Ecocards v. Tekstir, Inc.

• Decision Date: 18 March 2020
• Docket Number: S-19-0190
• Citation: 459 P.3d 1111
• Parties: ECOCARDS, a Wyoming corporation, Appellant (Plaintiff), v. TEKSTIR, INC., a Delaware corporation, Appellee (Defendant).
• Court: Wyoming Supreme Court

459 P.3d 1111

ECOCARDS, a Wyoming corporation, Appellant (Plaintiff),

v.TEKSTIR, INC., a Delaware corporation, Appellee (Defendant).

S-19-0190

Supreme Court of Wyoming.

March 18, 2020

Representing Appellant: Richard R. Thomas and Vonde M. Smith, Smith LC, Jackson, Wyoming.

Representing Appellee: No appearance.

Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.

KAUTZ, Justice.

[¶1] Ecocards sued Tekstir, Inc. for failing to perform under a website development agreement. The district court determined Teton County, Wyoming, was not the proper venue for Ecocards’ suit and granted Tekstir’s¹ motion to dismiss the action. The court relied upon a forum selection clause in the parties’ Master Services Agreement (MSA) which required any claim or suit arising under the agreement to be litigated in Orange County, California. Ecocards claims the district court improperly resolved disputed issues of fact in determining the MSA (with its forum selection clause) was a valid contract. We conclude the district court did not decide any material issues of fact and the MSA governs the parties’ relationship. The district court did not abuse its discretion by dismissing the case for improper venue.

[¶2] We affirm.

ISSUE

[¶3] The issue on appeal is: Did the district court abuse its discretion in granting Tekstir’s motion to dismiss for improper venue?

FACTS

[¶4] Rebecca Bextel developed a business concept "of an on-line greeting card company that also provided access to non-profit companies to which customers ... could make financial contributions." She initially called her business "Charity Mail," but never organized as a business entity under that name. She later formed Ecocards as a Wyoming corporation, with its principal place of business in Teton County, Wyoming. Although the documents we will discuss herein refer variously to Charity Mail, Ms. Bextel, and Ecocards, Ecocards does not claim it is not the correct party or that it is not bound because the agreements used the other names. For ease of reference, we will refer to the business as Ecocards.

[¶5] In January 2018, Ms. Bextel contacted Tekstir about developing a website for Ecocards. Greg Dawson, a principal and officer of Tekstir, was primarily responsible for negotiating with Ms. Bextel. On February 3, 2018, Ms. Bextel signed an agreement with Tekstir. Under the agreement, Tekstir would build a website, including a home page and three to five content pages, for Ecocards to show to potential investors. Ms. Bextel said she paid a total of $10,000 for this work, including a $5,000 "initial payment followed by an additional $5,000 payment."²

[¶6] During this same time, the parties were negotiating the MSA and an agreement for a fully functional website. On January 30, 2018, Mr. Dawson emailed a draft of the MSA to Ms. Bextel. He said he had modified the agreement to "address the key issues we discussed." He also said that, although Tekstir could proceed with the initial work without having the MSA in place, it would have to be finalized before the parties signed "a further development agreement."

[¶7] On Friday, March 16, 2018, Ms. Bextel signed the MSA, which stated it was effective that day, and emailed it to Mr. Dawson. The record contains a fully executed copy of the MSA, showing Mr. Dawson signed the agreement when he received it from Ms. Bextel on March 16, 2018. The MSA set out the general terms for Tekstir to create various programs and internet applications for Ecocards. For specific projects, the MSA stated that Tekstir would perform the services "described in[,] and in accordance with[,] one or more written statements of services (each, an ‘Exhibit’ and/or a ‘SOW’) to be entered into by the parties and attached to this Agreement." Mr. Dawson stated in his affidavit that "SOW" means "scope of work." The MSA included an initial term, commencing on the effective date and continuing "until the later of (a) twelve calendar months; and (b) the date of expiration or termination of the last-to-survive Exhibit hereunder." Following the initial term, the MSA would renew automatically for successive twelve-month terms. However, after the initial term, either party could terminate the MSA "by providing the other with at least sixty (60) calendar day[s] written notice of termination." Under the general terms section of the MSA, the agreement could not be "amended or modified except by a written instrument signed by both parties." It also provided that "[e]xclusive venue for any claim or suit arising hereunder shall be in Orange County, California."

[¶8] The initial specific project was described in an attachment to the MSA: "Exhibit A – SOW 101159." It stated Tekstir would provide a "4 month build" of "Version 1 including Web Portal and App, Backend Admin Portal, iOS and Android Apps." The total cost of this work was $28,200, but only $23,200 was "due on signing because we deduct $5,000 paid for web site[.]"

[¶9] On Sunday, March 18, 2018, two days after signing and delivering the MSA, Ms. Bextel sent an email to Mr. Dawson stating she could not pay for Tekstir’s services at that time. "The same day or the day after," Mr. Dawson called her to discuss the email. He told her "not to worry" and to "let him know if [she] decided to move forward." Over the next few months, the parties discussed ways to modify the project and pay for it. On June 5, 2018, they agreed Tekstir would develop a website and mobile apps for Ecocards in exchange for a cash payment and a ten percent equity interest in Ecocards. This agreement is referred to in the record as the "website development agreement." On June 15, 2018, Tekstir advised Ecocards it had resumed working on its project.

[¶10] Ecocards filed this action in the Teton County district court on January 7, 2019, claiming Tekstir failed to "adequately perform its obligations under the website development agreement." Ecocards also requested a judgment declaring the equity agreement unenforceable. Tekstir filed a motion to dismiss under Wyoming Rule of Civil Procedure 12(b)(3)³ because, under the MSA’s forum selection clause, venue in Teton County, Wyoming, was improper. The parties filed additional materials, affidavits and declarations addressing the venue issue. After a hearing, the district court granted Tekstir’s motion to dismiss for improper venue. Ecocards appealed.

STANDARD OF REVIEW

[¶11] We generally review a district court’s rulings regarding venue for abuse of discretion. Saunders v. Saunders, 2019 WY 82, ¶ 10, 445 P.3d 991, 996 (Wyo. 2019) ; Bourke v. Grey Wolf Drilling Co., 2013 WY 93, ¶ 14, 305 P.3d 1164, 1167 (Wyo. 2013).

Judicial discretion is a composite of many things, among which are conclusions drawn from objective criteria; it means a sound judgment exercised with regard to what is right under the circumstances and without doing so arbitrarily or capriciously.

Burnham v. Coffinberry, 2003 WY 109, ¶ 5, 76 P.3d 296, 298 (Wyo. 2003). To the extent we are required to address legal issues to resolve this case, our review is de novo. Saunders, ¶ 10, 445 P.3d at 996 (citing BTU W. Res., Inc. v. Berenergy Corp., 2019 WY 57, ¶ 14, 442 P.3d 50, 54-55 (Wyo. 2019) ).

[¶12] In determining whether a case should be dismissed for improper venue under Rule 12(b)(3), the court generally accepts the well-pleaded allegations in the plaintiff’s complaint as true. Saunders, ¶ 11, 445 P.3d at 996 (citing Espinoza v. Evergreen Helicopters, Inc., 359 Or. 63, 376 P.3d 960, 982 (2016) ); 5B Fed. Prac. & Proc. Civ. § 1352 (3d. ed. 2019) (discussing identical federal rule). The court must also draw all reasonable inferences and resolve all factual conflicts in favor of the plaintiff. Id. However, the court may examine the defendant’s affidavits or declarations which contradict the facts stated in the complaint regarding venue. Id. See also, Hancock v. Am. Tel. and Tel. Co., Inc., 701 F.3d 1248, 1260-61 (10th Cir. 2012) (quoting Pierce v. Shorty Small’s of Branson Inc., 137 F.3d 1190, 1192 (10^th Cir. 1998) ) ("[A] plaintiff may rest on the well-pled facts in the complaint to oppose a motion to dismiss for improper venue, but only to the extent that such facts are uncontroverted by defendant’s evidence." (internal quotation marks omitted)).

[¶13] If there are disputed issues of fact regarding venue, the district court may, in its discretion, hold an evidentiary hearing to resolve the Rule 12(b)(3) motion. Brooks Range Petroleum Corp. v. Shearer, 425 P.3d 65, 71 (Alaska 2018) ; Hancock, 701 F.3d at 1261 ; Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1139-40 (9^th Cir. 2004). "Upon holding an evidentiary hearing to resolve material disputed facts, the district court may weigh evidence, assess credibility, and make findings of fact that are dispositive on the Rule 12(b)(3) motion. These factual findings, when based upon an evidentiary hearing and ... disputed material issues, will be entitled to deference." Murphy, 362 F.3d at 1140.

DISCUSSION

[¶14] Ecocards asserts the district court should not have dismissed its case based upon the forum selection clause in the MSA. It claims there are disputed issues of material fact as to whether the MSA and its associated forum selection clause are valid and a jury should decide those issues. We conclude there are no issues of material fact. Furthermore, in accordance with the legal principles recited above, the court, not a jury, would decide any issues of fact regarding a Rule 12(b)(3) motion to dismiss.⁴

Validity of the MSA

[¶15] Ecocards asserts that its relationship with Tekstir is governed only by the website development agreement (which does not include a forum selection clause). It claims it presented credible evidence, through Ms. Bextel’s declaration and evidence of the parties’ communications, showing there are factual questions as to whether the MSA is a valid contract, including:

• The MSA was one of many drafts of possible agreements that Ecocards exchanged with Tekstir.

• On March 16, 2018, Ms. Bextel,

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