BACO Holdings, Inc. v. Arria Data2Text, Limited ( 2023 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
BACO HOLDINGS, INC., )
a Delaware Corporation, )
)
Plaintiff, )
) Case No.: N22C-08-445 FJJ
v. )
)
ARRIA DATA2TEXT, LIMITED, )
a Scottish Limited Company, )
)
Defendant. )
Submitted: February 10, 2023
Decided: February 24, 2023
MEMORANDUM OPINION AND ORDER
Upon Consideration of Defendant’s Motion to Dismiss:
DENIED
Andrew Silverman, Esquire, of MACELREE HARVEY, LTD., Centreville, Delaware,
Attorney for Plaintiff BACO Holdings, Inc.
Scott Czerwonka, Esquire, of the WILKS LAW FIRM, LLC, Wilmington, Delaware,
Attorney for Defendant Arria Data2Text, Limited.
JONES, J.
INTRODUCTION
This matter involves a contractual scheme for delivery of a centralized call
routing prototype (the “Prototype”) on the Amazon Web Services Connect
Platform.1 The contract at issue was meant to safeguard payment to Plaintiff BACO
Holdings, Inc. (“BACO”) after BACO allegedly scaled the Prototype to connect
over 1,100 users to Defendant Arria Data2Text Limited (“Arria”)’s service
offerings.2 But as it turned out, per BACO, Arria never paid for the services BACO
rendered in August of 2022, as the contract allegedly requires.3 Thus, this action
seeks to impose liability on Arria for breach of contract.4
For present purposes, the issue before the Court is jurisdictional: can Arria be
haled into a Delaware court to answer for a contract-related claim, despite having
no relationship with Delaware other than its status as a party to a contract with a
Delaware forum selection clause? Arria answers in the negative, and has moved to
dismiss the complaint on these grounds under Superior Court Civil Rule 12(b)(2).
This opinion addresses, and ultimately DENIES, Arria’s motion. The Court’s
reasoning follows.
FACTUAL AND PROCEDURAL OVERVIEW
BACO, a Delaware corporation, initially contracted to make the Prototype
available to Arria, a Scotland-based company, in April 2021.5 After a number of
1
Pl.’s Compl. at 2.
2
Id.
3
Id.
4
Id. at 4.
5
Id. at 2.
2
mutually-approved amendments to the contract,6 Arria ultimately agreed to provide
BACO with $1,050,000.00 in exchange for the Prototype.7 BACO’s obligations
under the contract were outlined in a Statement of Work, and Arria agreed to tender
payment to BACO pursuant to a Payment Schedule the parties last revised in
December 2021.8
As described in the Statement of Work, “invoicing [from BACO would] be on
the 1st and 15th of each month with payment due [from Arria] on the 15th and 30th of
each month.”9 But, according to BACO, Arria failed to tender the $515,000.000 it
owed in August 2022 payments.10
BACO initiated this action shortly thereafter, and Arria filed the motion to
dismiss before the Court in December 2022.11 BACO responded on February 10,
2023.12 The motion is now fully briefed and ripe for consideration.
STANDARD OF REVIEW
“A non-resident defendant may move to dismiss for lack of personal jurisdiction
under Rule 12(b)(2).”13 “Generally, a plaintiff does not have the burden to plead in
its complaint facts establishing a court’s personal jurisdiction over [a non-resident]
6
Id. The first amendment came in May 2021, when BACO and Arria amended the contract to a Statement of Work.
Through the Statement of Work, BACO agreed to scale the Prototype “to connect over 1,100 users to Arria’s service
offerings.” Id. Then, in December 2021, the Statement of work was ratified and amended to revise the payment
schedule for BACO’s services. Id. Arria’s alleged failure to perform under the Revised Payment Schedule has led to
the action presently before the Court.
7
Id.
8
Id. at 2-3.
9
Id. at 3.
10
Id.
11
D.I. 5.
12
D.I. 10.
13
Green Am. Recycling, LLC v. Clean Earth, Inc., 2021 WL 2211696, at *3 (Del. Super. June 1, 2021) (citing Del.
Super. Ct. Civ. R. 12(b)(2)).
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defendant.”14 But when Rule 12(b)(2) is invoked, the plaintiff does carry this
burden.15
Where no discovery has been conducted, plaintiff’s burden is a prima facie
one.16 As such, “the Court ‘is not limited to the pleadings and can consider
affidavits, briefs of the parties,’ and the record as a whole.”17 “Still, unless
contradicted by affidavit, the Court must (1) accept as true all well-pleaded
allegations in the complaint; and (2) construe the record in the light most favorable
to the plaintiff.”18
ANALYSIS
As presented above, Arria submits the Court lacks personal jurisdiction to hear
this matter pursuant to the forum selection clause in the parties’ contract. The forum
selection provision reads, in relevant part:
Any action arising out of or relating to this Agreement shall be
brought exclusively in a court of competent jurisdiction in New
Castle, Delaware, unless prohibited by applicable law.19
Delaware law favors the enforcement of forum selection clauses,20 which are
presumptively valid and should be specifically enforced unless the resisting party
clearly shows that enforcement would be unreasonable and unjust, or that the clause
14
Focus Fin. P’rs, LLC v. Holsopple, 241 A.3d 784, 800 (Del. Ch. 2020) (internal quotation marks and citation
omitted). Precedent resolving dismissal motions filed under the Court of Chancery’s analogous rules is usually of
equal influence when addressing those filed under this Court’s. See, e.g., CLP Toxicology, Inc. v. Casla Bio Holdings
LLC, 2020 WL 3564622, at *9 n.65 (Del. Ch. June 29, 2020) (finding no difference in the Rule 12(b)(2) context and
collecting authority); see also Green Am. Recycling, 2021 WL 2211696, at *3 n.40.
15
Green Am. Recycling, 2021 WL 2211696, at *3 (citing AeroGlobal Capital Mgmt, LLC v. Cirrus Indus., Inc., 871
A.2d 428, 437-38 (Del. 2005)).
16
Id.; see also id. at *3 n.42.
17
Id. at *3.
18
Id. (internal quotation marks and citations omitted); see also id. at *3 ns.44-45.
19
Pl.’s Compl., Ex. A, at ¶ 16.
20
Plaze, Inc. v. Callas, 2019 WL 1028110, at *3 (Del. Ch. Feb. 28, 2019).
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is invalid for reasons such as fraud or overreaching.21 Delaware courts routinely
defer to forum selection clauses and “give effect to the terms of private agreements
to resolve disputes in a designated judicial forum out of respect for the parties’
contractual designation.”22 If the forum selection clause is freely negotiated, then
Delaware courts are to presume the clause is prima facia valid and does not violate
due process.23
Through its motion, Arria does not argue the invalidity, unreasonableness,
fraudulence, or overreach of the forum selection provision. Nor does it dispute that
the contract was freely negotiated. Instead, Arria argues this Court is not a “court
of competent jurisdiction,” as provided in the forum selection clause, and the
Court’s hearing of the dispute is “prohibited by applicable law” because the Court
lacks independent grounds for personal jurisdiction over Arria beyond the
provision.24
It is well-settled that Delaware law permits a defendant to contractually agree to
a court’s exercise of personal jurisdiction.25 As the United States Supreme Court
has recognized, “the personal jurisdiction requirement is a waivable right [and] there
are a ‘variety of legal arrangements’ by which a litigant may give express or implied
consent to the personal jurisdiction of the court.’”26 The Delaware Supreme Court
has expressed similar sentiments: “Where the parties to the forum selection clause
21
Id. (citing Ingres Corp. v. CA, Inc., 8 A.3d 1143, 1146 (Del. 2010).
22
Id. (citing Ashall Homes Ltd. V. ROK Entm’t Gp., 992 A.2d 1239, 1245 (Del. Ch. 2010)).
23
Id.24
D.I. 5 at ¶ 5.
25
In re Pilgrim’s Pride Corp. Derivative Litig., 2019 WL 1224556, at *1 (Del. Ch. Mar. 15, 2019).
26
Burger King. Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14 (1985) (citations omitted).
5
have consented freely and knowingly to the court’s exercise of jurisdiction, the
clause is sufficient to confer personal jurisdiction on a court.”27
Finally, as the Court of Chancery recently noted, “[w]here a party commits to
the jurisdiction of a particular court by forum or contract, such as through a forum
selection clause, a minimum contacts analysis is not required; the Court’s analysis
[instead] focuses on the contractual language.”28 When the language is clear and
unambiguous, the Court will give effect to the plain meaning of the contract’s terms
and provisions.29 Language is ambiguous if it is susceptible to more than one
reasonable interpretation,30 and an interpretation is unreasonable if it “produces an
absurd result” or a result “that no reasonable person would have accepted when
entering the contract.”31
Here, the plain meaning of the clause states that the parties consent to the
exclusive jurisdiction of the courts of New Castle County, Delaware. Those courts,
obviously, include this Court. Arria’s argument, which asks the Court to assume
the phrase “unless prohibited by applicable law” nullifies, a priori, the forum
27
Nat’l Indus. Gp. (Hldg.) v. Carlyle Inv. Mgmt., LLC, 67 A.3d 373, 381 (Del. 2013).
28
ActiGraph Holdings, LLC v. Cyntech, Inc., 2023 WL 1989141, at *1 (Del. Ch. Feb. 14, 2023) (internal citations and
quotations omitted).
29
Seidensticker v. Gasparilla Inn, Inc., 2007 WL 4054472, at *1 n.1 (Del. Ch. Nov. 8, 2007) (“Under Delaware law,
courts interpret contracts to mean what they objectively say. This approach is longstanding and is motivated by grave
concerns of judicial fairness and efficiency.”).
30
Osborn ex rel Osborn v. Kemp, 991 A.2d 1153, 1160 (Del. 2010).
31
Id. (citations omitted). Arria’s motion, which misapplies the Delaware Supreme Court’s holding in
Germaninvestments AG v. Alloment Corp., produces an absurd result. See Germaninvestments AG v. Alloment Corp.,
225 A.3d 316. In sum, Arria submits Germaninvestments requires the forum selection clause to be stated in
“crystalline” terms before the Court can exercise personal jurisdiction. There are two issues with this position. First,
the Court is satisfied the forum selection clause here is expressed in “crystalline” terms. Second, Germaninvestments
stands for the proposition that Delaware jurisdiction can be retained if a permissive forum selection clause selects
jurisdictions outside of Delaware. See id. at 331. If anything, the holding permits jurisdiction in Delaware as well as
proper jurisdiction elsewhere. Id. So, Germaninvestments, at best, is inapposite to Arria’s argument, and, at worst,
directly contradicts it.
6
selection the parties had just agreed to in the same sentence, is wholly unreasonable.
If the Court were to accept this line of reasoning, then the entire clause would be
superfluous.
Because Arria consented to litigate the case in Delaware by contract, the Court
need not, and will not, reach a traditional due process inquiry.
CONCLUSION
For the foregoing reasons, Arria’s motion to dismiss pursuant to Rule 12(b)(2)
is DENIED.
IT IS SO ORDERED.
/s/ Francis J. Jones, Jr.
Francis J. Jones, Jr., Judge
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