Drake Water Technologies, Inc. v. National Oilwell Varco, L.P.

Filing 28

ORDER re 5 MOTION to Transfer to United States District Court for the Southern District of Texas, Houston Division filed by National Oilwell Varco, L.P. Hearing on Defendant's Motion to Transfer was held, as noted, on May 31, 2017. NOV's Motion to Transfer is GRANTED. This case is transferred to the United States District Court for the Southern District of Texas, Houston Division. Signed by Judge Sam E Haddon on 6/2/2017. (HEG)

IN THE UNITED STATES DISTRICT COURT

FILED

FOR THE DISTRICT OF MONTANA

JUN 0 't. 2017

HELENA DIVISION

Clerk. U.S. District Court
District Of Montana
Helene

DRAKE WATER TECHNOLOGIES,
INC.,

No. CV 17-38-H-SEH
Plaintiff,
vs.

ORDER

NATIONAL-OIL WELL VARCO,
L.P.,
Defendant.

Background 1
Plaintiff Drake Water Technologies, Inc. filed this action in state court on
February 23, 2017, alleging claims related to work developing an industrial waste
cleanup technology, "ThermFlo," for use in the oil and gas industry. The amended
complaint describes ThermFlo as a technology "designed to be a mobile, thermal
process for on-site remediation of organically contaminated solids derived
1

Document pinpoint citations reference the CM/ECF system page numbers.
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primarily from the production of crude oil." 2 The Defendant, National-Oilwell
Varco, L.P. ("NOV"), in its Answer to Amended Complaint, asserts it "provides
services to the oil and gas industry, including services related to environmental
remediation." 3
On February 1, 2015, Plaintiff and NOV entered into a Consultant
Agreement by which Plaintiff"agree[d] to provide certain engineering, testing and
development services to NOV." 4 NOV, in its Answer to Amended Complaint,
states "it paid Plaintiff to work on developing the ThermFlo technology during
2015. " 5 Plaintiff asserts NOV later agreed to support Plaintiffs application for
grant funding from the North Dakota Industrial Commission ("NDIC") to develop
a mobile ThermFlo unit. 6
The case was removed to this Court on March 28, 2017. 7 An amended
complaint was filed on April 16, 2017, alleging five counts related to NOV's
failure to support the grant application: Breach of Contract, Promissory Estoppel,

2

Doc. 11 at 3.

3

Doc. 18 at 3.

4

Doc. 7-1 at2.

5

Doc. 18 at 4.

6

See Doc. 11 at 5.

7

Doc. I.
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Equitable Estoppel, Surety Obligations, and Attorney Fees. 8 NOV counterclaimed
asserting, inter alia, that Plaintiff breached the February 1, 2015, Consultant
Agreement and that NOV is entitled to a declaratory judgment that it is the rightful
owner of certain inventions under the Consultant Agreement. 9
Motion to Transfer
NOV moved under 28 U.S.C. § 1404(a) to transfer the case to the United
States District Court for the Southern District of Texas, Houston Division, in
accordance with a forum-selection clause in the Consultant Agreement. 10 A
hearing on the motion was held on May 31, 201 7.
Paragraph 6.2 of the Consultant Agreement states:
This Agreement, and any modifications to or
extensions of this Agreement, shall be construed under
and governed by the laws of the State of Texas without
regard to conflicts of law provisions. Any action or
proceeding arising out of or relating to this Agreement
shall be brought in a court sitting in Harris County,
Texas, and each of the parties irrevocably submits to the
exclusive jurisdiction of such court in any such action or
proceeding, waiving any objection it may now or
hereafter have to venue or convenience of forum. 11

8

Doc. 11.

9

See Doc. 9 at 12-19; see also Doc. 18 at 2.

10

Doc. 5.

11

Doc. 7-1 at6.
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Plaintiff acknowledges transfer is appropriate if its claims arise out of or
relate to the Consultant Agreement. 12 Plaintiff maintains, however, its "claims are
based on an entirely separate transaction, not founded, factually or legally on any
part of the Consultant Agreement;" 13 an argument, which, unfortunately for
Plaintiff, wholly ignores that the Consultant Agreement is at the heart of and forms
the basis for NOV's counterclaim.
28 U.S.C. § 1404. Change of venue

A forum-selection clause that selects a particular federal district may be
enforced by transfer under 28 U.S.C. § 1404(a):
(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. 14
A contractually valid forum-selection clause is to "be 'given controlling weight in
all but the most exceptional cases. "' 15 "[It] is presumptively valid[.] [T]he party

12

See Doc. 12 at 13.

13

Doc. 12 at 24.

14

28 U.S.C. § 1404(a) (2012); see also Atl. Marine Constr. Co. v. United States Dist.
Court, 134 S. Ct. 568, 579 (2013).
15

Atl. Marine Constr. Co., 134 S. Ct. at 579 (quoting Stewart Org., Inc. v. Ricoh Corp.,
487 U.S. 22, 33 (1988) (Kennedy, J., concurring)).

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seeking to avoid a forum selection clause bears a 'heavy burden' to establish a
ground upon which [the court] will conclude the clause is unenforceable." 16
Plaintiffs arguments in opposition to transfer are grounded in criteria
governing permissive transfer, criteria addressed by the United States Supreme
Court in Atlantic Marine Construction Company. The principles enunciated there,
including that: (1) "plaintiffs choice of forum merits no weight;" 17 (2) the Court
"should not consider arguments about the parties' private interests;" 18 and (3)
transfer of a case to the forum named in the forum-selection clause "will not carry
with it the original venue's choice-of-law rules," 19 all mitigate against Plaintiffs
position on transfer.
Forum-Selection Clause

Plaintiff does not dispute the validity of the forum-selection clause itself. In
addition, the parties agree the forum-selection clause is broad, applying to "[a]ny
action or proceeding arising out of or relating to [the Consultant Agreement]." 20

16

Doe Iv. AOL LLC, 552 F.3d 1077, 1083 (9th Cir. 2009) (citing MIS Bremen v. Zapata
Off-Shore Co., 407 U.S. 1, 17 (1972)).
17

At!. Marine Constr. Co., 134 S. Ct. at 581.

18

Id. at 582.

1•

Id.

20

Doc. 7-1 at 6; see also Doc. 6 at 16, Doc. 12 at 15-16.

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Plaintiffs argument that the clause has no application to the claims as asserted in
the amended complaint is, however, wide of the mark.
The amended complaint alone demonstrates Plaintiffs claims "relate to" the
Consultant Agreement. Moreover, the assertion that NOV failed to satisfy its
obligation to support further development of ThermFlo technology through the
NDIC grant process necessarily relies upon, and, indeed, references, the work
completed under the Consultant Agreement. 21
Federal Rule of Civil Procedure 13 governs the assertion of counterclaims.
Here, NOV's counterclaim 22 unequivocally arises out of the Consultant
Agreement, specifically paragraph 5.1 governing ownership of "inventions
conceived or made as a result of or in performance of the services under [the
Consultant Agreement]." 23 In its counterclaim, NOV specifically asserts "Plaintiff
developed the ThermFlo pilot unit as a result of and in performance of the
Consultant Agreement." 24

21

See Doc. 11 at 4-5 (alleging, inter a/ia, NOV agreed to support grant application
"[b]ased on the successes of the preceding year.")
22

NOV's counterclaim is properly before the Court. NOV's Answer to Amended
Complaint states that "[b]oth its counterclaim and jury trial demand are incorporated by reference
herein and expressly preserved." Doc. 18 at 2.
23

Doc. 7-1at5; see also Doc. 9 at 12-19.

24

Doc. 9 at 15.
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Application of the principles of Atlantic Marine Construction Company in
this case is both necessary and appropriate. The validity of the forum-selection
clause is unrefuted. Consideration of Plaintiffs claims and NOV's counterclaim
in conjunction with the plain language of the Consultant Agreement warrants
transfer.
ORDERED:
1.

Hearing25 on Defendant's Motion to Transfer was held, as noted, on

May31,2017.
2.

NOV's Motion to Transfer2 6 is GRANTED.

3.

This case is transferred to the United States District Court for the

Southern District of Texas, Houston Division.
DA TED this

J ~ay of June, 2017.

_,(hw {/kle1n.)

~oN

United States District Judge

25

See Doc. 15.

26

Doc. 5.
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