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Daikin Applied Americas Inc. v. Kavlico Corporation

United States District Court, D. Minnesota

June 11, 2015

Daikin Applied Americas Inc., Plaintiff,
v.
Kavlico Corporation, Defendant.

William F. Auther, Esq., Bowman and Brooke, LLP, Phoenix, AZ; Jesse E. Sater, Esq., Bowman and Brooke, LLP, Minneapolis, MN, on behalf of Plaintiff.

Jared D. Kemper, Esq., Dykema Gossett, PLLC, Minneapolis, MN, on behalf of Defendant.

MEMORANDUM OPINION AND ORDER

ANN D. MONTGOMERY, District Judge.

I. INTRODUCTION

On June 3, 2015, the undersigned United States District Judge heard oral argument on Kavlico Corporation's ("Kavlico") Motion to Dismiss or Stay [Docket No. 5]. Kavlico argues that this Court lacks personal jurisdiction and that California is the forum to adjudicate this dispute. Plaintiff Daikin Applied Americas Inc. ("Daikin Applied") opposes the Motion. For the reasons set forth below, Kavlico's Motion is denied.

II. BACKGROUND[1]

Daikin Applied is a Delaware corporation with its principal place of business in Minneapolis, Minnesota. Compl. [Docket No. 1] ¶ 1. Daikin Applied manufactures commercial heating, ventilation, and air-conditioning ("HVAC") systems. Id. ¶ 6. Kavlico is a California corporation maintaining its principal place of business in California. Id. ¶ 2. Kavlico designs and manufactures components which Daikin Applied has used in some of its HVAC systems. Id. ¶¶ 7, 9.

Beginning in 2010, Kavlico began supplying Daikin Applied with high and low pressure transducers. Id. ¶ 8. The parties primarily conducted their business through written agreements. One such written agreement includes a forum selection clause in the Terms and Conditions. The forum selection clause states:

PURCHASER AND SELLER IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR MINNESOTA STATE COURT LOCATED IN THE COUNTY OF HENNEPIN, STATE OF MINNESOTA, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY ORDER DOCUMENT AND PURCHASER AND SELLER HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE LITIGATED IN SUCH COURTS.

Id. ¶ 4; Ex. A, Art. 18 (capitalization in original).

In early 2014, Daikin Applied discovered that Kavlico's transducers were causing refrigerant leaks in some of its HVAC systems. Id. ¶ 10. Kavlico, after being alerted to the leaks, determined that defects in the transducers' housing porosity and o-ring material were causing the leaks. Id. ¶ 13. Daikin Applied has demanded that Kavlico cover all past and future repair costs caused by the defective transducers, but Kavlico has refused. Id. ¶ 16.

On February 25, 2015, the parties unsuccessfully mediated their dispute. The very next day, Kavlico sued Daikin Applied in California state court, seeking payment and interest for 43 invoices on which Daikin Applied withheld payment. Daikin Applied removed the case to federal court and moved to dismiss. Daikin Applied's motion has been under advisement since May 20, 2015 in California federal court. Daikin Applied filed this Minnesota federal action on March 13, 2015.

III. DISCUSSION

A. Standard of ...


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