William J. Martinez, United States District Judge
Plaintiff MPVF Lexington Partners, LLC ("MPVF Partners") and Plaintiff Lexington Downtown Hotel, LLC ("Lexington Downtown") (collectively, "Plaintiffs") are Colorado-based entities with interests in property in Lexington, Kentucky. (ECF No. 5 ¶¶ 1-2, 12-23.) Claiming breach of a settlement agreement, Plaintiffs have sued several Kentucky-based entities and individuals: W/P/V/C, LLC; VCI, Inc.; Premium Financial Group, LLC ("Premium"); Vine Company, LLC ("Vine"); MCV II, LLC ("MCV II"); The Webb Companies; R. Dudley Webb; and D. Woodford Webb, Jr. (collectively, "Defendants").
Before the Court is Plaintiffs' Motion for Summary Judgment. (ECF No. 14.) For the reasons explained below, the Court grants summary judgment against Defendant Vine solely on the question of whether Vine breached the parties' settlement agreement by filing a lawsuit in Kentucky. Summary judgment is denied as to all other theories of liability and all other Defendants. Furthermore, Plaintiffs' claims are dismissed for lack of Article III jurisdiction to the extent those claims rely on MCV II's demands for reimbursement of certain rents allegedly paid by mistake.
Summary judgment is warranted under Federal Rule of Civil Procedure 56 "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if, under the relevant substantive law, it is essential to proper disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir.2001). An issue is "genuine" if the evidence is such that it might lead a reasonable trier of fact to return a verdict for the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir.1997).
In analyzing a motion for summary judgment, a court must view the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). In addition, the Court must resolve factual ambiguities against the moving party, thus favoring the right to a trial. See Houston
The following facts are undisputed unless otherwise noted.
This action revolves around a hotel, residential, retail, parking, and office complex in downtown Lexington, Kentucky, which the Court will refer to as the "Property." (ECF No. 23 at 9, ¶ 2.) The top five floors of the hotel building are actually a separate real estate interest from the hotel itself. (Id. ¶ 1.) The parties refer to this separate interest as the "Air Lot." (Id.) The Air Lot — i.e., the top five floors — comprises privately owned condominiums. (Id. ¶ 4.)
As the Court noted in a previous order, the various Plaintiffs and Defendants are or have once been owners of various pieces of the Property, "although sometimes indirectly through a complicated network of what appear to be special- or single-purpose LLC entities." (ECF No. 34 at 2.)
As of 2008, Plaintiff MPVF Partners owned the Air Lot. (ECF No. 14-1 § 1.) In July of that year, MPVF Partners and Defendant Vine entered into the "Option Agreement" by which MPVF Partners granted Vine the "Air Rights Option." (ECF No. 14 at 3.) The Air Rights Option gave Vine the right, through July 31, 2014, to buy the Air Lot for one dollar. (Id.; ECF No. 14-1 §§ 1-2.) Assuming proper exercise of the Air Rights Option, the Option Agreement required MPVF Partners, "[o]n the Closing Date," to
(Id. § 5(b).)
Sometime in 2011 or early 2012, a wide-ranging dispute (one of many between and among these litigious entities) arose between Plaintiffs, Defendants, and various non-parties regarding their legal obligations toward each other and the Property. (See ECF No. 49-5 at 2-4.) This dispute spawned a lawsuit in the Eastern District of Kentucky and another in Kentucky state court. (Id. at 1-2.)
In February 2012, the parties settled their differences through the "February 2012 Settlement Agreement." (Id. at 1.) Through that agreement, MPVF Partners and others promised that "they have not placed or caused to be placed any other
In 2013, another dispute arose. Defendants claim that "the MPVF entities" planned to sell the office portion of the Property in violation of a right of first offer in favor of Defendant Premium, an entity aligned with Vine. (ECF No. 23 at 11, ¶¶ 15-20.) Premium filed suit against MPVF Partners and others in Kentucky state court, seeking to enjoin the sale. (ECF No. 14 at 4.)
In February 2014, the parties to that lawsuit entered into the February 2014 Settlement Agreement. (ECF No. 14-2.) Per that agreement, the office portion of the Property was conveyed to Defendant MCV II. (ECF No. 14 at 4.)
The peace bought through the February 2014 Settlement Agreement only lasted a few months. In June 2014, MPVF Partners sold the hotel portion of the Property to Plaintiff Lexington Downtown, and Premium objected that the sale violated another right of first offer. (Id.) Furthermore, in July 2014, Vine delivered a notice that it was exercising the Air Rights Option, but MPVF Partners rejected that notice, claiming that the February 2014 Settlement Agreement had released MPVF Partners from its obligations under the Option Agreement. (Id. at 5.)
These disputes prompted the parties to begin negotiating yet another settlement agreement. In late August 2014, while those negotiations were ongoing, MPVF Partners recorded what the parties call the "Easement Agreement." (ECF No. 23 at 15, ¶ 44.)
Vine claims that it knew nothing of the Easement Agreement when the parties finally executed their latest settlement agreement, the "October 2014 Settlement Agreement." (Id. at 14, ¶ 41.) That agreement settled — or at least attempted to settle — the parties' disputes over both the sale of the hotel portion of the Property and the continuing force of the Option Agreement. (ECF No. 14-5.)
Concerning the Option Agreement, the October 2014 Settlement Agreement's recitals noted that "Vine purported to exercise the Air Rights Option" but "MPVF Partners rejected Vine's attempt to purchase the Air Rights Interests contending that the Air Rights Option was released pursuant to the [February 2014] Settlement Agreement." (Id. at 1.) Nonetheless, "[w]ithout admitting any wrongdoing or liability ... the Parties desire[ed] to settle any disputes, claims or disagreements ... with respect to ... the Air Rights Option." (Id.) As part of the settlement, MPVF Partners agreed to (and did) convey the Air Lot to Vine via quitclaim deed. (Id. § 2; ECF No. 14 at 5.)
Concerning the scope of the release, the agreement defined the "Claims" being settled as, among other things,
(ECF No. 14-5 § 1 (underscoring in original).) Those "Excluded Claims" were defined, in relevant part, as "any easements, declarations, operating agreements or encumbrances of record in the Fayette County Clerk's Office that benefit or burden the Hotel Land, the Hotel, the Office Land, the Office and/or [the Air Lot], and ... the obligations of the Parties under this Agreement, ... [and] the Quitclaim Deed." (Id.)
The October 2014 Settlement Agreement contained a Colorado choice-of-law clause (id. § 15), and also a Colorado choice-of-forum clause ("Forum Selection Clause"), originally appearing in all capital letters but which the Court will reprint with normal capitalization:
(Id. § 16.)
Not surprisingly, additional disagreements surfaced quickly after the October 2014 Settlement Agreement. Reaching back to the sale of the office (facilitated by the February 2014 Settlement Agreement), counsel for MCV II sent a letter to counsel for MPVF Partners on November 5, 2014, claiming that MCV II had been improperly charged and MPVF Partners had been improperly credited for about $27,000 in rents receivable at the closing of the office sale. (ECF No. 14-8.) MCV II threatened legal action if MPVF Partners did not refund that amount promptly ("Rent Demand"). (Id. at 2.)
On January 8, 2015, counsel for MCV II sent a follow-up letter regarding the Rent Demand. (ECF No. 14-9.) Counsel announced that the letter was MCV II's "final notice that unless such amount is paid in full ... further steps by any and all means shall be taken to both collect the amount due and to hold MPVF and its appropriate representative or representatives personally responsible for their actions across the board." (ECF No. 14-9 at 1.)
The Rent Demand appears to be a fairly minor rumbling compared to the eruption that occurred when Vine discovered the Easement Agreement, allegedly sometime in the weeks after the October 2014 Settlement Agreement. (ECF No. 23 at 15, ¶ 46.) In response, Vine filed suit against MPVF Partners and Lexington Downtown in
Vine's original complaint ("Original Kentucky Complaint") recounted most of the parties' previous agreements and disputes, with special emphasis on, and long quotations from, the Option Agreement. (Id. ¶¶ 8-19.) Vine summarized the dispute over the Option Agreement that arose in July 2014 and stated that the parties "eventually reached a resolution of their differences, as memorialized in [the October 2014 Settlement Agreement]. As part of that resolution, and as provided by the Option Agreement, MPVF Partners executed a Quitclaim Deed in favor of Vine Company for the Air Lot." (Id. ¶ 20.) Vine noted, however, that the October 2014 Settlement Agreement's definition of "Excluded Claims" encompasses easements of record on the Air Lot, and therefore claims regarding such easements were "preserved and not released." (Id. ¶ 21.)
Vine then went on to allege specifics regarding the Easement Agreement and its allegedly onerous burdens. (Id. ¶¶ 23-31.) Vine highlighted the Option Agreement's language requiring MPVF Partners to convey title to the Air Lot "free and clear of all liens and encumbrances except... easements and restrictions currently of record and easements and restrictions subsequently put to record which do not materially impact ownership or use." (Id. ¶ 32 (quoting ECF No. 14-1 § 5(b)).) Vine claimed that the Easement Agreement was "therefore contrary to the express terms of the Option Agreement." (Id.)
Vine repeatedly accused MPVF Partners and Lexington Downtown of acting "in contravention of" or "in direct contravention of" the Option Agreement. (Id. ¶¶ 35, 40, 47.) Rather than suing for such "contravention," however, Vine asserted causes of action for: (1) declaratory judgment, seeking a declaration "that the Easement Agreement is unenforceable as to Vine Company or any subsequent purchaser of the Air Lot because it was entered into in violation of the Option Agreement" (id. ¶ 42); and (2) slander of title, claiming that the Option Agreement's prohibition of encumbrances such as those contained in the Easement Agreement render the Easement Agreement "a false statement about the status of Vine Company's title to the Air Lot" (id. ¶ 47).
Plaintiffs (who are defendants in the Kentucky Action) moved to dismiss the Kentucky Action on January 23, 2015. (ECF No. 23-6.) Plaintiffs' first argument for dismissal was improper venue, invoking the October 2014 Settlement Agreement's Forum Selection Clause, which specifies a Colorado forum. (Id. at 10-11.) Plaintiffs also made several failure-to-state-a-claim arguments. (Id. at 11-19.)
The Kentucky court denied Plaintiffs' motion in full. Concerning the Forum Selection Clause, the Kentucky court was persuaded by Vine's reference to the October 2014 Settlement Agreement's Excluded Claims provision and concluded, "the Court believes that there is at least some issue with respect to whether or not this is simply an interpretation of either the settlement agreement or the option agreement." (ECF No. 23-7 at 19.) In other words, it appears the Kentucky court believed that uncertainty regarding the necessity of interpreting the Option Agreement or October 2014 Settlement Agreement was sufficient to trump the Forum Selection Clause.
The same day Plaintiffs filed their motion to dismiss the Kentucky Action, they filed a lawsuit against Defendants in Arapahoe
Defendants then filed a motion to transfer the case to the Eastern District of Kentucky ("Transfer Motion"). (ECF No. 16.) Defendants recognized that "Plaintiffs filed this action, claiming that Vine breached [the October 2014 Settlement Agreement] by, among other things, filing the Kentucky Action." (Id. at 2.) Defendants contended, however, that the real purpose of this action is "to improperly shoe-horn the first-filed Kentucky Action into a Colorado court." (Id.) Defendants argued, as they did in response to the Kentucky Action motion to dismiss, that the October 2014 Settlement Agreement's Excluded Claims provision took the Kentucky Action out of the Forum Selection Clause, so it should have no weight in the transfer analysis. (Id. at 12-14.) Defendants further argued that the Eastern District of Kentucky would be a more convenient, less expensive, and all-around better forum for everyone involved. (Id. at 15-19.) Defendants also feared "inconsistent judgments and rulings between this Court and the Kentucky Court." (ECF No. 24 at 4.)
This Court denied the Transfer Motion. (ECF No. 34.) The Court noted, as Defendants themselves realize, that the crux of Plaintiffs' claims is that "the Kentucky Action violates the October 2014 Settlement Agreement." (Id. at 7.) The Court deemed that an "unusual" claim given that second-filed lawsuits are usually "mirror images of the first-filed lawsuit, e.g., if the first-filed suit is for breach of contract, the second-filed suit is for declaratory judgment of non-breach. Sometimes the second-filed suit seeks an injunction against the first-filed suit." (Id.) Here, however, "Plaintiffs do not seek declaratory judgment that they did nothing wrong with respect to the easements burdening the Hotel, or declaratory judgment that the easements are valid, and they do not seek an injunction against the Kentucky Action." (Id.) Plaintiffs' claim thus reduces to the theory that "the Kentucky Action, by its very existence, breaches the October 2014 Settlement Agreement, entitling Plaintiffs to indemnification and damages." (Id. at 8.) Such a claim, this Court held, falls within the Forum Selection Clause. (Id. at 8-10.) And, given the weight that a valid forum selection clause carries in any transfer analysis, the Court concluded that transfer to the Eastern District of Kentucky would be inappropriate. (Id. at 10-11.)
On July 21, 2015, Vine filed a second amended complaint in the Kentucky Action ("Second Amended Kentucky Complaint"). (ECF No. 49-4.) The major difference between the Second Amended Kentucky Complaint and the Original Kentucky Complaint is the insertion of an additional theory of liability, i.e., that the Easement Agreement violated not just the Option Agreement, but also the February 2012 Settlement Agreement. As described above (Part II.C), the February 2012 Settlement Agreement appears to prohibit MPVF Partners from placing additional liens or encumbrances on the Air Lot, and it contains a Kentucky choice-of-law and choice-of-forum clause.
Plaintiffs' argument revolves around the scope of the October 2014 Settlement Agreement, which is governed by Colorado law. (ECF No. 14-5 § 15.) In Colorado, "[t]he interpretation of a settlement agreement, like that of any contract, is a question of law." Montoya v. Connolly's Towing, Inc., 216 P.3d 98, 102 (Colo.
The application of a forum selection clause is one of those questions that must necessarily be decided early in litigation (usually based on the applicable contract and relevant pleadings) or it is effectively nullified.
The Forum Selection Clause covers "any dispute or legal action arising from or concerning this agreement ... and/or the Quitclaim Deed." (ECF No. 14-5 § 16.) This is extremely broad language, particularly the word concerning, which is a synonym for "relating to." See Merriam-Webster Online, s.v. "concerning," at http://www.merriam-webster.com/dictionary/concerning (last visited Sept. 11, 2015). Courts have routinely interpreted such language as "broader than the concept of a causal connection, and to mean simply connected by reason of an established or discoverable relation." Huffington v. T.C. Grp., LLC, 637 F.3d 18, 22 (1st Cir.2011) (citing authorities). Thus, if there is any "discoverable relation" between the October 2014 Settlement Agreement and the claims asserted in the Kentucky Action, the Forum Selection Clause requires such claims to be brought in Colorado.
In this case, the "discoverable relation" is obvious. The entire premise of the Original Kentucky Complaint is an alleged breach of a duty established in the Option Agreement to deliver title to the Air Lot "
This relation is further emphasized by the scope of the October 2014 Settlement Agreement's release: "all claims, actions, causes of action, and demands related to, or arising in connection with," among other things, "the Option Agreement" and "the Air Rights Interests," including "known or unknown" and "suspected or unsuspected" claims, "whether arising in contract or tort, or at law, [or] in equity." (ECF No. 14-5 § 1.) A claim asserting a breach of the Option Agreement or some sort of defect in the Air Lot caused by Plaintiffs certainly concerns the October
Vine, of course, has not brought a direct breach-of-contract claim. The Original Kentucky Complaint seeks declaratory judgment and alleges slander of title. (ECF No. 14-7 ¶¶ 37-49.) But a "guiding principle for determination of the scope of a forum selection clause ... is that courts will not tolerate `artful pleading' of non-contract claims to avoid a forum selection clause." Terra Int'l, Inc. v. Miss. Chem. Corp., 922 F.Supp. 1334, 1380 (N.D.Iowa 1996), aff'd, 119 F.3d 688 (8th Cir.1997). In this case, the claims for declaratory judgment and slander of title both allege "contravention of the Option Agreement" through Plaintiffs' recording of the Easement Agreement. (ECF No. 14-7 ¶¶ 37-49.) Under the circumstances, "contravention" can mean nothing but "breach," and Vine cannot avoid that implication through wordplay. Vine's claims turn on proving that Plaintiffs did something the Option Agreement did not allow them to do, and that necessarily concerns October 2014 Settlement Agreement, which supposedly released all claims relating to the Option Agreement. See Huffington, 637 F.3d at 22 (enforcing forum selection clause where plaintiff sued for misrepresentation, not breach of contract, but "the alleged misrepresentations at issue are actionable here, on [the plaintiff's] own theories of liability, only because they caused him to enter into an agreement whereby he made an unfavorable purchase. In a nutshell, only if the misrepresentations proximately caused the agreement and consequent acquisition was there a recoverable loss." (internal quotation marks omitted)).
An important corollary to the lack of tolerance for artful pleading is that a forum selection clause can apply even when the contract at issue is raised only as a defense to the plaintiff's claims. Thus, even where a party "is not technically suing for breach of contract," the forum selection clause can still apply if "the entire controversy centers around which party's interpretation of the contract is the correct one." Int'l Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112, 116 (5th Cir.1996). That quite accurately describes this dispute. Plaintiffs argue, with colorable support, that the October 2014 Settlement Agreement released them from claims such as those in the Kentucky Action. (ECF No. 14 at 11-19.) Vine contends the opposite. (ECF No. 23 at 19-24.) The correct interpretation of the October 2014 Settlement Agreement is therefore directly at issue. See also John Wyeth & Bro. Ltd. v. CIGNA Int'l Corp., 119 F.3d 1070, 1076 (3d Cir.1997) (holding that a "broadly worded" forum selection clause, "extending to any dispute `arising ... in relation to'" the contract, "easily encompasses a dispute in which the [contract] is raised as a defense").
The Second Amended Kentucky Complaint does not materially change the analysis. As relevant here, the only change worked by that complaint is the addition of a cause of action for breach of the February 2012 Settlement Agreement.
The problem for Vine, however, remains the sweeping scope of the October 2014 Settlement Agreement and its Forum Selection Clause. Again, that Clause encompasses any claim concerning the October 2014 Settlement Agreement. Among the "concerns" of the October 2014 Settlement Agreement was the release of any sort of claim "related to, or arising in connection with ... the Air Rights Interests." (ECF No. 14-5 § 1.) A claim for breach of the February 2012 Settlement Agreement due to supposedly unlawful encumbrances on the Air Lot certainly relates to "the Air Rights Interests." Thus, at a minimum, resolving the claim for breach of the February 2012 Settlement Agreement will require resolving the effect of the October 2014 Settlement Agreement on the prior agreement, including, e.g., whether the February 2012 agreement merged into the October 2014 agreement, whether the October 2014 agreement qualifies as a written-and-signed amendment to the February 2012 agreement, and so forth. All of these questions concern the October 2014 Settlement Agreement and therefore must be raised in a Colorado forum.
Finally, Vine cannot rely on the October 2014 Settlement Agreement's definition of "Excluded Claims" to avoid the Forum Selection Clause. (See ECF No. 23 at 19-20.) As this Court explained in its order denying the Transfer Motion, the Excluded Claims provision and the Forum Selection Clause address different subjects. (ECF No. 34 at 9.) The Excluded Claims provision establishes that various claims were not released by the October 2014 Settlement Agreement, including claims regarding "any easements ... or encumbrances or record ... that benefit or burden... [the] Air Lot." (ECF No. 14-5 § 1.) Vine's claims in the Kentucky Action therefore at least arguably were not released through the October 2014 Settlement Agreement.
But that does not mean that the Forum Selection Clause cannot apply. In Colorado, a court must prefer "a construction of the contract that harmonizes provisions instead of rendering them superfluous." Copper Mountain, Inc. v. Indus. Sys., Inc., 208 P.3d 692, 700 (Colo.2009). Again, the Forum Selection Clause covers "any dispute or legal action arising from or concerning" the October 2014 Settlement Agreement. (Id. § 16.) Vine's Kentucky Action asserts a breach of the Option Agreement, claims regarding which were
For the foregoing reasons, the Court holds as a matter of law that Vine breached the Forum Selection Clause. This holding does not extend to any other Defendant. Vine is the only plaintiff in the Kentucky Action and Plaintiffs here have not explained how any other Defendant could be liable for Vine's choice to file that lawsuit in Kentucky. Accordingly, this grant of summary judgment on liability runs against Vine only.
Having found Vine liable for breach of the Forum Selection Clause, the Court must address a more difficult issue — the appropriate remedy. Plaintiffs do not provide any help here. In a half-page argument lacking any legal citations, Plaintiffs simply insist that they should collect their attorneys' fees and expenses incurred in the Kentucky Action and this action. (ECF No. 14 at 19.) The issue is much more complicated.
The Court could not locate any case in which a court awarded damages for breach of a forum selection clause. Rather, when a forum selection clause is at issue, courts generally enforce it by either: (1) dismissing the lawsuit, because the court agrees it should have been filed elsewhere, see, e.g., Edge Telecom, Inc. v. Sterling Bank, 143 P.3d 1155, 1158 (Colo.Ct.App. 2006); or (2) enjoining the party in breach of the forum selection clause from pursuing a lawsuit elsewhere, see, e.g., Gen. Protecht Grp., Inc. v. Leviton Mfg. Co., 651 F.3d 1355, 1365-66 (Fed.Cir.2011); Tex. Instruments Inc. v. Tessera, Inc., 231 F.3d 1325, 1332 (Fed.Cir.2000); Rouse v. Tex. Capital Bank, N.A., 394 S.W.3d 1, 7-8 (Tex.App.-Dallas 2011); Babcock & Wilcox Co. v. Control Components, Inc., 161 Misc.2d 636, 614 N.Y.S.2d 678, 684 (Sup. Ct.1993).
Here, remedy #1 is no longer available because the court in the Kentucky Action denied Plaintiffs' motion to dismiss that case based on the Forum Selection Clause. As for remedy #2, Plaintiffs have not requested an injunction (see ECF No. 5 at 10-11), and an anti-suit injunction is probably unavailable in any event. Although Plaintiffs may have been able to seek an injunction from the Colorado state court where they first filed this lawsuit, Defendants' removal to this Court eliminates that option because federal courts are subject to the Anti-Injunction Act: "A court of the United States may not grant an injunction to stay proceedings in
Thus, the question is whether a damages remedy is available to a party whose forum selection clause has been breached and who cannot obtain any of the traditional remedies for such a breach. More precisely, because this Court's jurisdiction rests on 28 U.S.C. § 1332, the question is whether the Colorado Supreme Court would provide such a remedy. Valley Forge Ins. Co. v. Health Care Mgmt. Partners, Ltd., 616 F.3d 1086, 1093 (10th Cir.2010) (when no state law is on point, "our task in diversity cases is to predict how the state supreme court would rule"). The Court could locate no Colorado authority on point.
But forum selection clauses already inhabit such an upside-down world. The default remedies for breach of a forum selection clause (a court dismissing the suit before it or enjoining the parties from litigating elsewhere) are essentially a form of specific performance. In Colorado, specific performance supposedly requires no adequate remedy at law. See, e.g., Bernhardt v. Hemphill, 878 P.2d 107, 113 (Colo. Ct.App.1994). Yet this Court could locate no case, from Colorado or otherwise, analyzing the potential for a damages remedy before deciding whether to enforce a forum selection clause.
Given this, the Court predicts that the Colorado Supreme Court would offer a damages remedy under the circumstances (i.e., when the other lawsuit cannot be dismissed or enjoined). To begin, Colorado courts are thus far unanimous in holding that forum selection clauses are presumptively enforceable. See Cagle, 295 P.3d at 464-65. More importantly, Colorado courts have long avoided holdings that would "deny [a contracting party] a remedy" and "in effect, abrogate an important element of the contract ..., render it a nullity, and permit the [other party] to violate it with impunity." Bleecker v. Colo. & S. Ry. Co., 50 Colo. 140, 114 P. 481, 483 (1911). If no damages remedy existed, then the Forum Selection Clause would become a nullity and all parties to the October 2014 Settlement Agreement could violate it with impunity so long as they could convince some non-Colorado court not to dismiss an improperly filed lawsuit. The Court predicts that the Colorado Supreme Court would not endorse this possibility, given that it would cast doubt on the enforceability of every Colorado forum selection clause, now and in the future.
The next question is the appropriate measure of damages. "In a breach of contract action, the measure of damages is the amount it takes to place the plaintiff in the position it would have occupied had the breach not occurred." Acoustic Mktg. Research, Inc. v. Technics, LLC, 198 P.3d 96, 98 (Colo.2008). Accordingly, in an action for breach of a forum selection clause, the baseline from which damages should be judged is the hypothetical scenario in which the breaching party had filed its lawsuit in the proper forum. In this case, then, the baseline from which damages should be measured is the hypothetical scenario in which Vine filed the Kentucky Action in this Court or Arapahoe County District Court. Plaintiffs' damages would then comprise the fees and expenses incurred above what Plaintiffs would have incurred anyway had the Kentucky Action been filed here from the outset. Importantly, such damages, if any, will continue to accrue as long as Vine continues to pursue the Kentucky Action in Kentucky.
The Court further notes the fee-shifting clause in the October 2014 Settlement Agreement: "[T]he prevailing Party in any proceeding relating to enforcement of this Agreement shall be awarded its costs and reasonable attorney fees." (ECF No. 14-5
Plaintiffs ask this Court not only to find a breach of the Forum Selection Clause, but also to hold that the October 2014 Settlement Agreement entirely extinguished the claims asserted in the Kentucky Action. (ECF No. 14 at 13-18.) In other words, Plaintiffs do not simply want a finding that the Kentucky Action concerns the October 2014 Settlement Agreement and should therefore have been filed here. Plaintiffs want the Court to declare that the Kentucky Action is an attempt to resurrect settled claims and therefore a total repudiation and breach of the October 2014 Settlement Agreement.
The Court is not convinced on this record (developed without discovery) that the Kentucky Action is, as a matter of law, a repudiation of the October 2014 Settlement Agreement. On the record as currently presented, the Court sees a genuine factual dispute over whether Vine already released the claims it is litigating in Kentucky, as well as a dispute regarding the underlying merits. Thus, although Vine certainly should have brought its claims in Colorado, the Court cannot yet grant summary judgment either way on the substance of those claims.
Lastly, the Court must consider MCV II's Rent Demand. (See Part II.F, supra.) The Rent Demand appears to be no more than a footnote in the parties' larger dispute, but Plaintiffs insist it is also a breach of the October 2014 Settlement Agreement because that agreement supposedly extinguished all pre-existing, non-Excluded claims, and the Rent Demand is a pre-existing, non-Excluded claim. (See ECF No. 14 at 19-20.)
The Court finds, sua sponte, that it lacks Article III jurisdiction over the Rent Demand dispute. Article III jurisdiction depends on, among other things, an "actual or imminent" injury to "a legally protected interest." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The record before the Court contains no indication of such an injury. MCV II sent one threatening letter in November 2014 and another in January 2015. It has since done nothing. The Rent Demand is not part of the Original Kentucky Complaint or the Second Amended Kentucky Complaint, nor has MCV II asserted a counterclaim in this lawsuit for the allegedly wrongfully paid rent. (See ECF No. 47.) Plaintiffs have therefore failed to demonstrate an actual or imminent injury based on the Rent Demand.
For the reasons set forth above, the Court ORDERS as follows:
