White Oak Power Constructors v. Alstom Power, Inc. (Maryland U.S.D.C.)

Filed: November 7, 2017

Opinion by: Catherine C. Blake, United States District Judge

Holding: Tort claims based on conduct prior to the execution of a contract are not outside the scope of the agreed to forum selection clauses and that enforcing said clauses, which refer to “any legal action” related to the agreement.

Facts: In 2013, Defendant, Old Dominion Electric Cooperative (“Old Dominion”) entered into an Equipment Purchase Agreement (“Alstom Agreement”) with Defendant Alstrom Power, Inc. (“Alstrom”) for three generators for use in the Wildcat Point Generation Facility under development in Rising Sun, Maryland (“the Plant”). In 2014, Old Dominion entered into an Engineer, Procure and Construct Contract (“White Oak Agreement”) with Plaintiff, White Oak Power Constructors (“White Oak”) to construct the Plant and prepare it for operation. All three parties also signed an Assignment, Assumption, and Consent Agreement (“Assignment Agreement”) assigning certain of Old Dominion’s rights and responsibilities from the Alstrom Agreement to White Oak.

The Alstrom Agreement forum selection clause states:

 “Any legal action with respect to this Agreement shall exclusively be brought in the state courts of Virginia located in Henrico County, Virginia or in the United States District Court for the Easter District of Virginia located in Richmond, Virginia…each of the parties irrevocably waives any objection…further irrevocably waives and agrees not to plead or claim in any such court that any action or proceeding brought in any such court has been brought in an inconvenient forum.”       

The Assignment Agreement contains a substantively identical forum-selection provision. In addition, the White Oak Agreement forum selection clause states:

“Both parties hereto agree…to submit to the exclusive jurisdiction of the United States District Court for the Eastern District of Virginia located in Richmond, Virginia, in any litigation between the parties or, if the federal court lacks jurisdiction, the state courts of the Commonwealth of Virginia located in Henrico County, Virginia…contractor hereby waives any objection that it may now or hereafter to the venue of any such suit or any such court or that such suit is brought in an inconvenient forum.”

Plaintiff argued that its tort claims were outside the scope of the forum selection clauses and, even if the tort claims are within the scope of the forum selection clauses, enforcing the clauses would be unreasonable. The court denied all of Plaintiff’s arguments.

Analysis: The court first acknowledged the Supreme Court’s holding that: “When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause. Only under extraordinary circumstances unrelated to the convenience of the parties should a §1404(a) motion be denied.” Plaintiff made the following arguments against enforcement of the forum selection clauses, and for the following reasons, the court denied each argument in turn:

(1)  Plaintiff’s tort claims were outside the scope of the forum selection clauses.

The court relied on the language of the Agreements to dismiss this claim, citing, “the Alstrom Agreement referred to ‘any legal action or proceeding with respect to this agreement’ and ‘actions of proceedings arising out of or in connection with this agreement.’ Both of these clauses therefore encompass pre-execution conduct of the parties related to the bidding on and negotiation of the agreements, including the alleged fraud in the inducement.”

(2)  Enforcing the clauses would be unreasonable.

The court cited the fourth circuit, explaining, “a forum selection clause may be found unreasonable if: (i) its formation was induced by fraud or overreaching; (ii) the complaining party will for all practical purposes be deprived of his day in court because of the grave inconvenience or unfairness of the selected forum; (iii) the fundamental unfairness of the chosen law may deprive the plaintiff of a remedy; or (iv) its enforcement would contravene a strong public policy of the forum state.”

The court found none of the above circumstances present, explaining, “[Plaintiff] has not advanced any facts to show that the forum selection clause specifically was obtained by fraud or overreaching…[and Plaintiff] offered no evidence that it will be gravely inconvenient or that it would be unfair to litigate this case in the forum state to which it agreed.” Similarly, there was no discussion of contravening a strong public policy by enforcing the clause. The court concluded, “allowing [Plaintiff] to escape its obligations under the forum selection clause…would be permitting forum shopping.”

(3)  Plaintiff did not bargain for the forum selection clause in the Alstrom Application.

The court quickly dismissed this final argument, explaining, “[Plaintiff] knew it would be subject to assignment of the Alstrom Agreement when it entered in the White Oak Agreement and the Assignment Agreement…[Plaintiff] could have bargained for a different forum selection clause. Instead, it agreed to inclusion of an identical clause in the Assignment Agreement. Further, the forum selection clause in the White Oak Agreement is even broader than that in the Alstrom Agreement.”

The opinion is available in PDF.

Capitol PaymentSystems, Inc. v. Salvatore Di Donato (Maryland U.S.D.C.)

Filed: May 23, 2017

Opinion by: Ellen L. Hollander

Holding:  Transfer of venue is appropriate if the convenience of the witnesses, convenience of the parties, and interest of justice outweigh the plaintiff’s choice of venue.

Facts:  Plaintiff is a Maryland corporation with the principle place of business in Maryland that operated payment transaction processing services to a wide array of businesses. Defendant is a New Jersey company with a principle place of business in New Jersey, that operated as an agent in the electronic payment processing industry. Plaintiff and Defendant entered into a contractual agreement in which the defendant would provide independent marketing services.

Plaintiff alleged that Defendant entered into outside business agreements with third parties in breach of the agreement. Plaintiff and Defendant attempted to renegotiate the terms of the agreement, but failed to reach an understanding.

Plaintiff filed suit seeking injunctive relief in the Anne Arundel County Circuit Court on February 1, 2016. Defendant filed a counter suit in the United States District Court for the District of New Jersey on February 25, 2016 before being served for the Maryland case. After withdrawing the case for an injunction from the Circuit Court, the Plaintiff removed the case to the United States District Court of Maryland on March 23, 2016 and the Defendant moved to transfer venue to New Jersey.

Defendant argued that New Jersey was a more convenient forum because it is where the dispute arose, the potential witnesses reside, and the majority of the evidence is located. Plaintiff contended Maryland is the appropriate venue since it is a Maryland corporation, the agreement is governed by Maryland law, the signed agreement was returned to Maryland, and the first-to-file rule requires adjudication of the case in Maryland.

Analysis:  The Court began its analysis by upholding the validity of both the Maryland suit as well as the New Jersey action. In adjudicating a motion to transfer the Court examines several case-specific factors. The factors pertinent to this case include: 1) the weight accorded to the plaintiff’s choice of venue; 2) witness convenience and access; 3) convenience of the parties; and 4) the interest of justice. (Citing Plumbers and Pipefitters Nat. Pension Fund v. Plumbing Serv., Inc.)

The Court began its analysis by reviewing the Plaintiff’s choice of venue. Since the conduct underlying the claim occurred entirely in New Jersey the Plaintiffs’ choice of venue is diminished. The Court sided with the Defendant that the convenience of the witnesses favored New Jersey because all the third parties citied in the complaint, which the merchant Defendant allegedly interfered with, are located in New Jersey or New York. The convenience of the parties would not be more burdensome in New Jersey or Maryland, so the Court did not weight this factor heavily in the final determination. Likewise, transfer would not negatively impact the interest of justice since New Jersey Courts have ample history of ruling on cases controlled by Maryland law.

Finally, the Court declined to adhere to the first-to-file rule since the convenience of the factors supported transfer to New Jersey. Examining this rule under the interests of justice, the fact that the Plaintiff filed first in Maryland Court did not control because of the specifics of the matter. Defendants filed in Federal Court before the Plaintiff, weeks before being served notice of the Maryland case and the Maryland case was moved to Federal Court.

Motion to transfer Granted.

The full opinion is available in PDF.