United States District Court, D. Hawaii
ORDER: (1) DENYING DEFENDANT'S MOTION TO TRANSFER
VENUE; AND (2) GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS
Derrick K. Watson United States District Judge.
alleges that SkyBridge failed to meet its contractual
obligations to implement an Oracle software platform designed
to serve Servco's automotive business. SkyBridge moves to
either transfer this action to the Northern District of
Georgia, pursuant to a contractual forum selection clause, or
to dismiss this action in its entirety. Dkt. No. 27. Because
the contract on which SkyBridge relies was not executed, and
there is no other basis on the facts before the Court to
uphold it, SkyBridge's motion to transfer is DENIED.
Additionally, for the reasons that follow, the Court GRANTS
SkyBridge's motion to dismiss Servco's implied
covenant claim, but DENIES the motion to dismiss Servco's
other five claims.
Servco's Negotiations With SkyBridge
a Hawaii corporation with its principal place of business in
Honolulu, distributes and sells automobiles, brokers
specialty insurance, and distributes appliances. Complaint
(“Compl.”) ¶¶ 9, 12. To operate its
business, Servco relies on a complex network of retail,
finance, and supply chains. Id. ¶ 13.
2012, facing the impending end of its existing legacy
computer systems, Servco began its search for a replacement.
Id. ¶ 14. After consulting with Oracle
regarding its business needs, Servco selected an Oracle
E-Business Suite R12.2.4 package (“Oracle EBS”)
and an Oracle Data Integrator (“ODI”) platform.
Id. ¶ 15. Oracle recommended that
Servco engage a software implementer that was an Oracle
Platinum Level Partner or higher. Id. ¶ 16.
Heeding that advice, Servco contacted several software
implementers, including SkyBridge, a Georgia corporation with
its principal place of business in Marietta, Georgia.
Id. ¶¶ 10, 17.
scheduled a three-day meeting with SkyBridge at Servco's
headquarters in Hawaii on December 15, 16, and 17, 2014.
Id. ¶ 19. In preparation for the meeting,
Servco provided SkyBridge with information regarding its
business and bill of materials. Id. ¶ 19. On
December 15, 2014, Servco personnel met with SkyBridge's
Executive Vice President, Gurmeet Bhatia, as well as with Tim
Broderick and Pramod Alluri of SkyBridge. Id.
¶¶ 19, 21. At this meeting, SkyBridge stated:
“We are Oracle and PeopleSoft experts, ” and the
company “live[s] and breathe[s] Oracle EBS and
PeopleSoft.” Id. ¶ 21. SkyBridge also
represented that many of its consultants had more than twelve
years of experience, emphasized that it was equipped to
handle Servco's complex business needs, and touted its
purported status as an Oracle Platinum Partner. Id.
Based on these representations, and, in particular, its
Platinum status, Servco selected SkyBridge as its systems
integration and software project manager. Id. ¶
The Contract Documents
January 2015, SkyBridge provided Servco with a draft
Statement of Work (“SOW”). Declaration of John
Harris ¶ 4. The SOW sets forth SkyBridge's
services and responsibilities, which included developing and
maintaining the project plan, maintaining day-to-day project
tasks, ensuring the quality and timely completion of tasks,
configuring and developing the Oracle EBS application, and
providing training. Compl. ¶¶ 32-33.
the next several months, the parties negotiated the terms of
the SOW and exchanged several drafts. Id. Harris
Decl. ¶¶ 4-7. On May 5, 2015, SkyBridge
claims that Mr. Bhatia emailed a final version of the SOW to
Servco for signature. Declaration of Gurmeet S. Bhatia ¶
15; see also Dkt. No. 27-3, SkyBridge Exh. A.
Although Servco disputes that the May 5, 2015 version was the
“final” version, each side agrees that the
parties executed a final SOW on May 8, 2015. Harris Decl.
¶¶ 7-8; Bhatia Decl. ¶ 17; Compl. ¶ 30.
final SOW cross-references a “services agreement”
or what the parties sometimes refer to as a “Master
Services Agreement” (“MSA”):
This Statement of Work (“SOW”) is executed by and
between SkyBridge Global Inc. (“Company” or
“SkyBridge”) and Servco Pacific, Inc.
(“Servco”) pursuant and subject to the terms and
conditions of that certain Services Agreement [e.g., the MSA]
executed contemporaneously with this SOW by the parties (the
Exh. A. The draft of the services agreement attached to Mr.
Bhatia's May 5, 2015 email purports to govern the SOW and
includes provisions relating to, among other things, the
content of the SOW, the manner of billing and payment, the
venue for any legal action arising out of the parties'
contract, and the governing law for the interpretation and
enforcement of the agreement. See Dkt. No. 27-5,
SkyBridge Exh. C. Although SkyBridge asserts that a final
version of this agreement was provided to Servco for
signature, it is undisputed that no such agreement was ever
signed by the parties. See Bhatia Decl. ¶¶
14-15; Harris Decl. ¶¶ 5-9.
Breach of SkyBridge's Obligations Under the
obligated SkyBridge to an approximate nine-month
implementation schedule for the finance project and a
concurrent twelve-month schedule for the distribution
project. This translated to planned “go-live”
dates of January 4, 2016 and April 25, 2016, respectively.
Id. ¶ 35. SkyBridge also agreed that
“[t]he project budget is not to exceed the above
estimated amount [$1, 991, 100 for consulting services and
$352, 406.25 for travel expenses] unless the scope and
approach of the project is changed and approved by the
steering committee.” Id. ¶ 36; Dkt. No.
39 at 14.
to Servco, throughout 2015, SkyBridge provided repeated
assurances that its work was both on track and on budget.
These promises proved to be empty ones, however, as SkyBridge
was unable to meet either the implementation schedule or the
budget set forth in the SOW, resulting in SkyBridge
unilaterally changing the project timeline to reflect a
January 6, 2017 go-live date. Id. ¶¶ 37,
42. When Servco complained, and with SkyBridge unable to meet
the SOW deadlines, the parties selected a new September 12,
2016 go-live date, but with an agreement to evaluate the
project's progress in April 2016 to assess the
project's viability. Id. ¶¶ 44-45.
April 2016, Servco opted to terminate SkyBridge because of
SkyBridge's repeated delays, inexperience, and inability
to lead the project. Id. ¶ 46.
26, 2016, Servco filed a Complaint, alleging the following
causes of action: (1) breach of contract (Count I); (2)
breach of the implied covenant of good faith and fair dealing
(Count II); (3) fraud (Count III); (4) rescission (Count IV);
(5) unjust enrichment (Count V); and (6) declaratory relief
(Count VI). Dkt. No. 1. Servco asserts subject matter
jurisdiction based on diversity of citizenship pursuant to 28
U.S.C. § 1332(a)(2). Id. In addition, Servco
asserts that venue is proper in the District of Hawaii
pursuant to 28 U.S.C. § 1391(b) because a substantial
part of the events or omissions giving rise to its claims
occurred in this district. Id.
August 11, 2016, SkyBridge filed a Motion to Dismiss or
Transfer Venue to Georgia Pursuant to Mandatory Forum
Selection Clause, or, in the alternative, Motion to Dismiss
for Failure to State a Claim (Dkt. No. 27). The Court elected
to decide the motion without a hearing pursuant to Local Rule
7.2(d). Dkt. No. 44.
Rule of Civil Procedure 12(b)(3) provides that a Court may
dismiss a claim for improper venue. Once venue is challenged,
the plaintiff has the burden of proving that venue is proper
in this district. See Piedmont Label Co. v. Sun Garden
Packing Co., 598 F.2d 491, 496 (9th Cir. 1979). In
considering a Rule 12(b)(3) motion, the Court may consider
facts outside the pleadings and need not accept the pleadings
as true. Kukje Hwajae Ins. Co. v. M/V Hyundai
Liberty, 408 F.3d 1250, 1254 (9th Cir. 2005). If there
are contested factual issues, the Court is obligated to draw
all reasonable inferences and resolve the factual conflicts
in favor of the non-moving party or hold a pre-trial
evidentiary hearing on the disputed facts. Murphy v.
Schneider Nat'l, Inc., 362 F.3d 1133, 1138-39 (9th
to 28 U.S.C. § 1406(a), “[t]he district court of a
district in which is filed a case laying venue in the wrong
division or district shall dismiss, or if it be in the
interest of justice, transfer such case to any district or
division in which it could have been brought.” The
Court has discretion in determining whether to transfer or
dismiss an action for improper venue. See King v.
Russell, 963 F.2d 1301, 1304 (9th Cir.1992).
Rule of Civil Procedure 12(b)(6) permits a motion to dismiss
for failure to state a claim upon which relief can be
granted. Pursuant to Ashcroft v. Iqbal, “[t]o
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
555 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 554, 570 (2007)). “[T]he tenet
that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal
Rule 12(b)(6), review is generally limited to the contents of
the complaint. Sprewell v. Golden State Warriors,
266 F.3d 979, 988 (9th Cir. 2001); Campanelli v.
Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). However,
courts may “consider certain materials-documents
attached to the complaint, documents incorporated by
reference in the complaint, or matters of judicial
notice-without converting the motion to dismiss into a motion
for summary judgment.” United States v.
Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).