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Wellons, Inc. v. Sia Energoremonts Riga Ltd.

United States District Court, Ninth Circuit

September 20, 2013

WELLONS, INC., an Oregon corporation, Plaintiff,
v.
SIA ENERGOREMONTS RIGA LTD., a Latvian limited liability company, Defendant.

ORDER ON DEFENDANT ENERGOREMONTS RIGA, LTD.'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION, FORUM NON CONVENIENS, OR COMITY

ROBERT J. BRYAN, District Judge.

This matter comes before the court on Defendant Energorements Riga, LTD.'s Motion to Dismiss for Lack of Personal Jurisdiction, Forum Non Conveniens, or Comity. Dkt. 10. The court has considered the relevant documents and the remainder of the file herein.

PROCEDURAL HISTORY

On May 20, 2013, plaintiff Wellons, Inc. (Wellons), an Oregon corporation that does business in Clark County, Washington, filed this civil case in Clark County Superior Court against Sia Energoremonts Riga LTD, (SER) a Latvian limited liability company, asserting breach of contract. Dkt. 1. On August 2, 2013, the case was removed to federal court on the basis of diversity of citizenship. Dkt. 1, at 2.

MOTION TO DISMISS

On August 9, 2013, SER filed a motion to dismiss, contending that (1) there is no basis for personal jurisdiction over SER, a Latvian company; (2) the case should be dismissed on the basis of forum non conveniens because Latvia is the proper forum for this dispute; and (3) the case should be dismissed under the principles of international comity, in favor of a forum in Latvia. Dkt. 10.

On September 9, 2013, Wellons filed its opposition, arguing that SER's communications with Washington residents, visit to Washington to negotiate the contract, and ongoing business relationship with Wellons were sufficient to establish personal jurisdiction. Wellons also contends that neither forum is favorable in comparison to the other so the case should not be dismissed under forum non conveniens or the principles of international comity. Dkt. 13.

SER filed its reply on September 13, 2013.

RELEVANT FACTS

Introduction. Plaintiff Wellons is an Oregon Corporation with its corporate offices in Vancouver, Washington. Dkt. 14, at 1. Dave Butler is a sales director and project manager from Wellons, and he was the main point of contact for Defendant SER with Wellons. Dkt. 14, at 1. Mr. Butler works out of Wellons' Vancouver office, as well as his home office in Gig Harbor, Washington. Id.

Defendant SER is a Latvian industrial construction company specializing in the design and construction of large scale heating and power plants. Dkt. 11, at 1. SER is located in Riga, Latvia. Id. SER has no offices in the United States, no agents in the United States, and no projects in the United States. Id. at 4.

This dispute arose out of a heating and power plant in Riga that SER constructed for Rigas Siltums, a Latvian heating utility owned in part by the Latvian Ministry of Economics and the municipality of Riga. Id. at 2. Wellons provided a wood-fired boiler system for the plant, and, after a boiler component malfunctioned during installation, SER declined to pay Wellons everything owed under the contract. Id., at 9. Consequently, Wellons brought this suit to recover the full amount due on the contract. Dkt. 1-1, at 4-5.

Contract Negotiations Begin. The parties began negotiating in the summer of 2009. Dkt. 11, at 2. According to Ingars Draudzins, SER's Thermopower plants and Boiler Houses Department Director, Gandras Energoefektas (Gandras) introduced SER to Wellons. Id. Gandras is a Lithuanian company and was one of SER's suppliers for equipment. Id. Following this introduction, Mr. Butler met with SER representatives in Latvia. Dkt. 14, at 1. This meeting, which also took place in the summer of 2009, was the first meeting of the parties. Id.

The parties continued to correspond via e-mail messages, Skype phone calls, and inperson meetings. Dkt. 14, at 1; Dkt. 11, at 3. Although Mr. Butler was sometimes traveling while communicating with SER, the communications between Latvia and Washington State were frequent throughout the business relationship. Dkt. 11, at 6; Dkt. 14-1, at 2. In his declaration, Mr. Butler stated that he has 213 email messages on his computer from SER to him, "along with a few to other representatives of Wellons." Dkt. 14, at 2. "The vast majority of these" were sent to Mr. Butler while he was present in Washington State. Id. Mr. Butler also has 285 email messages that he sent to SER, "including a few that were sent by other Wellons' representatives." Id. "The vast majority of these were sent from Washington state" as well. Id.

According to SER, communications ran though Gandras until at least March of 2010. Dkt. 11, at 3. Soon after, SER began working directly with Wellons as SER prepared its bid to construct the heating and power plant in Riga. Id. Ultimately, Mr. Butler emailed SER (copying Gandras) an offer containing technical and pricing information in March 2010 (the Offer). Dkt. 11, at 3. SER incorporated the Offer into its final bid. Dkt. 10, at 4.

SER continued to cultivate its relationship with Wellons through April of 2010, and visited an operating Wellons' boiler in Russia. Dkt. 11, at 4. SER also requested Wellons send some brochures about Wellons broilers. Dkt. 14-1, at 4.

SER Contracts with Wellons. At the end of 2010, SER learned from Rigas Siltums that it had been awarded the project. Dkt. 11, at 4. On January 6, 2011, SER sent an email to Wellons asking Wellons to send a "standard contract draft, " in the hope that it would be a"good start of long term cooperation for future!!!" Dkt. 14-1, at 6. Mr. Butler suggested that the parties "sit down and work through the various specifics of the project. Id., at 7. SER agreed, e-mailing that "we must discuss all the items asap." Id. at 6.

SER and Wellons then arranged for SER to travel from Latvia to Wellons' corporate offices in Vancouver to discuss the contract. Id. at 7. Mr. Butler recommended by e-mail message that SER fly into Portland, Oregon, as the Portland airport was only 15 minutes from Wellons' offices in Vancouver. Id. The parties then contemplated spending one day touring a plant south of Portland, which had a Wellons boiler; and two days discussing the contract proposal at Wellons' offices in Vancouver. Id., at 6; Dkt. 11, at 3.

Wellons also provided SER with an"expected" schedule for the project. Dkt. 14-1, at 7. This schedule estimated that the boiler would be in operation 64 weeks after the contract was signed. Id. Wellons' work in its facilities stateside (engineering, designing, manufacturing, procuring, and shipping the boiler components) was estimated to take 52 weeks. Id. Installation was estimated to start 36 weeks into the project, and the system would be in operation 28 weeks later. Id.

One week later three SER employees (Pavels Arsenjans, Janis Vilmanis, and Ingars Draudzins) flew from Riga to Portland and followed the contemplated itinerary. Dkt. 11, at 4. Mr. Draudzins indicated that SER toured the plant south of Portland, and then spent two days discussing the contract proposal at Wellons' offices in Vancouver, WA. Id. The SER employees stayed at a hotel in Portland. Id.

Negotiations continued after the SER representatives returned to Riga, and the contract was finalized by early February. Dkt. 11, at 4-5. SER signed on February 10th, 2011, and Wellons signed on February 11th. Id., at 5; Dkt. 11-1, at 58.

Contract Details. The contract's cover page reflects that it was prepared by Wellons for SER. Id. at 13. Wellons' address is listed on the front page as "2525 West Firestone Lane, Vancouver, Washington 98660." Id. The cover page separately provides that Wellons' headquarters is in Vancouver. Id. Overall, the contract details a general list of services that Wellons will provide via its own facilities:"The proposed scope covers engineering and design of the boiler, furnace and associate air and gas handling systems, manufacturing of the steam generator and combustion equipment, and procurement of the plant equipment enumerated in this proposal. The scope also includes technical assistance with mechanical installation and commissioning on a per diem basis." Id., at 15. The contract further provides that all shipments would depart from either Vancouver, Washington, or Sherwood, Oregon:"Wellons will prepare all equipment for overseas shipment and will load the equipment into standard or hi-cube containers, provided by the Purchaser to Wellons facilities in Vancouver, WA or Sherwood, OR, USA." Id. at 46. Price calculations similarly anticipated that the equipment would ship from Vancouver: "Prices shown [in the contract] are Ex-Works, Vancouver, Washington, USA, loaded into Purchaser's containers for overseas shipment." Id. at 48. SER agreed to pay Wellons a total price in U.S. Dollars of $5, 250, 000. Id. at 47. The preliminary delivery schedule estimated that final delivery would take Wellons 50 weeks from the date of initial deposit. Id. at 48. The contract makes no mention of applicable law or choice of forum.

During the course of the contract, SER made payments by depositing money into Wellons' accounts in either Portland, Oregon, or Minneapolis, Minnesota. Dkt. 11, at 5. SER's bank for the project was SEB banka in Latvia. Dkt. 11, at 5.

Execution of the Contract. Work on the project began soon after the contract's finalization. "Wellons made the boiler components, then, the components were shipped to Latvia by the Arco Transport company, an Estonian company with offices in Estonia and Latvia." Dkt. 11, at 5. Meanwhile, SER constructed the rest of the heating and power plant in Riga. Id., at 5-6. The final shipment left Wellons facilities by January 6, 2012. Dkt. 14-1, at 14. A total of 41 containers were sent from Wellons' facilities to Riga. Id.

The contract also obligated Wellons to provide "technical assistance with mechanical installation and commissioning on a per diem basis." Dkt 11-1, at 15. Wellons employees traveled to Riga multiple times to assist with commissioning the plant. Dkt. 11, at 6.

Boiler Malfunctions. On January 28, 2013, Mr. Draudzins e-mailed Mr. Butler and informed him that a safety valve for the boiler had a problem. Dkt. 11, at 6. Mr. Draudzins explained that SER had decided to stop work to dismantle and inspect the safety valve. Id. at 7.

Wellons sent an employee, Pete Harwood, to Riga to assist with the issues. Id. Wellons ended up ordering a new safety valve from its supplier, Farris Engineering. Id. Wellons' engineers also sent ideas on how to fix the valve situation to Mr. Harwood and others working on the problem in Riga. Id.

The second valve did not work either. Id. SER emailed Mr. Butler to notify him and urgently requested that he send a technical expert from Farris to check the valve in the field and determine the cause of the problem. Id. SER believed the Farris factory to be located in Ohio, but soon Farris' parent company in the United Kingdom became involved. Id. at 7-8. On February 20, 2013, Mr. Butler notified SER that ...


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