Dawson v. Fitzgerald ( 1999 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
AUG 26 1999
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
HANLEY DAWSON, III,
Plaintiff-Appellee,
v. No. 99-1054
(D.C. No. 98-M-2778)
BRIAN D. FITZGERALD, (D. Colo.)
Defendant-Appellant.
ORDER AND JUDGMENT *
Before TACHA , McKAY , and MURPHY , Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination
of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Defendant Brian D. Fitzgerald appeals from an order issued by the district
court remanding the case to state court. The district court found the parties had
waived their statutory right to remove the action to federal court based on a forum
selection clause in the contract. For the following reasons, we agree with the
district court and affirm the remand order.
As Beaver Creek homeowners, plaintiff Hanley Dawson, III and defendant
were eligible to participate in a lottery held by Vail Corporation, Inc. to purchase
land in the Strawberry Park area of Beaver Creek located in Eagle County,
Colorado. According to defendant, in order to better defendant’s chances in the
lottery, George P. Broadbent, another Beaver Creek homeowner, suggested that
plaintiff also enter the lottery on defendant’s behalf. 1
Plaintiff was successful in
the lottery and obtained the right to purchase the lot that defendant desired.
Thereafter, defendant drafted and the parties executed the Assignment/Second
Sale Agreement (the Assignment Contract) pursuant to which plaintiff assigned to
defendant the right plaintiff had acquired to enter into a sales contract to purchase
land from Vail Corporation. Among other provisions, the Assignment Contract
states that “[i]f Assignee sells the subject property prior to building [a] residence,
then the net sales proceeds . . . shall be divided equally (50/50) by Assignor and
1
The parties stipulated that plaintiff will amend his complaint to add
Broadbent as a plaintiff in the state court action or, in the event we were to
reverse the district court’s order in this appeal, in the federal court action.
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Assignee.” Appellant’s App. at 8. Plaintiff subsequently assigned to defendant
his sales contract with Vail Corporation and defendant purchased the land in
Strawberry Park. Defendant did not build a residence on the property. In 1998,
defendant sold the land covered under the Assignment Contract but did not share
any of the net sales proceeds with plaintiff.
Plaintiff filed a complaint in District Court, Eagle County, Colorado,
claiming breach of contract, unjust enrichment, promissory estoppel, and quantum
meruit. Defendant removed the action to federal court pursuant to 28 U.S.C.
§§ 1441, 1446. 2
Plaintiff moved to have the case remanded to state court based
on a clause in the contract that provides: “[t]he Assignment/Second Sale
Agreement shall be governed under the laws of the State of Colorado, and all
parties agree that venue is proper in the District Court of Eagle County,
Colorado.” Appellant’s App. at 9. The district court granted plaintiff’s motion
and defendant appealed. The parties jointly sought our expedited review which
we hereby grant.
We have appellate jurisdiction under 28 U.S.C. § 1291. Generally, in
order to be appealable under § 1291, a decision has to be final in the traditional
sense that it “‘ends the litigation on the merits and leaves nothing for the court to
2
The parties do not dispute that diversity jurisdiction exists under 28
U.S.C. § 1332(a); plaintiff is a resident of Illinois, defendant is a resident of
Connecticut, and the amount in controversy exceeds $75,000.
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do but execute the judgment.’” Quackenbush v. Allstate Ins. Co. , 517 U.S. 706,
712 (1996) (quoting Catlin v. United States , 324 U.S. 229, 233 (1945)). Despite
this definition of finality, a remand order is appealable under § 1291 because it is
a collaterally final order terminating the action in federal court. See id. at
712-15.
When confronted with a remand order, we must determine whether our
review is barred by 28 U.S.C.§ 1447(d), which states that “[a]n order remanding a
case to the State court from which it was removed is not reviewable on appeal or
otherwise.” Here, the district court’s remand was based on a forum selection
clause rather than on § 1447(c) grounds, i.e., a defect in the removal procedure or
lack of jurisdiction. Hence, our review of the district court’s order is not barred.
See Quackenbush , 517 U.S. at 711-12 (reiterating principle that only § 1447(c)
remand orders are shielded from review by § 1447(d)).
We review de novo the district court’s decision to remand the case to state
court based on an interpretation of a contract provision. See, e.g. , Excell, Inc. v.
Sterling Boiler & Mechanical, Inc. , 106 F.3d 318, 320 (10th Cir. 1997); Milk ‘N’
More, Inc. v. Beavert , 963 F.2d 1342, 1345 (10th Cir. 1992). As stated in Excell ,
because “there are no material discrepancies between Colorado law and federal
common law on these matters” we need not decide “whether Colorado state law or
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federal common law controls the validity and interpretation of the forum selection
clause.” Excell , 106 F.3d at 320.
Forum selection clauses are “prima facie valid and should be enforced
unless enforcement is shown by the resisting party to be unreasonable under the
circumstances.” Milk ‘N’ More , 963 F.2d at 1346. When interpreting contract
language limiting the filing of actions, our goal is to give effect to the parties’
intent as evinced by the language of the contract. See SBKC Serv. Corp. v. 1111
Prospect Partners, L.P. , 105 F.3d 578, 582 (10th Cir. 1997) ( SBKC ). In Milk ‘N’
More , we discussed the difference between mandatory and permissive forum
selection clauses and acknowledged that “a waiver of one’s statutory right to
remove a case from a state to a federal court must be ‘clear and unequivocal.’”
Milk ‘N’ More , 963 F.2d at 1346 (quoting Regis Assocs. v. Rank Hotels
(Management) Ltd. , 894 F.2d 193, 195 (6th Cir. 1990)).
The contract in Milk ‘N’ More provided that:
The parties herein have mutually agreed that said lease and the
purchase option agreement contained herein, where applicable, shall
be governed by the laws of the State of Kansas and the parties further
agree that venue shall be proper under this agreement in Johnson
County, Kansas .
Milk ‘N’ More , 963 F.2d at 1343. We found this language was “reasonably clear”
and “strongly point[ed] to the state court of [Johnson County, Kansas].” Id. at
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1346. Thus, we concluded the clause was a valid, enforceable forum selection
clause. See id.Since deciding Milk ‘N’ More , we have had other opportunities to construe
forum selection clauses in a remand context. See Excell, Inc. , 106 F.3d 318;
SBKC , 105 F.3d 578 . In Excell , the contract provided that “[j]urisdiction shall be
in the State of Colorado, and venue shall lie in the County of El Paso, Colorado.”
Excell , 106 F.3d at 321. We construed this language as a mandatory forum
selection clause which limited the parties to the District Court of El Paso County,
Colorado. See id. In SBKC , the contract provided that “an action may be
maintained in the State of Kansas and the County of Wyandotte for the purposes
of collecting . . . a deficiency.” SBKC , 105 F.3d at 580. This court did not find
that this language constituted a forum selection clause and reversed the district
court’s remand.
Defendant raises three arguments in support of his appeal of the district
court’s remand order. First, he asserts that the district court erred in stating that
the parties to the Assignment Contract waived their statutory right of removal.
Next, defendant contends that the district court incorrectly deemed the language
at issue in the Assignment Contract a forum selection clause. Last, defendant
argues that the district court abused its discretion by issuing a remand order
without giving defendant the opportunity to defend against plaintiff’s motion.
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The clause containing the pertinent contract language before us comprises
two subparts. The first part specifies that “[t]he Assignment/Second Sale
Agreement shall be governed under the laws of the State of Colorado.”
Appellant’s App. at 9. The “shall” employed in the first part mandates that
Colorado law will control disputes between the parties. See Milk ‘N’ More , 963
F.2d at 1346 (“The use of the word ‘shall’ generally indicates a mandatory intent
unless a convincing argument to the contrary is made.”). The second part of the
clause -- “and all parties agree that venue is proper in the District Court of Eagle
County, Colorado,” Appellant’s App. at 9, -- is the focus of this dispute.
The language, “venue is proper in the District Court of Eagle County,
Colorado,” is limiting and mandatory. While the word “shall” appears expressly
in the first part only and not in the second part, the “is proper” language of the
second part, in conjunction with the designation of a particular tribunal, is
functionally equivalent to the “shall be proper” language considered in Milk ‘N’
More and the “venue shall lie” language considered in Excell . In our view, the
“is proper” language cannot be equated with the permissive, nonmandatory “may
be maintained” language analyzed in SBKC . Indeed, we see little to distinguish
the language here from the forum selection clauses in Excell and Milk ‘N’ More .
Hence, we hold that the clause is mandatory. Because the clause is mandatory
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and unequivocal, the parties to the Assignment Contract waived their statutory
right to remove contract disputes to federal court.
Nor do we agree with defendant that the language fails to constitute a
forum selection clause. The clause designates a specific tribunal, the District
Court of Eagle County, Colorado. Therefore, the clause is distinct from the
clause we considered in SBKC which provided only that “an action may be
maintained in the State of Kansas and the County of Wyandotte.” SBKC , 105
F.3d at 580. Our treatment of the clause here as a mandatory and enforceable
forum selection clause accords with the reasoning expressed in SBKC in which
this court applied the term “forum selection clause” only to clauses that designate
a specific tribunal to the exclusion of all others. See id. at 582.
Since we agree with the district court that the language at issue in the
Assignment Contract is an enforceable forum selection clause, defendant can
escape its effect only by demonstrating it is unfair or unreasonable. See Excell ,
106 F.3d at 321. Defendant does not take the position that the clause is either
unfair or unreasonable.
Defendant contends that the district court abused its discretion by ruling on
plaintiff’s remand motion without providing defendant an opportunity to submit a
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brief on the issue. 3
Absent “a specific federal rule, the Federal Rules of Civil
Procedure permit federal judges to regulate practice ‘in any manner consistent
with federal law, rules adopted under 28 U.S.C. §§ 2072 and 2075, and local rules
of the district.’” Beaird v. Seagate Tech., Inc. , 145 F.3d 1159, 1164 (10th Cir.)
(quoting Fed. R. Civ. P. 83(b)), cert. denied , __ U.S. __, 119 S. Ct. 617 (1998).
Permitting a party opposing a remand motion to file a brief falls within the ambit
of “supervision of litigation” since there is no federal law, rule adopted under 28
U.S.C. §§ 2072 or 2075, or local rule that is controlling. Cf. id. at 1164 (holding
that district court’s decision whether to consider matters raised by summary
judgment movant in reply brief without permitting opposing party to surreply falls
under “supervision of litigation”). District court actions that fall within the
framework of “supervision of litigation” are reviewed under an abuse of
discretion standard. See Pierce v. Underwood , 487 U.S. 552, 558 n.1 (1988). We
3
Defendant asserts that he would have opposed the remand motion by
showing that a later contract between plaintiff and defendant, the Assignment of
Sales Contract, does not contain the forum selection clause that is found in the
Assignment/Second Sale Agreement. See Appellant’s Opening Br. at 18 (stating
that defendant was “precluded from showing that the parties’ final 1995
agreement dealing with the same subject matter contains no [forum selection
clause] language”). Defendant fails to develop this argument and demonstrate
how the later agreement affects the terms and provisions of the
Assignment/Second Sale Agreement. Therefore, we do not address this argument.
See National Commodity & Barter Ass’n v. Gibbs , 886 F.2d 1240, 1244 (10th Cir.
1989) (holding that court is “not required to manufacture a party’s argument on
appeal when it has failed in its burden to draw [court’s] attention to the error
below”).
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do not find that the district court here “made a clear error of judgment or
exceeded the bounds of permissible choice in the circumstances.” United States
v. Ortiz , 804 F.2d 1161, 1164 n.2 (10th Cir. 1986)). Therefore, we hold that the
district court did not abuse its discretion.
Accordingly, the remand order of the United States District Court for the
District of Colorado is AFFIRMED.
Entered for the Court
Deanell Reece Tacha
Circuit Judge
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