WaterVation PLLC v. Shamrock Envtl. Corp.

Decision Date30 June 2020
Docket NumberCase No: 2:20-CV-00063-MLC
PartiesWATERVATION PLLC, Plaintiff, v. SHAMROCK ENVIRONMENTAL CORPORATION, Defendant.
CourtU.S. District Court — District of Wyoming
ORDER GRANTING DEFENDANT'S MOTION TO STAY AND DENYING PLAINTIFF'S MOTION TO REMAND

THIS MATTER comes before the Court upon Defendant Shamrock Environmental Corporation's Motion to Dismiss [Doc. 3] which, alternatively, requests the Court to stay or transfer this case ("Motion to Dismiss"), and Plaintiff WaterVation, PLLC's Motion to Remand [Doc. 13]. The Court has fully reviewed the briefings and is fully apprised of the facts and law surrounding these motions.

I. BACKGROUND

This case arises out of a state court action where Plaintiff WaterVation, PLLC ("WaterVation") requested the state court to declare that the First Judicial District, Laramie County, Wyoming, is the sole and exclusive venue for disputes arising from a Subcontract between WaterVation and Defendant Shamrock Environmental Corporation ("Shamrock") and find that Shamrock breached the Subcontract by bringing the parties' disputes to arbitration in North Carolina ECF_2 at 1, 8.

In late 2017, the Wyoming Game & Fish Commission ("WGFC") solicited bids for a "design-build" stream restoration project and Shamrock allegedly approached WaterVation about working together to submit a bid to work on the WGFC project. Id. at 2. Shamrock submitted a bid and WGFC accepted it. Id. WGFC and Shamrock entered a contract ("the Prime Contract") that allowed Shamrock to engage subcontractors but required that "each subcontractor be bound by the Contract." Id. at 3; id. at 37, § 8(JJ)(iii). This requirement is key in the present dispute because the Prime Contract contains a forum selection clause. Id. at 4; id. at 38, § 9(B). The forum selection clause is written as follows:

B. Applicable Law, Rules of Construction, and Venue. The construction, interpretation, and enforcement of this Contract shall be governed by the laws of the State of Wyoming, without regard to conflicts of law principles. The terms "hereof," "hereunder," "herein," and words of similar import, are intended to refer to this Contract as a whole and not to any particular provision or part. The Courts of the State of Wyoming shall have jurisdiction over this Contract and the parties. The venue shall be the First Judicial District, Laramie County, Wyoming.

Id. at 38, § 9(B). Additionally, the Prime Contract requires that "[i]n the event of a conflict or inconsistency between the language of this Contract and the language of any attachment or document incorporated by reference, the language of this Contract shall control." Id. at 4; id. at 40, § 9(K).

Following the formation of the Prime Contract between WGFC and Shamrock, in 2018 Shamrock and WaterVation entered into a Subcontract Agreement ("the Subcontract"). Id. at 4. WaterVation maintains that the Prime Contract was fully incorporated into the Subcontract. Id. at 4, n.1. The Subcontract provided that the subcontractor agreed

to be bound to Shamrock by the terms of the Prime Contract insofar as it relates in any way to the Subcontractor's Work, and to assume towards Shamrock, in connection with the Subcontractor's Work, all of the obligations and responsibilities which Shamrock by its Prime Contract assumes towards the Customer, the project owner or anyone else.

Id. at 4-5; id. at 56, § 1(I). The Subcontract specifies that the subcontractor's work must be performed "strictly in accordance with . . . [t]he Prime Contract." Id. at 56, §1(E).

Importantly, the Subcontract contains an arbitration provision. Id. at 68, § 31. The provision specifies that:

Any dispute, controversy, or claim (a "Dispute") arising out of or in connection with the Subcontract shall be referred to and determined by binding arbitration conducted in accordance with the American Arbitration Association ("AAA") arbitration rules for commercial disputes (the "rules"), which are deemed to be incorporated herein by reference, except that in the event of any conflict between the Rules and the arbitration provisions set forth below, the provisions set forth below shall govern and control. The arbitration hearing shall be held in Greensboro, North Carolina, unless a different location is specified in writing by Shamrock.

Id.1 The Subcontract further notes that:

Shamrock may, in its sole discretion, elect to waive arbitration by written notice to Subcontractor and, in the event Shamrock waives arbitration, any claim or dispute shall be determined by a court of competent jurisdiction. For purposes of any lawsuit, Subcontractor consents to the personal jurisdiction of the state and federal courts located in Guilford County, North Carolina for adjudication of any claim or dispute involving Shamrock or which is related to or arising from this Subcontract.

Id. at 69, § 31(C). Additionally, the Subcontract provides that "the rights and obligations arising under this subcontract shall be governed and construed in accordance with the laws of North Carolina or if such designation if [sic] unenforceable, then by the laws of the statewhere the subcontractor's work is to be performed, without giving effect to choice of law principles." Id. at 68, § 30.

Pursuant to the arbitration clause in the Subcontract, Shamrock submitted a Demand for Arbitration on October 14, 2019, with AAA in Greensboro, North Carolina ("the North Carolina Arbitration"). Id. at 5. Shamrock paid a filing fee on December 30, 2019, and AAA opened the North Carolina Arbitration. Id. In the Demand, Shamrock alleged that WaterVation committed professional negligence, breached common law and fiduciary duties, tortuously interfered with the Prime Contract, and breached the Subcontract. Id. at 6. Shamrock further raised claims for indemnification and breach of the implied covenant of good faith and fair dealing. Id. The North Carolina Arbitration is still pending. Id. The date for an arbitration hearing has been discussed and could occur in September 2020. Id. WaterVation has preserved its objection to venue in the North Carolina Arbitration and has paid no fees to AAA for administration of the North Carolina Arbitration. Id.

WaterVation filed the present declaratory judgment action in state court, maintaining that the Prime Contract is fully incorporated into the Subcontract, which raises questions concerning the construction and validity of the forum selection clauses. Id. at 6-7. In its complaint, WaterVation maintains that the Prime Contract and Subcontract have irreconcilable forum selection provisions and that the Prime Contract "shall control" where there is inconsistency, according to the Prime Contract. Id. at 7. WaterVation further argues that the Subcontract does not contain any language limiting the application of the forum selection clause in the Prime Contract. Id. Therefore, WaterVation seeks a declaration that the Subcontract evinces intent for the Prime Contract to control withrespect to the forum selection clause and, thus, disputes under the Subcontract must be brought in Wyoming. Id. Further, WaterVation seeks a declaration that the two forum selection clauses have irreconcilable differences and that ambiguity should be construed against Shamrock, as the drafter of the Subcontract. Id. Alternatively, WaterVation seeks a declaration that there is no mutual assent supporting any purported agreement, the two forum selection clauses are irreconcilable, and the Subcontract does not constitute an offer capable of acceptance in terms of the forum selection clause. Id. at 8.

In light of its declaratory judgment action, WaterVation maintains that bringing the North Carolina Arbitration constitutes a breach of the Subcontract, and the breach is the direct and proximate cause of damages to WaterVation. Id. In sum, WaterVation essentially requests a declaration that the North Carolina Arbitration is not the appropriate forum, Shamrock breached the Subcontract in bringing the North Carolina Arbitration, and WaterVation is entitled to money damages for breach of the contract.

Subsequent to WaterVation filing its declaratory judgment action in state court, on April 9, 2020 Shamrock removed the action to the U.S. District Court for the District of Wyoming. ECF_1; ECF_6. WaterVation does not dispute that diversity jurisdiction exists under 28 U.S.C. § 1332(a), as the parties are completely diverse and the amount in controversy exceeds $75,000. ECF_14 at 5-6; ECF_1 at 2.

Almost simultaneous with its removal action, Shamrock filed its Motion to Dismiss, requesting the Court to dismiss the action for forum non conveniens or, alternatively, to stay or transfer the action to the Middle District of North Carolina. ECF_3 at 1. Shamrock argues that the Subcontract must control. ECF_4 at 6-7, 11-12. According to Shamrock,the Prime Contract's forum selection clause only applies to its parties, which is a defined term that does not include WaterVation. Id. at 4-5, 8. Moreover, Shamrock argues the Prime Contract was only incorporated into the Subcontract as to WaterVation's work, not as to the forum selection clause. Id. at 4, 9-10. Because Shamrock maintains that the Subcontract contains a valid forum selection clause, in the form of an arbitration agreement, it argues that the proper method of addressing the clause is to dismiss the action under the doctrine of forum non conveniens. Id. at 12-14. Alternatively, Shamrock argues that the Court must stay litigation until arbitration is complete because the parties agreed to arbitrate and agreed to delegate arbitrability questions to the arbitrator. Id. at 14-15. The last option is to transfer the case to the Middle District of North Carolina, which is the only court with authority to compel arbitration pursuant to the AAA rules. Id. at 15.

Prior to responding to Shamrock's Motion to Dismiss, WaterVation filed a Motion to Remand on April 20, 2020. ECF_13. The Motion to Remand argues that the Wyoming First...

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