SARAH S. VANCE, District Judge.
Third party defendant Matthaios Fafalios moves to dismiss defendants Marine Managers, Ltd. and Homeland Maritime, Ltd.'s third party complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), failure to state a claim under Rule 12(b)(6), and in the alternative, on the basis of forum non conveniens.
Defendants and third-party plaintiffs Marine Managers, Ltd. (Marine) and Homeland Maritime, Ltd. (Homeland) are foreign corporations organized and existing under the laws of the Marshall Islands.
Third-party defendant Matthaios Fafalios is a citizen of Greece, who presently resides in Louisiana.
Plaintiff Chalos & Co., P.C. (Chalos) is a law firm organized and existing under the laws of New York, with offices in New York, Texas, and Florida.
On October 24, 2014, Chalos filed this breach of contract action against Marine and Homeland, invoking the Court's diversity jurisdiction under 28 U.S.C. § 1332.
On February 2, 2015, Marine and Homeland filed a third-party complaint against Fafalios alleging that he fraudulently induced them to enter the retainer agreement with Chalos.
In December 2013, Marine and Homeland (defendants) hired Fafalios to serve as Chief Engineer for defendants' vessel, the M/V TRIDENT NAVIGATOR.
In mid-January 2014, approximately one month into Fafalios's employment, the United States began investigating the M/V TRIDENT NAVIGATOR and its crew after the vessel voyaged from Saudi Arabia to New Orleans, Louisiana. The Government suspected that the M/V TRIDENT NAVIGATOR had illegally discharged "oily waste" in violation of the Act to Prevent Pollution from Ships, 33 U.S.C. § 1901, et seq.
On June 17, 2014, defendants notified Chalos that they considered the retainer agreement to be null and void and refused to continue to pay Fafalios's legal fees.
Defendants argue that their retainer agreement with Chalos for Fafalios's representation is null and that they should not be liable for Fafalios's legal fees because defendants agreed to the contract in error.
Only after defendants executed Chalos's retainer agreement did defendants allegedly learn about Fafalios's misrepresentations. The Government disclosed to defendants certain physical evidence that contradicted Fafalios's prior statements. In addition, other crew members recanted their statements and notified defendants that those false statements were made at Fafalios's urging.
Fafalios, as third-party defendant, now moves to dismiss defendants' third-party complaint for lack of subject matter jurisdiction, failure to state a claim, and forum non conveniens. The Court concludes that defendants' third-party complaint should be dismissed for forum non conveniens. Accordingly, the Court will not address Fafalios's other grounds for dismissal.
The doctrine of forum non conveniens allows a court to decline jurisdiction and dismiss a case, even when the case is properly before the court, if it may be more conveniently tried in another forum. 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 Disaster Near New Orleans v. Pan Am. World Airways, Inc., 821 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 the court to dismiss a case because the plaintiff's chosen forum 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 makes it possible for him to lose out completely," it is subject to "careful limitation." Id.
In analyzing whether a case should be dismissed for forum non conveniens, the Court must first determine whether an adequate alternative forum exists. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n.22 (1981); DTEX, LLC v. BBVA Bancomer, S.A., 508 F.3d 785, 794 (5th Cir. 2007). The alternative forum must be both available and adequate. See Alpine View Co. Ltd. v. Atlas Copco AB, 205 F.3d 208, 221 (5th Cir. 2000). A forum is available if "the entire case and all parties can come within the jurisdiction of that forum." Gonzalez v. Chrysler Corp., 301 F.3d 377, 379 (5th Cir. 2002) (citing In re Air Crash Disaster, 821 F.2d at 1165). A forum is adequate if the parties will not be deprived of all remedies or treated unfairly. See Alpine View, 205 F.3d at 221. If the defendant shows that an adequate alternative forum exists, the court must then consider whether certain private and public interest factors weigh in favor of dismissal. Piper Aircraft, 454 U.S. at 257; McLennan v. Am. Eurocopter Corp., Inc., 245 F.3d 403, 424 (5th Cir.2001). The defendant bears the burden of persuading the court that a lawsuit should be dismissed on forum non conveniens grounds. DTEX, 508 F.3d at 794.
The existence of a contractual forum selection clause imposes a heavy burden on the party resisting dismissal. See Carnival Cruise Lines, 499 U.S. 585, 586 (1991). Forum selection clauses are prima facie valid and should be enforced unless the non-moving party can show that enforcement would be unreasonable or unjust under the circumstances. M/S BREMEN v. Zapata Off-Shore Co., 407 U.S. 1, 16-17 (1972). Unreasonableness may exist when (1) the incorporation of the forum selection clause into the parties' contract was a result of fraud or overreaching; (2) the party seeking to escape enforcement of the forum selection clause "will . . . be deprived of his day in court" because of grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; and/or (4) enforcement of the forum selection clause would contravene a strong public policy of the forum state. Haynsworth v. The Corp., 121 F.3d 956, 963 (5th Cir. 1997) (citing Carnival Cruise Lines, 499 U.S. 585, 595 (1991); Bremen, 407 U.S. at 12-13, 15, 18).
The sole basis on which Fafalios argues defendants' claim should be dismissed for forum non conveniens is the applicability of the forum selection clause in the employment contract between defendants and Fafalios. Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for the W. Dist. of Tex., 134 S.Ct. 568, 580 (2013) ("[T]he appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens.").
"[A] valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases." Id. at 581 (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring)). Neither defendants nor Fafalios dispute the validity of the forum selection clause in the employment contract.
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) (citing 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' contract[] 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] clause[], the clause[] cannot apply." Roby v. Corp. of Lloyd's, 996 F.2d 1353, 1361 (2d Cir. 1993).
To determine whether a forum selection clause applies to specific 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); Gullion v. JLG Serviceplus, Inc., No. H-06-1015, 2007 WL 294174, at *5 (S.D. Tex. Jan. 29, 2007) (relying on Terra Int'l).
Here, the forum selection clause states, "Any dispute arising out of the interpretation or the performance of this Contract shall be referred to the Courts of Piraeus (Maritime Division) which are exclusively competent to hear these disputes applying Greek Law to the exclusion of the Courts of any country or jurisdiction."
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). For example, courts have held that "the language `arising out of' is broad in scope and reaches all disputes that have their origin in the employment 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);
Here, defendants attempt to contrast what they characterize as two separate disputes with Fafalios. In what defendants call the "Retainer Agreement Controversy," the issue is who, if anyone, is liable for the fees and expenses Chalos incurred in representing Fafalios during his criminal investigation and trial.
The Court concludes that the forum selection clause encompasses defendants' claim for fraud, which is ultimately grounded in Fafalios's conduct as a seaman aboard the M/V TRIDENT NAVIGATOR. Interpreting the forum selection clause broadly, the Court finds that the language
Both the Employment Controversy and the Retainer Agreement Controversy are grounded in Fafalios's employment relationship with defendants. "[P]olicies justifying application of forum selection clauses in contract cases are equally applicable to tort causes of action arising out of that contractual relationship." Knight Oil Tools, Inc. v. Unit Petroleum Co., No. CIV 05-0669 JB/ACT, 2005 WL 2313715, at *12 (D.N.M. Aug. 31, 2005) (citing Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd., 709 F.2d 190 (3d Cir. 1983)). Notably, Fafalios was still employed as a seaman at the time of the illegal discharge in January 2014, as well as at the time of the alleged fraud in February 2014.
More importantly, defendants' tort claim "involve[s] the same operative facts as a parallel claim for breach of contract." See, e.g., Terra Int'l, 119 F.3d at 694; Manetti-Farrow, 858 F. 2d at 514. In defendants' own words, the Employment Controversy "involves whether Fafalios is liable to Defendants for the damages vicariously inflicted on them when, as an employee of Defendants under a Greek seaman's contract, Fafalios illegally discharged oil into the ocean and falsified records to cover-up his crime." To prevail on the Retainer Agreement Controversy, defendants must prove that Fafalios falsely proclaimed his innocence, which means defendants must first prove that Fafalios actually discharged the oil illegally and falsified records to conceal his actions. In other words, to show that Fafalios misrepresented his innocence, defendants have to prove the same conduct that breached the employment contract. That defendants must also show that Fafalios falsely proclaimed his innocence does not change the result. Therefore, defendants' fraud claim rests on the same material facts as any potential parallel breach of contract action, which defendants freely admit must be litigated in Greece. "[C]laims involving the same operative facts as a claim for breach of contract that is subject to a forum selection clause should also be litigated in the forum chosen by the parties." Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 24 (1st Cir. 2009) (internal citations omitted).
Finally, in support of his motion to dismiss for forum non conveniens, Fafalios argues that defendants' claim to indemnity for any liability on Chalos's retainer agreement must arise out of the performance of the employment contract because the contract contains an indemnity provision.
Because the Court finds that the forum selection clause applies, defendants, as the parties resisting enforcement, bear the burden to show that enforcement would be unreasonable or unjust under the circumstances. Bremen, 407 U.S. at 16-17; Haynsworth, 121 F.3d at 963. Defendants have made no attempt to show that enforcement of the forum selection clause would be unreasonable here. Therefore, this dispute must be litigated in Greece.
In addition to suing Fafalios for damages, defendants seek to tender him as a defendant to Chalos under Federal Rule of Civil Procedure 14(c). Under Rule 14(c), "the third-party plaintiff may demand judgment in the plaintiff's favor against the third-party defendant [and] the action proceeds as if the plaintiff had sued both the third-party defendant and the third-party plaintiff." Fed. R. Civ. P. 14(c)(2). Defendants argue that because Rule 14(c) requires the plaintiff to proceed directly against the third party, Fafalios cannot rely on the forum selection clause to achieve dismissal.
Even if defendants are correct, the Court finds that their attempt to implead Fafalios under Rule 14(c) is improper. Rule 14(c) provides in relevant part:
Rule 14(c)(1). By its plain language, Rule 14(c) requires that the original plaintiff must have asserted an admiralty or maritime claim under Rule 9(h). See Luera v. M/V ALBERTA, 635 F.3d 181, 187 (5th Cir. 2011) (noting Rule 14(c) impleader was available because the plaintiff's original claim was in admiralty); Harrison v. Glendel Drilling Co., 679 F.Supp. 1413, 1417 (W.D. La. 1988) (holding Rule 14(c) "has no application" where the original plaintiff did not bring his claim under the court's admiralty jurisdiction even though the defendants' third-party claims arose under maritime law). In addition, the Fifth Circuit requires that the third-party plaintiff's claim also arise under admiralty or maritime law. Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 243 (5th Cir. 2009) ("In addition, the Rule requires the third-party plaintiff . . . to assert an action sounding [in] admiralty or maritime. . . .").
Here, Chalos's state-law breach of contract claim does not arise under admiralty or maritime law. Therefore, defendants' impleader is not proper under Rule 14(c).
For the foregoing reasons, the Court GRANTS third-party defendant Matthaios Fafalios's Motion to Dismiss for Forum Non Conveniens.