United States District Court, D. Arizona
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 ...