San Diego Gas & Electric Co. v. Ninth Judicial District Court

2014 MT 191, 329 P.3d 1264, 375 Mont. 517, 2014 Mont. LEXIS 523, 2014 WL 3537883
CourtMontana Supreme Court
DecidedJuly 18, 2014
DocketNo. OP 14-0326
StatusPublished
Cited by4 cases

This text of 2014 MT 191 (San Diego Gas & Electric Co. v. Ninth Judicial District Court) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
San Diego Gas & Electric Co. v. Ninth Judicial District Court, 2014 MT 191, 329 P.3d 1264, 375 Mont. 517, 2014 Mont. LEXIS 523, 2014 WL 3537883 (Mo. 2014).

Opinion

[518]*518OPINION AND ORDER

¶1 San Diego Gas & Electric Co. (San Diego) has petitioned this Court to exercise supervisory control in relation to a proceeding pending before the Ninth Judicial District Court, Toole County, denominated NaturEner USA, LLC v. San Diego Gas & Electric Co., Cause No. DV-13076. San Diego requests that this Court determine that the District Court is proceeding under a mistake of law based on its April 28, 2014 Order denying San Diego’s Motion to Dismiss or Stay. We grant the petition.

BACKGROUND

¶2 The underlying action arose as the result of a contractual dispute between San Diego and several NaturEner wind-energy companies (collectively, NaturEner). San Diego is a California utility, and NaturEner is a group of Delaware limited liability companies headquartered in California. In January 2012, San Diego and NaturEner entered into two contracts. The first is an agreement (Purchase Agreement) for San Diego to purchase renewable energy credits and electricity from NaturEner. The credits and electricity are generated at the Rim Rock wind farm in Glacier and Toole counties, Montana. The Purchase Agreement contains the following clauses:

This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the state of California, without regard to principles of conflicts of law.
THE PARTIES HEREBY CONSENT TO CONDUCT ALL DISPUTE RESOLUTION, JUDICIAL ACTIONS OR PROCEEDINGS ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONJUNCTION WITH, OUT OF, RELATED TO OR ARISING FROM THIS AGREEMENT IN THE CITY OF SAN DIEGO, CALIFORNIA.

(Emphasis in original.)

¶3 The second contract (Contribution Agreement) requires San Diego to invest approximately $285 million to acquire an equity interest in the Rim Rock wind farm. The Contribution Agreement contains a clause specifying that New York law applies in the event of a dispute, and that “THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NON EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK COUNTY, NEW YORK ... .” (Emphasis in original.) In both the Purchase Agreement and [519]*519Contribution Agreement, the parties also agreed to certain “Avian Conditions” for the protection of birds and bats that might be harmed through operation of the wind farm. The parties later amended the Contribution Agreement through a separate “Avian Conditions Agreement.”

¶4 On December 19, 2013, San Diego filed suit in California's San Diego Superior Court, seeking a declaration that NaturEner had not satisfied the “Avian Conditions” of the agreements. The next day, NaturEner filed a nearly identical suit in Montana’s Ninth Judicial District Court, seeking a declaration that it had satisfied the “Avian Conditions,” and alleging breach of the Contribution Agreement and breach of the covenant of good faith and fair dealing. San Diego filed a Motion to Dismiss or Stay, which the District Court denied.

¶5 San Diego then petitioned this Court for a writ of supervisory control, or in the alternative, a writ of review. This Court subsequently ordered that a response be filed by NaturEner, which has been filed. The issue raised in San Diego’s petition is whether the District Court erred as a matter of law by accepting jurisdiction over the parties’ dispute in light of the forum selection clause contained in the Purchase Agreement, as well as forum non conveniens and principles of comity.

DISCUSSION

¶6 This Court “has general supervisory control over all other courts.” Mont. Const, art. VII, § 2(2). However, “Supervisory control is an extraordinary remedy, reserved for extraordinary circumstances.” Stokes v. Mont. Thirteenth Jud. Dist. Ct., 2011 MT 182, ¶ 5, 361 Mont. 279, 259 P.3d 754 (citing Hegwood v. Mont. Fourth Jud. Dist. Ct., 2003 MT 200, ¶ 6, 317 Mont. 30, 75 P.3d 308). Acceptance of supervisory control is decided on a case-by-case basis and is “limited to cases involving purely legal questions, in which the district court is proceeding under a mistake of law causing a gross injustice or constitutional issues of statewide importance are involved.” Stokes, ¶ 5 (citing M. R. App. P. 14(3)). We may assume supervisory control to direct the course of litigation if the district court “is proceeding based on a mistake of law, which if uncorrected, would cause significant injustice for which appeal is an inadequate remedy.” Stokes, ¶ 5 (citing Simms v. Mont. Eighteenth Jud. Dist. Ct., 2003 MT 89, ¶ 18, 315 Mont. 135, 68 P.3d 678).

¶7 We conclude that this case is appropriate for the exercise of supervisory control. The issues raised by San Diego are purely legal, involving questions of contract interpretation and judicial expediency. [520]*520Requiring an appeal from final judgment could result in inconsistent judgments from multiple states’ courts, protracted and redundant litigation, and undue burden on state resources. We have previously explained that promoting judicial economy and avoiding procedural entanglements are adequate grounds for this Court to issue a writ of supervisory control. Truman v. Mont. Eleventh Jud. Dist. Ct., 2003 MT 91, ¶ 15, 315 Mont. 165, 68 P.3d 654 (citation omitted). Therefore, we will address the issues raised in San Diego’s petition that we conclude are dispositive — the nature of the forum selection clause contained in the Purchase Agreement and forum non conveniens.

A. Choice of Law Provision

¶8 “Where a contract contains both a choice of law clause and a forum selection clause, we first determine whether the choice of law clause is valid.” Polzin v. Appleway Equip. Leasing, Inc., 2008 MT 300, ¶ 13, 345 Mont. 508, 191 P.3d 476 (citation omitted). We rely on the Restatement (Second) of Conflict of Laws, §§ 6, 187-88 (1971) in making this determination. Polzin, ¶ 14. A contractual choice of law clause is valid unless three factors can be established: “(1) but for the choice of law provision, Montana law would apply under § 188 of the Restatement', (2) Montana has a materially greater interest in the particular issue than the parties [sic] chosen state; and (3) application of the chosen state’s law would contravene a Montana fundamental policy.” Polzin, ¶ 14 (citation omitted).

¶9 The Purchase Agreement states that California law governs the rights and duties of the parties in this case. Neither San Diego nor NaturEner dispute the validity of the choice of law clause. We likewise see no reason that application of California law would contravene Montana’s fundamental policy, regardless of the outcome of an analysis under factors (1) and (2). Accordingly, we accept the choice of law clause as valid and apply California law in interpreting the forum selection clause contained in the Purchase Agreement. See Polzin, ¶ 19 (applying Washington law in determining that the forum selection clause was valid and that Montana venue was inappropriate under the terms of the contract).

B. Forum Selection Clause

¶10 In California, forum selection clauses are valid and will be given effect in the court’s discretion and in the absence of a showing that enforcement would be unreasonable. Smith, Valentino & Smith, Inc. v. Super. Ct. of Los Angeles Cnty., 551 P.2d 1206, 1209 (Cal.

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Bluebook (online)
2014 MT 191, 329 P.3d 1264, 375 Mont. 517, 2014 Mont. LEXIS 523, 2014 WL 3537883, Counsel Stack Legal Research, https://law.counselstack.com/opinion/san-diego-gas-electric-co-v-ninth-judicial-district-court-mont-2014.