Hill Country Utilities, L.L.C. v. Amerigas Propane, L.P.
| Decision Date | 09 April 2021 |
| Docket Number | A-20-CV-959-LY |
| Parties | HILL COUNTRY UTILITIES, L.L.C. v. AMERIGAS PROPANE, L.P. |
| Court | U.S. District Court — Western District of Texas |
Before the Court are Plaintiff's Motion for Remand (Dkt. No. 9); the Response (Dkt. No. 11); and Reply (Dkt. No. 14). The District Judge referred the above-motion to the undersigned for report and recommendation pursuant to 28 U.S.C. §636(b)(1)(B), FED. R. CIV. P. 72, and Rule 1(d) of Appendix C of the Local Court Rules.
This case involves a dispute about a forum selection clause contained in a contract between the parties. Hill Country Utilities, L.L.C. is a real estate developer that does most of its business in Central Texas. In 2018, Hill Country began work on a real estate development near Spicewood, Texas called Ascensions on Lake Travis. As part of the development, Hill Country entered into a written contract with AmeriGas Propane, L.P., to provide installation, maintenance, and provision of a propane distribution system to Ascensions. Dkt. No. 9-1. Under the contract, AmeriGas agreed to install certain equipment and provide propane services to the neighborhood. Id. at 2; 3, § 2.3; 4, § 4.1. AmeriGas agreed it would invoice the owner of each unit based on that unit's propane usage. Id. at 3, § 2.3. In consideration for receiving the exclusive contractual right to provide propane services to Ascensions, AmeriGas also agreed to pay Hill Country a quarterly royalty fee based on neighborhood consumption. Id. at 3-4, § 3.6.
Hill Country asserts that AmeriGas seriously delayed performance of its contractual obligations, delaying the development. In October 2019, AmeriGas informed Hill Country that it was repudiating the contract. Hill Country alleges that along with its loss of royalty fees, it is struggling to power the development and facing substantial costs to mitigate its losses and to continue the development. Hill Country filed suit in state court in Travis County, asserting AmeriGas breached the contract. AmeriGas removed the case to this Court based on diversity jurisdiction. Hill Country now moves to remand, arguing that the contract prohibited removal.
A defendant may remove "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). When original jurisdiction is based on diversity of citizenship, the cause of action must be between "citizens of different States" and the amount in controversy must exceed $75,000. 28 U.S.C. § 1332. Subject matter jurisdiction must exist at the time of removal to federal court, based on the facts and allegations contained in the complaint. St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998). Furthermore, "any doubt about the propriety of removal must be resolved in favor of remand." Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007).
Hill Country bases its motion to remand on a provision of the Agreement. That provision states:
11.4. Governing Law. The Agreement shall be governed in all respects by the laws of the State of Texas without regard to the state's choice of law provisions. Each Party consents to the exclusive jurisdiction before the United States District Court for the Western District of Texas or state courts located in Travis County, Texas having appropriate jurisdiction.
Dkt. No. 9-1. Hill Country contends that this clause did two things: (1) it gave each party the right to file a breach of contract suit in either state or federal court in Travis County; and (2) it provided that each party agreed it would not challenge whichever of those venues the first party chose. AmeriGas disagrees, and notes that there is no language in the contract waiving its right to remove any suit, and because there is diversity jurisdiction, and the contract specifically identified the Western District as a permitted forum, it was permitted to remove the case to this Court. It further notes that Hill Country is reading language into § 11.4 that is not there, and courts faced with "materially identical" forum selection clauses have denied motions to remand. Dkt. No. 11 at 2.
In the Fifth Circuit a party may contractually waive its right to remove a case from state to federal court by: (1) explicitly stating that it is doing so; (2) allowing the other party the right to choose venue; or (3) establishing an exclusive venue within the contract. City of New Orleans v. Mun. Admin. Services, Inc., 376 F.3d 501, 504 (5th Cir. 2004). In City of New Orleans, the court explained that a party who "consents to jurisdiction in one forum does not necessarily waive its right to have an action heard in another." Id. Rather, for a clause to create an exclusive forum for suit, "it must go beyond establishing that a particular forum will have jurisdiction and must clearly demonstrate the parties' intent to make that jurisdiction exclusive." Id. (citing Keaty v. Freeport Indonesia, Inc., 503 F.2d 955 (5th Cir.1974)). The waiver must be "clear and unequivocal," if not explicit. McDermott International, Inc. v. Lloyds Underwriters, 944 F.2d 1199 (5th Cir.1991). "Ambiguous language cannot constitute a 'clear and unequivocal' waiver." Grand View PV Solar Two, LLC v. Helix Elec., Inc./Helix Elec. of Nev., L.L.C., J.V., 847 F.3d 255, 258 (5th Cir. 2017) (citing New Orleans, 376 F.3d at 505-06).
Relying on two Fifth Circuit cases and two district court decisions, Hill Country argues that § 11.4 satisfies two of the three permissible means for AmeriGas to have waived its right to remove: (1) it provides two courts of exclusive venue—Travis County state court or the Western District ofTexas; and (2) it gives the party filing suit the right to pick from either of these two exclusive venues. The first case Hill Country relies on for this claim is Waters v. Browning-Ferris Indus., Inc., 252 F.3d 796, 797 (5th Cir. 2001). In Waters, the Fifth Circuit panel interpreted the following clause:
Company irrevocably (i) agrees that any such suit, action, or legal proceeding may be brought in the courts of [Texas] or the courts of the United States for [Texas], (ii) consents to the jurisdiction of each such court in any such suit, action or legal proceeding and (iii) waives any objection it may have to the laying of venue of any such suit, action or legal proceeding in any of such courts.
252 F.3d at 797. The Waters court reasoned that "[a] reading of this provision leads . . . to the inescapable conclusion that the plaintiff negotiated with the defendant a clear right to establish 'irrevocably' the place where his suit could be filed and heard." Id. at 798. The court further noted that although a waiver of the right to remove need not include "magic" words, that was not a problem in that case, as the company explicitly "waive[d] any objection" to the two agreed- upon venues. Id. at 797.
Hill Country also relies on the Fifth Circuit's decision in City of Rose City v. Nutmeg Insurance Co., 931 F.2d 13 (5th Cir.1991). The contract in that case stated:
[i]n the event of our [Nutmeg's] failure to pay any amount claimed to be due under your [Rose City's] policy, we, at your request agree to submit to the jurisdiction of any Court of Competent jurisdiction within the United States and will comply with all requirements necessary to give such Court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such Court.
Id. Rose City initially filed suit in state court, and Nutmeg removed it to federal court. Rose City then moved to remand, arguing that the language of the agreement prevented Nutmeg from removing the case. The district court disagreed and denied the motion to remand. The Fifth Circuit reversed, stating:
Here there was no question that Nutmeg would have to submit to the jurisdiction of some court in the United States. Nutmeg is a Connecticut corporation with its principal place of business in Hartford, Connecticut. . . . [I]t is clear from the language of the clause at issue here that Nutmeg did not promise only to submit tothe jurisdiction of "some Court . . . within the United States," but rather promised to submit to the jurisdiction of "any Court . . . within the United States." We are persuaded that this clause gives to the policyholder (or its assignee) the right to select the forum, foreclosing Nutmeg's right to remove this action to federal court.
Id. at 15-16. Hill Country contends this reasoning applies here as well, noting that the court stated that although the contract language did "not specifically mention the right of a defendant to remove an action from state court to federal court, the language of the clause makes clear that the policyholder shall enjoy the right to choose the forum in which any dispute will be heard." Id. at 15.
This argument overlooks the important distinctions between the contract language in City of Rose City and the contract language here. First, as the Circuit noted, Nutmeg agreed that it could be sued in any court of competent jurisdiction. And importantly, it also agreed that it would "comply with all requirements necessary to give such Court jurisdiction." City of Rose City, 931 F.2d at 13. Taken together, this language clearly implies that Nutmeg was waiving the right to change the venue that Rose City selected. So, while the word "waiver" is not present in the City of Rose City contract, by agreeing that it would "comply with all requirements necessary to give [Rose City's chosen forum] jurisdiction," Nutmeg implicitly waived the right to remove the case.1 In the contract here, there is no comparable language that even implies that the parties were agreeing not to remove a suit to the agreed upon federal forum if they were sued in state court.
Hill Country also cites to...
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