Nw. Bldg. Components v. Adams
| Docket Number | Civil Action 22-cv-00790-CMA-KLM |
| Decision Date | 26 May 2022 |
| Parties | NORTHWEST BUILDING COMPONENTS, INC., Plaintiff, v. PHILIP D. ADAMS, Defendant. |
| Court | U.S. District Court — District of Colorado |
ORDER GRANTING MOTION TO TRANSFER CASE TO THE DISTRICT OF IDAHO
This matter is before the Court on Defendant's Motion to Dismiss for Lack of Jurisdiction, or in the Alternative Motion to Transfer Venue (the “Motion”). (Doc. # 15.) For the following reasons, the Motion is granted, and this case is transferred to the United States District Court for the District of Idaho.
This is a dispute between a former employer and employee. On March 30, 2022, Plaintiff Northwest Building components, Inc. (“Plaintiff” or “Northwest”) commenced this action against Defendant Philip D. Adams (“Defendant” or “Mr. Adams”). (Doc. # 1.) Northwest is in the business of “manufacturing, marketing, selling, and distributing trusses; roof, floor and stair components; framing; siding and other building materials and supplies, and providing services with respect thereto.” (Doc. # 1 ¶ 8.) Further, Northwest “supplies high quality roof and floor trusses for commercial, residential, and agricultural buildings and specializes in all areas of wood construction.” (Id.)
Mr. Adams commenced his employment with Northwest in approximately October 2004, and he was a shareholder from 2009 through June 1, 2020. (Doc. # 1 at ¶ 13.) On June 1, 2020, Mr. Adams entered into a Stock Purchase Agreement whereby Kodiak Building Partners, LLC purchased all outstanding shares of capital stock of Northwest, including shares owned by Mr. Adams. (Id. at ¶ 14.) At that time, Mr. Adams became the General Manager of Northwest. (Id. at ¶ 15.)
On June 1, 2020, in connection with his new role as General Manager, Mr. Adams signed an Employment Agreement, which set forth his salary, benefits, and obligations to maintain confidentiality. (Doc. # 1 at ¶¶ 17-18; Doc. # 1-1.) A separate Restrictive Covenant Agreement (“RCA”) is attached as Exhibit A to the Employment Agreement. (Doc. # 1 at ¶ 21; Doc. # 1-1 at 18.) Northwest alleges, inter alia, that Mr. Adams breached the Employment Agreement by working for a competitor, misappropriated trade secrets, and has engaged in conversion and unfair competition. (Doc. # 1.) Northwest brings claims for Breach of Contract, Misappropriation of Trade Secrets under federal and state law, Conversion, Civil Theft, Tortious Interference with Contract, Tortious Interference with Prospective Business Advantage, Unjust Enrichment, Unfair Competition, and Common Law Unfair Competition. (Doc. # 1 at 1319.)
Mr. Adams moved to dismiss this action for lack of jurisdiction and for improper venue. (Doc. # 15.) Northwest is a Washington corporation with its principal place of business in Idaho. (Doc. # 1 at ¶ 4.) Mr. Adams is a resident and citizen of Idaho. (Id. at ¶ 5.) Mr. Adams has lived in Idaho for the last 11 years, and he lived in Washington for 49 years prior to moving to Idaho. (Doc. # 16 at ¶ 22.) Mr. Adams has never lived in Colorado, has never owned property in Colorado, has never operated a business or had a license in Colorado, and has no immediate family in Colorado. (Id. at 22-26.) He has flown through Denver's airport occasionally, and he attended one trade show in Colorado and visited a facility in the last few months in connection with his current employment. (Id. at ¶ 27.)
The parties dispute which contract controls in this case, and the contracts contain different choice of forum clauses dictating where the action must be brought. Plaintiff alleges that the Court has personal jurisdiction over the parties, and venue is proper in the District of Colorado, because this action arises out the Employment Agreement and RCA. (Doc. # 1 at ¶ 7.) The Employment Agreement contains a forum selection clause providing that all lawsuits “shall be brought exclusively in the state or federal courts located in Denver, Colorado.” (Doc. # 1 at ¶ 7; Doc. # 1-1 at 9 ¶ 13.) The RCA contains identical language. (Doc. # 1-1 at 24 ¶ 15.) As a result, Northwest argues that the Court has jurisdiction over Mr. Adams. (Id.)
Mr. Adams maintains that a subsequent Severance Agreement governs this action. (Doc. # 16 at ¶ 13.) The Severance Agreement was signed on November 4, 2021, after Mr. Adams resigned from Northwest. (Doc. # 17.) The Severance Agreement contains a “Choice of Law and Venue” paragraph which states that the agreement (Doc. # 17 at ¶ 18.)
Further, the Severance Agreement states that Northwest and Mr. Adams are entering into the agreement to “resolve fully and finally potential disputes regarding Employee's employment” with Northwest. (Doc. # 17 at 1.) Like the Employment Agreement and the RCA, the Severance Agreement contains a provisions setting forth Defendant's obligations with respect to trade secrets and confidential information he learned during his employment. (Id. at 4-5.) The Severance Agreement also states that the agreement is (Doc. # 17 at ¶ 16.)
Rule 12(b)(3) provides that a defendant may move to dismiss a complaint because of “improper venue.” Fed.R.Civ.P. 12(b)(3). Once venue is challenged, it is the plaintiff's burden to show that venue is proper in the forum district. See Gwynn v. TransCor Am., Inc., 26 F.Supp.2d 1256, 1261 (D. Colo. 1998). “At the motion to dismiss stage, a plaintiff must present only a prima facie showing of venue.” Scott v. Buckner Co., 388 F.Supp.3d 1320, 1324 (D. Colo. 2019). “[I]n reviewing a defendant's Rule 12(b)(3) motion to dismiss for improper venue, the Court may examine facts outside of the complaint and must draw all reasonable inferences and resolve all factual conflicts in favor of the plaintiff.” Id. (internal quotations omitted). Courts must “accept the well-pleaded allegations of the complaint as true to the extent that they are uncontested by the defendant's affidavits.” Id. (quoting Karl W. Schmidt & Assocs., Inc. v. Action Envtl. Sols., LLC, No. 14-cv-00907-RBJ, 2014 WL 6617095, at *2 (D. Colo. Nov. 21, 2014)). “If the parties present conflicting affidavits, all factual disputes are resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party.” Scott, 388 F.Supp.3d at 1324 (quotation marks and citations omitted).
Mr. Adams moves to dismiss this action pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and pursuant to Rule 12(b)(3) for improper venue. (Doc. # 15.) Alternatively, Mr. Adams requests that the Court transfer the action to the United States District Court for District of Idaho pursuant to 28 U.S.C. § 1404(a). (Id. at 15.)
“[T]here is no mandatory ‘sequencing of jurisdictional issues.'” Sinochem Int'l Co. Ltd. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 431 (2007) (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999)). The Supreme Court has explained:
The question of personal jurisdiction, which goes to the court's power to exercise control over the parties, is typically decided in advance of venue, which is primarily a matter of choosing a convenient forum. On the other hand, neither personal jurisdiction nor venue is fundamentally preliminary in the sense that subject-matter jurisdiction is, for both are personal privileges of the defendant, rather than absolute strictures on the court, and both may be waived by the parties. Accordingly, when there is a sound prudential justification for doing so, we conclude that a court may reverse the normal order of considering personal jurisdiction and venue.
Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979) (internal citations omitted). Thus, courts may properly consider venue arguments before deciding personal jurisdiction. Wardell v. Am. Dairy Goat Ass'n, 21-cv-01186-PAB-NRN, 2022 WL 375577, at *4 (D. Colo. Feb. 8, 2022), report and recommendation adopted, 21-cv-01186-PAB-NRN, 2022 WL 596276 (D. Colo. Feb. 28, 2022) (deciding venue before personal jurisdiction); Aspen Corps., Inc. v. Gorman, 18-cv-01325-CMA-SKC, 2019 WL 1281211, at *3 (D. Colo. Mar. 20, 2019) (same).
In this case, as discussed more fully below, venue is obviously improper in the District of Colorado. It is the Court's practice to seek efficient outcomes. Accordingly, the Court finds that it is more efficient to simply transfer the litigation to the District of Idaho rather than dismiss this action based on lack of personal jurisdiction or improper venue. See Leroy, 443 U.S. at 180-81 ().
As a threshold matter, the Court must resolve which law applies. “There is a distinction . . . between what law governs the enforceability of [a] forum selection clause and what law governs the interpretation of [a] forum selection clause.” State ex rel. Balderas v. Real Est. L. Ctr., P.C., 430 F.Supp.3d 900, 919 (D.N.M. 2019) (collecting cases). Enforceability of a forum selection clause is governed under federal rather than state law. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 28, 108 S.Ct. 2239, 2243,
101 L.Ed.2d...
To continue reading
Request your trial