SARAH S. VANCE, District Judge.
Before the Court is third-party defendant Professional Service Industries Inc.'s (PSI's) motion to dismiss or transfer for forum non conveniens the third-party complaint filed by defendants/third-party plaintiffs Iron Horse of Metairie Road, L.L.C. and Iron Rooster, L.L.C.
The present motion concerns a third-party complaint filed by Iron Horse and Iron Rooster against PSI.
The initial complaint in this litigation arose out of a dispute over the remediation of environmental contamination on property in Metairie, Louisiana.
In 2000, the owner of the adjoining property filed suit against KFC California and other defendants over the environmental contamination.
In November 2004, PSI prepared for KFC California a Voluntary Remedial Action Plan (VRAP) that set forth procedures for the environmental remediation.
On September 20, 2013, Iron Horse agreed to purchase the Property from KFC U.S. Properties in a written purchase agreement.
Iron Rooster alleges that KFC Corporation instructed PSI to assist Iron Rooster during the due diligence period, and to treat Iron Rooster as if it were a client.
On February 14, 2014, after the due diligence period was complete, KFC Corporation sold the Property to Iron Rooster.
After Iron Rooster purchased the Property, PSI continued to perform remediation services for Iron Rooster.
Each of the post-sale agreements contained an identical "Choice of Law and Exclusive Venue" provision.
In March 2015, pursuant to the 2014 VRAP Proposal and June 2014 agreement, PSI submitted a revised VRAP to the LDEQ on Iron Rooster's behalf (the 2015 VRAP).
In June 2016, the LDEQ sent letters to both KFC Corporation and Iron Rooster regarding the status of remediation at the Property.
On December 1, 2016, KFC Corporation filed suit against Iron Rooster, alleging violations of the purchase and assignment agreements.
On February 28, 2018, Iron Rooster filed a third-party complaint against PSI seeking indemnification for any damages Iron Rooster may owe KFC Corporation.
On April 10, 2018, PSI moved to dismiss or transfer the third-party complaint for forum non conveniens.
The doctrine of forum non conveniens allows a court to decline jurisdiction, even when the case is properly before the court, if the case may be tried in another forum more conveniently. In re Volkswagen of Am., Inc., 545 F.3d 304, 313 (5th Cir. 2008). The doctrine "rests upon a court's inherent power to control the parties and the cases before it and to prevent its process from becoming an instrument of abuse or injustice." In re Air Crash Distaster near New Orleans v. Pan Am. World Airways, Inc., 812 F.2d 1147, 1153-54 (5th Cir. 1987) (en banc), vacated on other grounds sub nom. Pan Am. World Airways, Inc. v. Lopez, 490 U.S. 1032 (1989), opinion reinstated on other grounds, 883 F.2d 17 (5th Cir. 1989) (en banc). The doctrine allows dismissal or transfer of a case when "the forum chosen by the plaintiff is so completely inappropriate and inconvenient that it is better to stop the litigation in the place where brought and let it start all over again somewhere else." In re Volkswagen, 545 F.3d at 313 n.8 (quoting Norwood v. Kirkpatrick, 349 U.S. 29, 31 (1955)). Because the doctrine "not only denies the plaintiff the generally accorded privilege of bringing an action where he chooses, but [also] makes it possible for him to lose out completely," it is subject to "careful limitation." Id. In deciding a motion to transfer for forum non conveniens, a court is not limited to the allegations in the complaint, but may consider all of the evidence before it. See Alcoa S.S. Co. v. M/V Nordic Regent, 654 F.2d 147, 158-59 (2d Cir. 1980) (en banc) ("[I]t is the well-established practice . . . to decide [forum non conveniens] motions on affidavits.").
The existence of a contractual forum selection clause imposes a heavy burden on the party resisting transfer.
Id. The Supreme Court recently explained that "a valid forum-selection clause should be given controlling weight in all but the most exceptional cases." See Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for W. Dist. Of Tex., 571 U.S. 49, 63 (2013) (quoting Stewart Org., Inc. v. Ricoh Corp., 587 U.S. 22, 33 (1988)).
PSI has fashioned its motion as a "Motion to Dismiss for Forum Non Conveniens and Alternative Motion to Transfer."
The parties first dispute whether Iron Rooster's third-party complaint contains allegations that PSI breached the post-sale agreements.
Iron Rooster also refers to the March 2014 and June 2015 agreements as extensions, modifications, and/or amendments to the PSI Contract.
Because Iron Rooster has alleged breaches of the post-sale agreements, the Court must next determine whether the scope of the forum-selection clause in those agreements extends to Iron Rooster's other claims in the third-party complaint.
Before a court will enforce a forum selection clause, it must first determine "whether the clause applies to the type of claims asserted in the lawsuit." Braspetro Oil Servs. Co. v. Modec (USA), Inc., 240 F. App'x 612, 616 (5th Cir. 2007) (quoting Terra Int'l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 692 (8th Cir. 1997)). The court "must look to the language of the parties' contracts to determine which causes of action are governed by the forum selection clause." Id. (quoting Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 222 (5th Cir. 1998)). "[I]f the substance of the[] claims, stripped of their labels, does not fall within the scope of the [forum selection] clauses, the clauses cannot apply." Roby v. Corp. of Lloyd's, 996 F.2d 1353, 1361 (2d Cir. 1993). Contractual forum selection clauses may apply to tort causes of action depending on the language of the forum selection clause. See Marinechance Shipping, 143 F.3d at 222-23 (forum selection clause covering "any and all disputes or controversies arising out of or by virtue of" an employment contract applied to tort claim arising during the course of plaintiff's employment).
To determine whether a forum selection clause applies to tort claims, the Eighth Circuit has enunciated three general tests: (1) whether the tort claims "ultimately depend on the existence of a contractual relationship between the parties"; (2) whether resolution of the tort claims "relates to the interpretation of the contract"; and (3) whether the tort claims "involve the same operative facts as a parallel claim for breach of contract." Terra Int'l, 119 F.3d at 694; see also Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 (9th Cir. 1988) (applying the "relates to interpretation of the contract" test). Courts in this district regularly apply the tests articulated in Terra International when interpreting forum selection clauses. See, e.g., Claimserviceprovider, Inc. v. St. Paul Travelers Cos., Inc., No. 06-2475, 2006 WL 2989240, at *4 (E.D. La. Oct. 18, 2006); Chalos & Co., P.C. v. Marine Managers, Ltd., No. 14-2441, 2015 WL 5093469, at *5 (E.D. La. Aug. 28, 2015).
Here, the forum selection clauses state that "[t]he exclusive venue for all actions or proceedings arising in connection with this agreement shall be either the Circuit Court in DuPage County, Illinois, or the Federal Court for the Northern District of Illinois."
As a general rule, courts read forum selection clauses broadly, "in keeping with the public policy favoring their use." Paduano v. Express Scripts, Inc., 55 F.Supp.3d 400, 432 (E.D.N.Y. 2014) (collecting cases). "The term `arising' is generally interpreted as indicating a causal connection." Braspetro Oil Servs., 240 F. App'x at 616; see also Phillips v. Audio Active Ltd., 494 F.3d 378, at 389 (2d Cir. 2002) (noting that to "arise out of" means "to originate from a specified source, and generally indicates a causal connection"). Courts in numerous circuits have held that the phrase "arising out of," and similar language, "is broad in scope and reaches all disputes that have their origin in the . . . contract, regardless of whether the dispute involves interpretation or performance of the contract per se." Marzano v. Proficio Mortg. Ventures, LLC, 942 F.Supp.2d 781, 789 (N.D. Ill. 2013) (collecting cases); see also Coors Brewing Co. v. Molson Breweries, 51 F.3d 1511, 1515 (10th Cir. 1995) (holding that "arising in connection with the implementation, interpretation or enforcement" was broad language); TradeComet.com LLC v. Google, Inc., 435 F. App'x 31, 35 (2d Cir. 2011) (interpreting a forum selection clause that reads, "arising out of or relating to this agreement or the Google Program(s)," broadly to encompass plaintiff's claim). Similarly, courts hold that the use of phrases like "arising out of" or arising "in connection with" should be read broadly to encompass both contractual and tort claims. See, e.g., Roby, 996 F.2d at 1361 (holding that there is "no substantive difference . . . between the phrases `relating to,' `in connection with' or `arising from,'" and that such language should be broadly read to include tort actions); Paduano, 55 F. Supp. 3d at 432 ("[W]hen `arising out of,' `relating to,' or similar language appears in a forum selection clause, such language is regularly construed to encompass securities, antitrust, and tort claims associated with the underlying contract.") (internal quotation marks omitted).
Courts also find phrases like "any dispute" or all "litigation of any dispute" in a forum selection clause, or in a similar contractual provision, to be indicative of a clause's broad scope. See Claimserviceprovider, Inc., 2006 WL 2989240, at *1, *5-6 (finding that a forum selection clause covering "litigation of any dispute arising under" the contract broadly applied to plaintiff's claims for fraud, negligence, and conversion); Nat'l R.R. Passenger Corp. v. Boston & Me. Corp., 850 F.2d 756, 760 (D.C. Cir. 1988) (explaining that the phrase "[a]ny claim or controversy" is broad in scope); Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 225 (2d Cir. 2001) (interpreting broadly a clause that stated, "any dispute arising from the making, performance or termination of this Charter Party").
The Court now turns to whether the forum selection clause in the postsale agreements encompasses Iron Rooster's contract, tort, detrimental reliance, or attorney fees claims.
As the Court has already noted, Iron Rooster alleges that PSI breached its contractual commitments set forth "(a) in the PSI Contract, (b) in amendments, supplements and/or extensions of the PSI Contract; and (c) in express written and oral agreements and commitments entered after the February 14, 2014 sale."
But even if the post-sale agreements are better classified as separate contracts from the PSI Contract, rather than amendments to it, the post-sale agreements are so similar to the PSI Contract that adjudicating all of Iron Rooster's breach of contract claims would involve the same operative facts. The PSI Contract laid out the scope of services PSI would provide KFC Corporation in order to remediate the contamination at the Property.
The Court therefore finds that determining whether PSI breached its commitments in the PSI Contract would "involve the same operative facts" as Iron Rooster's parallel claim for breach of the post-sale agreements. See Terra Int'l, 119 F.3d at 694; Claimserviceprovider, Inc., 2006 WL 2989240, at *5 (ruling that a forum selection clause covering disputes "arising under" the contract applied to an alleged breach of a separate contract, because both claims would "involve the same operative facts"). Iron Rooster's allegation that PSI breached the PSI Contract therefore "aris[es] in connection" with the post-sale agreements, and the forum selection clause applies to this allegation regardless of whether the post-sale agreements did in fact formally amend the PSI Contract.
Iron Rooster alleges that PSI made material false representations to Iron Rooster during and after the due diligence period regarding the status of the environmental remediation.
Because Iron Rooster's alleged tort injury is inextricably linked with its claim that PSI breached the June 2014 agreement, these tort allegations "aris[e] in connection" with that agreement and are subject to the agreement's forum selection clause. See Zichichi v. Jefferson Ambulatory Surgery Ctr., LLC, No. 07-2774, 2007 WL 3353304, at *5-6 (E.D. La. Nov. 7, 2007) (forum selection clause covering "any dispute or matter arising under" an operating agreement encompassed fraud and tort claims because the plaintiff could not "prove resulting injury without showing th[e] rights he had pursuant to [the] contract"). In Zichichi, the plaintiff alleged that the defendants conspired to terminate his ownership interest in a surgery center. Id. at *1. The plaintiff's ownership interest in the surgery center was established in an operating agreement that contained a forum selection clause. Id. at *1-2. Because the plaintiff's theory of injury was based on a deprivation of his rights under the operating agreement, the court held that the "plaintiff's fraud and conspiracy claims . . . necessarily arise out of the operating agreement." Id. at *6. Here, Iron Rooster's alleged injury similarly depends upon a showing that PSI's misrepresentations and concealments prevented Iron Rooster from realizing its rights under the June 2014 agreement, under which PSI allegedly promised to implement a new VRAP that would ultimately allow Iron Rooster to develop the Property.
The Court also finds that adjudicating Iron Rooster's tort claims would "involve the same operative facts" as adjudicating its contract claims. See Terra Int'l, 119 F.3d at 694; Claimserviceprovider, Inc., 2006 WL 2989240, at *5; Chalos & Co., 2015 WL 5093469, at *6 (tort claim involved the same operative facts as a parallel contract claim because to prevail on the contract claim, party needed to first prove the conduct underlying its tort claim). Iron Rooster alleges that PSI breached its various contractual commitments by (1) failing to disclose that the new VRAP could not be implemented without KFC Corporation's consent; (2) failing to disclose that the 2005 VRAP had been abandoned; (3) failing to disclose that the multi-phase extraction (MPE) system—which was a key component of the remediation effort—had been inoperable since 2012; (4) failing to fully delineate the extent of the contamination; (5) failing to disclose meetings between PSI and the LDEQ during the due diligence period; and (6) falsely representing that all necessary offsite remediation had been completed.
Finally, it is of no import that some of the facts underlying Iron Rooster's tort allegations took place before the post-sale agreements were executed. See Braspetro Oil Servs. Co., 240 F. App'x at 616-17. In Braspetro, the defendants won a bid to construct a large offshore oil platform. The contract between the parties contained a forum selection clause requiring "any dispute or controversy arising from" the contract to be litigated in Brazil. Id. at 616. When the defendants failed to complete the project, the plaintiff filed suit, alleging the defendants breached the parties' agreement and also fraudulently induced the plaintiffs to initially award the project to the defendants. Id. at 614. The Fifth Circuit acknowledged that many of the actions underlying the plaintiff's tort claims occurred before the operative contract was executed, but nevertheless enforced the forum selection clause on the plaintiff's tort claims. Id. at 616-17.
Iron Rooster alleges it detrimentally relied upon eight representations made by PSI during and after the due diligence period: (1) that remediation of the Property was "virtually complete"; (2) that PSI had disclosed accurate information regarding the status of the contamination; (3) that Iron Rooster could rely upon PSI for accurate information; (4) that KFC Corporation was in compliance with the 2005 VRAP; (5) that the 2015 VRAP would complete the remediation process; (6) that KFC Corporation would accept the 2015 VRAP; (7) that Iron Rooster would soon obtain a Certificate of Completion from the LDEQ; and (8) that after the Property was sold, PSI would continue to provide services to Iron Rooster as necessary until the remediation was complete.
The Court finds that as with Iron Rooster's misrepresentation and suppression claims, the allegations in the claim for detrimental reliance are essentially derivative of the allegations in Iron Rooster's contract claims,
Iron Rooster's third-party complaint includes a cause of action for attorney fees under Louisiana Civil Code article 1958.
Because the Court finds that the forum selection clause applies to each of Iron Rooster's claims, Iron Rooster, as the party resisting enforcement, bears the burden to show that enforcement would be unreasonable or unjust under the circumstances. See Atl. Marine Constr., 571 U.S. at 67; Haynsworth, 121 F.3d at 963. To determine whether transfer is unwarranted despite the existence of a valid forum selection clause, the Court looks to (1) the four factors that may indicate enforcement of the clause is unreasonable, see Haynsworth, 121 F.3d at 963; and (2) the five public-interest factors that may weigh in favor of denying transfer despite the enforceability of the clause, see Al Copeland Invs., 884 F.3d at 545.
Iron Rooster cites one of the factors identified in Haynsworth to argue that enforcing the forum-selection clause would be unreasonable under the circumstances—that Iron Rooster would suffer "grave inconvenience or unfairness" because enforcement would, "as a practical matter," prevent Iron Rooster from seeking indemnity from PSI for any potential damages owed to KFC Corporation.
Moreover, this Court has previously enforced a forum selection clause in the context of a third-party complaint seeking indemnification when enforcement would force the third-party defendant to bring its claim in a foreign country. See Chalos, 2015 WL 5093469, at *2, *7. In Chalos, the defendant argued that the third-party defendant employee's fraudulent misrepresentations induced it to enter into a retainer agreement with the plaintiff, which the plaintiff alleged the defendant breached. Id. at *2. The employee's employment contract with the defendant contained a forum-selection clause granting Greece exclusive jurisdiction over any employment dispute. Id. at *7. This Court reasoned that any litigation connected to the employment contract and third-party complaint was the province of the Greek courts, and granted the employee's forum non conveniens motion. Id.
Iron Rooster does not specifically argue that transfer is improper pursuant to any of the five public-interest factors the Fifth Circuit commonly applies in an analysis under 28 U.S.C. § 1404(a).
For the foregoing reasons, the Court GRANTS PSI's motion to transfer for forum non conveniens. Iron Rooster's third-party complaint is transferred to the Northern District of Illinois. KFC Corporation's motion to sever and try Iron Rooster's third-party complaint separately, PSI's motion to dismiss for failure to state a claim, and PSI's motion for summary judgment are all DENIED as moot.