Quasar Energy group LLC v. WOF SW GGP 1 LLC

          ORDER

          HONORABLE RANER C. COLLINS UNITED SLATES DISTRICT JUDGE

         Pending before the Court is Defendant WOF SW GGP I LLC's (“WOF”) motion to dismiss or, in the alternative stay (doc. 14), a report and recommendation (“R&R”) prepared by Magistrate Judge Eric Markovich, Plaintiff quasar energy group llc's objections to the R&R and WOF's response. In the R&R, Magistrate Judge Markovich recommends that this Court grant Defendants' motion and dismiss the claims without prejudice with leave for quasar to file an amended complaint reasserting those claims, pending the outcome of the motions currently before the District Court in Oregon. After reviewing the entire record, this Court shall accept and adopt the R&R's conclusion and grant WOF's motion to dismiss.

         STANDARD OF REVIEW

         This Court must “determine de novo any part of the magistrate judge's disposition that has been properly objected to. The district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions.” Fed.R.Civ.P. 72(b)(3); see also 28 U.S.C. § 636(b)(1).

         FACTUAL AND PROCEDURAL BACKGROUND

         The factual and procedural background of this case is fully articulated in the R&R. In essence, quasar and WOF entered into two separate agreements within several days of each other: the Design-Build Agreement and the Operations and Maintenance Agreement (“O&M Agreement”). The Design-Build Agreement, which was entered into first, contains a mandatory forum selection clause stating that claims must be brought to Phoenix, Arizona. The O&M Agreement contains a permissive forum selection clause stating that claims under that agreement may be brought to a state or federal court in Oregon. The agreement also states that once a complaint is filed in Oregon, the parties waive any objections they may have regarding venue.

         On July 19, 2018, WOF filed a complaint in Oregon state court against quasar seeking declaratory relief that WOF rightfully terminated the O&M Agreement. On July 23, 2018, quasar filed a complaint in this Court alleging, among other things, breaches of the Design- Build and O&M Agreements. Doc. 1.

         On August 21, 2018, WOF filed its Motion to Dismiss or, in the Alternative, Stay the Arizona suit. Doc. 14.

         DISCUSSION

         Plaintiff makes two objections to the R&R. First, Plaintiff contends that the R&R erred because it did not enforce the mandatory forum selection clause that requires construction claims to be litigated in Arizona. Second, Plaintiff argues that the R&R's first to file analysis is flawed.

         A. The R&R properly concluded that the mandatory forum selection clause did not apply to claims arising out of the O&M agreement.

         Plaintiff argues that the conflicting forum selection clauses can be harmonized because its claims under the O&M Agreement are subject to the mandatory forum selection clause found in the Design-Build Agreement. Plaintiff reaches this conclusion by noting that the allegations in the O&M Agreement rely on dates found in the Design-Build Agreement, and thus, the mandatory forum selection clause in the Design-Build Agreement must also apply. Plaintiff also claims that the Design-Build Agreement's mandatory forum selection clause supersedes the O&M Agreement's permissive clause because the O&M Agreement fully incorporates the Design-Build Agreement. Lastly, Plaintiff believes that if the conflicting terms cannot be harmonized, then the mandatory provision prevails over the permissive provision because the claims are a part of a common nucleus of operative facts.

         In response, WOF contends that the agreements are separate and distinct. WOF also argues that although the Design-Build Agreement's forum selection clause is mandatory, so too is the O&M Agreement's forum selection clause once a claim is filed in Oregon because the parties agreed to waive challenges to jurisdiction.

         A “forum-selection clause ‘should control except in unusual cases.”' Yei A. Sun v. Advanced China Healthcare, Inc., 901 F.3d 1081, 1088 (9th Cir. 2018) (quoting Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Texas, 571 U.S. 49, 64 (2013)). “Where the parties have agreed to a forum-selection clause, they ‘waive the right to challenge the preselected forum as inconvenient or ...