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Omega Liner Co., Inc. v. The Monte Vista Group, LLC

United States District Court, D. South Dakota

September 16, 2019

OMEGA LINER COMPANY, INC., Plaintiff,
v.
THE MONTE VISTA GROUP, LLC, RICHARD MONTEMARANO, AND RENE QUITTER Defendants.

          MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER VENUE

          Lawrence L. Piersol United States District Judge.

         Pending before the Court is Defendants' Motion to Transfer Venue pursuant to 28 U.S.C. § 1404(a), Motion to Dismiss for Failure to State a Claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure; and Motion for More Definite Statement. Doc. 23. For the following reasons, Defendants' motion to transfer-venue is granted.

         BACKGROUND

         On or around January 9, 2017, Plaintiff, Omega Liner Company, Inc. ("Omega Liner Co."), a South Dakota corporation with its principal place of business in Canton, South Dakota, and The Monte Vista Group ("Monte Vista Group"), a California limited liability company with its principal place of business in San Diego, California, entered into a Purchase and License Agreement ("Agreement") related to the manufacturing and sale of ultra violet cured-in-place pipe ("Pipe Liners"). Doc. 26, ¶¶ 1, 2. Under the terms of the Agreement, Omega Liner Co. purchased certain equipment, licensed certain software and intellectual property ("patent license"). Doc. 26-1. Pertinent to the present motions pending before the Court, Paragraph 18.H. of the Agreement, states as follows:

This Agreement shall be governed by the laws of the State of California (excepting any conflict of laws or provisions which would serve to defeat application of California substantive law). Each of the parties to this Agreement hereby irrevocably and unconditionally: (i) consents to submit to the exclusive jurisdiction of the courts of San Diego County, California for any proceeding arising in connection with this Agreement and each such party agrees not to commence any such proceeding except in such courts, and (ii) waives any objection to the laying of venue of any such proceeding in the courts of San Diego County, California.
EACH PARTY, KNOWINGLY AND AFTER CONSULTATION WITH COUNSEL, FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, WAIVES ALL RIGHT TO TRIAL BY JURY OF ANY CLAIM ARISING WITH RESPECT TO THIS AGREEMENT OR ANY MATTER RELATED IN ANY WAY THERETO TO THE EXTENT PERMITTED BY LAW.

Doc. 26-1. Execution of the Agreement was expressly conditioned on Omega Liner Co's receipt of a South Dakota Economic Development REDI (Revolving Economic Development and Initiative) Fund Loan. Doc. 26, ¶ 12.

         Between approximately November 2016 and January 2017, Plaintiff alleges that defendant Richard Montemarano ("Montemarano"), the managing director of Monte Vista Group, and defendant Rene Quitter, the technology director of Monte Vista Group, with intent of inducing Omega Liner Co. to enter into the Agreement, represented to Omega Liner Co. that it:

a. Had expertise in installing and operating the equipment used to manufacture Piper Liners ("Equipment") subject to the Agreement;
b. Had expertise in manufacturing Pipe Liners;
c. Had expertise in manufacturing 60" Pipe Liners;
d. Had expertise in training third parties in the operation of the Equipment and manufacturing Piper Liners;
e. Had valuable trade secrets and confidential information regarding the Equipment and Pipe Liner manufacturing process; and
f. Would provide Omega Liner Company a "total solution" package for the Equipment.

Doc. 26, ¶ 13. Omega Liner Co. alleges that such representations were false, that Defendants knew or should have known that they were false, and that it reasonably relied on such representations to its detriment. Doc. 26, ¶¶ 13-17. Omega Liner Co. alleges that Monte Vista Group's representations were exposed as being false when representatives from the company spent months at Omega Liner Co.'s manufacturing plant in Canton, South Dakota, assisting Omega Liner Co. in installing the Equipment, training it in operating the Equipment, and aiding it in manufacturing Pipe Liners using the Equipment. Doc. 26, ¶ 17. Plaintiff alleges that the first Pipe Liners produced with the assistance of Monte Vista Group exhibited numerous areas of superficial cracking of the pure resin section above the fiberglass sections, making the Liners unsightly and of questionable structural integrity ("First Liners"). Doc. 26, ¶ 18. Plaintiff alleges that Monte Vista Group did not know what caused the defect or how to prevent similar defects in the future. Doc. 26, ¶18.

         The First Liners had been produced for a public works project ("Project"). Doc. 26, ¶ 19. Monte Vista Group instructed Omega Liner Co. to stop installing the First Liners on the Project. Doc. 26, ¶ 19. The First Liners were shipped back to Omega Liner Co.'s manufacturing plant in South Dakota and new Pipe Liners, which are alleged to have been produced without Monte Vista Group's input, were manufactured and shipped to the Project. Doc. 26, ¶ 19.

         Omega Liner Co. alleges that Monte Vista Group acknowledged that it was responsible for the damages caused by the First Liners and that it would forego royalties under the Agreement until Omega Liner Co. was compensated by Monte Vista Group's insurance and/or waived royalties, but that subsequently, Monte Vista Group requested royalties from Omega Liner Co. Doc. 26, ¶ 20.

         On or about April 6, 2018, Omega Liner Co. provided Monte Vista Group with written notice of some of its defaults and alleges that to date, Monte Vista Group has failed and/or refused to cure its defaults. Doc. 26, ¶ 24. Omega Liner Co. is presently manufacturing its own Pipe Liners ("the Omega Liner") at its manufacturing plant in Canton, South Dakota. Doc. 26, ¶ 25. Omega Liner Co. alleges that the Omega Liner was created without the Monte Vista Group's input and without reliance on the Monte Vista Group's methods and technologies. Doc. 26, ¶ 26.

         On August 23, 2018, Omega Liner Co. filed a complaint in the United States District Court for the District of South Dakota Southern Division against Monte ...


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