Miller Family Industries, Inc. v. Ives

Background

The caption identifies the plaintiff as Miller Family Industries, Inc., while the background section identifies it as Miller Family Industries, LLC. The background states that the plaintiff was organized under Delaware law and that its principals were Alan and Abraham Miller. Christopher Ives was identified as an individual residing in California.

According to the amended complaint, Ives proposed creating and funding a company that would provide commercial working-capital and financing products to small and medium-sized businesses. The parties signed a Memorandum of Understanding for the formation of Levo Funding, Inc., a Delaware company. The plaintiff would be the primary investor and owner, and Ives would serve as chairman of the board and chief executive officer. The plaintiff alleged that Ives made false or misleading statements and supplied misleading financial information, causing it to advance more than $6.5 million to fund Levo Funding.

The amended complaint asserted claims for fraudulent inducement, common-law fraud, negligent misrepresentation, and breach of contract. Ives moved to dismiss based on the doctrine allowing a court to decline a case when another forum is more appropriate, improper venue, and failure to state a claim. He also sought transfer under 28 U.S.C. § 1404(a), the federal statute governing transfers for convenience and the interests of justice.

Forum-Selection Clause

The MOU’s governing-law and venue provision stated that the parties irrevocably consented to the exclusive jurisdiction and venue of Delaware’s state or federal courts, to the extent legally permitted. The court found that the clause was clearly communicated, mandatory, and broad enough to cover all four claims.

The court reasoned that the fraud and negligent-misrepresentation claims were connected to the MOU because the alleged representations led the plaintiff to create and fund Levo Funding, and the breach-of-contract claim directly concerned the MOU. The court rejected the plaintiff’s argument that the clause applied only to disputes involving rights and obligations expressly stated in the MOU. It also rejected the argument that requiring the plaintiff to obtain Delaware counsel made enforcement unreasonable.

Because the clause selected either state or federal courts in Delaware, the court treated transfer to the federal court in Delaware as the proper remedy rather than dismissal under the doctrine allowing dismissal when the alternative forum is outside the federal court system. The court found no extraordinary public-interest circumstances that would justify refusing to enforce the clause.

Other Arguments and Disposition

The court again treated Ives’s Rule 12(b)(3) improper-venue argument as waived because it had not been properly raised in his opening brief. The court declined to decide Ives’s Rule 12(b)(6) argument that the amended complaint failed to state a claim, explaining that the transferee court should address that issue. The court also declined to consider Ives’s request for sanctions because he raised it for the first time in a reply brief.

The court stated that Ives’s motion was granted in part and denied in part. It ordered the Clerk to transfer the case to the United States District Court for the District of Delaware, terminate all pending motions, and close the case in the Southern District of New York. The opinion does not separately identify which specific portions of the motion correspond to the “granted in part” and “denied in part” language beyond the rulings described above.