreements. In Lakeshore’s view, Engineered Floors should not be permitted to

benefit from the preferential pricing reflected in the Pricing Agreements and

purchase orders and at the same time disavow the choice of law provision that may

not be favorable to it.

Further, Lakeshore argues that because California law applies, the Beaulieu

Terms attached to the invoices, including the choice of law and forum selection

clauses, may not contradict or modify the terms of the earlier Pricing Agreements

and purchase orders.

On the other hand, Engineered Floors contends that Georgia law applies

because by accepting and paying for carpeting sold under invoices containing the

Beaulieu Terms, Lakeshore agreed to the Georgia forum selection and choice of

law clauses reflected therein. Engineered Floors further argues that a forum

selection clause in an invoice is valid under Georgia law, especially where the

recipient of the invoice does not object to it.

Additionally, Engineered Floors argues that the Pricing Agreements “are of

no consequence” because it was not a party to the agreements and did not assume

them with the bankruptcy sale.

In a nutshell, there does not appear to be a dispute that the Pricing

Agreements governed Lakeshore’s and Beaulieu’s relationship. At the heart of the

disagreement is (i) whether Engineered Floors assumed the Pricing Agreements

and (ii) whether the invoices issued by Beaulieu and Engineered Floors modified

or superseded the terms of the Pricing Agreements and purchase orders.

With respect to the first issue, California law is clear that “[a] voluntary

acceptance of the benefit of a transaction is equivalent to a consent to all the

obligations arising from it, so far as the facts are known, or ought to be known, to

the person accepting.” Cal. Civ. Code § 1589. See also id. § 3521 (“He who takes

the benefit must bear the burden.”). In deciding that a plaintiff “was not entitled to

make use of [an insurance] policy as long as it worked to her advantage [and] then

attempt to avoid its application in defining the forum in which her dispute . . .

should be resolved,” the court in NORCAL Mutual Insurance Co. v. Newton

emphasized that “‘[n]o person can be permitted to adopt that part of an entire

transaction which is beneficial to him/her, and then reject its burdens.’” 100 Cal.

Rptr. 2d 683, 699 (Cal. Ct. App. 2000). Cf. Tyler v. J.I. Metrovich Bldg. Co., 190

P. 208, 209 (Cal. Ct. App. 1920) (stating that “it is elementary that a party cannot

denounce a contract as void, and at the same time demand enforcement of its

provisions favorable to him”).

Georgia law is similar in providing that a party may be bound by a contract

through his performance or acceptance of the benefits thereunder. For example, in

Del Lago Ventures, Inc. v. QuikTrip Corp., the Georgia Court of Appeals stated

that even if “one of the parties has not signed [a contract], his acceptance is

inferred from a performance under the contract, in part or in full, and he becomes

bound.” 764 S.E.2d 595, 599 (Ga. Ct. App. 2014). See also Kennington v. Small,

136 S.E. 326, 329 (Ga. Ct. App. 1926) (stating that “[a] defendant, having received

the benefit of . . . performance, is bound by the terms of the contract”); Gruber v.

Wilner, 443 S.E.2d 673, 676 (Ga. Ct. App. 1994) (stating that “[a] contract signed

by one of the parties only, but accepted and acted on by the other party to it, may

be just as binding as if it were signed by both parties, if the obligations of the

parties are mutual”) (internal punctuation omitted).

In light of the similarity between Georgia and California law, the Court need

not decide which applies to the question of whether Engineered Floors assumed the

Pricing Agreements. The conclusion is the same under either state’s law. The

record shows that Engineered Floors continued to perform under and accept the

benefits of the Pricing Agreements after it purchased Beaulieu’s assets. Indeed,

Engineered Floors provided carpeting and submitted twenty-three invoices on its

own behalf using the agreed upon price terms. Because Engineered Floors

accepted the benefits of the Pricing Agreements, including the price terms, it

cannot now disavow the choice of law provision in those agreements. On these

facts, Engineered Floors is deemed to have assumed the Pricing Agreements and is

thereby bound by their terms, including the California choice of law provision.3

Similarly without merit is Engineered Floors’ contention that its invoices

modified or superseded the terms of the Pricing Agreements. In India Paint and

Lacquer Co. v. United Steel Production Corp., the court referenced the “prevailing

rule” under California law that “an invoice, standing alone, is not a contract and a

buyer is ordinarily not bound by statements thereon which are not a part of the

3 Engineered Floors’ argument that it did not assume the agreements during

Beaulieu’s bankruptcy proceedings is unavailing. This fact is not relevant because

Engineered Floors’ subsequent performance under the Pricing Agreements shows

that it eventually assumed them.

original agreement.” 267 P.2d 408, 415 (Cal. Ct. App. 1954) (internal citations

omitted). The rationale is that payment of an invoice in accordance with an

existing contract does not, by itself, establish assent to the addition of terms to the

underlying contract. See C9 Ventures v. SVC-W., L.P., 136 Cal. Rptr. 3d 550, 565

(Cal. Ct. App. 2012). For that to occur, the payment “must be related to the

proposed modification or addition and differ from the performance already

required of the party by the existing contract.” Id. (finding that because the party’s

payment of the invoices was already required under the existing contract, and it

took no additional steps constituting acceptance of the indemnification provision,

the party’s payment of the invoice “did not manifest assent to the invoice’s

conditions, but merely constituted performance of the previous . . . contract

between the parties”). In short, absent other action that constitutes acceptance of

the modified terms, the mere payment of an invoice cannot be deemed to modify

the terms of an existing agreement. See id.

In this case, Lakeshore was already obligated to pay invoices submitted

pursuant to the purchase orders (and the Pricing Agreements), so its fulfillment of

that duty did not constitute assent to the Georgia choice of law and forum selection

clause in the Beaulieu Terms. The Court, therefore, finds that the Beaulieu Terms

did not modify the California choice of law provision in the Pricing Agreements

and purchase orders. As such, California law is relevant for the purpose of

assessing whether the forum’s familiarity with the governing law weighs in favor

of transfer.4

Although district courts are eminently capable of applying the law of states

other than the one in which they sit, the transferee court in this case will be “at

home with the [governing law],” and this factor thus weighs in favor of transfer.

See Atl. Marine Constr. Co., Inc. v. U. S. Dis. Ct., 571 U.S. 49, 63 n.6 (2013)

(noting that in a § 1404(a) analysis, courts may consider “‘the local interest in

having localized controversies decided at home [and] the interest in having the trial

of a diversity case in a forum that is at home with the law’”).

The Weight Accorded a Plaintiff’s Choice of Forum; Trial Efficiency

and the Interests of Justice, Based on the Totality of the Circumstances

Lakeshore acknowledges that a plaintiff’s choice of forum is ordinarily

entitled to deference, but it argues that such deference should not be afforded here

because Engineered Floors has litigated these same claims in another forum (the

Bankruptcy Court). Lakeshore also contends that Engineered Floors’ decision to

file suit in this Court constitutes forum shopping. Lakeshore reasons that although

4 Because the Georgia forum selection clause does not apply here, the Court need

not address Engineered Floors’ argument that the clause should be given

controlling weight in the § 1404(a) analysis.

Engineered Floors stipulated to the dismissal of the First California Action to allow

its subsequently filed action in Bankruptcy Court to proceed, Engineered Floors

nevertheless filed the action in this Court before those proceedings had concluded.

Engineered Floors does not address this argument directly and responds only

that Lakeshore’s arguments for transfer “ignore” Engineered Floors’ “rights to

have its claims determined in its chosen forum.”

“[I]t is well-established that courts apply a presumption in favor of the

plaintiff’s choice of forum.” Freeman v. Graco, Inc., No. 1:13-cv-662-ODE, 2013

WL 12070089, at *4 (N.D. Ga. Nov. 7, 2013). “That being said, this factor is not

dispositive on its own.” In Huntley v. Chicago Board of Options Exchange, the

court found that “on balance,” other factors weighed heavily in favor of transfer

and refused to give the plaintiff’s choice of forum controlling weight. 132 F. Supp.

3d 1370, 1375 (N.D. Ga. 2015). The court reasoned that it could not “ignore the

fact that [the] case [was] primarily about alleged acts and omissions that took place

in [the transferee forum]” and would “require testimony from . . . nonparty

witnesses, who also live in [that forum].” Id.

Here, the Court is mindful of the traditional deference given to a plaintiff’s

choice of forum, but like the court in Huntley, the Court finds that such deference

does not outweigh the other applicable factors. The convenience of the witnesses

is also of great importance in a § 1404(a) analysis, and as described herein,

Lakeshore has demonstrated that key witnesses are located in California and are

out of reach of this Court’s jurisdiction whereas Engineered Floors has not shown

that any of the witnesses it identified are key to resolution of this case or that it

would be unable to produce them in California for trial.

Further, the physical evidence (and other significant evidence) at the center

of this dispute is located in California. The Court is also cognizant of the

consideration of having the trial of a diversity case in a forum that is at home with

the law.

Finally, in looking at the totality of the circumstances, the Court notes that

while not dispositive (and the conclusion would not otherwise change), the facts

tend to support Lakeshore’s contention that Engineered Floors engaged in forum

shopping by filing suit in this Court.

In sum, because the convenience of key witnesses, the availability of process

to compel attendance at trial, the location of and access to key evidence, the

familiarity of the transferee forum with the governing law, trial efficiency, the

interests of justice and the totality of the circumstances all weigh strongly in favor

of transfer, the Court GRANTS Lakeshore’s request to transfer (ECF No. 5). All

other issues raised in Lakeshore’s Motion not addressed herein are DENIED as

moot. The Clerk is DIRECTED to transfer the case to the Central District of

California.

SO ORDERED this 8th day of March, 2021.

J.\P/ BOULEE

United States District Judge

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