The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.
SUMMARY August 22, 2019
2019COA129
No. 18CA1331, Avicanna Inc. v. Mewhinney — Contracts — Forum Selection — Unilateral Waiver
A division of the court of appeals holds that a plaintiff cannot
unilaterally waive a forum selection clause when the clause was not
included exclusively for the plaintiff’s benefit. COLORADO COURT OF APPEALS 2019COA129
Court of Appeals No. 18CA1331 Pitkin County District Court No. 17CV30089 Honorable Christopher G. Seldin, Judge
Avicanna Inc.,
Plaintiff-Appellant,
v.
Timothy Mewhinney, Steven Garcia, and The Laughing Dog Group, LLC, a Colorado limited liability company,
Defendants-Appellees.
JUDGMENT AFFIRMED
Division I Opinion by JUDGE GROVE Taubman and Hawthorne, JJ., concur
Announced August 22, 2019
Dentons US LLP, Karen Ashley Phillips, Robert A. Hammeke, Denver, Colorado, for Plaintiff-Appellant
Law Office of Corry & Associates, Robert J. Corry, Jr., Abbey G. Moffitt, Denver, Colorado, for Defendants-Appellees ¶1 In this commercial dispute, we consider whether plaintiff,
Avicanna Inc., should have been permitted to sue defendants in
Pitkin County District Court or whether, as the district court found,
Avicanna was bound by a forum selection clause that designated
the courts of Ontario, Canada, as the forum for the resolution of
any disputes between Avicanna and its contractual counterparties.
Because nothing in the parties’ contract showed that the forum
selection clause was included exclusively for Avicanna’s benefit, we
conclude that Avicanna could not unilaterally waive that provision.
We therefore affirm the district court’s order enforcing the forum
selection clause and dismissing Avicanna’s complaint without
prejudice.1
I. Background
¶2 As the district court described it, this case involves a “topsy-
turvy expression of incentives” in which a Canadian plaintiff filed
1 Most of the time a dismissal without prejudice is not a final, appealable order. Norby v. Charnes, 764 P.2d 407, 408 (Colo. App. 1988). Where, as here, however, the circumstances of the case indicate that the action cannot be saved and that the district court’s order precludes further proceedings, dismissal without prejudice qualifies as a final judgment for the purposes of appeal. Id.; see also Brody v. Bock, 897 P.2d 769, 777 (Colo. 1995).
1 suit in Colorado against Colorado defendants, and then
unsuccessfully opposed a motion by those Colorado defendants to
move the litigation off of their home turf and back to Canada.
¶3 Avicanna is a Canadian corporation with its principal place of
business in Ontario, Canada. It contracted with St. J Distribution
LLC, a Colorado limited liability company, and several of its
members to purchase certain assets from that business. 2 Among
other things, the asset purchase agreement included the following
choice of law and forum selection provision:
9.10 Governing Law; Attornment
This Agreement will be construed, interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each Party irrevocably attorns and submits to the exclusive jurisdiction of the courts of Ontario and irrevocably waives objection to the venue of any proceeding in those courts or that those courts provide an inconvenient forum.
2 The individual defendants each executed subsidiary independent contractor agreements. These agreements each included a forum selection clause that was materially identical to the clause that appears in the asset purchase agreement, so we only conduct a single analysis of the forum selection question in this opinion.
2 ¶4 Alleging breach of contract, Avicanna sued all of the
contractual counterparties, along with Laughing Dog Group, LLC,3
in Pitkin County. Two of the defendants, St. J Distribution LLC and
John David Robinson (collectively, St. J), then filed cross-claims
against the remaining defendants — Timothy Mewhinney, Steven
Garcia, and The Laughing Dog Group, LLC (collectively, the
Mewhinney defendants).
¶5 The Mewhinney defendants moved to dismiss both the
complaint and St. J’s cross-claims for failure to state a claim on
which relief may be granted. Neither motion mentioned the forum
selection clause. Instead, the Mewhinney defendants kept quiet
about the issue until filing their reply in support of their motion to
dismiss Avicanna’s complaint, when they argued that the forum
selection clause deprived the trial court of jurisdiction over the
dispute.
¶6 Because the Mewhinney defendants raised it for the first time
in a reply (and because it did not implicate the district court’s
subject matter jurisdiction, see Nickerson v. Network Sols., LLC,
3The Laughing Dog Group, LLC was owned and/or managed by one or more of the members of St. J. Distribution LLC.
3 2014 CO 79, ¶ 13), the district court declined to consider the
Mewhinney defendants’ forum selection argument as part of the
motions to dismiss. In a subsequent sua sponte order, however,
the court stated that “the issue is significant, and if a party wishes
to enforce [the forum selection clause] . . . it should be afforded an
opportunity to present argument to that effect.” The court invited
briefing on the issue and, shortly thereafter, the Mewhinney
defendants moved to enforce the forum selection clause.
¶7 In a detailed written order, the district court ruled that the
forum selection clause “unambiguously states that each party
submits to the jurisdiction of [the courts of] Ontario,” and that
because nothing in the parties’ agreement showed that the clause
was included “solely for Avicanna’s benefit,” Avicanna could not
unilaterally waive it. The district court also rejected Avicanna’s
argument that the Mewhinney defendants “relinquished any right to
enforce the clause by failing to raise it earlier,” thereby waiving their
right to invoke its protections. Although the court stated that the
Mewhinney defendants’ tardiness in raising the issue made it “a
close case,” the court ultimately concluded that Avicanna was not
prejudiced by the delay. As a result, the court granted the
4 Mewhinney defendants’ motion to enforce the forum selection
clause and dismissed the case without prejudice.
II. Avicanna Could Not Unilaterally Waive the Forum Selection Clause
¶8 Avicanna argues that the forum selection clause in the
contract was intended for its sole benefit, and that it was therefore
entitled to unilaterally waive its protections and file suit in
Colorado. We disagree.
A. Standard of Review
¶9 We review de novo a district court’s application of a forum
selection clause. Adams Reload Co. v. Int’l Profit Assocs., Inc., 143
P.3d 1056, 1058 (Colo. App. 2005).
B. Analysis
¶ 10 Our goal in interpreting a contract is “to determine and give
effect to the intention of the parties.” USI Props. E., Inc. v. Simpson,
938 P.2d 168, 173 (Colo. 1997). To discern the parties’ intent, we
look first to “the language of the instrument itself.” City of Aurora v.
N. Colo. Water Conservancy Dist., 236 P.3d 1222, 1226 (Colo. 2010).
If that language is unambiguous, we will enforce the contract
consistent with the plain and ordinary meanings of its terms. Id.
5 ¶ 11 A forum selection clause will be enforced unless the party
seeking to avoid its effect — Avicanna in this case — proves that
enforcement of the clause would be unfair or unreasonable. Edge
Telecom, Inc. v. Sterling Bank, 143 P.3d 1155, 1159 (Colo. App.
2006). Avicanna likewise carries the burden of demonstrating that
it was entitled to unilaterally waive the forum selection clause. See
ABC Mobile Sys., Inc. v. Harvey, 701 P.2d 137, 139 (Colo. App.
1985). “[T]he mere fact that a defendant seeking to enforce the
forum selection clause is a resident of the state where the action is
commenced will not render the clause ineffective.” Id. at 139-40
(citing Societe Jean Nicholas Et Fils v. Mosseux, 597 P.2d 541 (Ariz.
1979)). Rather, the contractual forum must be so gravely difficult
and inconvenient that parties seeking to escape their contract will
for all practical purposes be deprived of their day in court. Id.
¶ 12 Avicanna does not contend that the forum selection clause is
ambiguous. Nor does it assert that enforcement of the clause would
be unfair or unreasonable. Instead, relying in large part on the
analysis in Rizas v. Vail Resorts, Inc., No. 08-CV-139-J, 2009 WL
10664834 (D. Wyo. Oct. 1, 2009), Avicanna argues that it was
entitled to unilaterally waive enforcement of the forum selection
6 clause because that provision was included in the contract
exclusively for its benefit.
¶ 13 It is well-settled that a party may waive a provision that was
included in a contract for that party’s sole benefit. See Fravert v.
Fesler, 11 Colo. App. 387, 391, 53 P. 288, 290 (1898) (“Any person
may waive a formal condition inserted in a contract for his benefit,
and the waiver need not be express.”); see also 13 Williston on
Contracts § 39:24, Westlaw (4th ed. database updated May 2019).
But it is equally true that “a waiver of contract requirements and
conditions may not be made unilaterally when it would deprive the
nonwaiving party of a benefit under the provision in question.” 13
Williston on Contracts at § 39:24. Accordingly, Avicanna could
unilaterally waive the forum selection clause if — but only if — it
demonstrated that the clause was intended to benefit Avicanna
alone.
¶ 14 Because the forum selection clause is unambiguous, Avicanna
may not rely on extrinsic evidence to show that it was the sole
beneficiary of that provision. ABC Mobile, 701 P.2d at 140.
Instead, Avicanna argues that its sole beneficiary status may be
gleaned from the four corners of the contract itself — and in
7 support of its position it points out that it was the only signatory
that was a resident of Ontario, while all the other parties were from
Colorado. Thus, Avicanna argues, “the Ontario choice of forum
clauses were drafted for the sole benefit of Avicanna, the only party
that is an Ontario resident.”
¶ 15 For three reasons, we disagree that Avicanna’s status as the
only Canadian resident, standing on its own, is enough to show
that the parties incorporated the forum selection clause into this
complex arm’s-length agreement exclusively for Avicanna’s benefit.
¶ 16 First, inferring the substance of the parties’ negotiations from
the four corners of the contract is impossible. Mewhinney and
Garcia may have agreed to the forum selection clause as drafted —
or perhaps even requested it in the first instance — for any number
of reasons. For example, they may have believed that Canadian
courts resolve disputes quicker, more fairly, or more efficiently. Or
perhaps they concluded that, in the event of a breach, substantive
Ontario law would be more favorable to them than Colorado law.
Or they might have reluctantly agreed to a bilateral forum selection
clause in exchange for the inclusion of more favorable terms
elsewhere in the contract.
8 ¶ 17 Second, the forum selection clause, by its plain terms, applies
to “Each Party.” As demonstrated by the differing outcomes in
Open Text Corp. v. Grimes, 262 F. Supp. 3d 278 (D. Md. 2017), and
Imperium Insurance Co. v. Allied Insurance Brokers, Inc., No. CIV.
CCB-12-1373, 2012 WL 4103889 (D. Md. Sept. 17, 2012), two
cases that considered forum selection clauses with substantial
similarities to the clause in dispute here, this language of mutuality
signals an intent to apply the forum selection clause to every
signatory to the contract.
¶ 18 In Open Text, the court considered an employment contract
between a Maryland-based employee (Grimes) and a Canadian
corporation (Open Text) that was based in Ontario. The contract
included a promise by the employee that “I hereby irrevocably
attorn to the jurisdiction of the courts of the Province of Ontario.”
262 F. Supp. 3d at 281. After the corporation sued the employee in
Maryland, the employee moved to dismiss, arguing that the forum
selection clause required suit to be filed in Ontario. Relying on “the
specific language of the Grimes Agreement,” which “only include[d]
a promise by Grimes,” the court concluded that “[t]he mere fact that
Grimes agreed to ‘irrevocably attorn to the jurisdiction of the courts
9 of the Province of Ontario’ did not foreclose Open Text’s ability to file
suit in Grimes’ home state.” Id. at 286.
¶ 19 In reaching this conclusion, the Open Text court distinguished
Imperium, a case involving a forum selection clause that, instead of
including a promise by only one of the litigants, bound “each party.”
The clause at issue in Imperium stated as follows:
Each party . . . stipulates that the State and Federal courts located in the County of New York, State of New York shall have in personam jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy, or proceeding arising out of or related to this Agreement.
Imperium, 2012 WL 4103889, at *1. This clause, the court
determined, was “bilateral” — that is, intended to benefit both
parties — particularly when it was considered together with other
portions of the contract that specifically allotted authority and
responsibilities to one party or the other. Id. And because the
clause was a “mutually beneficial provision,” it could not be
unilaterally waived by either party. Id. at *3.
¶ 20 We agree with the reasoning in Open Text and Imperium. And,
taking the same approach that the courts applied in those cases, we
conclude that Rizas — the centerpiece of Avicanna’s argument —
10 actually supports the district court’s conclusion in this case. Most
importantly, as in Open Text, the provision at issue in Rizas, which
included both forum selection and choice of law clauses, did not
purport to protect “each party.” To the contrary, it provided in
pertinent part that
[i]t is agreed by [the tour operator] and the Tour Member that all legal claims, actions, and proceedings against [the tour operator] under, in connection with, resulting from or incident to a tour may be instituted, if at all, only in a state or federal court within the State of Connecticut, USA, to the exclusion of the courts of or in any other state or jurisdiction. It is further agreed that all such claims, actions and proceedings shall be governed by and decided in accordance with the laws of the State of Connecticut.
Rizas, 2009 WL 10664834, at *2. While this clause prescribed the
forum and governing law for lawsuits filed against the tour
operator, it did not designate the forum or governing law for a
lawsuit that might be filed by the tour operator against a tour
member. In other words, the provision at issue in Rizas protected
only one party to the transaction and, as a result, was the very
definition of a provision that is not mutually beneficial. Because it
11 protected only the tour operator, the Rizas court correctly found
that the forum selection clause and choice of law language were
included for the tour operator’s sole benefit. And because the
provision at issue protected only the tour operator, that party was
permitted to unilaterally waive it.
¶ 21 Third, we find significant the forum selection clause’s proviso
that each party “irrevocably attorns and submits to the exclusive
jurisdiction of the courts of Ontario.” (Emphasis added.)
“Irrevocable” means “[u]nalterable; committed beyond recall.”
Black’s Law Dictionary 994 (11th ed. 2019). Allowing Avicanna to
sidestep the forum selection clause — that is, to revoke its
ostensibly irrevocable commitment to abide by its terms — would
render this language meaningless, a result we strive to avoid. See
Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310, 1313 (Colo.
1984) (“An integrated contract in the first instance is to be
interpreted in its entirety with the end in view of seeking to
harmonize and to give effect to all provisions so that none will be
rendered meaningless.”).
¶ 22 For these reasons, we agree with the district court’s
conclusion that Avicanna failed to carry its burden of showing by a
12 preponderance of the evidence that it was the sole beneficiary of the
forum selection clause.
III. The Mewhinney Defendants Did Not Waive the Forum Selection Clause
¶ 23 Avicanna next contends that the Mewhinney defendants
waived any opportunity to enforce the forum selection clause by
failing to timely raise the issue in the district court. We disagree.
¶ 24 Ordinarily, waiver is a factual matter determined by the trial
court. Vessels Oil & Gas Co. v. Coastal Ref. & Mktg., Inc., 764 P.2d
391, 392 (Colo. App. 1988). But where, as here, the facts bearing
on waiver are uncontested and the evidence before the trial court is
entirely documentary, waiver becomes a matter of law, and we are
not bound by the trial court’s findings. Id.
¶ 25 Waiver is the intentional relinquishment of a known right.
Vanderbeek v. Vernon Corp., 25 P.3d 1242, 1248 (Colo. App. 2000),
aff’d, 50 P.3d 866 (Colo. 2002). A party waives a contractual right,
including the right to rely on a forum selection clause, if the party
acts inconsistently with the right and prejudice accrues to the other
13 parties to the contract. Id. (holding that plaintiffs waived the right
to rely on forum selection clause when they filed an action in a
different forum); see also Gallagher’s NYC Steakhouse Franchising,
Inc. v. 1020 15th St., Inc., Nos. 08-cv-01639-PAB-BNB, 08-cv-
01896-PAB-BNB, 2009 WL 1796297, at *4 (D. Colo. June 23, 2009)
(unpublished opinion) (holding that plaintiff waived the right to
enforce Florida forum selection clause when it filed the case in
Colorado); cf. Vessels Oil & Gas Co., 764 P.2d at 392 (holding that
merely filing an answer, commencing discovery, and engaging in
settlement negotiations outside selected venue did not constitute
waiver of forum selection clause). “Waiver may be express, or it
may be implied when a party’s actions manifest an intent to
relinquish a right or privilege.” Venard v. Dep’t of Corr., 72 P.3d
446, 450 (Colo. App. 2003). However, in establishing implied waiver
by conduct, “the conduct itself should be free from ambiguity and
clearly manifest the intention not to assert the benefit.” Dep’t of
Health v. Donahue, 690 P.2d 243, 247 (Colo. 1984).
¶ 26 In Vessels, a division of this court considered whether a
defendant had relinquished its right to enforce a forum selection
clause by failing to raise the issue for three months after the
14 complaint was filed. During that period, the defendant filed its
answer to the complaint, engaged in settlement negotiations, and
served discovery requests on the plaintiff. Vessels, 764 P.2d at 392.
In rejecting the plaintiff’s waiver argument, the division noted that
“filing an answer on the merits, or commencing discovery, without
more, does not constitute a waiver as a matter of law.” Id.
¶ 27 Here, the district court looked to Vessels to conclude that,
while it was a “close case . . . the only substantive acts in the
litigation actually initiated by” the Mewhinney defendants were their
various motions to dismiss. The court also noted the Mewhinney
defendants’ “noncompliance with certain features of the Rules [of
Civil Procedure],” their procedural motions practice, and their
answers to the cross-claims filed by the St. J defendants, but the
court ultimately concluded that “only the motions to dismiss
potentially constitute sufficient engagement with this forum to
support a finding of waiver.”
¶ 28 Next, turning to the requirements for a finding of waiver — the
intentional relinquishment of a known right and prejudice — the
district court pointed out that the Mewhinney defendants had first
raised the forum selection issue in the replies that they submitted
15 in support of their motions to dismiss, rather than in separate
papers after briefing was closed. These circumstances, the court
noted, “suggest[ed] not so much an intentional relinquishment of a
known right by a party as it [did] an oversight by counsel in the
early stages of the case.” With respect to prejudice, the court found
that the fee shifting provision of the contract, together with the
possibility that “fees will be recoverable . . . in the Canadian courts,
where fee-shifting is apparently the rule,” were enough to overcome
Avicanna’s claim that it would be unfairly harmed if the forum
selection clause were enforced.
¶ 29 We agree with the district court. To be sure, the Mewhinney
defendants waited longer than the defendant in Vessels to raise the
forum selection issue, but their level of engagement in the case —
which is a more important factor in our view — was actually less.
Importantly, the Mewhinney defendants never independently
attempted to invoke the district court’s jurisdiction by, for example,
filing counterclaims against Avicanna, cross-claims against St. J, or
impleading third parties who were not named in either complaint.
Indeed, the only reason that the Mewhinney defendants filed
anything in the district court was because Avicanna attempted to
16 unilaterally contravene the forum selection clause in the first place
by filing suit in Colorado.
¶ 30 Given the Mewhinney defendants’ limited substantive
engagement in the case and the possibility of fee-shifting under the
terms of the contract or pursuant to Canadian law, we conclude
that the prejudice suffered by Avicanna is not sufficient to support
a finding of waiver by the Mewhinney defendants. While counsel
certainly should have been more attentive, we decline to hold that
his tardiness in recognizing the issue was a clear manifestation of
the Mewhinney defendants’ intent to waive the choice of forum
provision.
¶ 31 We are not persuaded otherwise by the fact that the
Mewhinney defendants relied on Colorado law in their motions to
dismiss. At the threshold, for many of the reasons that we have
already discussed in the context of the forum selection clause, it is
doubtful that either party could have unilaterally waived the choice
of law provision. The contract reflects the parties’ mutual
agreement to apply Canadian law. And because nothing within the
four corners of the contract suggests that provision was included
17 solely for the benefit of the Mewhinney defendants, it follows that
the Mewhinney defendants could not unilaterally waive it.
¶ 32 In any event, nothing in the record suggests that the
Mewhinney defendants’ failure to assert defenses under Canadian
law was intentional, rather than yet another oversight on the part of
counsel. Under the circumstances here, we decline to infer from
counsel’s initial reliance on Colorado law an intention on the part of
the Mewhinney defendants to waive the choice of law provision of
the parties’ contract.
IV. Appellate Attorney Fees
¶ 33 The Mewhinney defendants request an award of attorney fees
and costs pursuant to C.A.R. 38(b) and 39.1. Although Avicanna
did not succeed in this appeal, it advanced cogent and
well-supported arguments. See Mission Denver Co. v. Pierson, 674
P.2d 363, 365 (Colo. 1984) (“Standards for determining whether an
appeal is frivolous should be directed toward penalizing egregious
conduct without deterring a lawyer from vigorously asserting his
client’s rights.”); see also Janicek v. Obsideo, LLC, 271 P.3d 1133,
1140 (Colo. App. 2011) (“[A] claim is not frivolous ‘if it is meritorious
but merely unsuccessful[.]’” (quoting Hamon Contractors, Inc. v.
18 Carter & Burgess, Inc., 229 P.3d 282, 299 (Colo. App. 2009))). We
therefore decline to award appellate attorney fees.
V. Conclusion
¶ 34 We affirm the district court’s judgment and deny the
Mewhinney defendants’ request for attorney fees and costs.
JUDGE TAUBMAN and JUDGE HAWTHORNE concur.