FindWhere Holdings, Inc. v. Sys. Env't Optimization, LLC
Decision Date | 29 November 2010 |
Docket Number | No. 09-2155,09-2155 |
Citation | 626 F.3d 752 |
Parties | FINDWHERE HOLDINGS, INCORPORATED, Plaintiff-Appellee, v. SYSTEMS ENVIRONMENT OPTIMIZATION, LLC; Frank Williams; Matthew Williams, Defendants-Appellants, and Homeland Security Networks, Incorporated; Terry A. Colls; Ted Dewinter, Defendants. |
Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Philip J. Harvey, Fiske & Harvey, PLC, Alexandria, Virginia, for Appellants. Alan Bruce Croft, McCandlish & Lillard, Leesburg, Virginia, for Appellee. ON BRIEF: Adrien C. Pickard, Fiske & Harvey, PLC, Alexandria, Virginia, for Appellants. Lawrence J. McClafferty, McCandlish & Lillard, Leesburg, Virginia, for Appellee.
Before KING, DAVIS, and KEENAN, Circuit Judges.
Affirmed by published opinion. Judge DAVIS wrote the opinion, in which Judge KING and Judge KEENAN joined.
Appellee FindWhere Holdings, Inc. ("FindWhere") filed suit in the Circuit Court for Loudoun County, Virginia, seeking damages for breach of contract against Homeland Security Networks, Inc. ("Homeland Security") and others, including Appellants Systems Environment Optimization, LLC ("SEO, LLC"), Frank Williams and Matthew Williams. FindWhere alleged that SEO, LLC, was potentially liable as a subsidiary of Homeland Security. FindWhere also alleged that the entity defendants never properly formed, thereby exposing the four individual defendants to potential liability for the obligations of the corporate defendants.
Appellants removed the case to the United States District Court for the Eastern District of Virginia. FindWhere filed a timely motion to remand the case to state court based on the contract's forum selection clause. Following a hearing, the district court granted the motion and remanded the case. On appeal, Appellants contend that the district court erred in concluding that the forum selection clause confers jurisdiction over the parties' dispute exclusively to the state courts of Virginia.1 We reject Appellants' contention and affirm.
FindWhere sells global positioning systems and provides follow-up tracking services. FindWhere and Homeland Security entered into a contract in May 2008 wherein Homeland Security agreed to act as FindWhere's exclusive reseller in several countries in the Middle East.
FindWhere filed suit in the Circuit Court for Loudoun County, Virginia, in June 2009 for breach of contract. FindWhere alleged that Homeland Security failed to pay for units ordered by SEO, LLC (a Homeland Security subsidiary). SEO, LLC, Frank Williams, and Matthew Williams removed the case to the United States District Court for the Eastern District of Virginia on July 22, 2009, on the basis of diversity of citizenship jurisdiction.2 FindWhere filed a motion to remand the case to state court based on the contract's forum selection clause, which states:
This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, USA. Jurisdiction and venue of any dispute or legal action brought by either party arising out of or relating to this Agreement or the commercial relationship of the parties, shall lie exclusively in, or be transferred to, the courts of the State of Virginia, USA. Company [Homeland Securities] hereby submits, consents, and agrees not to contest such jurisdiction and venue....
At the hearing conducted by the district court, the parties and the court focused attention on the phrase "or be transferred to, the courts of the State of Virginia." Appellants argued that the presence of the phrase—"or to be transferred to"—in the forum selection clause must contemplate federal court jurisdiction over contractual disputes because a state court cannot "transfer" a case to another state's courts, whereas federal courts, alone, have authority to transfer venue to a federal court in a different state. See, e.g., 28 U.S.C. § 1404(a). FindWhere, relying on more expansive definitions of the word "transfer," responded that the provision allowing transfer should not be interpreted so narrowly as Appellants suggested. FindWhere contended that "the simple meaning of transferred is to go to or to be taken from one place to another." Mot. Hr'g Tr. 4.
The district court, in granting the motion to remand, stated:
... I'm of the opinion that the clause here is one that is focused on sovereignty. "Exclusively in" refers to, in my view, the court in the State of Virginia. I understand the defense position that "or be transferred to" language that it's not possible to transfer a case from one state to another, and that viewing the clause in its entirely, I still think that it is a clause that selects a sovereignty. And I do not think that the federal court is a federal court of the State of Virginia.
Upon this timely appeal, we have jurisdiction pursuant to 28 U.S.C. § 1291.Although the appeal is from the district court's remand order, the case does not fall within the general prohibition of appellate review for remand orders pursuant to 28 U.S.C. § 1447(d). The general prohibition of section 1447(d) extends only to remand orders based on a lack of subject matter jurisdiction or a timely raised defect in removal procedure. See Ellenburg v. Spartan Motors Chassis, 519 F.3d 192, 194 (4th Cir.2008) (citing Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127, 116 S.Ct. 494, 133 L.Ed.2d 461 (1995)). Every circuit to have considered the issue has held that a remand order based on a forum selection clause is reviewable on appeal. See Autoridad de Energia Electrica de Puerto Rico v. Ericsson, 201 F.3d 15 (1st Cir.2000); Yakin v. Tyler Hill Corp., 566 F.3d 72, 75 (2d Cir.2009); Foster v. Chesapeake Ins., 933 F.2d 1207 (3d Cir.1991); Waters v. Browning-Ferris Industries, 252 F.3d 796 (5th Cir.2001); DaWalt v. Purdue Pharma, 397 F.3d 392, 399 (6th Cir.2005); Cruthis v. Metropolitan Life Ins. Co., 356 F.3d 816 (7th Cir.2004); Kamm v. ITEX Corp., 568 F.3d 752, 755 (9th Cir.2009); Milk ' N' More v. Beavert, 963 F.2d 1342 (10th Cir.1992); Global Satellite Communication v. Starmill, 378 F.3d 1269 (11th Cir.2004).
This court reviews "de novo a district court's decision on an issue of contract interpretation." Seabulk Offshore v. American Home Assurance, 377 F.3d 408, 418 (4th Cir.2004). The parties' agreement provides that it is to be construed under the law of Delaware. It is settled in Delaware that "a court must construe the agreement as a whole, giving effect to all provisions therein." E.I. du Pont de Nemours & Co., Inc. v. Shell Oil Co., 498 A.2d 1108, 1113 (Del.1985).
In granting the motion to remand, the district court applied the widely-accepted rule that forum selection clauses that use the term "in [a state]" express the parties' intent as a matter of geography, permitting jurisdiction in both the state and federal courts of the named state, whereas forum selection clauses that use the term "of [a state]" connote sovereignty, limiting jurisdiction over the parties' dispute to the state courts of the named state. Doe 1 v. AOL, LLC, 552 F.3d 1077, 1082 (9th Cir.2009) ) (per curiam); Am. Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d 921, 926 (10th Cir.2005) ( ); Dixon v. TSE Int'l Inc., 330 F.3d 396, 398 (5th Cir.2003) ( ); LFC Lessors, Inc. v. Pac. Sewer Maint. Corp., 739 F.2d 4, 7 (1st Cir.1984) ( ).
We think the rule is sound and join our sister circuits in adopting it here. The forum selection clause before us is unambiguously expressed in terms of sovereignty and therefore excludes...
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