SPCK USA, Inc. v. Precision Couplings, LLC

          OPINION

          KEVIN MCNULTY. UNITED STATES DISTRICT JUDGE.

         Plaintiff SPCK USA, Inc. ("SPCK USA") brings this action against Defendant Precision Couplings, LLC ("Precision") for breach of contract, breach of the New Jersey Uniform Commercial Code, account stated, unjust enrichment, and breach of the implied covenant of good faith and fair dealing. (DE 1). In response, Precision moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, and under Fed.R.Civ.P. 12(b)(3) for improper venue. (DE 9). In the alternative, Precision moves under 28 U.S.C. §§ 1404 and 1406 and the doctrine of forum non conveniens to transfer venue of this action to the United States District Court for the Southern District of Texas. (DE 9-3).

         For the reasons explained in this opinion, I will DENY Precision's motion to dismiss and GRANT Precision's motion to transfer.

         I. Background

         a. The Parties

         Defendant Precision is a limited liability company organized and existing under the laws of the State of Texas with its principal place of business in Houston, Texas. (DE 1 ¶ 6; DE 9-5 ¶ 3).^[1]

         Non-party SPCK Co. Ltd. ("SPCK Korea") is a manufacturer incorporated under the laws of the Republic of Korea and it mainly produces premium couplings and other products used in the Oil Country Tubular Goods ("OCTG") marketplace. (DE 12 ¶ 3). Although SPCK Korea is not a party to this dispute, the complaint often fails to distinguish between SPCK Korea and plaintiff SPCK USA. (DE 1; DE 12).

         The complaint defines "SPCK" as "Plaintiff SPCK USA, INC." (DE 1, p. 1) It often refers to "SPCK" without any further identifier, implying that the entity referred to is SPCK USA. The parties' affidavits, however, reveal that the complaint sometimes incorrectly misidentifies SPCK Korea as "SPCK" (impliedly, SPCK USA). In this opinion, I will attempt to correct, or at least highlight, such discrepancies.

         Plaintiff SPCK USA is a business incorporated under the laws of the State of New Jersey with its principal place of business in Fort Lee, New Jersey. (DE 1 ¶ 5). The complaint states that "SPCK . . . [is] a manufacturer and seller of commercial goods." (DE 1 ¶ 4). Precision, however, avers that SPCK USA does not manufacture couplings or any other products that were purchased by Precision. (DE 9-5 ¶ 11).^[2] In its responding affidavit, SPCK USA does not contest the assertion that SPCK USA is not the manufacturer. (DE 12). Rather, SPK USA's affidavit clarifies that SPCK Korea is a coupling manufacturer (DE 12 ¶ 3), and that SPK Korea started business with Precision before SPCK USA was formed. (DE 12 ¶ 4). In fact, SPCK Korea formed SPCK USA to facilitate its preexisting business relationship with Precision. (DE 12 ¶ 5). SPCK USA was formed for two reasons: (1) to facilitate the purchase of U.S. insurance coverage relating to the shipment of couplings from SPCK Korea (in South Korea) to Precision (in Houston, Texas) (DE 12 ¶ 5; DE 9-5 ¶ 17); and (2) to stand as importer of record so that Precision would avoid obligations it would incur when receiving the products in Texas. (DE 12 ¶ 5).

         SPCK USA's affidavit describes SPCK USA as a trading import company, [see, e.g., DE 12 ¶ 19), which has facilitated the shipments by arranging insurance, paying taxes, and receiving payments from Precision. (DE 12 ¶ 16).

         b. Business relationships and formation of SPCK USA

         In 2016, SPCK Korea began doing business with Precision. (DE 12 ¶ 4). Precision asserts that its business relationship with SPCK Korea began in January 2016 when Precision began purchasing couplings through SPCK Korea's sales representative, Michael Shon. (E 9-5 ¶ 7). SPCK Korea does not address the subject of Michael Shon in its affidavit or briefs, and his name does not appear in the complaint. (DE 1; 12; 12-12).

         In early 2016, Jason Hubbard and Matthew Hubbard of Precision visited Korea, where they met with Keon Chen, who is now the president of SPCK USA. (DE 12 ¶¶ 1, 5). Precision alleges that Keon Chen was and is the Chief Operating Officer of SPCK Korea, which SPCK USA does not deny. (DE 9-5 ¶ 11; DE 12). During that visit, Jason and Matthew Hubbard requested that SPCK Korea create a United States-based company for the two purposes discussed supra. (DE 12 ¶ 5). SPCK Korea suggested that it could provide product liability insurance from a reputable insurer in Korea, but Precision insisted on a U.S. insurer and referred to a specific insurance company in Texas. (DE 12 ¶¶ 6, 14).^[3]

         Keon Chen acceded to Precision's request and established SPCK USA in New Jersey. (DE 12 ¶ 16). At no time did Precision object or take issue with respect to the location of SPCK USA. (DE 12 ¶ 7). Precision agreed to conduct business with SPCK USA going forward, knowing that SPCK USA would be a New Jersey entity. (DE 12 ¶ 8).

         In the complaint, SPCK USA alleges that on several occasions from December 2016 to January 2017, engineers and representatives of Precision visited the "manufacturing site of SPCK." (DE 1 ¶ 8). In response, Precision clarifies that the visits, as the complaint does not make clear, were to "SPCK Korea's manufacturing site . . . located in South Korea, not New Jersey." (DE 9-5 ¶ 23, n. 2) (emphasis added). SPCK USA has not rebutted Precision's version. (DE 12).

         c. The Exclusive Distributorship Agreement

         On August 1, 2017, Precision and SPCK USA entered into an Exclusive Distributorship Agreement ("EDA"). (DE 11 9). In the EDA, Precision designated SPCK USA as the "main point of contact to remediate all non-conforming claims to include ... (3) any other legally available remedy." (DE 12 ¶ 10). Also, under the terms of the EDA, Precision was required to order a minimum No. of couplings every month, with payment due 30 days from the date on which the couplings arrived in the Houston Port. (DE 1 ¶¶ 12, 14).

         Under the terms of the EDA, Precision submitted no fewer than 20 purchase orders and made wire transfers to SPCK USA's bank, the Shinhan Bank America, located in New York. (DE 12 ¶¶ 11-12). Precision asserts that it sent the purchase orders via e-mail directly to Michael Shon in South Korea. (DE 13, 6 (citing DE 13-2 ¶¶ 3-13)). In the exhibits supporting Precision's affidavit, Michael Shon's responses to said purchase orders include a signature line with his position at SPCK Korea, (see, e.g., DE 13-2, 27, 35). SPCK USA has not rebutted that the purchase orders were sent, via e-mail, to Michael Shon, nor does it rebut that Michael Shon engaged in such communications from South Korea. I note, however, that the purchase orders identify the vendor as SPCK USA and lists SPCK USA's New Jersey address. (DE 12-2). It is unclear from the record whether copies of the purchase orders may have been sent to SPCK in New Jersey, in addition to Michael Shon in South Korea.

         At a certain point, Precision placed seven purchase orders, which SPCK USA allegedly arranged to fill by shipping the goods in eight containers. (DE 1 ¶¶ 16-18). Precision allegedly received the first three containers without complaint. (DE 1 ¶17). However, on or about February 14, 2018, Precision raised a quality issue regarding the couplings received in the fourth container. (DE 1 ¶ 18). The parties agreed to quality-test a sample of 90 couplings (DE 1 ¶ 20), but Precision allegedly reneged on that agreement. (DE 1 ¶20).

         Subsequently, an "SPCK" representative and inspector visited Precision's Texas offices in an effort to investigate, and possibly, resolve any problems with the couplings. (DE 1 ¶ 1). Precision avers that the visiting representative was an SPCK Korea representative. (DE 9-5 ¶ 34). Again, SPCK USA has not rebutted Precision's version. (DE 12).

         On May 30, 2018, Precision sent a "Notice of Contract Termination" (the "termination letter") to SPCK USA alleging breach of the EDA. (DE 12 ¶ 17; DE 12-6). SPCK USA asserts that Precision sent the termination letter to SPCK USA's address in New Jersey. (Id.). Precision does not dispute that the termination letter was sent to the New Jersey address, but states that it was also sent to Keon Choe's e-mail address. (DE 13, 7). Thus the parties agree, at least to the extent that one copy of the letter was sent to SPCK USA.

         SPCK USA's claims related to the EDA are based on the parties' disagreement over the quality of the couplings, Precision's failure to pay, and the ...