KFC Corporation v. Iron Horse of Metairie Road, LLC et al, No. 2:2016cv16791 - Document 154 (E.D. La. 2018)
Court Description: ORDER AND REASONS - For the foregoing reasons, the Court GRANTS PSI's motion to transfer for forum non conveniens. Iron Rooster's third-party complaint is transferred to the Northern District of Illinois. KFC Corporation's motion to sever and try Iron Rooster's third-party complaint separately, PSI's motion to dismiss for failure to state a claim, and PSI's motion for summary judgment are all DENIED as moot. Signed by Judge Sarah S. Vance on 7/31/2018. (cg)
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KFC Corporation v. Iron Horse of Metairie Road, LLC et al Doc. 154 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA KFC CORPORATION CIVIL ACTION VERSUS NO. 16-16791 IRON HORSE OF METAIRIE ROAD, LLC AND IRON ROOSTER, LLC SECTION “R” (5) ORD ER AN D REASON S Before the Court is third-party defendant Professional Service Industries Inc.’s (PSI’s) m otion to dism iss or transfer for forum non conveniens the third-party com plaint filed by defendants/ third-party plaintiffs Iron Horse of Metairie Road, L.L.C. and Iron Rooster, L.L.C.1 For the following reasons, PSI’s m otion is granted because certain contracts between PSI and Iron Horse and Iron Rooster contain a forum selection clause precluding the third-party com plaint from being filed in this forum . Plaintiff KFC Corporation’s m otion to sever and try Iron Rooster’s thirdparty com plaint separately,2 PSI’s m otion to dism iss for failure to state a claim ,3 and PSI’s m otion for sum m ary judgm ent 4 are all denied as m oot. 1 2 3 4 R. Doc. 71. R. Doc. 66. R. Doc. 97. R. Doc. 99. Dockets.Justia.com I. BACKGROU N D The present m otion concerns a third-party com plaint filed by Iron Horse and Iron Rooster against PSI.5 The Court first recounts the facts of the underlying dispute. A. En viro n m e n tal Co n tam in atio n The initial com plaint in this litigation arose out of a dispute over the rem ediation of environm ental contamination on property in Metairie, Louisiana.6 In 1991, Kentucky Fried Chicken (KFC) of California purchased a piece of real property located at 70 2 Metairie Road in Metairie (the Property).7 KFC California later learned that the Property and an adjoining property located at 80 0 Metairie Road were contam inated perchloroethylene and its m etabolites (the PERC contam ination).8 with All parties agree that this contam ination was caused by a dry-cleaning facility that operated on the prem ises before KFC California purchased the Property.9 5 6 7 8 9 R. Doc. 58. R. Doc. 1. R. Doc. 65-3 at 1; R. Doc. 76-1 at 2. Id. R. Doc. 1 at 2 ¶ 8; R. Doc. 58 at 3 ¶ 8; R. Doc. 99-1 at 3. 2 In 20 0 0 , the owner of the adjoining property filed suit against KFC California and other defendants over the environm ental contam ination.10 This litigation ended in a settlem ent and stipulated consent decree.11 In the consent decree, KFC California agreed to rem ediate the PERC contam ination on its property at 70 2 Metairie Road and the adjoining property.12 The agreem ent provided that rem ediation would be subject to oversight and approval by the Louisiana Departm ent of Environm ental Quality (LDEQ), and would follow tim etables an d deadlines set by the LDEQ. 13 In Novem ber 20 0 4, PSI prepared for KFC California a Voluntary Rem edial Action Plan (VRAP) that set forth procedures for the environm ental rem ediation.14 PSI is an environm ental consultant.15 This plan was subm itted in March 20 0 5 and approved by the LDEQ (the 20 0 5 VRAP).16 PSI and KFC California then allegedly entered into a contract whereby PSI would perform environm ental consulting services for KFC California in connection with the Property (the PSI Contract).17 In 20 0 5, 10 11 12 13 14 15 16 17 R. Doc. 1-2; R. Doc. 65-3 at 2; R. Doc. 76-1 at 2. R. Doc. 1-2. Id. at 2. Id. at 3. R. Doc. 13-13; R. Doc. 13-16. R. Doc. 65-3 at 2; R. Doc. 76-1 at 3. R. Doc. 13-13; R. Doc. 13-17 at 39. R. Doc. 99-2 at 1; R. Doc. 121-1 at 2; R. Doc. 13-18 at 20 . 3 KFC California transferred its interest in the property to KFC U.S. Properties, Inc.18 B. Sale o f th e Pro p e rty an d D u e D ilige n ce Pe rio d On Septem ber 20 , 20 13, Iron Horse agreed to purchase the Property from KFC U.S. Properties in a written purchase agreem ent.19 The purchase agreem ent provided for a 30 -day inspection and due diligence period, and gave Iron Horse the right to cancel the purchase agreem ent during this period.20 Iron Horse then assigned the purchase agreem ent to Iron Rooster (hereinafter, Iron Horse and Iron Rooster are collectively referred to as Iron Rooster).21 After the agreem ent was signed, KFC U.S. Properties m erged into plaintiff KFC Corporation, and title to the Property was thus transferred to KFC Corporation.22 Iron Rooster alleges that KFC Corporation instructed PSI to assist Iron Rooster during the due diligence period, and to treat Iron Rooster as if it were a client.23 Iron Rooster alleges that one day before the close of sale, PSI provided Iron Rooster with a proposal for a new VRAP (the 20 14 VRAP 18 19 20 21 22 23 R. Doc. 65-3 at 3; R. Doc. 76-1 at 3. R. Doc. 13-9; R. Doc. 65-3 at 3; R. Doc. 76-1 at 4. R. Doc. 13-9 at 2; R. Doc. 65-3 at 3; R. Doc. 76-1 at 4. R. Doc. 65-3 at 7; R. Doc. 76-1 at 5. R. Doc. 65-3 at 7; R. Doc. 76-1 at 5. R. Doc. 58 at 4 ¶ 15. 4 Proposal).24 Iron Rooster states that in the 20 14 VRAP Proposal, PSI indicated it would recom m end to the LDEQ that the Property receive an “LDEQ VRP Certificate of Com pletion.”25 Iron Rooster further alleges that it relied on the 20 14 VRAP Proposal when it agreed to proceed with the sale. 26 On February 14, 20 14, after the due diligence period was com plete, KFC Corporation sold the Property to Iron Rooster.27 On the date of sale, KFC Corporation and Iron Rooster also signed an Assignm ent, Assum ption, and Indem nification Agreem ent.28 The assignm ent agreem ent purported to assign to Iron Rooster KFC Corporation’s rights under the PSI Contract.29 The agreem ent specifically provided that Iron Rooster would assum e KFC Corporation’s obligations related to the contam ination, the rem ediation, and the settlem ent agreem ent, and that Iron Rooster would com plete the rem ediation “in a diligent and expeditious m anner.”30 The pream ble to the assignm ent agreem ent states that rem ediation “is in progress pursuant to a 24 25 26 27 28 29 30 Id. at 7 ¶¶ 30 , 32. Id. 7 ¶ 31. Id. 7 ¶ 34. R. Doc. 99-2 at 1; R. Doc. 121-1 at 2. R. Doc. 13-11; R. Doc. 65-3 at 7; R. Doc. 76-1 at 5. R. Doc. 99-2 at 1; R. Doc. 121-1 at 2. R. Doc. 13-11 at 3-4. 5 voluntary rem ediation plan” and “was and is being handled by Professional Services Industries, Inc. (PSI).”31 C. Po s t-Sale Re m e d iatio n After Iron Rooster purchased the Property, PSI continued to perform rem ediation services for Iron Rooster.32 PSI and Iron Rooster entered into at least three agreem ents outlining PSI’s post-sale rem ediation work (the post-sale agreem ents).33 First, in March 20 14, Iron Rooster authorized PSI to undertake confirm atory soil sam pling to verify the required rem ediation.34 Second, in J une 20 14, Iron Rooster authorized PSI to com plete a new VRAP that would m eet the LDEQ’s requirements for obtaining a certificate of 31 Id. at 2. R. Doc. 99-2 at 2; R. Doc. 121-1 at 3. 33 R. Doc. 71-3; R. Doc. 71-4; R. Doc. 71-6. Iron Rooster appears to argue that the post-sale agreem ents are not enforceable contracts because Iron Rooster did not sign the authorization pages attached to the agreem ents. R. Doc. 81 at 7-8; R. Doc. 71-3; R. Doc. 71-4; R. Doc. 71-6. But Iron Rooster explicitly states in its third-party com plaint that it authorized each of the post-sale agreem ents, which would render them enforceable contracts. See R. Doc. 58 at 11 ¶¶ 46, 49; 15 ¶ 69. To the extent that Iron Rooster’s opposition brief to PSI’s m otion for forum non conveniens contradicts these explicit allegations in the third-party com plaint, the Court construes Iron Rooster’s opposition as an untim ely m otion to am end its pleadings, which the Court denies under Federal Rule of Civil Procedure 16(b). See Morin v. Moore, 30 9 F.3d 316, 323 (5th Cir. 20 0 2); Im bornone v. Tchefuncta Urgent Care, Inc., No. 11-3195, 20 13 WL 3818331, at *4 (E.D. La. J uly 22, 20 13) (applying the Rule 16(b) “good cause” standard to an opposition brief that am ended the pleading after the deadline set by the scheduling order). 34 R. Doc. 58 at 11 ¶ 46; R. Doc. 71-3. 6 32 com pletion.35 Pursuant to the J une 20 14 agreem ent, PSI com m itted to prepare a new VRAP, publicly notice the new VRAP, and subm it responses to public and LDEQ com m ents on the proposed VRAP.36 Iron Rooster alleges that PSI represented that the steps in the J une 20 14 agreem ent were necessary to obtain final LDEQ approval of the rem ediation, which would allow Iron Rooster to finally develop the Property. 37 Third, in J une 20 15, Iron Rooster authorized PSI to conduct off-site rem ediation sam pling at a site adjacent to the Property.38 Iron Rooster and PSI dispute whether these agreem ents am ended the PSI Contract, or whether they were wholly separate from the PSI Contract.39 Each of the post-sale agreem ents contained an identical “Choice of Law and Exclusive Venue” provision.40 The provision states: The exclusive venue for all actions or proceedings arising in connection with this agreem ent shall be either the Circuit Court in DuPage County, Illinois, or the Federal Court for the Northern District of Illinois.41 35 R. Doc. 58 at 11 ¶ 49; R. Doc. 71-4 at 2. Iron Rooster confirm s in its response to PSI’s m otion for sum m ary judgm ent that the docum ent PSI includes as R. Doc. 71-4 is the J une 20 14 agreem ent Iron Rooster references in paragraph 49 of its third-party com plaint. See R. Doc. 121 at 3 n.22. 36 R. Doc 71-4. 37 R. Doc. 58 at 12 ¶ 51. 38 Id. at 15 ¶¶ 68-69; R. Doc. 71-6. 39 R. Doc. 99-2 at 2; R. Doc. 121-1 at 3. 40 R. Doc. 71-3 at 10 ; R. Doc. 71-4 at 8; R. Doc. 71-6 at 12. 41 Id. 7 In March 20 15, pursuant to the 20 14 VRAP Proposal and J une 20 14 agreem ent, PSI subm itted a revised VRAP to the LDEQ on Iron Rooster’s behalf (the 20 15 VRAP).42 According to J oseph Caldarera, Iron Rooster’s sole m em ber, the 20 15 VRAP was not accepted by the LDEQ because the 20 0 5 VRAP rem ained in place.43 In J une 20 16, the LDEQ sent letters to both KFC Corporation and Iron Rooster regarding the status of rem ediation at the Property.44 A J une 14, 20 16 letter to Iron Rooster stated that the extent of the contam ination at the Property had not been evaluated and com pleted, and that it was the LDEQ’s understanding that rem ediation efforts had ceased since the sale of the Property.45 A J une 6, 20 16 letter to KFC Corporation sim ilarly stated that on-site rem ediation and m onitoring of site conditions ceased after Iron Rooster purchased the Property, and that KFC Corporation rem ained obligated to rem ediate the contam ination.46 42 43 44 45 46 R. Doc. 76-5; see also R. Doc. 23-4 at 13; R. Doc. 65-2 at 2. R. Doc. 121-2 at 5. R. Doc. 58 at 17 ¶ 78; R. Doc. 76-4. R. Doc. 76-4 at 1. R. Doc. 1-2 at 41-42. 8 D. KFC’s In itial Co m p lain t an d Iro n Ro o s te r’s Th ird -Party Co m p lain t On Decem ber 1, 20 16, KFC Corporation filed suit against Iron Rooster, alleging violations of the purchase and assignm ent agreem ents.47 The com plaint alleged that Iron Rooster failed to fulfill its obligation to rem ediate the environm ental contam ination on the Property.48 On February 28, 20 18, Iron Rooster filed a third-party com plaint against PSI seeking indem nification for any dam ages Iron Rooster m ay owe KFC Corporation.49 The third-party com plaint contains claim s for breach of contract (Count One), specific perform ance (Count Two), detrim ental reliance (Count Three), negligent and fraudulent m isrepresentation (Count Four), negligent and fraudulent suppression (Count Five), and attorney fees (Count Six).50 Iron Rooster alleges that PSI breached its contractual com m itm ents to com plete the rem ediation process on Iron Rooster’s behalf.51 Iron Rooster further alleges that during and after the due diligence period, PSI m isrepresented and failed to disclose relevant facts about the 47 48 49 50 51 R. Doc. 1. Id. at 10 ¶ 35. R. Doc. 58 at 2 ¶ 4. Id. at 20 -30 . Id. at 20 -25. 9 status of the environm ental rem ediation, which prevented Iron Rooster from com pleting the rem ediation and developing the property.52 E. Mo tio n to D is m is s o r Tran s fe r On April 10 , 20 18, PSI m oved to dism iss or transfer the third-party com plaint for forum non conveniens.53 PSI argues dism issal or transfer is required because the March 20 14, J une 20 14, and J une 20 15 agreem ents, as well as an agreem ent from August 20 14, contain forum selection clauses requiring litigation arising from the contracts to be brought in state or federal court in Illinois.54 Iron Rooster argues in its opposition that the agreem ents PSI cites do not form the basis of its contract claim s in the third-party com plaint.55 Iron Rooster states that its contract claim s instead assert a breach of the PSI Contract, which was assigned to Iron Rooster on the date of sale and which does not contain a forum -selection clause.56 Iron Rooster further argues in the alternative that if its contract claim s do assert a breach of the three post-sale agreem ents, the Court should not enforce the forum selection clauses because (1) the m ajority of Iron Rooster’s claim s can be tried in Louisiana, so in the interest of judicial econom y the contract claim s 52 53 54 55 56 Id. at 25-29. R. Doc. 71. R. Doc. 71-1. R. Doc. 8 1 at 1. Id. at 2. 10 should be tried here as well; 57 and (2) Iron Rooster would be subject to “grave inconvenience or unfairness” because a transfer would, “as a practical m atter,” prevent Iron Rooster from seeking indem nity from PSI for any potential dam ages owed to KFC Corporation.58 PSI argues in its reply that the PSI Contract cannot form the basis of Iron Rooster’s contract claim s because the PSI Contract contained a clause prohibiting assignm ent. 59 PSI further argues that even if the assignm ent of the PSI Contract was valid, Iron Rooster has conceded that the post-sale agreem ents am ended the PSI Contract, so the agreem ents’ forum -selection clauses would still govern.60 II. LEGAL STAN D ARD The doctrine of forum non conveniens allows a court to decline jurisdiction, even when the case is properly before the court, if the case m ay be tried in another forum m ore conveniently. In re Volksw agen of Am ., Inc., 545 F.3d 30 4, 313 (5th Cir. 20 0 8). The doctrine “rests upon a court’s inherent power to control the parties and the cases before it and to prevent its process from becom ing an instrum ent of abuse or injustice.” In re Air 57 58 59 60 Id. at 12. Id. at 13. R. Doc. 90 at 2. Id. at 4. 11 Crash Distaster near N ew Orleans v. Pan Am . W orld Airw ay s, Inc., 812 F.2d 1147, 1153-54 (5th Cir. 1987) (en banc), vacated on other grounds sub nom . Pan Am . W orld Airw ay s, Inc. v. Lopez, 490 U.S. 10 32 (1989), opinion reinstated on other grounds, 883 F.2d 17 (5th Cir. 1989) (en banc). The doctrine allows dism issal or transfer of a case when “the forum chosen by the plaintiff is so com pletely inappropriate and inconvenient that it is better to stop the litigation in the place where brought and let it start all over again som ewhere else.” In re Volksw agen, 545 F.3d at 313 n.8 (quoting N orw ood v. Kirkpatrick, 349 U.S. 29, 31 (1955)). Because the doctrine “not only denies the plaintiff the generally accorded privilege of bringing an action where he chooses, but [also] m akes it possible for him to lose out com pletely,” it is subject to “careful lim itation.” Id. In deciding a m otion to transfer for forum non conveniens, a court is not lim ited to the allegations in the com plaint, but m ay consider all of the evidence before it. See Alcoa S.S. Co. v. M/ V N ordic Regent, 654 F.2d 147, 158-59 (2d Cir. 198 0 ) (en banc) (“[I]t is the well-established practice . . . to decide [forum non conveniens] m otions on affidavits.”). 12 The existence of a contractual forum selection clause im poses a heavy burden on the party resisting transfer.61 See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 586 (1991). Forum selection clauses are prim a facie valid and should be enforced unless the non-m oving party can show that enforcem ent would be unreasonable or unjust under the circum stances. M/ S Brem en v. Zapata Off-Shore Co., 40 7 U.S. 1, 16-17 (1972). Unreasonableness m ay exist when (1) the incorporation of the forum selection clause into the parties’ contract was a result of fraud or overreaching; (2) the party seeking to escape enforcem ent of the forum selection clause “will . . . be deprived of his day in court” because of grave inconvenience or unfairness of the selected forum ; (3) the fundam ental unfairness of the chosen law will deprive the plaintiff of a rem edy; and/ or (4) enforcem ent of the forum selection clause would contravene a strong public policy of the forum state. Hay nsw orth v. The Corp., 121 F.3d 956, 963 (5th Cir. 1997) (citing Carnival Cruise Lines, 499 U.S. at 595). The non-m oving party m ay also argue that certain public-interest factors weigh in favor of denying the m otion to transfer. Al Copeland Invs., L.L.C. v. First Specialty Ins. Corp., 884 F.3d 540 , 545 (5th Cir. 20 18 ). These factors include: 61 In the Fifth Circuit, federal law governs the enforceability of forum selection clauses in diversity cases. Barnett v. Dy nCorp Int’l, L.L.C., 831 F.3d 296, 30 1 (5th Cir. 20 16). 13 (1) adm inistrative difficulties flowing from court congestion; (2) local interest in having localized controversies decided at hom e; (3) the interest in having the trial of a diversity case in a forum that is at hom e with the law that m ust govern the action; (4) the avoidance of unnecessary problem s in conflict of laws; and (5) the unfairness of burdening citizens in an unrelated forum with jury duty. Id. The Suprem e Court recently explained that “a valid forum -selection clause should be given controlling weight in all but the m ost exceptional cases.” See Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for W . Dist. Of Tex., 571 U.S. 49, 63 (20 13) (quoting Stew art Org., Inc. v. Ricoh Corp., 587 U.S. 22, 33 (1988 )). III. D ISCU SSION A. Tran s fe r, Rath e r Th an D is m is s al, Is th e Pro p e r Re m e d y PSI has fashioned its m otion as a “Motion to Dism iss for Forum N on Conveniens and Alternative Motion to Transfer.”62 The Court finds that if PSI’s m otion is granted, transfer rather than dism issal is the appropriate rem edy. Under 28 U.S.C. § 140 6(a), a district court can dism iss a case if it has been filed in the “wrong” venue. Sim ilarly, under Federal Rule of Civil Procedure 12(b)(3), a party m ay m ove to dism iss a case for “im proper venue.” The question of whether a venue is “wrong” or “im proper” is 62 R. Doc. 71-1. 14 generally governed by 28 U.S.C. § 1391. See Atl. Marine Constr., 571 U.S. at 55-56. Section 1391 allows a civil action to be brought in a district “in which a substantial part of the events . . . giving rise to the claim occurred. § 1391(a)(1). PSI does not argue that the Eastern District of Louisiana is the “wrong” or “im proper” venue as defined by Section 1391. Indeed, because nearly all of the relevant events took place in Louisiana, this district would indisputably be the correct venue for the litigation absent the forum selection clause in the post-sale agreem ents. PSI instead argues that the forum selection clauses are valid, enforceable, and clearly delineate the courts in which Iron Rooster’s claim s can be brought. The Suprem e Court has instructed that transfer under 28 U.S.C. § 140 4(a) is the appropriate rem edy in this situation. Atl. Marine Constr., 571 U.S. at 59-60 . B. Iro n Ro o s te r Alle ge s PSI Bre ach e d th e Po s t-Sale Agre e m e n ts The parties first dispute whether Iron Rooster’s third-party com plaint contains allegations that PSI breached the post-sale agreem ents.63 Iron Rooster argues in its opposition that its contract claim s are based solely on an alleged breach of the PSI Contract, and that it does not seek to enforce the post-sale agreem ents.64 But the J une 20 14 agreem ent—which Iron Rooster 63 64 R. Doc. 8 1 at 2; R. Doc. 90 at 2. R. Doc. 8 1 at 2. 15 refers to as an “extension, m odification, and/ or am endm ent to the PSI Contract”65—figures prom inently in Iron Rooster’s breach of contract allegations.66 Iron Rooster states that pursuant to the J une 14 agreem ent, PSI com m itted to “prepare and obtain a new VRAP and application as contem plated by the 20 14 VRAP Proposal” that would garner final approval from the LDEQ.67 Iron Rooster explicitly alleges that PSI breached the com m itm ents PSI m ade in the J une 14 agreem ent,68 and that Iron Rooster was injured as a result of that breach.69 Iron Rooster also refers to the March 20 14 and J une 20 15 agreem ents as extensions, m odifications, and/ or am endm ents to the PSI Contract.70 Iron Rooster alleges throughout the third-party com plaint that PSI breached its contractual com m itm ents set forth “(a) in the PSI Contract, (b) in am endm ents, supplem ents and/ or extensions of the PSI Contract; and (c) in express written and oral agreem ents and com m itm ents entered after the 65 R. Doc. 58 at 11 ¶ 49. See, e.g., id. at 11-12 ¶¶ 49-55. 67 Id. at 11-12 ¶¶ 49, 50 . 68 Id. at 12 ¶ 52. 69 See id. at 10 ¶ 42. To the extent Iron Rooster’s opposition brief to PSI’s m otion for forum non conveniens contradicts these explicit allegations in the third-party com plaint, the Court again construes Iron Rooster’s opposition as an untim ely m otion to am end its pleadings, which the Court denies under Federal Rule of Civil Procedure 16(b). See Morin, 30 9 F.3d at 323; Im bornone, 20 13 WL 3818331, at *4. 70 R. Doc. 58 at 11 ¶ 46; 15 ¶¶ 67-68. 16 66 February 14, 20 14 sale.”71 Iron Rooster therefore also alleges in the thirdparty com plaint that PSI has breached the March 20 14 and J une 20 15 agreem ents. Because Iron Rooster has alleged breaches of the post-sale agreem ents, the Court m ust next determ ine whether the scope of the forum -selection clause in those agreem ents extends to Iron Rooster’s other claim s in the third-party com plaint. C. Sco p e o f Fo ru m -Se le ctio n Clau s e s Before a court will enforce a forum selection clause, it m ust first determ ine “whether the clause applies to the type of claim s asserted in the lawsuit.” Braspetro Oil Servs. Co. v. Modec (USA), Inc., 240 F. App’x 612, 616 (5th Cir. 20 0 7) (quoting Terra Int’l, Inc. v. Miss. Chem . Corp., 119 F.3d 688, 692 (8th Cir. 1997)). The court “m ust look to the language of the parties’ contracts to determ ine which causes of action are governed by the forum selection clause.” Id. (quoting Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 222 (5th Cir. 1998)). “[I]f the substance of the[] claim s, stripped of their labels, does not fall within the scope of the [forum selection] clauses, the clauses cannot apply.” Roby v. Corp. of Lloy d’s, 996 F.2d 1353, 1361 (2d Cir. 1993). Contractual forum selection clauses m ay apply to tort 71 Id. at 21 ¶ 97 (em phasis added). 17 causes of action depending on the language of the forum selection clause. See Marinechance Shipping, 143 F.3d at 222-23 (forum selection clause covering “any and all disputes or controversies arising out of or by virtue of” an em ploym ent contract applied to tort claim arising during the course of plaintiff’s em ploym ent). To determ ine whether a forum selection clause applies to tort claim s, the Eighth Circuit has enunciated three general tests: (1) whether the tort claim s “ultim ately depend on the existence of a contractual relationship between the parties”; (2) whether resolution of the tort claim s “relates to the interpretation of the contract”; and (3) whether the tort claim s “involve the sam e operative facts as a parallel claim for breach of contract.” Terra Int’l, 119 F.3d at 694; see also Manetti-Farrow , Inc. v. Gucci Am ., Inc., 858 F.2d 50 9, 514 (9th Cir. 1988) (applying the “relates to interpretation of the contract” test). Courts in this district regularly apply the tests articulated in Terra International when interpreting forum selection clauses. See, e.g., Claim serviceprovider, Inc. v. St. Paul Travelers Cos., Inc., No. 0 6-2475, 20 0 6 WL 2989240 , at *4 (E.D. La. Oct. 18, 20 0 6); Chalos & Co., P.C. v. 18 Marine Managers, Ltd., No. 14-2441, 20 15 WL 50 93469, at *5 (E.D. La. Aug. 28, 20 15). Here, the forum selection clauses state that “[t]he exclusive venue for all actions or proceedings arising in connection with this agreem ent shall be either the Circuit Court in DuPage County, Illinois, or the Federal Court for the Northern District of Illinois.”72 The operative language is “all actions or proceedings arising in connection with this agreem ent.”73 As a general rule, courts read forum selection clauses broadly, “in keeping with the public policy favoring their use.” Paduano v. Express Scripts, Inc., 55 F. Supp. 3d 40 0 , 432 (E.D.N.Y. 20 14) (collecting cases). “The term ‘arising’ is generally interpreted as indicating a causal connection.” Braspetro Oil Servs., 240 F. App’x at 616; see also Phillips v. Audio Active Ltd., 494 F.3d 378, at 389 (2d Cir. 20 0 2) (noting that to “arise out of” m eans “to originate from a specified source, and generally indicates a causal connection”). Courts in num erous circuits have held that the phrase “arising out of,” and sim ilar language, “is broad in scope and reaches all disputes that have their origin in the . . . contract, regardless of whether the dispute involves interpretation or perform ance of the contract per se.” 72 73 R. Doc. 71-3 at 10 ; R. Doc. 71-4 at 8; R. Doc. 71-6 at 12. Id. 19 Marzano v. Proficio Mortg. Ventures, LLC, 942 F.Supp.2d 781, 789 (N.D. Ill. 20 13) (collecting cases); see also Coors Brew ing Co. v. Molson Brew eries, 51 F.3d 1511, 1515 (10 th Cir. 1995) (holding that “arising in connection with the im plem entation, interpretation or enforcem ent” was broad language); TradeCom et.com LLC v. Google, Inc., 435 F. App’x 31, 35 (2d Cir. 20 11) (interpreting a forum selection clause that reads, “arising out of or relating to this agreem ent or the Google Program (s),” broadly to encom pass plaintiff’s claim ). Sim ilarly, courts hold that the use of phrases like “arising out of” or arising “in connection with” should be read broadly to encom pass both contractual and tort claim s. See, e.g., Roby , 996 F.2d at 1361 (holding that there is “no substantive difference . . . between the phrases ‘relating to,’ ‘in connection with’ or ‘arising from ,’” and that such language should be broadly read to include tort actions); Paduano, 55 F. Supp. 3d at 432 (“[W]hen ‘arising out of,’ ‘relating to,’ or sim ilar language appears in a forum selection clause, such language is regularly construed to encom pass securities, antitrust, and tort claim s associated with the underlying contract.”) (internal quotation m arks om itted). Courts also find phrases like “any dispute” or all “litigation of any dispute” in a forum selection clause, or in a sim ilar contractual provision, to be indicative of a clause’s broad scope. See Claim serviceprovider, Inc., 20 0 6 20 WL 2989240 , at *1, *5-6 (finding that a forum selection clause covering “litigation of any dispute arising under” the contract broadly applied to plaintiff’s claim s for fraud, negligence, and conversion); Nat’l R.R. Passenger Corp. v. Boston & Me. Corp., 850 F.2d 756, 760 (D.C. Cir. 1988 ) (explaining that the phrase “[a]ny claim or controversy” is broad in scope); Louis Drey fus N egoce S.A. v. Bly stad Shipping & Trading Inc., 252 F.3d 218, 225 (2d Cir. 20 0 1) (interpreting broadly a clause that stated, “any dispute arising from the m aking, perform ance or term ination of this Charter Party”). The Court now turns to whether the forum selection clause in the postsale agreem ents encom passes Iron Rooster’s contract, tort, detrim ental reliance, or attorney fees claim s. 1. Co n t r a ct cla im s As the Court has already noted, Iron Rooster alleges that PSI breached its contractual com m itm ents set forth “(a) in the PSI Contract, (b) in am endm ents, supplem ents and/ or extensions of the PSI Contract; and (c) in express written and oral agreem ents and com m itm ents entered after the February 14, 20 14 sale.”74 Iron Rooster principally argues that its contract claim s are based solely on a breach of the PSI Contract, which does not 74 Id. at 21 ¶ 97 (em phasis added). 21 contain a forum selection clause.75 The Court has already determ ined that Iron Rooster in fact alleges that PSI breached each of the post-sale agreem ents. However, it could still be true that Iron Rooster’s separate allegation that PSI breached the PSI Contract is not subject to the forum selection clause in the post-sale agreem ents. But Iron Rooster’s third-party com plaint explicitly states that each of the post-sale agreem ents was an extension, m odification, and/ or am endm ent to the PSI Contract.76 Iron Rooster therefore concedes that the post-sale agreem ents am ended the PSI Contract to include the forum selection clause, rendering any allegation that PSI violated the term s of the PSI Contract subject to the forum selection clause. But even if the post-sale agreem ents are better classified as separate contracts from the PSI Contract, rather than am endm ents to it, the post-sale agreem ents are so sim ilar to the PSI Contract that adjudicating all of Iron Rooster’s breach of contract claim s would involve the sam e operative facts. The PSI Contract laid out the scope of services PSI would provide KFC 75 The parties dispute whether Iron Rooster can assert that PSI breached the PSI Contract, because the PSI Contract contained a provision prohibiting assignm ent. R. Doc. 81 at 6 n.14; R. Doc. 90 at 2. The Court need not, and will not, address this question in the context of PSI’s present m otion. 76 R. Doc. 58 at 11 ¶¶ 46, 49; 15 ¶¶ 67-68. 22 Corporation in order to rem ediate the contam ination at the Property.77 Iron Rooster alleges that PSI breached the PSI Contract because “it failed and refused to com plete the rem ediation services as described in that contract.”78 Each of the post-sale agreem ents sim ilarly authorizes PSI to take certain steps to com plete the rem ediation.79 In particular, the J une 20 14 agreem ent authorized PSI to com plete an updated VRAP that would m eet the LDEQ’s requirem ents for obtaining a certificate of com pletion.80 In the PSI Contract and post-sale agreem ents PSI thus com m itted to achieve the sam e broad goal—to com plete the rem ediation so that Iron Rooster can develop the property. Iron Rooster in fact conflates the PSI Contract and the post-sale agreem ents in its third-party com plaint, alleging that “[p]ursuant to the PSI Contract[] and pursuant to written and oral agreem ents to extend m odify and/ or am end the PSI Contract . . . , PSI com m itted to conduct ongoing investigation and rem ediation services to im plem ent the new 20 14 Proposed VRAP.”81 Iron Rooster also concedes in its opposition to PSI’s forum non conveniens m otion that the post-sale agreem ents can best be viewed as 77 78 79 80 81 R. Doc. 13-18 at 23-26; R. Doc. 81 at 3. R. Doc. 58 at 21 ¶ 98. R. Doc. 71-3; R. Doc. 71-4; R. Doc. 71-6. R. Doc. 71-4 at 2. R. Doc. 58 at 9 ¶ 40 . 23 authorizations for PSI to perform specific tasks “in furtherance” of the goals set by the PSI Contract. 82 The Court therefore finds that determ ining whether PSI breached its com m itm ents in the PSI Contract would “involve the sam e operative facts” as Iron Rooster’s parallel claim for breach of the post-sale agreem ents. See Terra Int’l, 119 F.3d at 694; Claim serviceprovider, Inc., 20 0 6 WL 2989240 , at *5 (ruling that a forum selection clause covering disputes “arising under” the contract applied to an alleged breach of a separate contract, because both claim s would “involve the sam e operative facts”). Iron Rooster’s allegation that PSI breached the PSI Contract therefore “aris[es] in connection” with the post-sale agreem ents, and the forum selection clause applies to this allegation regardless of whether the post-sale agreem ents did in fact form ally am end the PSI Contract. 2. To r t cla im s Iron Rooster alleges that PSI m ade m aterial false representations to Iron Rooster during and after the due diligence period regarding the status of the environm ental rem ediation.83 Iron Rooster also alleges that PSI 82 R. Doc. 81 at 8 (Iron Rooster argues that “[t]he lim ited tasks described in the [post-sale agreem ents] thus were in furtherance of PSI’s obligations undertaken in the assigned PSI Contract”). 83 R. Doc. 58 at 27 ¶ 119 (Count Four). 24 concealed m aterial inform ation regarding the status of the rem ediation.84 Iron Rooster states that it has been dam aged by PSI’s failure to disclose ongoing delays with the rem ediation because Iron Rooster has been prevented from “im plem enting the . . . 20 14 VRAP Proposal and developing the property.”85 The J une 20 14 agreem ent is the m echanism by which Iron Rooster and PSI agreed to im plem ent the 20 14 VRAP Proposal.86 Iron Rooster’s theory of tort dam ages, then, is that PSI’s alleged torts prevented Iron Rooster from realizing its rights under the J une 20 14 agreem ent.87 Because Iron Rooster’s alleged tort injury is inextricably linked with its claim that PSI breached the J une 20 14 agreem ent, these tort allegations “aris[e] in connection” with that agreem ent and are subject to the agreem ent’s forum selection clause. See Zichichi v. Jefferson Am bulatory Surgery Ctr., LLC, No. 0 7-2774, 20 0 7 WL 335330 4, at *5-6 (E.D. La. Nov. 7, 20 0 7) (forum selection clause covering “any dispute or m atter arising under” an operating agreem ent encom passed fraud and tort claim s because the plaintiff could not “prove resulting in jury without showing th[e] rights he 84 Id. at 28 ¶ 126 (Count Five). Id. at 10 ¶ 42. 86 Id. at 11 ¶ 49 (alleging that in the J une 20 14 agreem ent, “PSI com m itted to prepare and obtain a new VRAP and application as contem plated by the 20 14 VRAP Proposal). 87 Id. at 10 ¶ 42, 11 ¶ 49. 25 85 had pursuant to [the] contract”). In Zichichi, the plaintiff alleged that the defendants conspired to term inate his ownership interest in a surgery center. Id. at *1. The plaintiff’s ownership interest in the surgery center was established in an operating agreem ent that contained a forum selection clause. Id. at *1-2. Because the plaintiff’s theory of injury was based on a deprivation of his rights under the operating agreem ent, the court held that the “plaintiff’s fraud and conspiracy claim s . . . necessarily arise out of the operating agreem ent.” Id. at *6. Here, Iron Rooster’s alleged injury sim ilarly depends upon a showing that PSI’s m isrepresentations and concealm ents prevented Iron Rooster from realizing its rights under the J une 20 14 agreem ent, under which PSI allegedly prom ised to im plem ent a new VRAP that would ultim ately allow Iron Rooster to develop the Property.88 The Court also finds that adjudicating Iron Rooster’s tort claim s would “involve the sam e operative facts” as adjudicating its contract claim s. See Terra Int’l, 119 F.3d at 694; Claim serviceprovider, Inc., 20 0 6 WL 2989240 , at *5; Chalos & Co., 20 15 WL 50 93469, at *6 (tort claim involved the sam e operative facts as a parallel contract claim because to prevail on the contract claim , party needed to first prove the conduct underlying its tort claim ). Iron Rooster alleges that PSI breached its various contractual com m itm ents by (1) 88 Id. at 10 ¶ 42, 11 ¶ 49, 12 ¶ 51. 26 failing to disclose that the new VRAP could not be im plem ented without KFC Corporation’s consent; (2) failing to disclose that the 20 0 5 VRAP had been abandoned; (3) failing to disclose that the m ulti-phase extraction (MPE) system —which was a key com ponent of the rem ediation effort—had been inoperable since 20 12; (4) failing to fully delineate the extent of the contam ination; (5) failing to disclose m eetings between PSI and the LDEQ during the due diligence period; and (6) falsely representing that all necessary offsite rem ediation had been com pleted.89 These very sam e allegations are included in Iron Rooster’s tort claim s. 90 Iron Rooster alleges that PSI m isrepresented the extent of the contam ination at the Property and that the rem ediation was in progress via the MPE m ethod.91 Iron Rooster further alleges that PSI failed to disclose the extent of the contam ination, that the MPE system had been abandoned, and that PSI and the LDEQ had m et during the due diligence period to discuss a “path forward.”92 Because Iron Rooster’s tort and contract allegations are essentially derivative of one another, the claim s revolve around the sam e operative facts. See Chalos & Co., 20 15 WL 50 93469, at *6. 89 90 91 92 The tort claim s therefore “aris[e] in Id. at 21-23 ¶ 99. Id. at 27 ¶ 119. Id. Id. 27 connection” with the post-sale agreem ents, which underpin Iron Rooster’s breach of contract claim s. Finally, it is of no im port that som e of the facts underlying Iron Rooster’s tort allegations took place before the post-sale agreem ents were executed. See Braspetro Oil Servs. Co., 240 F. App’x at 616-17. In Braspetro, the defendants won a bid to construct a large offshore oil platform . The contract between the parties contained a forum selection clause requiring “any dispute or controversy arising from ” the contract to be litigated in Brazil. Id. at 616. When the defendants failed to com plete the project, the plaintiff filed suit, alleging the defendants breached the parties’ agreem ent and also fraudulently induced the plaintiffs to initially award the project to the defendants. Id. at 614. The Fifth Circuit acknowledged that m any of the actions underlying the plaintiff’s tort claim s occurred before the operative contract was executed, but nevertheless enforced the forum selection clause on the plaintiff’s tort claim s. Id. at 616-17. 3. D e t r im e n t a l r e lia n ce cla im Iron Rooster alleges it detrim entally relied upon eight representations m ade by PSI during and after the due diligence period: (1) that rem ediation of the Property was “virtually com plete”; (2) that PSI had disclosed accurate inform ation regarding the status of the contam ination; (3) that Iron Rooster 28 could rely upon PSI for accurate inform ation; (4) that KFC Corporation was in com pliance with the 20 0 5 VRAP; (5) that the 20 15 VRAP would com plete the rem ediation process; (6) that KFC Corporation would accept the 20 15 VRAP; (7) that Iron Rooster would soon obtain a Certificate of Com pletion from the LDEQ; and (8) that after the Property was sold, PSI would continue to provide services to Iron Rooster as necessary until the rem ediation was com plete.93 The Court finds that as with Iron Rooster’s m isrepresentation and suppression claim s, the allegations in the claim for detrim ental reliance are essentially derivative of the allegations in Iron Rooster’s contract claim s,94 and therefore “involve the sam e operative facts” as the contract claim s. See Terra Int’l, 119 F.3d at 694; Claim serviceprovider, Inc., 20 0 6 WL 2989240 , at *5. Iron Rooster’s claim for detrim ental reliance is thus also subject to the forum selection clause in the post-sale agreem ents. 4. At t o r n e y fe e s cla im Iron Rooster’s third-party com plaint includes a cause of action for attorney fees under Louisiana Civil Code article 1958.95 This provision provides that “[t]he party against whom rescission is granted because of 93 94 95 R. Doc. 58 at 26 ¶ 112. Id. at 21-23 ¶ 99. Id. at 30 ¶ 135. 29 fraud is liable for dam ages and attorney fees.” La. Civ. Code art. 1958. Under Louisiana law, dam ages for “attorney’s fees are not allowed except where authorized by statute or contract.” Maloney v. Oak Builders, Inc., 235 So. 2d 386, 390 (La. 1970 ). Iron Rooster’s fraudulent m isrepresentation and suppression causes of action are the only claim s to which article 1958 could conceivably apply. As addressed earlier, the Court has already determ ined that Iron Rooster’s tort claim s “aris[e] in connection” with its claim that PSI breached the post-sale agreem ents. Because Iron Rooster’s claim for attorney fees is inextricably linked with its tort claim s, the claim for attorney fees also “aris[es] in connection” with Iron Rooster’s contract claim s and is subject to the forum selection clause in the post-sale agreem ents. D. En fo rce ability o f th e Fo ru m Se le ctio n Clau s e Because the Court finds that the forum selection clause applies to each of Iron Rooster’s claim s, Iron Rooster, as the party resisting enforcem ent, bears the burden to show that enforcem ent would be unreasonable or unjust under the circum stances. See Atl. Marine Constr., 571 U.S. at 67; Hay nsw orth, 121 F.3d at 963. To determ ine whether transfer is unwarranted despite the existence of a valid forum selection clause, the Court looks to (1) the four factors that m ay indicate enforcem ent of the clause is unreasonable, see Hay nsw orth, 121 F.3d at 963; and (2) the five public- 30 interest factors that m ay weigh in favor of denying transfer despite the enforceability of the clause, see Al Copeland Invs., 884 F.3d at 545. Iron Rooster cites one of the factors identified in Hay nsw orth to argue that enforcing the forum -selection clause would be unreasonable under the circum stances—that Iron Rooster would suffer “grave inconvenience or unfairness” because enforcem ent would, “as a practical m atter,” prevent Iron Rooster from seeking indem nity from PSI for any potential dam ages owed to KFC Corporation.96 Iron Rooster argues that a separate indem nification trial in Illinois “is not really an option” because the key witnesses and the Property all reside in Louisiana.97 But an assertion that the chosen forum is m erely inconvenient for the parties or their witnesses is not a sufficient reason for the Court to ignore a forum -selection clause, which is “given controlling weight in all but the m ost exceptional cases.” Atl. Marine Constr., 571 U.S. at 63; see id. at 64 (“When parties agree to a forum selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for them selves or their witnesses, or for their pursuit of the litigation.”). Iron Rooster has not identified any grave unfairness or practical im pedim ent that would essentially deprive it of its day in court in the Illinois 96 97 R. Doc. 8 1 at 12-13. Id. at 13. 31 state court or federal court the parties chose as the forum for this controversy. Moreover, this Court has previously enforced a forum selection clause in the context of a third-party com plaint seeking indem nification when enforcem ent would force the third-party defendant to bring its claim in a foreign country. See Chalos, 20 15 WL 50 93469, at *2, *7. In Chalos, the defendant argued that the third-party defendant em ployee’s fraudulent m isrepresentations induced it to enter into a retainer agreem ent with the plaintiff, which the plaintiff alleged the defendant breached. Id. at *2. The em ployee’s em ploym ent contract with the defendant contained a forum selection clause granting Greece exclusive jurisdiction over any em ploym ent dispute. Id. at *7. This Court reasoned that any litigation connected to the em ploym ent contract and third-party com plaint was the province of the Greek courts, and granted the em ployee’s forum non conveniens m otion. Id. Iron Rooster does not specifically argue that transfer is im proper pursuant to any of the five public-interest factors the Fifth Circuit com m only applies in an analysis under 28 U.S.C. § 140 4(a).98 See Al Copeland Invs., 884 F.3d at 545. Iron Rooster instead argues that venue in this Court is proper for its non-contract claim s, so in the interest of judicial econom y the 98 See id. at 12. 32 contract claim s should be tried here as well.99 This argum ent is m ooted by the Court’s finding that all of the claim s in Iron Rooster’s third-party com plaint apply to the forum selection clause in the post-sale agreem ents. The Court also finds that none of the public-interest factors that courts norm ally apply in a § 140 4(a) analysis is relevant to this case. The Suprem e Court instructs that an otherwise enforceable forum selection clause should only be ignored “under extraordinary circum stances.” Atl. Marine Constr., 571 U.S. at 62. No such exceptional circum stances are present here. IV. CON CLU SION For the foregoing reasons, the Court GRANTS PSI’s m otion to transfer for forum non conveniens. Iron Rooster’s third-party com plaint is transferred to the Northern District of Illinois. KFC Corporation’s m otion to sever and try Iron Rooster’s third-party com plaint separately, PSI’s m otion to dism iss for failure to state a claim , and PSI’s m otion for sum m ary judgm ent are all DENIED as m oot. 99 Id. (citing Axis Oilfield Rentals, LLC v. Mining, Rock, Excavation & Constr., LLC, No. 15-1627, 20 15 WL 577480 1 (E.D. La. Sept. 30 , 20 15) (noting that courts often consider “judicial econom y as an additional public-interest factor”)). 33 New Orleans, Louisiana, this _31st _ day of J uly, 20 18. ___ _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 34
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