Kelvion, Inc. v. PetroChina Canada Ltd.
Opinion
PetroChina Canada bought ten large heat-exchanger units from Kelvion's Oklahoma plant for use in PetroChina's oil and gas operations. Their contract included a mandatory forum-selection clause subjecting the parties to Canadian jurisdiction. After a dispute over unanticipated delivery costs that PetroChina refused to pay, Kelvion brought suit in Oklahoma. It asserted quantum meruit and unjust enrichment claims, arguing the forum-selection clause did not apply to its equitable claims.
The district court disagreed, concluding the forum-selection clause applied, and dismissed the suit under the doctrine of forum non conveniens . We agree-the parties plainly intended any dispute arising from their contract would be heard in Canadian courts. We affirm the district court's dismissal for forum non conveniens .
I. Background
In August 2012, PetroChina Canada, a Canadian corporation, purchased ten heat exchanger units from Kelvion's principal place of business in Catoosa, Oklahoma. 1 The parties agreed Kelvion would manufacture the exchangers "and arrange for their shipment to [PetroChina's] facility" in Alberta, Canada. App. 158. The Purchase *1091 Order Agreement contained the following provision:
This Purchase Order shall be governed by and construed in accordance with the laws of the Province of Alberta and the Parties agree to accept and submit to the exclusive jurisdiction of the courts of the Province of Alberta.
Id. 228, § 20.1. The Purchase Order also provided that "[c]ost changes ... will not be accepted unless official change order(s) have been issued by [PetroChina]." Id. 202. Once approved, Change Orders became incorporated into the Purchase Order as amendments.
Kelvion provided PetroChina a shipping estimate and shipped the exchangers from Oklahoma in February 2014. Because of unanticipated delays and seasonal restrictions on shipping weights over Canadian roads in the winter, delivery costs exceeded Kelvion's original estimate by $ 671,324. Kelvion never submitted nor did PetroChina approve any change order for the increased shipping costs.
After a long period of negotiation, Kelvion filed suit in Oklahoma state court in May 2017 asserting breach of contract, quantum meruit, and unjust enrichment claims. PetroChina promptly removed to federal court and filed a motion to dismiss for forum non conveniens based on the Purchase Order's mandatory forum-selection clause. Kelvion dropped its breach of contract claim, but insisted the forum-selection clause did not apply to its equitable claims because they addressed matters outside the scope of the contract. The district court dismissed for forum non conveniens after determining the Purchase Order's forum-selection clause governed Kelvion's claims.
II. Analysis
The doctrine of
forum non conveniens
permits a court to dismiss a case when an adequate alternative forum exists in a different judicial system and there is no mechanism by which the case may be transferred.
See
Charles Alan Wright et al., 14D Fed. Prac. & Proc. Juris. § 3828 (4th ed., Nov. 2018 update). Generally,
forum non conveniens
is proper when an adequate alternative forum is available and public- and private-interest factors weigh in favor of dismissal.
See
Piper Aircraft Co. v. Reyno
,
The Supreme Court directs us to several considerations in analyzing whether an action should be dismissed for
forum non conveniens
pursuant to a forum-selection clause.
See
Atl. Marine Constr. Co. v. U.S. Dist. Court
,
Nevertheless, Kelvion argues its equitable claims relate to expenses not bargained for in the contract and thus the forum-selection clause does not control. Kelvion also contends the forum-selection clause cannot apply because the Purchase Order is not a basis for its legal claims.
*1092 A. Standard of Review
As an initial matter, we must determine the appropriate legal framework. In the aftermath of
Atlantic Marine
, courts have considered several approaches to reviewing a district court's dismissal of an action for
forum non conveniens
when a forum-selection clause applies. For example, the Fifth Circuit adopted a bifurcated standard of review. Under this standard, the Fifth Circuit "review[s] the district court's interpretation of the [forum-selection clause] and its assessment of that clause's enforceability
de novo
, then ... review[s] for abuse of discretion the court's balancing of the private- and public-interest factors."
Weber v. PACT XPP Techs., A.G.
,
We find the Fifth Circuit's bifurcated standard sensible and adopt it as our own. Indeed, this standard follows our existing practice for contract interpretation and
forum non conveniens
: questions of contract interpretation are reviewed de novo,
In re: Motor Fuel Temperature Sales Practices Litig.
,
Thus, we proceed de novo to interpret the forum-selection clause and determine its applicability to this dispute. We then consider whether the district court abused its discretion in dismissing the case.
B. Applicability of the Forum-Selection Clause
The scope of a forum-selection clause is evaluated according to ordinary principles of contractual interpretation.
See, e.g.
,
Am. Soda, LLP v. U.S. Filter Wastewater Grp., Inc.
,
The provision here contains two independent clauses addressing choice of law and forum selection. The choice-of-law clause
*1093
governs interpretation of "[t]his Purchase Order," while the forum-selection clause commits "the Parties" to the "exclusive jurisdiction of the courts of the Province of Alberta." App. 228, § 20.1. Although there is no explicit limit to the types of disputes the parties are obligated to bring in the courts of Alberta under this clause, the conjunction linking the two clauses suggests the claims must be sufficiently connected to "[t]his Purchase Order."
3
The provision does not contain potentially broadening language, such as "related to," "associated with," or "arising in connection to."
See
Phillips v. Audio Active Ltd.
,
Even without such broadening language, Kelvion's equitable claims are inextricably linked to the Purchase Order. Its claims arise directly from the agreement, depend on the existence of the agreement, require the court to interpret the agreement, and involve the same operative facts as a claim for breach of the agreement. Kelvion's claims are not merely collateral matters, as it asserts.
The Purchase Order provides PetroChina would pay a "fixed" price, Kelvion would carry the "risk of loss" until the exchangers were delivered, and any "changes that may have an effect on prices" would be approved through a Change Order.
See
App. 225, § 9.1;
id.
226, § 10.1;
id.
202, § 5. If any of those contractual terms apply to the disputed shipping charges, Kelvion's equitable claims are moot.
See
Member Servs. Life Ins. Co. v. Am. Nat'l Bank & Tr. Co. of Sapulpa
,
Kelvion argues a forum-selection clause cannot apply if the contract containing the clause is raised only as a defense, rather than on the face of the complaint. But no such legal rule exists.
See, e.g.
,
MPVF Lexington Partners, LLC v. W/P/V/C, LLC
,
*1094
Indeed, the rule Kelvion proposes would substantially impair the public policy purpose of forum-selection clause enforcement. "If forum selection clauses are to be enforced as a matter of public policy, that ... policy requires that they not be defeated by artful pleading of claims."
Coastal Steel
,
The parties anticipated claims arising directly from the Purchase Order and its interpretation would be subject to the forum-selection clause. That expectation should be given effect.
C. Balancing of Public-Interest Factors
Having determined the forum-selection clause applies, we will "not consider arguments about the parties' private interests" and "may consider arguments about public-interest factors only."
Atl. Marine
,
III. Conclusion
The judgment of the district court is AFFIRMED.
References to Kelvion and PetroChina include their predecessors-in-interest, which were the signatories to the contract.
In this circuit, forum-selection clauses are also construed according to the governing law selected in the contract.
See
Yavuz v. 61 MM, Ltd.
,
The relevant provision states
This Purchase Order shall be governed by and construed in accordance with the laws of the Province of Alberta and the Parties agree to accept and submit to the exclusive jurisdiction of the courts of the Province of Alberta.
App. 228, § 20.1 (emphasis added).
See also
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.
,
Reference
- Full Case Name
- KELVION, INC., a Foreign Corporation, Plaintiff - Appellant, v. PETROCHINA CANADA LTD., Formerly Known as Brion Energy Corporation, a Foreign Corporation, Defendant - Appellee.
- Cited By
- 57 cases
- Status
- Published