Brooks Range Petroleum Corp. v. Shearer

• Decision Date: 27 July 2018
• Docket Number: Supreme Court Nos. S-16382
• Parties: BROOKS RANGE PETROLEUM CORPORATION, Petitioner, v. Daniel P. SHEARER, Respondent.
• Court: Alaska Supreme Court

425 P.3d 65

BROOKS RANGE PETROLEUM CORPORATION, Petitioner,

v.Daniel P. SHEARER, Respondent.

Supreme Court Nos. S-16382

Supreme Court of Alaska.

July 27, 2018

Elizabeth Hodes and Anne Marie Tavella, Davis Wright Tremaine LLP, Anchorage, for Petitioner.

James K. Wilkens, Bliss Wilkens, Anchorage, and Robert Campbell, Caliber Law Group, Barrow, for Respondent.

Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and Carney, Justices.

OPINION

MAASSEN, Justice.

I. INTRODUCTION

We granted a petition for review to resolve a venue dispute in an employment case. Daniel Shearer alleges that Brooks Range Petroleum Corporation (BRPC) promised him a ten-year term of employment, then terminated his employment two and a half years later. Shearer filed suit in the Second Judicial District, where he alleged the parties had negotiated and formed their contract. BRPC filed a motion to dismiss the case or to change venue to the Third Judicial District, where the contract was executed and where Shearer had performed most of his job duties. The superior court denied the motion, thus retaining venue in the Second Judicial District.

We conclude that neither Shearer's tort claims nor his contract-based claims arose in the Second Judicial District, and the chosen venue was therefore not proper. We reverse the superior court's order denying a change of venue.

II. FACTS AND PROCEEDINGS

A. Facts

Some of the factual background of this case is controverted. Where there is a reasonable dispute, we construe the facts in Shearer's favor.¹

Shearer, a resident of Alberta, Canada, alleged that in October 2011 he was "working as a drilling consultant for British Petroleum" (BP) when he was "presented an attractive offer of full time employment with BP." While considering BP's offer, Shearer learned that the "key drilling consultant" for another North Slope operator, BRPC, had suffered a heart attack, and he "volunteered to help." He covered the consultant position for BRPC during January 2012 at the Mustang location near Nuiqsut.²

While working there Shearer was approached by John Jay "Bo" Darrah, BRPC's co-founder and then-chief executive officer, who "recruited" Shearer to "fill a permanent full-time position with BRPC." Shearer told Darrah about BP's employment offer, "emphasizing the importance ... of long-term employment security." According to Shearer, he and Darrah "verbally confirm[ed] [a] guarantee of long-term employment security of at least 10 years ... [and] shook hands on the agreement." "In reliance on these promises and representations," Shearer ceased negotiating for a permanent position with BP.

On January 30, 2012, Shearer traveled to Anchorage and attended a dinner hosted by BRPC, where he was "welcomed and introduced as the ‘new employee.’ " The next day the parties executed a short written employment contract at BRPC's Anchorage office, effective February 1, 2012. The contract made no reference to a guaranteed term of employment.

The parties dispute where the terms of their agreement were negotiated and accepted. Shearer contends that the agreement was fully negotiated at BRPC's Mustang location on the North Slope and that the written contract executed in Anchorage simply "memorializ[ed] the basic compensation terms of the verbal employment contract ... reached earlier." BRPC contends that it negotiated the material terms of the agreement and hired Shearer in Anchorage.

The parties also dispute where Shearer was expected to do his work. Shearer contends that he was hired to work primarily on the North Slope, though he concedes that he "would be expected to work in BRPC's Anchorage office during periods when there was no activity on the North Slope." BRPC contends that "Shearer was hired to work as a Drilling Manager in BRPC's Anchorage, Alaska office," but it concedes that "Shearer did travel to the project site on the North Slope." The parties agree that, as it turned out, Shearer worked primarily at BRPC's Anchorage office.

In 2014 Shearer learned that BRPC might be sold. He met with the president and chief executive officer, Barton J. Armfield, and another BRPC employee, and he reminded them of Darrah's oral commitment to a ten-year employment term. But in August 2015 he "was verbally advised by Armfield that his employment would be terminated." He was called the next day by another corporate officer, who advised him that "he would be receiving a letter informing him of his release from employment." BRPC asserts that its phone calls were made from Anchorage and the termination letter was sent from Anchorage to Shearer's home in Canada, which Shearer does not dispute.

B. Proceedings

Shearer sued BRPC for misrepresentation, breach of contract, and related claims. He served the summons and complaint on Armfield, BRPC's registered agent, in Anchorage in the Third Judicial District, but he filed his suit in Utqiagvik in the Second Judicial District. The parties dispute the location of BRPC's principal place of business: Shearer's complaint asserted that it was on the "North Slope, Alaska," but BRPC responded that it was in Anchorage. In an affidavit filed in support of BRPC's motion to change venue, Armfield asserted that it "does not maintain any permanent offices or employees in the Second Judicial District or Barrow [Utqiagvik]" and that it "currently ha[d] no employees or active operations in" the Second Judicial District. In a responsive affidavit Shearer asserted that he was "informed and believe[d] there [was] current activity at BRPC's Mustang Pad" on the North Slope and that he also believed "that BRPC [was] in the process of designing a production facility that [would] be situated near Nuiqsut, within the Second Judicial District."

BRPC filed a motion to dismiss for improper venue or alternatively to transfer venue to Anchorage in the Third Judicial District. The superior court in Utqiagvik considered the parties' pleadings and affidavits and denied the motion. It decided that Shearer's contract claims arose in Anchorage for venue purposes because that was "the place of intended performance for Shearer's employment contract," but that his tort claims arose in the Second Judicial District because he "was first injured when he relied on BRPC's alleged misrepresentations in Nuiqsut" by "ceas[ing] negotiations with BP."

To decide whether venue for the two different types of claims could remain in Utqiagvik, the court weighed the private interests of the litigants and the interests of the public. It noted that Shearer had a private interest in the venue of his choice but that "it would be easier and cheaper for BRPC to litigate the case in Anchorage"; "it is likely that most of the witnesses reside in Anchorage"; "it would be easier for witnesses outside of Alaska to travel to Anchorage" than to Utqiagvik; and "most of the evidence is in Anchorage." But the court also noted that the cost of transporting employment records from Anchorage to Utqiagvik was "minimal given that the entire contents could be put on a thumb drive or CD" and that "[w]itnesses c[ould] be deposed in Anchorage," though they "would have to testify in [Utqiagvik] if the parties felt it necessary to have the live testimony."

The superior court decided that these private interests were outweighed by the public interest of "the local community ... in having this controversy decided on the North Slope because a significant portion of the alleged wrongdoing occurred in Nuiqsut." The court concluded that because BRPC chose to do business on the North Slope—whose residents "work in those jobs and depend on the money to sustain them"—local jurors had "a stake in the matter" that weighed heavily in favor of retaining venue in the Second Judicial District. The court also declined to transfer venue on convenience grounds, finding that it was not necessary for "the convenience of witnesses and the ends of justice."³

The parties filed cross-petitions for review.⁴ We granted BRPC's petition and asked the parties to address the following issues:

(1) Where did the claim arise for the alleged tort of misrepresentation?

(2) Where did the claim arise for the alleged breach of contract?

(3) Should we adopt the doctrine of ancillary (or pendent) venue?

(4) Did the superior court abuse its discretion in denying a change of venue under AS 22.10.040 ?

(5) How should we address issues of overlapping venue?

III. STANDARD OF REVIEW

Whether the plaintiff's initial choice of venue is proper under Alaska Civil Rule 3(c) is a legal question we review de novo, applying our independent judgment to adopt the rule of law that is most persuasive in light of precedent, reason, and policy.⁵

IV. DISCUSSION

Venue requirements "are designed to [e]nsure that litigation is lodged in a convenient forum and to protect the defendant against being sued in an arbitrary place."⁶ Though important, venue has rarely been addressed in our case law. In the discussion that follows we first address how trial courts should view the evidence on a motion based on improper venue. We then address the tests used to determine where tort and contract claims arise for venue purposes. Applying those tests to Shearer's claims in this case, we decide that the Second Judicial District was not a proper venue because the claims did not arise there.

A. The Plaintiff Bears The Burden Of Proving Proper Venue; However, Absent An Evidentiary Hearing, The Court Evaluates The Pleadings In The Light Most Favorable To The Plaintiff.

By statute, "[v]enue for all actions shall be set under rules adopted by the supreme court."⁷ Alaska Civil Rule 3 governs venue. Actions involving real property are addressed by Rule 3(b) ; other civil actions are addressed by Rule 3(c). "[P]laintiffs ... must commence suit in [a] proper Rule 3 venue, and then, if that forum is inconvenient, move for a change of venue under AS 22.10.040."⁸ "This rule precludes plaintiffs from selecting a forum they believe is convenient without regard to Civil Rule 3."⁹

Alaska Civil Rule...