ORDER DENYING DEFENDANT'S MOTION TO TRANSFER VENUE PURSUANT TO SECTION 1404(a), OR IN THE ALTERNATIVE, TO DISMISS THE COMPLAINT

JILL A. OTAKE, District Judge.

This action involves a dispute between a contractor and subcontractor for a public works project in American Samoa. The subcontractor, Plaintiff Continental Transport Corporation, asserts breach of contract, fraudulent misrepresentation, negligent misrepresentation, and quantum meruit claims against Defendant Engineering Remediation Resources Group, Inc. Defendant moves to transfer the case to the Northern District of California, or in the alternative, to dismiss the misrepresentation counts (Counts II and III) of the Complaint.

For the reasons stated below, the Motion is DENIED.

I. BACKGROUND

A. Facts

i. Facts as Alleged in the Complaint

The American Samoa Power Authority (the "Power Authority") hired Defendant to construct the New Wells Nos. 1, 2, and 3 Water System Connection Project (the "Project") in Malaeimi Valley, American Samoa. Compl. ¶ 1. Defendant entered into a Construction Services Agreement (the "Prime Contract") with the Power Authority on July 13, 2016. Id. ¶ 1. Defendant hired Plaintiff to "execute all phases of field work" for the Project, and the parties executed a Subcontract on July 8, 2016. Id. ¶¶ 1-2. Plaintiff bid on the Project without seeing final design plans, basing its bid on Defendant's representations regarding the Project. Id. ¶ 3. Defendant provided final design plans after bid closing, and Plaintiff realized that the work required for the Subcontract exceeded its bid. Id. Plaintiff began construction anyway, allegedly because Defendant assured Plaintiff that the Power Authority would approve a change order to fund the additional work. Id.

Time passed without a change order and Plaintiff stopped work in November 2017. Id. ¶ 4. On February 23, 2018, Defendant and the Power Authority reached an agreement, and Plaintiff, Defendant, and the Power Authority executed agreements on March 13, 2018 (the "Letter Agreement") and on May 8, 2018 (the "Payment Agreement"). Id. ¶ 6. Plaintiff alleges that it completed all work under the Subcontract and Payment Agreement, but that it is still due money because Defendant failed to pay or authorize the Power Authority to pay. Id. ¶¶ 43-51. Plaintiff also claims that Defendant made misrepresentations that induced Plaintiff to enter into the Subcontract, begin work, and later enter into the Payment Agreement. Id. ¶¶ 52-67.

ii. The Agreements

The Prime Contract, Subcontract, and Payment Agreement contain governing law provisions. The Prime Contract states:

ECF No. 26-5 ¶¶ 15, 49.

The Subcontract indicates:

ECF No. 16-3 ¶¶ 4.12, 5.1.1.

Finally, the Payment Agreement states:

ECF No. 26-6 at 1, ¶ 4.7.

B. Procedural History

Plaintiff initiated this action on March 5, 2019, asserting breach of contract (Count I), fraudulent misrepresentation (Count II), negligent misrepresentation (Count III), and quantum meruit (Count IV) claims. ECF No. 1. Plaintiff prays for liquated, compensatory, consequential, and punitive damages; attorneys' fees; and any other relief deemed appropriate. Id. at 24.

On April 24, 2019, Defendant filed the instant Motion to Transfer Venue Pursuant to Section 1404(a), or in the alternative, to Dismiss the Complaint. ECF No. 16. Plaintiff filed an opposition, ECF No. 26, and Defendant responded with a reply, ECF No. 27. The Court asked for supplemental briefing to address questions regarding choice of law. ECF No. 28. Defendant responded to the Court's inquiry, ECF No. 30, and Plaintiff replied, ECF No. 31.

II. LEGAL ANALYSIS

A. Section 1404(a) Legal Standard

Defendant brings the Motion pursuant to 28 U.S.C. § 1404 and Federal Rule of Civil Procedure ("FRCP") 12(b)(6). Section 1404(a) states:

28 U.S.C. § 1404(a). Courts in the Ninth Circuit consider the following factors when addressing a motion to transfer venue:

Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000).

When a contract contains a mandatory forum selection clause, the analysis shifts:

Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 571 U.S. 49, 64-65 (2013). Although the presence of a forum-selection clause is "not dispositive," id. at fn. 20 (internal citations omitted), it should "be given controlling weight in all but the most exceptional cases," id. at 60 (internal quotation omitted).

B. Rule 12(b)(6) Legal Standard

Federal Rule of Civil Procedure ("FRCP") 12(b)(6) authorizes dismissal of a complaint that fails "to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). Although a court must accept all allegations contained in the complaint as true, this obligation does not extend to legal conclusions. Id. As such, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not `show[n]'—`that the pleader is entitled to relief.'" Id. at 679 (citing Fed. R. Civ. P. 8(a)(2)) (some alterations in original). If dismissal is ordered, a plaintiff should be granted leave to amend unless it is clear that amendment would be futile. Swartz v. KPMG LLP, 476 F.3d 756, 760 (9th Cir. 2007).

"In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). To state a claim for fraud, Plaintiff's Complaint must "identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about the purportedly fraudulent statement, and why it is false." Salameh v. Tarsadia Hotel, 726 F.3d 1124, 1133 (9th Cir. 2013). FCRP 9(b) applies to federal and state law claims sounding in fraud. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003).

C. Discussion

Defendant moves to transfer the case to the Northern District of California. Alternatively, Defendant argues that the case should be dismissed because (1) Plaintiff's misrepresentation claims fail to meet the pleading requirements of FCRP 9 and (2) the economic loss rule bars Plaintiff's fraud and negligent misrepresentation claims.

iii. Motion to Transfer

Defendant argues that the Subcontract does not specify a forum and the Jones factors weigh in favor of transferring the case to the Northern District of California. Defendant's argument fails because (1) the forum-selection clause in the Payment Agreement, which specifies the District of Hawaii as the parties' chosen forum, governs some of Plaintiff's claims, (2) the Jones factors weigh in favor of allowing the claims arising under the Subcontract to remain in the District of Hawaii.

1. Claims Arising under the Payment Agreement

Plaintiff, Defendant, and the Power Authority entered into the Payment Agreement on May 8, 2018 to address additional payments to Plaintiff. Compl. ¶ 6. The Payment Agreement contains a forum-selection clause, which states, "This agreement shall be governed by the laws of American Samoa, and any disputes arising out of this agreement shall be heard in the U.S. Federal Court in Honolulu, Hawaii." ECF No. 26-6 ¶ 4.7.

The following allegations in the Complaint clearly state plausible claims under the Payment Agreement:

Compl. ¶¶ 34-35, 46, 55, 69, 74 (emphases added).

While Defendant acknowledges that some claims arguably fall within the Payment Agreement, it argues for the first time in reply that (1) those claims are legally void, or (2) should be severed. Local Rule of Practice for the District of Hawaii ("Local Rule") 7.4 states, "A reply must respond only to arguments raised in the opposition. Any argument raised for the first time in the reply shall be disregarded." Local Rule 7.4. The Court therefore refuses to consider Defendant's argument that the claims are legally void, as it is not responsive to Plaintiff's Opposition.1

To the extent Defendant's request to sever responds to Plaintiff's Opposition, the Court denies the request. See Duarte v. California Hotel & Casino, No. CIV 08-00185 JMS LEK, 2009 WL 4668739, at *5 (D. Haw. Dec. 4, 2009) ("Courts often find that the interests of justice warrant transfer of an entire action as opposed to splitting the action between two different venues."); see also Valvanis v. Milgroom, No. 06-00144 JMS KSC, 2008 WL 1780306, at *7 (D. Haw. Apr. 10, 2008). In addition, severing the claims would not serve Defendant's purpose because the claims arising out of the Subcontract are properly in the District of Hawaii.

2. Claims Arising under the Subcontract

Defendant persuasively argues: (1) the Subcontract does not contain a mandatory forum-selection clause, and therefore the Atlantic Marine factors do not apply; (2) the forum-selection clause in the Prime Contract is not incorporated into the Subcontract; and (3) the Payment Agreement does not supersede the Subcontract. Nonetheless, the Court finds the Jones factors weigh in favor of retaining the case in the District of Hawaii.

Considering the first factor—where the relevant agreements were negotiated and executed—the contracts were negotiated in Honolulu, Hawai`i; American Samoa; West Linn, Oregon; and Martinez, California. Declaration ("Decl.") of David Cavagnol; Decl. of Cindy Liu ¶¶ 4-6; Decl. of Brian Wetzsteon ¶ 2-3; Decl. of Rowan Tucker ¶¶ 2-3. Importantly, the contracts were executed, at least in part, in Hawai`i. Cavagnol Decl. ¶ 3. This factor does not favor either the District of Hawaii nor the Northern District of California.

The second factor—the state that is most familiar with the governing law— favors the Northern District of California. California law will likely govern claims arising under the Subcontract.

The third factor—Plaintiff's choice of forum—favors the District of Hawaii. Defendant argues that the Court should not defer to Plaintiff's choice of forum because Plaintiff does not reside in Hawai`i, but this argument ignores the fact that American Samoa is not within any district. See United States v. Lee, 472 F.3d 638, 645 (9th Cir. 2006).

The fourth factor—the respective parties' contacts with the forum—favors the District of Hawaii. Defendant has contacts with Hawai`i and California, Compl. at ¶ 8, and even maintains an office in Hawai`i, Decl. of Laura Moritz ¶ 2, while Plaintiff has limited contacts with California, if any. See Decl. of Tony Togia`i ¶ 3.

The fifth factor—contacts related to the cause of action in the chosen forum—is neutral. The Subcontract was executed in part in Hawai`i, Cavagnol Decl. ¶ 4, and the Project took place in American Samoa, Compl. ¶ 1.

The sixth factor—the differences in the costs of litigation—favors retaining this case in the District of Hawaii. If litigation takes place in California, fifteen of Plaintiff's witnesses will have to fly from American Samoa to California. Togia`i Decl. ¶ 4. If litigation occurs in Hawai`i, witnesses from California, Oregon, Utah, Idaho, and American Samoa may need to fly to Hawai`i. Decl. of Brian Schnarr ¶ 3. While of course it would be more convenient for Defendant if the case were heard in the Northern District of California, it only makes sense that the case remain in the District of Hawaii, which is essentially equally convenient (for geographic and other reasons) for both parties. For similar reasons, factors seven and eight—the availability of compulsory attendance and ease of access to sources of proof—also favor maintaining this case in the District of Hawaii.

Based on the foregoing, Defendant's Motion to Transfer is DENIED.

iv. Motion to Dismiss Counts II and III

Defendant argues that Counts II and III should be dismissed because (1) Plaintiff fails to meet the specificity requirements of FRCP 9 and (2) the claims are barred by the economic loss rule. In its Motion, Defendant applies California law but fails to explain why the fraud and negligent misrepresentation claims are governed by California law.

The Court asked for supplemental briefing on the choice of law question. In Defendant's supplemental brief, Defendant argues that there is no conflict of law because under California and American Samoa law, the economic loss doctrine bars Plaintiff's fraud and negligent misrepresentation claims. Plaintiff contends that American Samoa law applies to the claims and that American Samoa law does not support Defendant's application of the economic loss rule.

The Court agrees with Defendant that it need not reach the choice of law question because California and American Samoa law are not in conflict on this issue. Because there is no conflict of law, a choice of law analysis is unnecessary. See Hamby v. Ohio Nat. Life Assur. Corp., Civ. No. 12-00122 JMS-KSC, 2012 WL 2568149, at *3 (D. Haw. June 29, 2012).

1. Fraudulent Misrepresentation

Defendant argues that the Court should dismiss Plaintiff's fraud and negligent misrepresentation claims because Plaintiff failed to meet the requirements of FRCP 9.

In Count II, Plaintiff alleges:

Compl. ¶¶ 53-57.

The Court finds that Plaintiff outlines fraud with the specificity required by FRCP 9. Plaintiff specifically alleges that Defendant's employees made misrepresentations about (1) the scope of the project and (2) Defendant's willingness to execute change orders with the Power Authority. Id.; see HS W. Pac. Elec. Co. Corp. v. Dragados/Flatiron, No. 118CV00166LJOBAM, 2018 WL 2088276, at *7 (E.D. Cal. May 4, 2018) (finding allegations that defendant withheld key information prior to execution of the subcontract were sufficient to state a fraud claim under FRCP 9). Accordingly, Defendant's Motion to Dismiss Count II is DENIED.

2. Negligent Misrepresentation

Defendant moves to dismiss Plaintiff's negligent misrepresentation claim "for the same reasons." Opp. at 28. This Court has declined to apply FRCP 9(b) to claims of negligent misrepresentation. Maeda v. Pinnacle Foods Inc., No. CV 18-00459 JAO-RLP, 2019 WL 2078764, at *15 (D. Haw. May 10, 2019). Even if Plaintiff's negligent misrepresentation claim was subject to the heightened pleading standards of FRCP 9(b), Plaintiff specifically alleges that Defendant lured Plaintiff into working at a reduced rate when Defendant knew or should have known that Plaintiff would incur significant expense. Id. ¶¶ 69, 74. Accordingly, Defendant's Motion is DENIED.

3. Economic Loss Doctrine

Under California or American Samoa law, the economic loss rule bars tort claims when a purchaser alleges injury only to a product itself, resulting in purely economic loss. East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986).2 But Plaintiff states more than a claim for economic loss resulting from a breach of contract. Compl. ¶¶ 53-57, 67-69. Plaintiff alleges that Defendant made misrepresentations that convinced Plaintiff to render a bid and enter into the Subcontract and Payment Agreement. Id. These claims are separate from Plaintiff's claims that Defendant breached the agreements. This is true whether Plaintiff's claims are governed by California law or American Samoa tort law. Accordingly, the economic loss rule does not bar Counts II and III, and Defendant's Motion to Dismiss is DENIED.

v. Plaintiff's Request to Strike and Disregard

In its Opposition, Plaintiff asks the Court to strike and disregard Defendant's statement that Plaintiff's workers "armed with machetes took control of project materials and equipment." Opp. at 21. Defendant makes this statement without citing to factual evidence. See Memo in Supp. of Mot. at 3. Local Rule 7.6 states, "Factual contentions made in support of or in opposition to any motion shall be supported by affidavits or declarations, when appropriate under the applicable rules. . . . Affidavits and declarations not in compliance with this rule may be disregarded by the court." Local Rule 7.6. In accordance with Rule 7.6, the Court disregards the statement.

III. CONCLUSION

For the reasons stated above, the Court DENIES Defendant's Motion.

IT IS SO ORDERED.