MPVF Lexington Partners LLC et al v. W/P/V/C LLC et al
Filing
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ORDER Denying 16 Defendants Motion to Dismiss or, in the Alternative, to Transfer Case, by Judge William J. Martinez on 6/4/2015.(evana, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 15-cv-0467-WJM-KMT
MPVF LEXINGTON PARTNERS, LLC, a Delaware limited liability company, and
LEXINGTON DOWNTOWN HOTEL, LLC, a Delaware limited liability company,
Plaintiffs,
v.
W/P/V/C, LLC, a Kentucky limited liability company,
VCI, INC. a Kentucky corporation,
PREMIUM FINANCIAL GROUP, LLC, a Delaware limited liability company,
VINE COMPANY, LLC, a Kentucky limited liability company,
MCV II, LLC, a Kentucky limited liability company,
THE WEBB COMPANIES, a Kentucky corporation,
R. DUDLEY WEBB, individually, and
D. WOODFORD WEBB, JR., individually,
Defendants.
ORDER DENYING MOTION TO TRANSFER
Plaintiff MPVF Lexington Partners, LLC (“MPVF Partners”) and Plaintiff
Lexington Downtown Hotel, LLC (“Lexington Hotel”) (collectively, “Plaintiffs”) are
Colorado-based entities with interests in property in Lexington, Kentucky. (ECF No. 5
¶¶ 1–2, 12–23.) Claiming breach of a settlement agreement, Plaintiffs have sued
several Kentucky-based entities and individuals: W/P/V/C, LLC; VCI, Inc.; Premium
Financial Group, LLC (“Premium”); Vine Company, LLC (“Vine”); MCV II, LLC (“MCV
II”); The Webb Companies; R. Dudley Webb; and D. Woodford Webb, Jr. (collectively,
“Defendants”). Defendants ask this Court to transfer this case to the United States
District Court for the Eastern District of Kentucky (“Transfer Motion”). (ECF No. 16.)
For the reasons stated below, the Transfer Motion is denied.
I. FACTS
This case involves certain hotel, residential, and office real estate interests
associated with a Hilton Hotel in downtown Lexington, Kentucky (“Hotel”). These
interests are owned, or have been owned, in some form by both Plaintiffs and
Defendants, although sometimes indirectly through a complicated network of what
appear to be special- or single-purpose LLC entities. (ECF No. 1 ¶¶ 17–28; ECF No. 5
at 3–5, ¶¶ 12–23.) In any event, at one point, one or the other of the Plaintiffs (or its
affiliate) and certain Defendants (or their affiliates) were members of one of these
LLCs, known as MCV Venture, which is not a party here (and is not to be confused with
Defendant MCV II). (Id. at 4, ¶ 16.)
The MCV Venture operating agreement led to a lawsuit in Kentucky state court in
2013. Specifically, Plaintiff MPVF Partners proposed to sell an office building
connected to the Hotel, allegedly in violation of the operating agreement’s right of first
offer in favor of Defendant Premium. (Id. ¶¶ 15–16.) Premium therefore sued MPVF
Partners, among others. (Id.) The parties settled that suit through the “February 2014
Settlement Agreement.” (Id. ¶ 17.) Exactly what was settled is not clear, but it appears
that Premium came out of the settlement under contract to buy the office building. (See
id. at 19–35.)
In June 2014, MPVF Partners sold the Hotel to Plaintif f Lexington Downtown.
(Id. at 5, ¶ 18.) Premium claimed that this also breached its right of first offer. (Id.) The
following month, while Premium’s latest first-offer dispute was still unfolding, Defendant
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Vine delivered to MPVF Partners a notice of exercise of an option granted to Vine many
years earlier. (Id. at 3, 5, ¶¶ 12–13, 20.) The option permitted Vine to purchase the “Air
Lot,” which is the air rights parcel associated with condominiums atop the Hotel. (Id. at
3, ¶¶ 12–13.) MPVF Partners rejected Vine’s exercise of the option, claiming that the
February 2014 Settlement Agreement had nullified the option. (Id. at 5, ¶ 20.)
In October 2014, various parties (including MPVF Partners and all Defendants)
entered into another settlement, the “October 2014 Settlement Agreement.” (Id. ¶ 21.)
The October 2014 Settlement Agreement purported to resolve both Premium’s dispute
regarding MPVF Partners’ sale of the Hotel and Vine’s dispute regarding MPVF
Partners’ rejection of the Air Lot option. (Id.) Through the October 2014 Settlement
Agreement, Vine acquired MPVF Partners’ interest in the Air Lot via a quitclaim deed.
(Id. ¶ 23.)
As will become significant later, the October 2014 Settlement Agreement
contains a choice-of-forum clause (“Forum Selection Clause”), originally appearing in all
capital letters but which the Court will reprint in this order with normal capitalization:
The exclusive venue for any dispute or legal action arising
from or concerning this agreement . . . and/or the quitclaim
deed shall be the United States District Court for the District
of Colorado or a Colorado state court sitting in Arapahoe
County, Colorado. The parties irrevocably consent to
personal jurisdiction of such courts.
(ECF No. 5-1 at 9.)
As with the February 2014 Settlement Agreement, the peace bought by the
October 2014 Settlement Agreement did not last long. In December 2014, Vine sued
Plaintiffs in Kentucky state court (“Kentucky Action”), alleging that Vine had just
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discovered certain Hotel-related easements recorded by Plaintiffs during the negotiation
of the October 2014 Settlement Agreement. (Id. at 35, ¶ 23.) Vine alleged that these
easements “impose[] several onerous, costly and unnecessary burdens” (id. at 36,
¶ 26), and requested a declaratory judgment that they are unenforceable (id. at 41,
¶ 42).
Vine justified its choice to bring the lawsuit in Kentucky, rather than Colorado, by
pointing to the portion of the October 2014 Settlement Agreement establishing that
“’any easements, declarations, operating agreements or encumbrances of record . . .
that benefit or burden the Hotel Land . . . and/or [the] Air Lot . . . and the oblig ations of
the parties under this Agreement . . . [or] the Quitclaim Deed’” are excluded from the
claims being settled by that Agreement (“Excluded Claims”). (Id. at 34–35, ¶ 21
(quoting id. at 5).) In other words, Vine took the position that an Excluded Claim falls
entirely outside of the Settlement Agreement, including its Forum Selection Clause.
In January 2015, Plaintiffs (who are defendants in the Kentucky Action) filed a
lawsuit in Colorado state court against Vine (the plaintiff in the Kentucky Action) and the
other parties to the October 2014 Settlement Agreement. (See generally ECF No. 5.)
Plaintiffs alleged that: (a) Vine had breached the October 2014 Settlem ent Agreement
by filing the Kentucky Action; (b) MCV II had breached the October 2014 Settlem ent
Agreement by demanding that Plaintiffs pay over certain rents collected prior to that
Agreement from tenants of the office building; and (c) all Defendants had breached
their obligation to indemnify Plaintiffs “against any and all loss, liability, claim or
expense, including attorneys’ fees, that [Plaintiffs] might incur as a result of the breach
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of this [Settlement] Agreement.” (Id. ¶¶ 34–42; ECF No. 5-1 at 7.) Plaintiffs also
requested a declaration “that the Kentucky Action and [MCV II’s] Rent Demand
constitute breaches of the October 2014 Settlement Agreement for which the
Defendants are obligated, jointly and severally, to indemnify [Plaintiffs].” (ECF No. 5 at
10, ¶ 45.) Defendants subsequently removed Plaintiffs’ lawsuit to this Court. (ECF
No. 1.)
II. ANALYSIS
A.
The Applicability of the Forum Selection Clause
Defendants’ Transfer Motion asks this Court to transfer this case to the Eastern
District of Kentucky under 28 U.S.C. § 1404(a): “For the convenience of parties and
witnesses, in the interest of justice, a district court may transfer any civil action to any
other district or division where it might have been brought or to any district or division to
which all parties have consented.”1 This provision normally requires the Court to weigh
and balance numerous factors, including
the plaintiff’s choice of forum; the accessibility of witnesses
and other sources of proof, including the availability of
compulsory process to insure attendance of witnesses; the
cost of making the necessary proof; questions as to the
enforceability of a judgment if one is obtained; relative
advantages and obstacles to a fair trial; difficulties that may
arise from congested dockets; the possibility of the
existence of questions arising in the area of conflict of laws;
the advantage of having a local court determine questions of
local law; and, all other considerations of a practical nature
that make a trial easy, expeditious and economical.
1
Originally, Defendants also sought dismissal for improper venue under Federal Rule of
Civil Procedure 12(b)(3) and 28 U.S.C. § 1391. (ECF No. 16 at 9–10.) In their reply, however,
Defendants explicitly abandon this argument. (ECF No. 24 at 1 n.1.)
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Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir. 1991)
(internal quotation marks omitted).
However, the Supreme Court has recently held that the presence of a valid
forum selection clause skews any § 1404(a) analysis heavily in favor of “the forum
specified in that clause. Only under extraordinary circumstances unrelated to the
convenience of the parties should a § 1404(a) motion [lead to transfer away from the
specified forum].” Atl. Marine Const. Co. v. U.S. Dist. Court, 134 S. Ct. 568, 581 (2013)
(footnote omitted). Indeed, “a valid forum-selection clause [should be] given controlling
weight in all but the most exceptional cases.” Id.
In terms of weighing and balancing the factors normally considered,
a court . . . should not consider arguments about the parties’
private interests. When parties agree to a forum-selection
clause, they waive the right to challenge the preselected
forum as inconvenient or less convenient for themselves or
their witnesses, or for their pursuit of the litigation. A court
accordingly must deem the private-interest factors to weigh
entirely in favor of the preselected forum.
Id. at 582. Thus, the only thing left to consider are public interest factors, which “may
include the administrative difficulties flowing from court congestion; the local interest in
having localized controversies decided at home; [and] the interest in having the trial of a
diversity case in a forum that is at home with the law.” Id. at 581 n.6 (internal quotation
marks omitted; alteration in original).
As noted above, the October 2014 Settlement Agreement includes a Forum
Selection Clause specifying Colorado as the “exclusive venue for any dispute or legal
action arising from or concerning this Agreement . . . and/or the quitclaim deed.” (ECF
No. 5-1 at 9.) Defendants do not claim that this Clause is invalid, but they insist it does
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not apply to this case. As they have argued in the Kentucky Action, they claim that the
October 2014 Settlement Agreement’s definition of “Excluded Claims” means that any
claim within that definition falls entirely outside of the Settlement Agreement and its
Forum Selection Clause. (ECF No. 16 at 13–14.)
The Court disagrees. To repeat, the Forum Selection Clause specifies an
“exclusive” Colorado forum “for any dispute or legal action arising from or concerning
this Agreement . . . and/or the quitclaim deed.” (ECF No. 5-1 at 9 (emphasis added).)
This lawsuit certainly fits within that extremely broad definition. Plaintiffs claim that the
Kentucky Action violates the October 2014 Settlement Agreement. (ECF No. 5 at 10,
¶ 45.) That claim indisputably arises from or concerns the Settlement Agreement.
To be sure, Plaintiffs’ claim is unusual. In the Court’s experience, these sorts of
second-filed lawsuits tend to be mirror images of the first-filed lawsuit, e.g., if the
first-filed suit is for breach of contract, the second-filed suit is for declaratory judgment
of non-breach. Sometimes the second-filed suit seeks an injunction against the
first-filed suit.2 But that is not the kind of lawsuit that Plaintiffs have brought here.
Plaintiffs do not seek declaratory judgment that they did nothing wrong with respect to
the easements burdening the Hotel, or declaratory judgment that the easements are
valid, and they do not seek an injunction against the Kentucky Action. Rather, they
2
The Court emphasizes, however, that federal courts should not “stay or enjoin pending
state court proceedings except under special circumstances.” Younger v. Harris, 401 U.S. 37,
41 (1971); see also 28 U.S.C. § 2283 (“A court of the United States may not grant an injunction
to stay proceedings in a State court except as expressly authorized by Act of Congress, or
where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.”). Moreover,
“[p]arallel state-court proceedings do not detract from [a federal court’s] obligation” to exercise
jurisdiction where otherwise appropriate. Sprint Commc’ns, Inc. v. Jacobs, 134 S. Ct. 584, 591
(2013).
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believe that the Kentucky Action, by its very existence, breaches the October 2014
Settlement Agreement, entitling Plaintiffs to indemnification and damages. (ECF No. 5
at 8–10, ¶¶ 34–45.) In practical terms, Plaintiffs have effectively asked this Court to
rule that, regardless of the outcome of the Kentucky Action, Defendants must indemnify
Plaintiffs for all costs, expenses, and fees flowing from the Kentucky Action.
On the merits, Plaintiffs may face difficulty justifying such a ruling, but the merits
are not before the Court on this Motion. 3 Plaintiffs have certainly asserted what they
believe to be a violation of the October 2014 Settlement Agreement. Such an
allegation falls under the Forum Selection Clause.
Defendants are correct that the October 2014 Settlem ent Agreement specifically
excludes (i.e., does not resolve) claims based on “any easements, declarations,
operating agreements or encumbrances of record . . . that benefit or burden the Hotel
Land . . . and/or [the] Air Lot . . . and the oblig ations of the parties under this Agreement
. . . [or] the Quitclaim Deed.” (ECF No. 5-1 at 5.) However, Defendants cannot be
correct that “[t]he excluded claims provision renders the October 2014 Settlement
Agreement, and its venue selection clause, irrelevant.” (ECF No. 24 at 4.) If that were
true, then even lawsuits for breach of “the obligations of the parties under this
Agreement” (an Excluded Claim) would be excluded from the Forum Selection Clause,
effectively nullifying it.
The October 2014 Settlement Agreement is governed by Colorado law. (ECF
No. 5-1 at 9.) In Colorado, a court must prefer “a construction of the contract that
3
Plaintiffs have, however, filed an early motion for summary judgment. (ECF No. 14.)
The Court will resolve that motion in due course.
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harmonizes provisions instead of rendering them superfluous.” Copper Mountain, Inc.
v. Indus. Sys., Inc., 208 P.3d 692, 700 (Colo. 2009). A harmonious interpretation is
certainly possible here because the Excluded Claims provision and the Forum Selection
Clause address different topics. The Excluded Claims provision tells the parties that
certain types of claims are not being released or settled. The Forum Selection Clause
tells the parties that any dispute arising from or concerning the Settlement Agreement
must be resolved in Colorado. Thus, to the extent an Excluded Claim arises from or
concerns the Settlement Agreement, a party may properly bring a lawsuit based on the
claim—but it must do so in Colorado.
The Court recognizes that the court in the Kentucky Action appears to have
accepted Defendants’ interpretation of the Excluded Claims provision and therefore
denied a motion to dismiss for improper venue filed by Plaintiffs here (who are
defendants in the Kentucky Action). (ECF No. 23-7 at 18–19.) The court reasoned that
there was uncertainty “whether or not [that case turns] simply [on] an interpretation of . .
. the settlement agreement.” (Id. at 19.) Perhaps that is true with respect to the claims
that Defendant Vine asserts in the Kentucky Action (although it would still seem to
suggest that the dispute should be adjudicated in Colorado, since answering the
question requires interpretation of the Settlement Agreement). Regardless, it is not true
with respect to the claims that Plaintiffs assert here. Directly at issue in this lawsuit is
whether Defendants breached the October 2014 Settlem ent Agreement by, among
other things, filing the Kentucky Action. Whether or not Plaintiffs’ theory of breach will
gain any traction on its merits, it is not a mirror image of the Kentucky Action and it
certainly arises from or concerns the October 2014 Settlement Agreement.
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Thus, the Forum Selection Clause applies to this lawsuit and this Court may not
analyze the private interests normally at stake when deciding a § 1404(a) transfer
motion. Atl. Marine, 134 S. Ct. at 581–82. This Court may only look to public interest
considerations, discussed next.
B.
Public Interest Considerations
Public interest considerations “may include the administrative difficulties flowing
from court congestion; the local interest in having localized controversies decided at
home; [and] the interest in having the trial of a diversity case in a forum that is at home
with the law.” Id. at 581 n.6 (internal quotation marks omitted; alteration in original).
Concerning “a forum that is at home with the law,” Defendants argue (based on
their interpretation of the Excluded Claims) that the October 2014 Settlement
Agreement’s choice of Colorado law does not apply, and that Kentucky law will apply
instead. (ECF No. 16 at 18.) On this, Defendants are simply incorrect. Again, as
Plaintiffs have framed their causes of action, they relate directly to the meaning of the
October 2014 Settlement Agreement. Resolving those causes of action will require
construing the parties’ rights and duties under the Agreement, and such construction
must be done under Colorado law. (ECF No. 5-1 at 9.) Thus, the “forum that is at
home with the law” is this forum.
With respect to “having localized controversies decided at home,” Defendants
are correct that this lawsuit ultimately stems from apparently long-running disputes
regarding the Hotel in Kentucky. (ECF No. 16 at 18–19.) However, Plaintiffs have not
established that a global resolution of all currently persisting disputes about the Hotel is
somehow so important to the general citizenry of Kentucky that it should override the
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parties’ choice of a Colorado forum.
Finally, as to administrative difficulties and court congestion, Defendants point to
statistics from the Administrative Office of the United State Courts showing that this
District has a more congested docket than the Eastern District of Kentucky. (ECF
No. 16 at 17–18.) In fact, when measured by average weighted filings per judge, this
District is almost twice as busy. (Id.) This factor alone weighs in favor of transfer, but
the Court cannot ignore the heavy thumb on the scale placed by the Forum Selection
Clause: “a valid forum-selection clause [should be] given controlling weight in all but the
most exceptional cases.” Atl. Marine, 134 S. Ct. at 581. Although the statistical
disparity is noteworthy, the Court does not deem it “exceptional” enough to override the
parties’ choice of forum.
In sum, the Court finds that the public interest considerations of a § 1404(a)
transfer analysis do not counsel in favor of transfer, at least not strongly enough to
overcome the Forum Selection Clause. 4
III. CONCLUSION
For the reasons set forth above, Defendants’ Motion to Dismiss or, in the
4
Defendants raise the possibility of “inconsistent judgments and rulings between this
Court and the Kentucky Court.” (ECF No. 24 at 4.) Principles of claim and issue preclusion
exist to resolve those problems, and regardless, transferring this lawsuit to the Eastern District
of Kentucky would not eliminate the possibility of inconsistent judgments and rulings. There
would still be two lawsuits: one in Kentucky state court and one in Kentucky federal court.
Defendants’ only real hope for avoiding the possibility of inconsistency would be to convince
one court or the other to abstain from exercising jurisdiction or to stay the case. Defendants
could have brought an abstention or stay motion in this Court, but they have not done so.
Given that the orderly administration of justice would call for such a motion as part of (or
simultaneously with) the Transfer Motion, the Court deems Defendants’ failure to bring such a
motion as a waiver of any abstention or stay argument based on the possibility of inconsistency
with the Kentucky Action.
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Alternative, to Transfer Case (ECF No. 16) is DENIED.
Dated this 4th day of June, 2015.
BY THE COURT:
William J. Martínez
United States District Judge
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