Diversified v. Kraus

2014 UT App 287_________________________________________________________
THE UTAH COURT OF APPEALS
DIVERSIFIED STRIPING SYSTEMS, INC.,
Plaintiff and Appellant,
v.
JOE KRAUS; FLJ, LLC; AND NATIONAL STRIPING,
Defendants and Appellees.
Memorandum Decision
No. 20130849-CA
Filed December 11, 2014
Third District Court, Salt Lake City Department
The Honorable Kate A. Toomey
No. 120901549
Jeremiah R. Taylor and Richard C. Terry, Attorneys
for Appellees
Timothy Miguel Willardson, Attorney
for Appellant
JUDGE JAMES Z. DAVIS authored this Memorandum Decision, in
which JUDGES J. FREDERIC VOROS JR. and JOHN A. PEARCE
concurred.
DAVIS, Judge:
¶1 Diversified Striping Stystems, Inc. (Diversified) appeals the
district court’s dismissal of its tort claims against Joe Kraus; FLJ,
LLC; and National Striping (collectively, Kraus) on grounds of
forum non conveniens. We reverse and remand for additional
findings.
¶2 On March 2, 2012, Diversified filed a complaint against
Kraus in Utah’s Third District Court, alleging fraud, tortious
interference with existing or prospective economic advantage, and
Diversified v. Kraus
defamation. On July 30, 2012, Kraus filed a motion to dismiss based
on lack of personal jurisdiction. On October 25, 2012, National
Striping filed a complaint against Diversified in Nevada, alleging
conversion and seeking declaratory relief. National Striping’s
claims arose from the same events as Diversified’s claims in the
Utah case. Diversified moved to dismiss the Nevada case, and the
Nevada court stayed the case “pending the outcome of the Utah
case.”
¶3 The Utah Third District Court held a hearing on Kraus’s
motion to dismiss on March 25, 2013. At the hearing, Kraus orally
moved to dismiss the case on forum non conveniens grounds as an
alternative to dismissing it on personal jurisdiction grounds. The
court indicated that it would not entertain the motion at that time
but that Kraus could brief it later.
¶4 Although neither party took any further action, on April 24,
2013, the district court issued a memorandum decision and order
determining that Utah had jurisdiction to hear the case1 but
declining jurisdiction on forum non conveniens grounds. It also
acknowledged the existence of a forum selection clause in a written
agreement between the parties but determined that the clause did
not apply to Diversified’s tort claims. Diversified appeals that
decision.
¶5 Diversified first argues that the district court erred in
determining that the forum selection clause in the parties’ agree-
1. In addition to the other arguments addressed in this decision,
Diversified argues that the court erred by dismissing the case
because Kraus submitted to personal jurisdiction in Utah.
However, because the district court determined that Utah has
personal jurisdiction over Kraus under Utah’s long-arm statute,
this argument is moot. See generally Ellis v. Swensen, 2000 UT 101,
¶ 25, 16 P.3d 1233 (“A case is deemed moot when the requested
judicial relief cannot affect the rights of the litigants.” (citation and
internal quotation marks omitted)).
20130849-CA 2 2014 UT App 287Diversified v. Kraus
ment did not apply to Diversified’s tort claims. “The trial court’s
interpretation of the forum selection clause is a question of law that
we review for correctness.” Energy Claims Ltd. v. Catalyst Inv. Group
Ltd. (Energy Claims I), 2012 UT App 32, ¶ 22, 275 P.3d 257, rev’d on
other grounds, 2014 UT 13, 325 P.3d 70.
¶6 Diversified asserts that, consistent with Energy Claims Ltd. v.
Catalyst Investment Group Ltd. (Energy Claims II), 2014 UT 13, 325
P.3d 70, we should interpret the forum selection clause broadly.
However, the forum selection clause in Energy Claims II governed
“any dispute, controversy or claim that is related to the parties’
contract.” Id. ¶ 45 (internal quotation marks omitted). It was
therefore much broader than the one in this case, which applied
only to “action[s] or proceeding[s] seeking to interpret or enforce
the provisions” of the parties’ agreement. The tort claims brought
by Diversified do not seek to interpret or enforce the provisions of
the parties’ agreement. Thus, the forum selection clause does not
apply to Diversified’s tort claims.
¶7 Diversified next asserts that the district court employed the
wrong legal standard in dismissing its case on forum non
conveniens grounds. “We review a dismissal on forum non
conveniens grounds for an abuse of discretion.” Id. ¶ 27. “While
this standard is highly deferential, it requires us to reverse when a
lower court fails to follow the governing legal standards.” Id.(citation and internal quotation marks omitted).
¶8 Evaluating a motion to dismiss on the grounds of forum non
conveniens involves several analytical steps. The first step requires
the court to “determine whether the plaintiff’s choice of forum is
entitled to deference.”2 Id. ¶ 26. The second step requires the court
2. Generally, “a plaintiff’s choice of forum is entitled to deference
when the plaintiff has brought suit in its home jurisdiction.” Energy
Claims II, 2014 UT 13, ¶ 30, 325 P.3d 70. Nevertheless, the crux of
(continued...)
20130849-CA 3 2014 UT App 287Diversified v. Kraus
to “determine whether an adequate alternative forum exists.” Id.(citation and internal quotation marks omitted). If there is an
adequate alterative forum, then the court must analyze and weigh
the factors set forth in Summa Corp. v. Lancer Industries, Inc., 559
P.2d 544 (Utah 1977). Energy Claims II, 2014 UT 13, ¶ 35. These
factors include (1) “‘the location of the primary parties’”; (2) the
place “‘where the fact situation creating the controversy arose’”; (3)
“‘the ease of access to proof, including the availability and costs of
obtaining witnesses’”; (4) “‘the enforceability of any judgment that
may be obtained’”; (5) “‘the burdens that may be imposed upon the
court in question in litigating matters which may not be of local
concern’”3 ; (6) “the practical burden plaintiffs will face in filing a
new action after dismissal for forum non conveniens”; and (7) any
other “relevant considerations.” Id. ¶¶ 36–37 (quoting Summa, 559
P.2d at 546).
¶9 Rather than undertaking this multi-step inquiry, the district
court appears to have merged its forum non conveniens analysis
with its personal jurisdiction analysis, considering the relevant
forum non conveniens factors only generally. Although many of
the court’s findings were relevant to the forum non conveniens
analysis—such as that the events precipitating the lawsuit occurred
in Nevada and California, that the issues implicated Nevada law,
and that Diversified would have no trouble pursuing its claims in
Nevada because a suit had already been initiated there—the court’s
analysis of the forum non conveniens issue was incomplete. Most
2. (...continued)
the analysis is whether the plaintiff’s forum choice “was motivated
by legitimate reasons” as opposed to “tactical advantage.” Iragorri
v. United Tech. Corp., 274 F.3d 65, 73 (2d Cir. 2001) (en banc), cited
with approval in Energy Claims II, 2014 UT 13, ¶¶ 31–33.
3. Although the burden imposed on the court remains a relevant
consideration, it “carries little weight” where it has been
determined that the plaintiff’s choice of forum was made “for
legally legitimate reasons.” Energy Claims II, 2014 UT 13, ¶ 40.
20130849-CA 4 2014 UT App 287Diversified v. Kraus
notably, the court did not determine the degree to which Diversi-
fied’s choice of forum was entitled to deference. Instead, the court
recognized “a presumption for the plaintiff,” but suggested that
such a presumption exists “primarily because dismissal forces the
plaintiff to initiate the suit anew in another state” and concluded
that because a suit had already been initiated in Nevada, that
concern was alleviated.
¶10 Our supreme court recently addressed the issue of deference
in Energy Claims II. The court explained that the degree of defer-
ence a plaintiff should be afforded in its choice of forum depends
on whether the plaintiff is “motivated by legitimate reasons” in
selecting the forum. Id. ¶¶ 32–33. Because the district court
declined to grant deference to Diversified’s choice of forum based
on its determination that Diversified could pursue its claims in an
alternative forum rather than on a determination that Diversified’s
motives were illegitimate, the court employed the wrong legal
standard. We therefore find it necessary to reverse the district
court’s ruling and remand the case for the district court to consider
the degree of deference that should be afforded to Diversified’s
choice of forum.
¶11 On remand, the district court should also fully analyze the
other factors relevant to the forum non conveniens analysis.
Because the district court ruled on the forum non conveniens issue
without permitting the parties to fully brief and argue it, see supra
¶ __, the court does not appear to have had the opportunity to
consider all facts relevant to the forum non conveniens issue, and
its order, addressing only some, but not all, of the Summa factors,
reflects that. Therefore, on remand, the parties should be given the
opportunity to brief the issue and present the relevant facts at a
hearing, and the district court should conduct the complete three-
step analysis outlined above before ruling on Kraus’s motion to
dismiss the Utah case.
20130849-CA 5 2014 UT App 287