Skydive Factory v . Skydive Orange 12-CV-307-SM 3/12/13 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
The Skydive Factory, Inc., Plaintiff
v. Case N o . 12-cv-307-SM Opinion N o . 2013 DNH 033 Skydive Orange, Inc., Defendant
O R D E R
Defendant removed this breach of contract case from the New
Hampshire Superior Court (Strafford County), invoking diversity
jurisdiction. 28 U.S.C. § 1332. Plaintiff moves for remand
(doc. n o . 9 ) on grounds that the parties’ contract requires any
dispute arising under the contract to be resolved in state court
and in Strafford County. Defendant objects, asserting that the
contract’s forum selection clause does not “clearly and
unequivocally” represent a waiver of its right of removal under
28 U.S.C. § 1441.
Generally, a forum selection clause mandating that disputes
be resolved in state court operates as a waiver of the parties’
removal rights under § 1441. See Karl Koch Erecting Co., Inc. v .
New York Convention Ctr. Dev. Corp., 838 F.2d 656, 659 (2d Cir.
1988); Insight Holding Group, LLC v . Sitnasuak Native Corp., 685
F. Supp. 2d 5 8 2 , 589 (E.D. V a . 2010) (“[T]he great weight of
existing circuit authority sensibly holds that by agreeing to a mandatory forum selection clause, parties ordinarily also waive
their § 1441 removal right.”). See also Pace Prop., LLC v .
Excelsior Const., Inc., 2008 WL 4938412, at *2 (N.D. Fla. Nov.
1 8 , 2008) (courts “will find a waiver of the statutory right to
removal only in cases where the forum selection clause mandates
that litigation take place in a particular forum, to the
exclusion of another forum.”). Although not clear-cut in this
circuit, the court assumes that waiver of the right of removal
must be “clear and unequivocal.” See Spenlinhauer v . R.R.
Donnelley & Sons, Co., 534 F. Supp. 2d 1 6 2 , 164 (D. M e . 2008)
(recognizing unsettled question in the First Circuit).
A forum selection clause may be mandatory as to
jurisdiction, venue, or both. Yakin v . Tyler Hill Corp., 566
F.3d 7 2 , 76 (2d Cir. 2009) (“A forum selection clause may bind
parties to either a specific jurisdiction or . . . a specific
venue.”) With regard to jurisdiction, the defendant argues that
the clause is permissive rather than mandatory, suggesting that
it only requires that cases be filed in state court, but not that
they be adjudicated there. With regard to venue, defendant also
says the clause is permissive. That i s , it permits, but does not
require, resolution of disputes in Strafford County.
2 A. Jurisdiction
The contract provides:
Controlling Law This Agreement shall be governed by and construed in accordance with the laws of the State of New Hampshire. Any or [sic] disputes related to this agreement shall be filed in Strafford County, the State Courts of New Hampshire.
Doc. n o . 3-2.
While somewhat clumsy and inartful in expression, the clause
does adequately convey the parties’ agreement that exclusive
jurisdiction over contractual disputes lies in the state court.1
See Silva v . Encyclopedia Britannica Inc., 239 F.3d 385 (1st Cir.
2001).
In Silva, the forum selection clause provided that “[t]his
agreement shall be governed and construed by the laws of the
State of Illinois and all actions involving this agreement must
be brought in the State of Illinois.” Id. at 386 (emphasis
added). The court found that the mandatory language of the
agreement — that i s , inclusion of the word “must” — “express[ed]
the parties’ intention to make the courts of Illinois the
exclusive forum for disputes arising under the contract.” Id. at
1 Because both parties rely on federal and New Hampshire precedent in construing the clause, the court assumes that the parties “do not rely on any distinctive features of” New Hampshire law. Phillips v . Audio Active, Ltd., 494 F.3d 3 7 8 , 386 (2d Cir. 2007). Accordingly, the court “appl[ies] general contract law principles and federal precedent to discern the meaning and scope of the forum clause.” Id.
3 389. It held, therefore, that the forum-selection clause was
mandatory in limiting jurisdiction over disputes to the state’s
courts, and affirmed dismissal of the case. Id.
The court at least implicitly construed the phrase “must be
brought” as being equivalent to “must be adjudicated.” The Court
of Appeals for the Second Circuit reached a similar conclusion
with respect to the phrase “shall be commenced.” Karl Koch
Erecting, 838 F.2d at 658. In Karl Koch Erecting, the court
affirmed a district court’s remand order, holding that the forum
selection clause’s mandate that “[n]o action shall be commenced
. . . except in the Supreme Court of the State of New York,
County of New York,” did not “literally preclude removal,” but,
rather, implicitly did s o . Id. at 659. The court reasoned that,
. . . the parties’ inclusion of the forum-selection clause makes little sense unless it precludes removal by [defendant]. [citation omitted] If the clause does not bar removal, [plaintiff’s] action, although it originated in state court, would be tried in federal court. . . . [Defendant], on the other hand, would not be permitted to assert counterclaims in federal court because they are an ‘action or proceeding . . . commenced by’ [defendant]. . . [That result] seems plainly at odds with the obvious purpose of the forum- selection clause, as well as with the purpose of Fed. R. Civ. P. 13(a) (compulsory counterclaim rule).
Id.
The clause at issue here, properly construed, memorializes
the parties’ agreement that the state courts of New Hampshire
4 shall have exclusive jurisdiction over the parties’ contractual
disputes. Like the provisions in Silva and Karl Koch Erecting,
the clause here uses mandatory language (i.e., “shall”). In
addition, the words “be filed,” as used here, like the words “be
brought” in Silva, and the phrase “shall be commenced” in Karl
Koch Erecting, were not meant to require a meaningless
ministerial act, but implicitly (and consistently with the
obvious intention of the parties) require adjudication in the
state’s courts.
The clause here is plainly mandatory with respect to state
court jurisdiction for an additional reason. While the clause in
Silva referenced only “the State of Illinois” (and yet was found
to mandate state court jurisdiction), the clause here
unambiguously identifies the “State Courts of New Hampshire.”
Cf. Global Satellite Commc’n C o . v . Starmill U.K., Ltd., 378 F.3d
1269, 1273 (11th Cir. 2004) (finding that forum selection clause
did not restrict jurisdiction where it mandated venue in a
particular county, but did not specify state or federal courts).
In BlueTarp Fin., Inc. v . Melloul Blamey Constr. S.C., Ltd., 846
F. Supp. 2d 3 0 7 , 313-14 (D.
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Skydive Factory v . Skydive Orange 12-CV-307-SM 3/12/13 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
The Skydive Factory, Inc., Plaintiff
v. Case N o . 12-cv-307-SM Opinion N o . 2013 DNH 033 Skydive Orange, Inc., Defendant
O R D E R
Defendant removed this breach of contract case from the New
Hampshire Superior Court (Strafford County), invoking diversity
jurisdiction. 28 U.S.C. § 1332. Plaintiff moves for remand
(doc. n o . 9 ) on grounds that the parties’ contract requires any
dispute arising under the contract to be resolved in state court
and in Strafford County. Defendant objects, asserting that the
contract’s forum selection clause does not “clearly and
unequivocally” represent a waiver of its right of removal under
28 U.S.C. § 1441.
Generally, a forum selection clause mandating that disputes
be resolved in state court operates as a waiver of the parties’
removal rights under § 1441. See Karl Koch Erecting Co., Inc. v .
New York Convention Ctr. Dev. Corp., 838 F.2d 656, 659 (2d Cir.
1988); Insight Holding Group, LLC v . Sitnasuak Native Corp., 685
F. Supp. 2d 5 8 2 , 589 (E.D. V a . 2010) (“[T]he great weight of
existing circuit authority sensibly holds that by agreeing to a mandatory forum selection clause, parties ordinarily also waive
their § 1441 removal right.”). See also Pace Prop., LLC v .
Excelsior Const., Inc., 2008 WL 4938412, at *2 (N.D. Fla. Nov.
1 8 , 2008) (courts “will find a waiver of the statutory right to
removal only in cases where the forum selection clause mandates
that litigation take place in a particular forum, to the
exclusion of another forum.”). Although not clear-cut in this
circuit, the court assumes that waiver of the right of removal
must be “clear and unequivocal.” See Spenlinhauer v . R.R.
Donnelley & Sons, Co., 534 F. Supp. 2d 1 6 2 , 164 (D. M e . 2008)
(recognizing unsettled question in the First Circuit).
A forum selection clause may be mandatory as to
jurisdiction, venue, or both. Yakin v . Tyler Hill Corp., 566
F.3d 7 2 , 76 (2d Cir. 2009) (“A forum selection clause may bind
parties to either a specific jurisdiction or . . . a specific
venue.”) With regard to jurisdiction, the defendant argues that
the clause is permissive rather than mandatory, suggesting that
it only requires that cases be filed in state court, but not that
they be adjudicated there. With regard to venue, defendant also
says the clause is permissive. That i s , it permits, but does not
require, resolution of disputes in Strafford County.
2 A. Jurisdiction
The contract provides:
Controlling Law This Agreement shall be governed by and construed in accordance with the laws of the State of New Hampshire. Any or [sic] disputes related to this agreement shall be filed in Strafford County, the State Courts of New Hampshire.
Doc. n o . 3-2.
While somewhat clumsy and inartful in expression, the clause
does adequately convey the parties’ agreement that exclusive
jurisdiction over contractual disputes lies in the state court.1
See Silva v . Encyclopedia Britannica Inc., 239 F.3d 385 (1st Cir.
2001).
In Silva, the forum selection clause provided that “[t]his
agreement shall be governed and construed by the laws of the
State of Illinois and all actions involving this agreement must
be brought in the State of Illinois.” Id. at 386 (emphasis
added). The court found that the mandatory language of the
agreement — that i s , inclusion of the word “must” — “express[ed]
the parties’ intention to make the courts of Illinois the
exclusive forum for disputes arising under the contract.” Id. at
1 Because both parties rely on federal and New Hampshire precedent in construing the clause, the court assumes that the parties “do not rely on any distinctive features of” New Hampshire law. Phillips v . Audio Active, Ltd., 494 F.3d 3 7 8 , 386 (2d Cir. 2007). Accordingly, the court “appl[ies] general contract law principles and federal precedent to discern the meaning and scope of the forum clause.” Id.
3 389. It held, therefore, that the forum-selection clause was
mandatory in limiting jurisdiction over disputes to the state’s
courts, and affirmed dismissal of the case. Id.
The court at least implicitly construed the phrase “must be
brought” as being equivalent to “must be adjudicated.” The Court
of Appeals for the Second Circuit reached a similar conclusion
with respect to the phrase “shall be commenced.” Karl Koch
Erecting, 838 F.2d at 658. In Karl Koch Erecting, the court
affirmed a district court’s remand order, holding that the forum
selection clause’s mandate that “[n]o action shall be commenced
. . . except in the Supreme Court of the State of New York,
County of New York,” did not “literally preclude removal,” but,
rather, implicitly did s o . Id. at 659. The court reasoned that,
. . . the parties’ inclusion of the forum-selection clause makes little sense unless it precludes removal by [defendant]. [citation omitted] If the clause does not bar removal, [plaintiff’s] action, although it originated in state court, would be tried in federal court. . . . [Defendant], on the other hand, would not be permitted to assert counterclaims in federal court because they are an ‘action or proceeding . . . commenced by’ [defendant]. . . [That result] seems plainly at odds with the obvious purpose of the forum- selection clause, as well as with the purpose of Fed. R. Civ. P. 13(a) (compulsory counterclaim rule).
Id.
The clause at issue here, properly construed, memorializes
the parties’ agreement that the state courts of New Hampshire
4 shall have exclusive jurisdiction over the parties’ contractual
disputes. Like the provisions in Silva and Karl Koch Erecting,
the clause here uses mandatory language (i.e., “shall”). In
addition, the words “be filed,” as used here, like the words “be
brought” in Silva, and the phrase “shall be commenced” in Karl
Koch Erecting, were not meant to require a meaningless
ministerial act, but implicitly (and consistently with the
obvious intention of the parties) require adjudication in the
state’s courts.
The clause here is plainly mandatory with respect to state
court jurisdiction for an additional reason. While the clause in
Silva referenced only “the State of Illinois” (and yet was found
to mandate state court jurisdiction), the clause here
unambiguously identifies the “State Courts of New Hampshire.”
Cf. Global Satellite Commc’n C o . v . Starmill U.K., Ltd., 378 F.3d
1269, 1273 (11th Cir. 2004) (finding that forum selection clause
did not restrict jurisdiction where it mandated venue in a
particular county, but did not specify state or federal courts).
In BlueTarp Fin., Inc. v . Melloul Blamey Constr. S.C., Ltd., 846
F. Supp. 2d 3 0 7 , 313-14 (D. M e . 2012), the court found that the
phrase “‘courts of the State of Maine’ could be either ‘a term of
sovereignty or simply a term of geography.’” Id. at 313 (quoting
LFC Lessors, Inc. v . Pacific Server Maint. Corp., 739 F.2d 4 , 6
(1st Cir. 1984)). In contrast, the phrase “State Courts of New
5 Hampshire” cannot reasonably be construed as “simply a term of
geography.” “State” directly modifies “Courts,” the phrase is
clearly a term of sovereignty, and it plainly does not include
federal courts.
The clause clearly and unequivocally expresses the parties’
intention to vest exclusive jurisdiction in New Hampshire’s state
courts. Remand, therefore, is warranted.
B. Venue
The parties here unmistakably agreed to litigate any
contractual dispute in Strafford County, New Hampshire. Remand
to the Superior Court of Strafford County i s , therefore
appropriate. See Yakin, 566 F.3d at 76 (where forum selection
clause contained “obligatory venue language,” remand to the state
court located in the designated venue was proper — because no
federal court was located there).
Courts have taken slightly different views with respect to
venue limitations. See Nahigian v . Juno-Loudoun, LLC, 661 F.
Supp. 2d 563, 568 (E.D. V a . 2009) (collecting cases). In
Nahigian, for example, the district court found that a county
venue restriction in a forum selection clause allowed litigation
of the parties’ dispute in federal court located in a different
county. The clause’s geographic limitation, the court held,
6 included the entire federal district because the district
included the designated county. Id. at 568-69. But, in Rihani
v . Team Exp. Distrib., LLC, 711 F. Supp. 2d 5 5 7 , 560-61 (D. Md.
2010), the court found Nahigian’s holding to be “inconsistent
with basic contract law principles” because it effectively
expanded the geographic region which the parties had restricted.
Id. (dismissing case where forum selection clause specified a
county venue for the parties’ disputes, and no federal court was
located in the county).
Given the jurisdictional mandate (i.e., jurisdiction lies
exclusively in New Hampshire’s courts), it necessarily follows
that venue is proper only in Strafford County. Whether, absent
that determination, the venue clause would preclude litigation in
federal court (located in Merrimack County) is a question for
another case on another day.
Conclusion
Plaintiff’s motion to remand, doc. n o . 9, is granted. The
case is remanded to the New Hampshire Superior Court (Strafford
County).
7 SO ORDERED.
t^»^^^*^^^^^
Steven J. McAuliffe Jnited States District Judge
March 1 2 , 2013
cc: Carl W . Potvin, Esq. Michael D. Ramsdell, Esq.