W. Consultants, Inc. v. Davis

• Decision Date: 30 September 2013
• Docket Number: No. 68309–8–I.,68309–8–I.
• Citation: 310 P.3d 824,177 Wash.App. 33
• Court: Washington Court of Appeals
• Parties: WEST CONSULTANTS, INC., Appellant, v. Carolyn E. DAVIS, an individual, dba Advanced Enterprise Systems and “A & E” Systems, a Washington sole proprietorship; Deltek Services, Inc., a Delaware corporation; Deltek Systems, Inc., a Delaware corporation; Deltek Corp., a Delaware corporation; Deltek, Inc., a Delaware corporation; and Deltek Partners, a purported Washington partnership, Respondents.

177 Wash.App. 33

310 P.3d 824

WEST CONSULTANTS, INC., Appellant,

v.Carolyn E. DAVIS, an individual, dba Advanced Enterprise Systems and “A & E” Systems, a Washington sole proprietorship; Deltek Services, Inc., a Delaware corporation; Deltek Systems, Inc., a Delaware corporation; Deltek Corp., a Delaware corporation; Deltek, Inc., a Delaware corporation; and Deltek Partners, a purported Washington partnership, Respondents.

No. 68309–8–I.

Court of Appeals of Washington, Division 1.

Aug. 19, 2013.

Publication Ordered Sept. 30, 2013.

Richard D. Seward, Attorney at Law, Port Orchard, WA, for Appellant/Cross–Respondent.

Stellman Keehnel, DLA Piper LLP, Nicole Mikiko Tadano, Attorney at Law, Seattle, WA, for Respondent/Cross–Appellant.

LEACH, C.J.

¶ 1 West Consultants Inc. (West) appeals the trial court's enforcement of a forum selection clause. This decision resulted in the dismissal of its claims against Deltek Inc., Deltek Services Inc., Deltek Systems Inc., Deltek Corp., and Deltek Partners (collectively Deltek) for improper venue and an award of reasonable attorney fees and costs to Deltek.¹ West alleges that the Deltek software it purchased from A & E Systems (A & E) did not work properly. West claims that a purchase agreement with A & E for the software, requiring suit in Washington, governs this case. The trial court concluded that Deltek's click-through license agreement West accepted when it installed the software, requiring suit in Virginia, governs. Because West's claims arise under the license agreement, the purchase agreement was not an integrated contract, and the applicable statutes entitle Deltek to attorney fees and costs, we affirm.

FACTS

¶ 2 West is an environmental engineering firm. Deltek Inc. is a Delaware corporation with corporate offices located in Virginia. It manufactures software. A & E Systems sells and maintains Deltek software. On March 28, 2008, West purchased a Deltek Vision Software license and quarterly maintenance from A & E. Deltek was not a party to and did not sign the purchase agreement, which stated,

No express warranties are given by A & E Systems regarding the Deltek, Inc. software that is being utilized in the performance of these services. Any implied warranties of fitness for a particular purpose, merchantability, or any other implied warranties as a matter of law, are specifically disclaimed. Any warranties for the Deltek, Inc. software will be given directly by Deltek, Inc. to the client and the client will look solely to Deltek, Inc. in regard to such warranties.

This agreement also included a choice of law provision: “This agreement shall be governed by the laws of the State of Washington and venue of any suit will be in King County, WA.”

¶ 3 West purchased installation, training, and support services from Deltek. West employee Hans Hadley signed a work order on May 13, 2008, requiring Deltek to assist Hadley with installing the software. The work order stated that it was subject to the terms of a separate license agreement between West and Deltek. This license agreement required bringing any claim “relating in whole or in part to this Agreement” in either a state court within Fairfax County, Virginia, or in the United States District Court for the Eastern District of Virginia. On May 16, 2008, a Deltek representative spoke on the phone with Hadley to assist him with installing the software. To complete the installation, Hadley accepted Deltek's license agreement by clicking on a series of buttons on his computer screen. This click-through agreement stated, “YOU AGREE TO BE BOUND BY THE ALL [sic] TERMS OF THIS AGREEMENT BY INSTALLING, COPYING OR USING THE SOFTWARE. IF YOU DO NOT INSTALL, COPY OR USE THE SOFTWARE[,] YOU MAY RETURN IT TO YOUR PLACE OF PURCHASE FOR A FULL REFUND, IF APPLICABLE.” The license agreement also included certain express warranties for the software's operation and disclaimed all implied warranties.

¶ 4 On March 22, 2010, after West determined that the software did not meet its needs, West sued Deltek and A & E in King County Superior Court, alleging violations of the Consumer Protection Act (CPA), chapter 19.86 RCW, breach of implied warranties of merchantability and fitness for a particular purpose, and unjust enrichment. On May 25, the court granted Deltek's motion to dismiss for improper venue under CR 12(b)(3), dismissing West's claims against Deltek without prejudice. On June 14, 2010, the court entered an order granting Deltek's request for attorney fees and costs. On August 5, 2011, after West and A & E settled, the court dismissed West's claims against A & E.

¶ 5 On December 27, 2011, Deltek filed a notice of presentation of judgment under CR 54 for both the dismissal order and the fee award. West responded to the motion and attached a declaration from its attorney, Richard Seward, stating, “Virginia law barred Plaintiff's Consumer Protection Act claim and that pursuing the balance of the claims in Virginia was cost prohibitive.” Deltek moved to strike a portion of the declaration, arguing that West was improperly attempting to introduce new evidence. The court denied Deltek's motion on January 17, 2012, and entered a final judgment on January 25. West appeals, and Deltek cross appeals.

STANDARD OF REVIEW

¶ 6 We review a trial court's decision on the enforceability of a forum selection clause using an abuse of discretion standard.² A trial court abuses its discretion when its decision is manifestly unreasonable or based on untenable grounds.³ “[T]he abuse of discretion standard gives deference to a trial court's fact-specific determination on enforceability of a forum selection clause, while permitting reversal where an incorrect legal standard is applied.” ⁴ But, if the case presents a pure question of law, “such as whether public policy precludes giving effect to a forum selection clause in particular circumstances,” we apply a de novo standard of review as to that question.⁵

¶ 7 We review the legal basis for an attorney fee award de novo, but we review the reasonableness of the award amount for abuse of discretion.⁶

ANALYSIS

¶ 8 West's primary contention is that the forum selection clause in the A & E purchase agreement controls its claims against Deltek, even though these claims arise out of the Deltek license agreement. West reaches this conclusion through the following analysis. A & E and Deltek are partners. The A & E purchase agreement provision establishing venue in King County binds its partner, Deltek. The forum selection clause in Deltek's license agreement modifies the purchase agreement provision without consideration. This lack of consideration makes the modification unenforceable. We reject West's analysis because it fails to recognize the “layered contract” nature of this transaction. We also reject West's policy arguments and its challenge to a fee award in Deltek's favor.

¶ 9 In M.A. Mortenson Co., Inc. v. Timberline Software Corp.,⁷ our Supreme Court approved the formation of “layered contracts” between a merchant and an end user.⁸ Mortenson, a contractor, issued a purchase order to Timberline for the purchase of software.⁹ Timberline shipped the software with a shrink-wrap license, which included a limitation of remedies provision.¹⁰ When Mortenson experienced problems with the software, Timberline invoked the limitation provisions. Mortenson contended that the parties' contract consisted only of its purchase order because it never saw or agreed to the provisions of the license agreement at the time the parties made their contract.¹¹ It also argued that delivery of the license was a request to add terms to the contract, to which the parties never agreed.¹² Our Supreme Court disagreed, holding that the license provisions were part of the parties' contract and use of the software constituted assent to the license terms.¹³ The court concluded, “[B]ecause RCW 62A.2–204 allows a contract to be formed ‘in any manner sufficient to show agreement ... even though the moment of its making is undetermined,’ it allows the formation of ‘layered contracts.’ ” ¹⁴

¶ 10 West's complaint asserts that Deltek breached implied warranties of merchantability and fitness for a particular purpose. It also alleges that Deltek violated the CPA “by selling a poor quality product to Plaintiff WEST and failed to provide adequate installation, training and maintenance services to render the product useful for any purposes, let alone the special and particular purposes of the Plaintiff.” West does not dispute that its claims relate in whole or in part to the license agreement, particularly the agreement's warranties and disclaimers, and it does not seek to rescind the license agreement. West does not allege any breach of the purchase agreement's provisions.

¶ 11 As West appropriately acknowledged at oral argument, here, as in Mortenson, the purchase order is not an integrated contract. West's claims cannot arise under the purchase agreement, which provides no express warranties regarding the software and disclaims any implied warranties. West had previously purchased software from A & E, although it had not previously used Deltek's products. West does not dispute that the license and purchase contract terms were clear. When West purchased Deltek's software, it had notice that it would be subject to a license. The purchase agreement between West and A & E recited that West was purchasing a license to use the software and noted that Deltek would provide any warranties for the software. The record indicates that a scroll box would have appeared on the computer screen during the software installation process, setting forth the terms of the license agreement, and that the installer would have been required to affirmatively select the option “I accept the terms of the license agreement” to proceed. The work order that Hadley signed stated explicitly that those same terms governed the work order.

¶ 12 West contends that it agreed to...