United States District Court, D. Arizona
ORDER
Honorable John J. Tuchi United States District Judge
At
issue is Defendants' Motion to Dismiss (Doc. 18, Mot.),
to which Plaintiffs filed a Response (Doc. 2, Resp.) and
Defendants filed a Reply (Doc. 29, Reply). In this Order, the
Court will also address but not fully resolve Plaintiffs'
Motions to Amend (Docs. 19, 21). The Court finds these
matters appropriate for resolution without oral argument.
See LRCiv 7.2(f). For the reasons that follow, the
Court will grant in part Defendants' Motion to Dismiss
and transfer this case to the Southern District of Texas,
Houston Division.
As a
threshold matter, the Court addresses Defendants' Amended
Notice of Removal (Doc. 32). Defendants removed this case
from Arizona state court. (Doc. 1.) In a recent Order (Doc.
31), the Court required Defendants to amend the Notice of
Removal to provide further detail as to the citizenship of
the limited liability company (LLC) and limited partnership
(LP) parties, so the Court could determine if it has
diversity jurisdiction over this matter. Upon review, the
Court finds that Defendants' allegations in the Amended
Notice of Removal (Doc. 32) are sufficient to demonstrate the
Court's subject matter jurisdiction at the time of
Defendants' removal of this case.
I.
FACTUAL BACKGROUND
This
case arises out of an oil exploration agreement or
agreements, allegedly entered into by Defendants Texas Energy
Acquisitions LP (TEA) and “by law” Alta Mesa GP
LLC (GP)-both Texas entities-and Plaintiffs Deep Wilcox Oil
& Gas LLC (Deep Wilcox) and Hankerson Oil LLC-both
Arizona entities. In 2009, TEA, and “by law” GP,
sought out Plaintiffs to invest in the exploration and
development of TEA's oil well, Herrin Well #1. TEA
representatives made a one-time visit to Phoenix, Arizona to
attend Plaintiffs' investor meetings and discuss Herrin
Well #1 in person. This well is located in Liberty County,
Texas. (Doc. 14, First Am. Compl. (FAC) ¶¶ 12-14,
23.) The parties agreed to a working interest ownership in
the well for Plaintiffs in exchange for funds and then
drafted an Exploration Agreement. (FAC ¶ 17.) Plaintiffs
remained in Arizona during the negotiation and drafting
period, and Defendants remained in Texas. (FAC ¶ 18.)
The
Agreement included both a forum selection and choice of law
clause, which required that any disputes between the parties
be resolved in accordance with Texas law and take place in
Harris County, Texas. (E.g., Mot. Ex. 1, Murrell
Decl. Ex. B, Agreement § 14.) The Agreement also
required TEA to send notices, updates, distributions, billing
statements, and other documents from Texas to Arizona. (FAC
¶ 26.)
After
entering into the Exploration Agreement, TEA retained
Defendant Alta Mesa Services LP (AMS) to operate the well.
(FAC ¶ 29.) TEA learned that the well was not
economically viable in 2009 but failed to inform Plaintiffs.
(FAC ¶ 32.) Plaintiffs did not learn this fact until
July 2016. (FAC ¶ 32.) Defendants also failed to
maintain any record of Plaintiffs' working interest in
Herrin Well #1. (FAC ¶ 37.)
In the
FAC, Plaintiffs allege seven claims, including fraudulent
conversion, fraud, fraudulent inducement, violating the
Consumer Fraud Act, gross negligence, breach of the
Exploration Agreement, and unjust enrichment. (FAC
¶¶ 41-95.) Defendants have now filed a Motion to
Dismiss, arguing that the Court lacks personal jurisdiction
over them, that venue is improper, that the forum non
conveniens doctrine applies, and that Plaintiffs fail to
state a claim. (Mot. at 1.) Defendants contend that the Court
should transfer the case to the Southern District of Texas,
Houston Division. (Mot. at 2.) Plaintiffs subsequently filed
an opposed Motion to Amend the Complaint (Doc. 19), and an
Amended Opposed Motion to Amend the Complaint (Doc. 21).
Because Defendants' request to transfer this case is
dispositive, the Court will focus its analysis on that aspect
of Defendants' Motion to Dismiss.
II.
LEGAL STANDARD
Under
28 U.S.C. § 1404(a), “[f]or the convenience of
parties and witnesses, in the interest of justice, a district
court may transfer any civil action to any other district or
division where it might have been brought.” The purpose
of this statute “is to prevent the waste of time,
energy and money and to protect litigants, witnesses and the
public against unnecessary inconvenience and expense.”
Airbus DS Optronics GmbH v. Nivisys LLC, No.
CV-14-02399-PHX-JAT, 2015 WL 3439143, at *2 (D. Ariz. May 28,
2015) (citation and internal quotation marks omitted). It is
the defendant's burden to show transfer is warranted, and
“[t]he defendant must make a strong showing of
inconvenience to warrant upsetting the plaintiff's choice
of forum.” Decker Coal Co. v. Commonwealth Edison
Co., 805 F.2d 834, 843 (9th Cir. 1986); see also
Jones v. GNC Franchising, Inc., 211 F.3d 495, 499 (9th
Cir. 2000).
District
courts employ a two-step analysis when determining whether a
transfer is proper. Airbus DS Optronics, 2015 WL
3439143, at *2. First, a court considers whether “the
case could have been brought in the forum to which the moving
party seeks to transfer the case.” Id. In
order to meet this requirement, the court in the proposed
transferee district “must have subject matter
jurisdiction and proper venue, and the defendant must be
amenable to service of process issued by that court.”
Id. “Second, a court must consider whether the
proposed transferee district is a more suitable choice of
venue based upon the convenience of the parties and witnesses
and the interests of justice.” Id. The Ninth
Circuit has set forth factors that a court may consider in
making this determination:
(1) the location where the relevant agreements were
negotiated and executed, (2) the state that is most familiar
with the governing law, (3) the plaintiff's choice of
forum, (4) the respective parties' contacts with the
forum, (5) the contacts relating to the plaintiff's cause
of action in the chosen forum, (6) the differences in the
costs of litigation in the two forums, (7) the availability
of compulsory process to compel attendance of unwilling
non-party witnesses, and (8) the ease of access to sources of
proof.
Jones, 211 F.3d at 498-99.
III.
ANALYSIS
In the
Motion to Dismiss, Defendants pose five arguments in support
of dismissal: 1) the Court does not have personal
jurisdiction over them; 2) the forum selection clause in the
Agreement renders venue improper; 3) the doctrine of
forum non conveniens applies; 4) Plaintiffs failed
to comply with Federal Rule of Civil Procedure 12(b)(6); ...