Blackwell Enters., Inc. v. Henkels & McCoy, Inc., CIV-12-1242-D
| Decision Date | 16 July 2013 |
| Docket Number | No. CIV-12-1242-D,CIV-12-1242-D |
| Parties | BLACKWELL ENTERPRISES, INC., Plaintiff, v. HENKELS & McCOY, INC., Defendant. |
| Court | U.S. District Court — Western District of Oklahoma |
Before the Court is the motion [Doc. No. 4] of Defendant Henkels & McCoy, Inc. ("Henkels") to dismiss this action for improper venue pursuant to Fed. R. Civ. P. 12(b)(3), seeking to enforce a forum selection clause contained in the written agreement executed by the parties. Plaintiff Blackwell Enterprises, Inc. ("Blackwell") timely responded to the motion, and Henkels filed a reply.
Blackwell brought this action in the District Court of McClain County, Oklahoma, seeking damages resulting from Henkels's alleged breach of a contract for services rendered to it by Blackwell in connection with the restoration of a pipeline right-of-way associated with a pipeline constructed by Henkels in Pennsylvania. The parties negotiated a written agreement in which Henkels was the contractor and Blackwell the subcontractor ("Agreement"). A copy of the Agreement is submitted as Exhibit 1 to Henkel's motion to dismiss. Blackwell alleges that Henkels is obligated to pay to Blackwell the sum of $1,235,343.67 plus interest for work performed by Blackwell pursuant to the Agreement and that Henkels has refused to pay the amount due and owing.
Henkels timely removed the action in accordance with 28 U. S. C. § 1441(a) and (b), basing federal jurisdiction on diversity of citizenship between the parties because Blackwell is an Oklahoma corporation having its principal place of business in Oklahoma, Henkels is a Pennsylvania corporation with a Pennsylvania principal place of business, and the amount in controversy exceeds $75,000.00, exclusive of interests and costs. Blackwell does not dispute the existence of diversity.
After removing the action, Henkels filed a motion to dismiss, alleging venue is improper here because the Agreement contains a forum selection clause mandating that disputes arising thereunder be litigated in the Court of Common Pleas of Montgomery County, Pennsylvania.
Where a litigant seeks enforcement of a forum selection clause, the issue is analyzed, as Henkels asserts, as a Fed. R. Civ. P. 12(b)(3) motion to dismiss for improper venue. K & V Scientific Co., Inc. v. Bayerische Motoren Werke Aktiengesellschaft, 314 F.3d 494, 497 (10th Cir. 2002). Accordingly, the Court is not confined to examining only the allegations in the complaint, but may consider material outside the pleadings. "A district court may examine facts outside the complaint to determine whether its venue is improper." 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1352, at 324 (3d ed. 2004). Although the Court considers the well-pleaded facts regarding venue as set forth in the complaint, see Pierce v. Shorty Small's of Branson, Inc., 137 F.3d 1190, 1192 (10th Cir. 1998), a defendant may seek to defeat venue by introducing evidence of its impropriety. Hancock v. American Telephone and Telegraph Company, Inc., 701 F.3d 1248, 1260 (10th Cir. 2012). If the defendant does so, the plaintiff then bears the burden of showing that venue is proper. Id.
"'In civil cases, the question of whether a litigant has brought an action in the proper court is a question of law.'" Witte v. Sloan, 250 F. App'x 250, 253 (10th Cir. 2007) (unpublished opinion) (quoting Ballesteros v. Ashcroft, 452 F.3d 1153, 1160 (10th Cir. 2006)). Similarly, "'[t]he enforceability of [a] forum selection' clause is a question of law." K & V Scientific, 314 F.3d at 497 (quoting Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 956 (10th Cir. 1992)).
In this case, the forum selection clause in the Agreement appears at Paragraph 23, which establishes a dispute resolution procedure to be followed in the event of "[a]ny dispute between the parties hereto, arising out of or related to this Agreement." Agreement, ¶ 23 at p. 6. The initial step in the procedure consists of the exchange of written statements between the parties in which they set out their respective positions regarding the disputed matter. Id. at ¶ 23 (a) and (b). If they are unable to reach an agreement, the dispute may be resolved by "arbitration or by suit in court, in accordance with the Contractor's direction." Id. at ¶ 23(c). The Agreement then provides that, if a lawsuit results, "suit must be instituted in, and the parties consent to the jurisdiction of, the Court of Common Pleas of Montgomery County, Pennsylvania." Id.
The construction of a forum selection clause is a matter of contract interpretation for the Court. K & V Scientific, 314 F.3d at 497(citing SBKC Serv. Corp. v. 1111 Prospect Partners, L.P., 105 F.3d 578, 581 (10th Cir. 1997)). Because contract interpretation requires the application of state law, the Court must first determine the law to apply in interpreting the forum selection clause.
"Under Oklahoma law, 'a contract will be governed by the laws of the state where the contract was entered into unless otherwise agreed and unless contrary to the law or public policy of the state where enforcement of the contract is sought.'" Been v. O.K. Industries, Inc., 495 F.3d1217, 1236 (10th Cir. 2007) (quoting Williams v. Shearson Lehman Bros., 917 P.2d 998, 1002 (Okla. Civ. App. 1995)) (emphasis added). In this case, Blackwell alleges that the Agreement was sent by Henkels to Oklahoma, where it was executed by Blackwell's President, Robert Blackwell, and returned to Pennsylvania, where it was executed by Henkels's Vice President, Robert Johnston. Even if it were not deemed to have been executed in Pennsylvania, however, the Agreement expressly states that it "is being executed and delivered in the Commonwealth of Pennsylvania and shall be construed and enforced in accordance with the law thereof." Agreement ¶ 35. Blackwell does not argue that Pennsylvania law is inapplicable. Accordingly, the Court will apply Pennsylvania law to interpret the Agreement.
Under Pennsylvania law, contract interpretation presents a question of law for the Court, and the following analysis applies:
In cases of a written contract, the intent of the parties is the writing itself. If left undefined, the words of a contract are to be given their ordinary meaning. Pines Plaza Bowling, Inc. v. Rossview, Inc., 394 Pa. 124, 145 A.2d 672 (1958). When the terms of a contract are clear and unambiguous, the intent of the parties is to be ascertained from the document itself. Hutchison v. Sunbeam Coal Corp., 513 Pa. 192, 519 A.2d 385, 390 (1986).
Kripp v. Kripp, 849 A.2d 1159, 1163, 1164 n. 5 (Pa. 2004). "It is settled law that a party is bound by clear and unambiguous language contained in a contract." Patriot Commercial Leasing Co., Inc. v. Kremer Restaurant Enterprises, LLC, 915 A.2d 647, 651 (Pa. Super. Ct. 2006), appeal denied, 951 A.2d 1166 (Pa. 2008).
"The scope of a forum selection clause is a question of contract interpretation." Marino v. Cross Country Bank, 2007 WL 1946533, at *5 (E.D. Pa. June 29, 2007) (unpublished) (citing John Wyeth & Brother Ltd. v. Cigna Int'l Corp., 119 F.3d 1070, 1073 (3d Cir. 1997)). To interpret thecontract,"'we first look to the text of the contract to determine whether it unambiguously states the parties' intentions.'" Id. (quoting John Wyeth, 119 F.3d at 1074). "To be 'unambiguous,' a contract clause must be reasonably capable of only one construction." Id. "A contract is ambiguous if it is reasonably susceptible of different constructions and capable of being understood in more than one sense." Kripp, 849 A.2d at 1163 (citing Hutchison, 519 A.2d at 390).
In this case, Blackwell refers to ambiguity in its response brief, but it does not identify any language in the forum selection clause which it contends is unclear or ambiguous. The Court has examined the clause according to the Pennsylvania law and applicable court decisions construing contracts. According to those decisions, the forum selection clause at issue here is clear and unambiguous.
Applying Pennsylvania law to determine whether a forum selection clause in a settlement agreement was unambiguous and enforceable, Marino examined a clause granting "exclusive jurisdiction" to the Delaware federal court "for any claims or disputes...arising out of, or relating to" the settlement. Marino, 2007 WL 1946533, at *5. According to the court, "to say the origin of a dispute is 'related' to an agreement is to say that the origin of the dispute has some 'logical or causal connection' to the agreement." Id. (quoting John Wyeth, 119 F.3d at 1074). The court found that the phrases, "arising out of" or "relating to," unambiguously applied the forum selection clause to any dispute having a logical connection to the agreement. Accordingly, the court found no ambiguity, and held the forum selection clause to be enforceable. Id.
Similarly, Patriot held that a clause requiring that "any legal action concerning this lease shall be brought in federal or state court located within or for Montgomery County, Pennsylvania" was not ambiguous because it was set out in "plain and nonlegal language." Patriot, 915 A.2d at649, 651. Thus, the court found the contract clearly required litigation to be brought in one of the designated forums, and it enforced the forum selection clause.
The forum selection clause language in this case is similar to that in both Marino and Patriot, as it applies to "any dispute" between the parties "arising out of or related to this Agreement." Agreement at ¶ 23. It further provides that litigation related to those disputes, "must be instituted in...the Court of Common Pleas of Montgomery County, Pennsylvania." Id. at ¶ 23(c). Thus, the Court concludes that the clause is clear and unambiguous.
Having so concluded, the Court must determine whether the clause is mandatory and enforceable. Although interpretation of the parties' contract requires application of...
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