Presidential Hospitality, LLC et al v. Wyndham Hotel Group, LLC et al

Filing 39

MEMORANDUM OPINION AND ORDER granting in part and denying in part 19 MOTION to Transfer Case Venue by District Judge James O. Browning. (vv)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
PRESIDENTIAL HOSPITALITY, LLC,
a New Mexico limited liability
company; ACE DEVELOPMENT,
INC., a New Mexico Corporation and
SAM BLUE,
Plaintiff,
vs.

No. CIV 17-0981 JB/JHR

WYNDHAM HOTEL GROUP, LLC, a
New Jersey limited liability company;
BAYMONT INN AND SUITES
FRANCHISE SYSTEMS, INC., a
Delaware Corporation and MICROTEL
INN AND SUITES FRANCHISING,
INC., a Georgia corporation,
Defendants.
MEMORANDUM OPINION AND ORDER
THIS MATTER comes before the Court on the Defendants’ Brief in Support of Motion
to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), filed September 29, 2017
(Doc. 19)(“Motion”). The Court held a hearing on June 4, 2018. The primary issues are:
(i) whether the forum selection clause in the Microtel Inns and Suites Franchising, Inc. License
Agreement, filed September 27, 2017 (Doc. 15-1)(“Franchise Agreement”), is contractually
valid; (ii) whether the United States District Court for the District of New Jersey would have
personal jurisdiction over the Plaintiffs if the Court transferred the case; (iii) whether the forum
selection clause in the Franchise Agreement and incorporated in the Amendment Assignment
and Assumption Agreement, filed September 27, 2017 (Doc. 15-2)(“Assignment Agreement”),
is void under New Mexico law, as those agreements are construction contracts under N.M. Stat.

Ann. § 57-28A-1; and (iv) whether the Court should transfer this matter to the United States
District Court for the District of New Jersey so that it can be consolidated with Microtel Inns
and

Suites

Franchising,

Inc.

v.

Presidential

Hospitality,

LLC,

No.

17-5637

(D.N.J.)(Wigenton, J.)(“New Jersey Action”). The Court concludes that: (i) the forum selection
clause is contractually valid; (ii) New Jersey has personal jurisdiction over Plaintiff Presidential
Hospitality and Plaintiff Sam Blue, but not over Plaintiff Ace Development, Inc.; (iii) the Court
may not consider New Mexico public policy when it sits in diversity and considers a 28 U.S.C.
§ 1404(a) motion, but, even if it could, the Franchise Agreement and the Assignment Agreement
are not construction contracts under N.M. Stat. Ann. § 57-28A-1, so the forum selection clause at
issue would not be void as against public policy; and (iv) the Court will transfer Presidential
Hospitality’s and Blue’s claims. The Court may not transfer Ace Development’s claims, because
New Jersey does not appear to have personal jurisdiction over that Plaintiff. Accordingly, the
Court grants the Motion in part and denies it in part. The Court severs Ace Development’s
claims under rule 21 of the Federal Rules of Civil Procedure and transfers the remaining parties
and claims.
FACTUAL BACKGROUND
The Court draws its facts from the First Amended Complaint for Violation of the New
Mexico Unfair Practices Act; Fraudulent Inducement; Negligent Misrepresentation; and Jury
Demand, filed September 25, 2017 (Eleventh Judicial District Court, County of San Juan, State
of New Mexico), filed in federal court on September 26, 2017 (Doc. 1-5)(“FAC”) and from
various attachments to the parties’ briefing. The Court uses and accepts those facts as true only
for the purposes of this Memorandum Opinion and Order. The Court’s acceptance and use of

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those facts here does not mean that those facts are true or that later litigation on those facts is
foreclosed. The Court also notes that the case is at an uncommon posture on a motion to transfer
in that the Court has already adjudicated a motion for a temporary restraining order, see
Memorandum Opinion and Order, 2018 WL 2604831, filed June 2018 (Doc. 37)(“MOO”), so it
has a greater grasp on the facts than it would have on a typical motion to transfer. The Court
summarizes the facts relevant to the transfer issue and then states its more detailed factual
findings from the MOO.
1.

Summary of Facts.

Defendant Wyndham Hotel Group, LLC, through its affiliates, Defendants Baymont Inn
and Suites Franchise Systems Inc., and Microtel Inn and Suites Franchising, Inc., offers, sells,
owns, and operates hotels and hotel chains throughout the United States. See FAC ¶ 1, at 2. In
March, 2011, Plaintiff Sam Blue, a managing member of Plaintiff Presidential Hospitality, LLC,
entered the Franchise Agreement with Microtel Inn, purchasing the rights to a Microtel Inn
franchise. See Franchise Agreement at 1. In exchange for the right to build and operate a
Microtel Inn hotel in Durango, Colorado, Blue agreed, among other things, to pay monthly fees
to Microtel Inn. See Franchise Agreement at 1, 6, 33. The Franchise Agreement includes a
forum selection clause, which reads:
Venue. Any litigation arising out of or related to this Agreement including,
without limitation, any breach of this Agreement and any and all disputes between
the parties, regardless of the form of action, shall be instituted exclusively at our
discretion in the state or federal court of general jurisdiction closest to our thencurrent principal business address. You expressly agree that you are subject to the
jurisdiction and venue of those courts for purposes of such litigation. You hereby
waive and covenant not to assert any claim that you are not subject to personal
jurisdiction in those courts or that venue in those courts is for any reason
improper, inconvenient, prejudicial or otherwise inappropriate (including, without

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limitation, any claim under the judicial doctrine of forum non conveniens). The
provisions of this Paragraph 13N shall be self-executing.
See Franchise Agreement at 29. In May, 2013, Blue, Presidential Hospitality, and Microtel Inn,
entered into the Assignment Agreement, which transferred Blue’s rights and obligations under
the Franchise Agreement to Presidential Hospitality, and allowed Presidential Hospitality to
build and operate the hotel in Aztec, New Mexico, instead of in Durango. See Assignment
Agreement at 1, 4. Blue remained secondarily liable for payment and performance of the
Franchise Agreement.

See Assignment Agreement at 1.

The Assignment Agreement

incorporates the Franchise Agreement, including the Franchise Agreement’s forum selection
clause. See Assignment Agreement at 2; Response at 2 n.1 (admitting that the forum selection
clause is incorporated into the Assignment Agreement by reference). Related to the Assignment
Agreement, Blue signed a Guaranty that Presidential Hospitality will punctually pay and perform
its obligations. See Guaranty at 1, filed September 27, 2017 (Doc. 15-3)(“Guaranty”). Blue
acknowledged in the Guaranty that the Franchise Agreement’s forum selection clause applies to
the Guaranty. See Guaranty at 1.
The Assignment Agreement also stipulates that a Development Incentive Note, filed
September 29, 2017 (Doc. 19-2)(“Dev. Incentive Note”) amends the Franchise Agreement. See
Assignment Agreement at 4.

In the Dev. Incentive Note, Microtel Inn agrees to loan

$105,000.00 to Presidential Hospitality, at no interest, on the conditions that Presidential
Hospitality passes a credit review, pays an application fee, completes the hotel in compliance
with the standards set forth in the Franchise Agreement, and opens the hotel no later than April
5, 2014. See Dev. Incentive Note at 1. Under the Dev. Incentive Note, one-fifteenth of the loan

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amount will be forgiven on each anniversary of the hotel’s opening date. See Dev. Incentive
Note at 1.
In March, 2015, Presidential Hospitality and Blue defaulted on their fee payments to
Microtel Inn. See Letter from Wyndham Hotel Group, LLC to Presidential Hospitality, LLC and
Sam Blue, at 1 (dated March 10, 2015), filed September 26, 2017 (Doc. 1-3). In August, 2015,
Presidential Hospitality and Microtel Inn entered a payment plan to pay off the past amount
Presidential Hospitality and Blue owed as a result of the March, 2015 default. See Payment Plan
Relating to the License Agreement between Microtel Inn & Suites and Presidential Hospitality,
LLC, for the Facility Designated as Unit #47176-03078-01-MTL, Located in Aztec, New
Mexico at 1 (dated August 3, 2015), filed September 26, 2017 (Doc. 1-4)(“Payment Plan”).
Presidential Hospitality did not make the required payments under the Payment Plan. See Letter
from Wyndham Hotel Group, LLC to Sam Blue and Presidential Hospitality, LLC at 1 (dated
October 8, 2015), filed September 26, 2017 (Doc. 1-4)(“October Default Notice”). In July,
2017, Wyndham Hotel sent Presidential Hospitality and Blue another default notice. See Letter
from Wyndham Hotel Group, LLC to Sam Blue and Presidential Hospitality, LLC at 1 (dated
July 12, 2017), filed September 26, 2017 (Doc. 1-4)(“July Default Notice”).

Presidential

Hospitality and Blue never cured that default, so Wyndham Hotel and Microtel Inn terminated
the Franchise Agreement. See Letter from Wyndham Hotel Group, LLC to Sam Blue and
Presidential Hospitality, LLC at 1 (dated September 12, 2017), filed September 27, 2017
(Doc. 15-5)(“Termination Notice”).
On August 1, 2017, Microtel Inn sued Presidential Hospitality and Blue in New Jersey
for the fees owed under the Franchise Agreement. See Microtel Inns and Suites Franchising,

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Inc. v. Presidential Hospitality, LLC, No. 17-5637, Complaint at ¶¶ 1-3, 35-44, at 1-2, 7-8
(D.N.J.)(Doc. 1). See also Microtel Inns and Suites Franchising, Inc. v. Presidential Hospitality,
LLC,

No. 17-5637,

First

Amended

Complaint

at

¶¶ 1-3,

67-86,

at

1-2,

14-17

(D.N.J.)(Doc. 9)(“NJ FAC”). In the NJ FAC, Microtel Inn alleges that Presidential Hospitality
and Blue: (i) have violated the Lanham Act, 15 U.S.C. § 1125(a), by continuing to use the
Microtel registered mark after the Franchise Agreement’s termination, see NJ FAC ¶¶ 45-55, at
10-12; (ii) owe damages for breach of the Franchise Agreement, NJ FAC ¶¶ 56-81, at 12-16; and
(iii) owe damages for breach of the Dev. Incentive Note, NJ FAC ¶¶ 82-86, at 16-17.
2.

Previous Factual Findings.

1.

Wyndham Hotel through its affiliates, Baymont Inn and Microtel Inn offers, sells,

owns, and operates hotels and hotel chains throughout the United States. See FAC ¶ 1, at 2.
2.

Plaintiff Sam Blue is a New Mexico citizen, who is a managing member of

Plaintiff Presidential Hospitality, LLC. See Draft Transcript of Motion Proceedings at 10:7-17
(taken September 28, 2017)(Court, Enriquez)(“Sept. Tr.”).1
3.

The other member of Presidential Hospitality is Plaintiff Ace Development, Inc.,

a New Mexico corporation with its principal place of business in New Mexico. See Sept. Tr. at
10:11-14 (Court, Enriquez); id. at 10:18-24 (Court, Enriquez).
4.

In March, 2011, Blue entered the Franchise Agreement, purchasing the rights to a

Microtel Inn franchise. See Franchise Agreement at 1.
5.

In May, 2013, Blue assigned his rights and obligations under the Contract to

Presidential Hospitality. See Assignment Agreement at 1.
1

The Court’s citations to the hearing transcript refer to the court reporter’s original,
unedited version. Any final transcript may contain slightly different page and/or line numbers

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6.

According to the Plaintiffs, “through various representations, promises,

omissions,” of which many were “false, incomplete, and misleading,” in addition to “highpressure-sales tactics,” the Wyndham Hotel and Microtel Inn induced Blue to purchase that
Microtel Inn franchise. FAC ¶ 2, at 1.
7.

Again, according to the Plaintiffs, that inducement resulted from a relationship

formed among Blue and an agent of the Wyndham Hotel, Gregg Koffler. See FAC ¶¶ 12-49, 6570, at 4-11, 14-16.
8.

Blue first met Koffler in June, 2010, because Koffler had contacted Blue to tell

him that the Wyndham Hotel was interested in property that Blue owned in Aztec, New Mexico.
See FAC ¶¶ 15-19, at 4-5.
9.

Blue believed that the Wyndham Hotel wanted to buy his land. See FAC ¶ 18, at

10.

At his meeting with Koffler, however, instead of discussing the Wyndham Hotel’s

5.

interest in buying Blue’s property, Koffler solicited Blue to purchase a Baymont Inn franchise.
See FAC ¶ 19, at 5.
11.

Koffler told Blue that, if Blue purchased the franchise, Blue would be able to

quickly flip the property for a profit. See FAC ¶ 21, at 5 (“Mr. Koffler told Mr. Blue that there
would be a line of people interested in purchasing the hotel and he guaranteed a buyer by the
time the hotel was built.”); id. ¶ 28, at 7.
12.

Blue was initially uninterested, because he wanted to sell his property. See FAC

¶¶ 13, 20, at 4-5.
13.

To further persuade Blue that purchasing the franchise was a solid investment,

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Koffler told Blue that the Wyndham Hotel “would most likely want to invest in the construction
of the hotel,” FAC ¶ 22, at 5, and that Blue, who had no experience in running a hotel, would not
have to operate it, see FAC ¶¶ 1, 21, 27 at 2, 5-6.
14.

After speaking briefly with a Wyndham Hotel executive, Koffler represented to

Blue that the Wyndham Hotel would invest $150,000.00 in the property. See FAC ¶ 23, at 6.
15.

Koffler did not tell Blue that the Wyndham Hotel’s investment would be a loan.

See FAC ¶ 23, at 6.
16.

Upon Koffler’s representations, in particular the representation that the Wyndham

Hotel would invest $150,000.00 of its own money in the property’s development, Blue agreed to
apply for a Baymont Inn franchise. See FAC ¶ 25, at 6.
17.

About a month later, and after Blue received preliminary approval to buy the

franchise, Blue had second thoughts and told Koffler that he did not think anyone would want to
buy the hotel from him. See FAC ¶ 26, at 6.
18.

Koffler again told Blue that the Wyndham Hotel “was going to have buyers ‘lined

up,’” FAC ¶ 28, at 7, and also that, if Blue did not agree to purchase the franchise, Koffler would
probably lose his job, see FAC ¶ 29, at 7.
19.

Blue subsequently agreed to the purchase and entered into the Baymont Franchise

Systems Inc., Franchise Agreement (“Baymont Contract”). See FAC ¶¶ 34-35, at 8.
20.

Baymont Inn did not provide Blue “a complete and timely copy of its Franchise

Disclosure Document” (“FDD”). FAC ¶ 36, at 8.2

2

The FDD is a document that the franchisor must disclose to the franchisee at least
fourteen calendar days before the franchisee signs a binding agreement with the franchisor. See
16 C.F.R. § 436.2(a). The FDD must contain certain information, including, among other things:

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21.

According to Blue, as a result of the Baymont Contract, he and Koffler became

friends. See FAC ¶¶ 37-38 at 8.
22.

“Mr. Koffler often told Mr. Blue what a great person he was and that he bragged

to his family about him.” FAC ¶ 38, at 8.
23.

Accordingly, “Mr. Blue felt compelled to help Mr. Koffler who referred to

Mr. Blue as his ‘friend.’” FAC ¶ 38, at 8.
24.

Shortly after entering the Baymont Contract, Koffler asked Blue to accompany

him on a potential deal to sell another franchise. See FAC ¶ 37, at 8 (“Mr. Koffler asked
Mr. Blue to vouch for him and Wyndham.”).
25.

Koffler told Blue that his job had been stressful lately, straining relations with his

family, so “he needed to make this sale.” FAC ¶ 37, at 8.
26.

When the potential deal did not happen, Koffler confessed to Blue that he needed

to sell another franchise or the Wyndham Hotel would fire him, and he would lose both his house
and his family. See FAC ¶ 39, at 9.
27.

Koffler also told Blue that he “owed people money” and that those people “would

hurt his family” if he did not pay them back. FAC ¶ 40, at 9.
28.

As Koffler later recounted, the threats against him were “either you pay me or I’ll

come knock on your door; I know where you live and I am going to tell your wife exactly what’s
going on here and you know, who knows what else was going to happen.” FAC ¶ 65, at 14.
29.

In the following weeks, Koffler frequently solicited Blue to buy a Microtel Inn

(i) a brief description of the franchised business; (ii) the total investment necessary to begin
operation; (iii) the franchisor-franchisee contract’s terms; and (iv) a general description of the
competition. See 16 C.F.R. § 436.3-.5.

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franchise for a property in Durango, Colorado. See FAC ¶ 41, at 9.
30.

Koffler again aggressively pitched the deal to Blue. See FAC ¶ 41, at 9.

31.

Koffler told Blue that Blue could easily re-sell the property for profit and that

“Wyndham would have several buyers ready to purchase the hotel.” FAC ¶ 42, at 9.
32.

Koffler added that the Microtel Inn franchise would be an even better deal than

the Baymont franchise, because Microtel Inn was a “new brand” that would be Wyndham
Hotel’s “top money maker.” FAC ¶ 41, at 9.
33.

Koffler also told Blue that “it was hard to get a Microtel franchise,” but he could

get Blue a special price. FAC ¶ 41, at 9.
34.

To further induce the sale, Koffler provided Blue a Smith Travel Research Report

(“Smith Report”). See FAC ¶ 43, at 9-10.
35.

The Smith Report contained information about hotels in Durango from 2005 to

2011, including: occupancy percentage, average daily rate, revenue per available room, supply,
demand, and revenue. See FAC ¶ 43, at 10.
36.

Koffler represented that any Microtel Inn hotel would “perform as well or better

than the hotels in the S[mith] report.” FAC ¶ 43, at 10.
37.

Relying on Koffler’s representations, Blue entered the Contract for a Microtel Inn

franchise and paid a $30,000.00 initial franchise fee. See FAC ¶¶ 44-46, at 10.
38.

Under the Contract, Wyndham Hotel and Microtel Inn have the right to terminate

the Contract with an opportunity to cure if Presidential Hospitality “fail[s] to pay us or any of our
affiliates fees or other amounts due under this Agreement . . . including, without limitation,
Application Fees, Royalty Fees, Contributions, GDS fees, travel agent commission fees or ISP

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fees.” Franchise Agreement at 22.
39.

Wyndham Hotel and Microtel Inn also have the right to terminate the Contract

“without giving you an opportunity to cure the default, effective upon written notice to you” if
“you receive from us three (3) notices of default of this Agreement within a twelve (12) month
period, regardless of whether the defaults are cured.” Franchise Agreement at 22.
40.

Microtel Inn did not provide Blue “a complete and timely copy of its FDD.” FAC

¶ 50, at 11.
41.

A few months after Blue entered the Contract, Blue had still not yet started

building the Baymont hotel. See FAC ¶ 47, at 10.
42.

When Koffler asked about the delay, Blue responded that he again had doubts

about the Baymont hotel, and that he was willing to renege on it, losing his initial investment
franchise fee. See FAC ¶ 47, at 10.
43.

Koffler told Blue that building a Microtel Inn hotel in Aztec would cost less than

building a Baymont hotel in the same location. See FAC ¶ 47, at 11.
44.

Accordingly, Koffler stated to Blue that he would work with the Wyndham Hotel

to transfer the Microtel Inn franchise from Colorado to New Mexico. See FAC ¶ 47, at 11.
45.

Koffler assured Blue that a Microtel Inn hotel in Aztec would “perform equally as

profitable as the hotels in the March 8, 2011 S[mith] report.” FAC ¶ 48, at 11.
46.

Blue agreed to the transfer. See FAC ¶ 51, at 11.

47.

Thus, Blue assigned the Microtel Inn franchise to Presidential Hospitality -- of

which Blue was a managing member -- and the Microtel Deal’s franchise site was moved from
Durango to Aztec. See FAC ¶¶ 51, 55, 57 at 11-12; Assignment Agreement, at 1.

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48.

There are several hotels in the Aztec area, many of which do not have brand

names associated with them. See Step Back Inn, http://stepbackinn.com/; Miss Gail’s Inn,
https://bit.ly/2xxKple; Enchantment Lodge, https://bit.ly/2xxKple.
49.

Many people who travel to Aztec do not travel there again.

50.

Many hotels exist without a well-known brand, such as Wyndham or Hilton or

Hyatt, attached to their name. See, e.g., Hotel Encanto, https://www.hotelencanto.com/; MCM
Elegenté Hotel, http://www.mcmelegantealbuquerque.com/.
51.

Under the Assignment Agreement, Blue and the other owner of Presidential

Hospitality -- ACE Development -- remain secondarily liable for Presidential Hospitality’s
performance under the Contract. See FAC ¶¶ 54, 59 at 12.
52.

Presidential Hospitality subsequently built the Microtel Inn hotel in Aztec. See

FAC ¶ 58, at 12.
53.

As the Microtel Inn hotel neared completion, Blue contacted the Wyndham Hotel

to determine whether it had found a buyer. See FAC ¶ 60, at 12.
54.

At that time, Koffler no longer worked for the Wyndham Hotel. See FAC ¶ 60, at

55.

The Wyndham Hotel had no buyers yet, but a representative said it would “put the

12-13.

word out.” FAC ¶ 60, at 13.
56.

When the Microtel Inn hotel was completed on October 3, 2013, the Wyndham

Hotel still had not found a buyer. See FAC ¶ 63, at 13.
57.

According to Blue, “Wyndham never intended or tried to find a buyer. . . . Mr.

Koffler’s representations and promises were only intended to induce Mr. Blue to purchase the

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hotel franchises and construct the hotel so that Wyndham could collect on royalty payments for
20 years.” FAC ¶ 63, at 13.
58.

Since completion, the Microtel Inn hotel has not performed on par or better than

the hotels listed in the Smith Report. See FAC ¶ 64, at 13.
59.

On March 10, 2015, Wyndham Hotel sent Presidential Hospitality and Blue a

notice of monetary default, stating that they were past due in recurring fees and charges in the
amount of $38,453.96. See Letter from Wyndham Hotel Group to Sam Blue and Presidential
Hospitality, LLC at 1 (dated March 10, 2015), filed September 26, 2017 (Doc. 1-3)(“March
Default Notice”).
60.

The default notice also states:

If you do not pay this amount within the time permitted, we reserve all rights
under the terms of the Agreement including but not limited to termination of the
Agreement and your right to operate in the Microtel Inn and Suites by Wyndham
System. This Notice does not modify, replace, or affect any default under the
Agreement, or any other default and termination notices, if any, from us or any of
our affiliates regarding the Facility. We also reserve the right to take any interim
steps permitted under the Agreement because of your default, such as suspending
the Facility’s access to our central reservation system.
March Default Notice at 1
61.

Blue received a copy of the March Default Notice. See Declaration of Sam Blue

in Support of Plaintiffs’ Application for Temporary Restraining Order ¶ 9, at 3 (dated September
22, 2017), filed September 26, 2017 (Doc. 1-2)(“Blue Declaration”).
62.

On April 17, 2015, Wyndham Hotel sent Presidential Hospitality and Blue

another notice of monetary default, stating they were past due in fees in the amount of
$41,101.56. See Letter from Wyndham Hotel Group to Sam Blue and Presidential Hospitality,
LLC at 1 (dated April 17, 2015), filed September 26, 2017 (Doc. 1-3)(“April Default Notice”).

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63.

The April Default Notice notes that Wyndham Hotel and Microtel Inn had

extended the cure period, but states that it is not “waiving the default or any other default under
the Agreement by extending the cure period. We are simply giving you a final opportunity to
avoid termination.” April Default Notice at 1.
64.

Blue received a copy of the April Default Notice. See Blue Declaration ¶ 10, at 3.

65.

In August, 2015, Presidential Hospitality and Microtel Inn entered a payment plan

to pay off the past amount owed. See Payment Plan relating to the License Agreement between
Microtel Inn & Suites and Presidential Hospitality, LLC, for the facility designated as Unit
#47176-03078-01-MTL, located in Aztec, NM at 1 (dated August 3, 2015), filed September 26,
2017 (Doc. 1-4)(“Payment Plan”).
66.

The Payment Plan again reserved all of Wyndham Hotel’s rights:

This plan does not affect our rights or remedies for any other default that has or
may arise under the Agreement. You expressly acknowledge that you are
obligated to pay timely any other amounts due under the Agreement or any
ancillary agreement and that we may also issue default notices for any other
defaults under this Agreement.
Payment Plan at 1.
67.

Presidential Hospitality did not make the required payments under the Payment

Plan. See Letter from Wyndham Hotel to Sam Blue and Presidential Hospitality at 1 (dated
October 8, 2015), filed September 26, 2017 (Doc. 1-4)(“October Default Notice”).
68.

Accordingly, in October, 2015, Wyndham Hotel sent Presidential Hospitality and

Blue a third notice of default. See October Default Notice at 1.
69.

In the October Default Notice, Wyndham Hotel again reserved all rights under the

Contract, stating:

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If you do not pay this amount within the time permitted, we reserve all rights
under the terms of the Agreement including but not limited to termination of the
Agreement and your right to operate in the Microtel Inn and Suites by Wyndham
System. This Notice does not modify, replace, or affect any default under the
Agreement, or any other default and termination notices, if any, from us or any of
our affiliates regarding the Facility. We also reserve the right to take any interim
steps permitted under the Agreement because of your default, such as suspending
the Facility’s access to our central reservation system.
October Default Notice at 1.
70.

Blue received a copy of the October Default Notice. See Blue Declaration ¶ 11,

71.

Presidential Hospitality and Blue never cured that default. See Tr. at 13:1-4

at 3.

(Sager).
72.

They did, however, make payments to Wyndham Hotel between October, 2015,

and July, 2017, in an amount “totaling approximately $42,000.00.” Declaration of Theresa
Bailey in Support of Plaintiffs’ Application for Temporary Restraining Order ¶ 4, at 2 (dated
September 22, 2017), filed September 26, 2017 (Doc. 1-4)(“Bailey Declaration”).
73.

Blue also exchanged various emails in the following months with Wyndham

Hotel “in an attempt to work out a resolution regarding unpaid monies.” Blue Declaration ¶ 12,
at 3.
74.

On January 23, 2017, Blue spoke with Jennifer Constantinou -- a Wyndham Hotel

in-house attorney -- who told him that “Wyndham would not pursue collection of the amounts
due as long as the parties were discussing a workable solution.” Blue Declaration ¶ 12, at 3.
75.

By July 12, 2017, Presidential Hospitality and Blue were past due in charges

owed to Wyndham Hotel to the tune of $169,915.47. See Letter from Wyndham Hotel to Sam

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Blue and Presidential Hospitality, LLC at 1 (dated July 12, 2017), filed September 26, 2017
(Doc. 1-4)(“July Default Notice”).
76.

On July 12, 2017, Wyndham Hotel sent another default notice. See July Default

Notice at 1.
77.

The July Default Notice informs Presidential Hospitality and Blue that they have

thirty days to cure the default and that Wyndham Hotel reserves all rights under the Contract, but
the July Default Notice does not state when the Contract will be terminated if Presidential
Hospitality and Blue fail to cure the default. See July Default Notice at 1.
78.

Blue received a copy of the July Default Notice. See Blue Declaration ¶ 14, at 4.

79.

After receiving a copy of the July Default Notice, Blue spoke with Lay El-

Bassuni -- Wyndham Hotel’s Vice President of Brand Operations for Microtel Inn -- who told
Blue that “while we work[] together on a workable solution, Wyndham would not shut off the
Hotel’s access to the central reservation system (“CRS”) or Wyndham My Portal
Communications website.” Blue Declaration ¶ 15, at 4.
80.

Presidential Hospitality and Blue never cured the default.

See Letter from

Wyndham Hotel to Sam Blue and Presidential Hospitality, LLC at 1 (dated September 12, 2017),
filed September 27, 2017 (Doc. 15-5)(“Termination Notice”).
81.

At some time after July 12, 2017, but before September 12, 2017, Wyndham

Hotel filed suit against Blue and Presidential Hospitality in the United States District Court for
the District of New Jersey to recover amounts owed. See Blue Declaration ¶ 16, at 4.
82.

At some time unknown, Presidential Hospitality “spent over $5000 in marketing

the hotel in the local community and local groups.” Blue Declaration ¶ 20, at 5.

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83.

On September 12, 2017, Wyndham Hotel terminated the Contract.

See

Termination Notice at 1.
84.

As a result of that Contract termination, the Plaintiffs’ Microtel Inn hotel was

delisted from internet websites that advertise available hotel rooms. See Bailey Declaration ¶¶ 7,
10, at 2-3.
85.

A Google search of “Aztec New Mexico Hotel,” however, still yields “Microtel

Inn & Suites by Wyndham Aztec” at the correct location with a local phone number.
https://bit.ly/2xxKple.
86.

Also as a result of the Contract termination, the Plaintiffs’ have not been able to

access Wyndham Hotel’s central reservation system, which allows the Plaintiffs’ to reserve hotel
rooms for guests. See Bailey Declaration ¶ 12, at 3.
87.

Ninety percent of the Plaintiffs’ Microtel Inn hotel’s reservations are made

through third-party websites. See Bailey Declaration ¶ 13, at 3.
88.

From September 1, 2017 to September 18, 2017, one hundred and seventy-four

reservations were made through third parties and two hundred and six reservations were made
through Wyndham Hotel’s central reservation system. See Bailey Declaration ¶ 13, at 3.
89.

The Plaintiffs “had projected that between September 21, 2017 and September 30,

2017,” they “would receive 40 reservations through third parties.” Bailey Declaration ¶ 13, at 34.
90.

Since the Termination Notice, reservations have dropped ninety percent and the

hotel has lost revenue. See Blue Declaration ¶ 19, at 5; Bailey Declaration ¶ 15, at 4.

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PROCEDURAL BACKGROUND
On September 12, 2017, Presidential Hospitality, Ace Development, and Blue filed suit
in the Eleventh Judicial District Court, County of San Juan, State of New Mexico contending
that Koffler, as the Wyndham Hotel’s agent, fraudulently induced Blue into entering the
Franchise Agreement, fraudulently induced Presidential Hospitality and Blue into the
Assignment Agreement, and fraudulently induced Ace Development and Blue into guaranteeing
Presidential Hospitality’s performance under the Assignment Agreement.

See Presidential

Hospitality, LLC v. Wyndham Hotel Group, No. D-1116-CV-2017-01329, Complaint for
Violation of the New Mexico Unfair Practices Act; Fraudulent Inducement; Negligent
Misrepresentation; and Jury Demand ¶¶ 110-125, at 23-27, filed September 12, 2017 (Eleventh
Judicial District Court, County of San Juan, State of New Mexico), filed in federal court
September 26, 2017 (Doc. 1-1). See also FAC ¶¶ 110-125, at 23-27. The Plaintiffs also bring
two claims premised on the New Mexico Unfair Practices Act, N.M. Stat. Ann. § 57-12-1 to 26
(“UPA”), and a negligent misrepresentation claim. See FAC ¶¶ 77-109, 126-132, at 19-23, 2728. In addition to damages, the Plaintiffs seek rescission of the Franchise Agreement and the
Assignment Agreement. See FAC at 29. On September 26, 2017, the Defendants removed the
action to federal court on the basis of diversity jurisdiction. See Notice of Removal at 1, filed
September 26, 2017 (Doc. 1).3
1.

The Motion.

The Defendants move to transfer this matter to the District of New Jersey, so that it may
be consolidated with the New Jersey Action. See Motion at 1. The Defendants argue that
3

In the MOO, the Court concluded that it had subject-matter jurisdiction based on
complete diversity. See MOO at 16, n.4, 2018 WL 2604831, at *8, n.4.

- 18 -

transfer and consolidation are proper, because they meet 28 U.S.C. § 1404(a)’s factors:
“(1) whether the case could have been brought in the other district or division; (2) whether
discretionary factors weigh in favor of transfer based on the convenience of parties and
witnesses; and (3) whether transfer is in the interest of justice.” Motion at 7 (citing Biotronik,
Inc. v. Lamorak Ins. Co., 2015 WL 3522362, at *4 (D.N.M. June 3, 2015)(Johnson, J.)). The
Defendants argue that they meet the first factor, because the Defendants all maintain a principal
place of business in New Jersey and are subject to personal jurisdiction in New Jersey. See
Motion at 7-8 (citing 28 U.S.C. § 1391(b)(1) (“A civil action may be brought in . . . a judicial
district in which any defendant resides, if all defendants are residents of the State in which the
district is located.”)).
The Defendants argue that the second factor also weighs in favor of transfer. See Motion
at 8-12. According to the Defendants, the United States Court of Appeals for the Tenth Circuit
recognizes nine discretionary factors a court can consider when faced with a motion to transfer:
(i) the plaintiff’s choice of forum; (ii) the accessibility of witnesses and other sources of proof;
(iii) the cost of making the necessary proof; (iv) the likelihood of enforcing the judgment if one
is obtained; (v) the relative advantages and obstacles to a fair trial; (vi) congested dockets;
(vii) conflict-of-law issues; (viii) the advantage of having a local court determine local law
questions; and (ix) all other economical considerations. See Motion at 8 (citing Employers Mut.
Cas. Co. v. Bartiles Roofs, Inc., 618 F.3d 1153, 1167 (10th Cir. 2010)). The Defendants argue
that, because they filed the New Jersey Action first, the Court should transfer the case. See
Motion at 9 (citing Hospah Coal Co. v. Chaco Energy Co., 673 F.2d 1161, 1163-64 (10th Cir.
1982)(“[T]he first court in which jurisdiction attaches has priority to consider the case.”)).

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According to the Defendants, courts “should depart from the first-filed rule only in extraordinary
circumstances involving inequitable conduct, bad faith, anticipatory suits or forum shopping.”
Motion at 10 (“The Court should not depart from the first-filed rule as there are no extraordinary
or special circumstances.”).
The Defendants also argue that conflicts of law issues favor transfer. See Motion at 10.
The Defendants contend that the operative agreements contain New Jersey choice-of-law
provisions, so, according to the Defendants, a New Jersey Court would be better equipped to
apply New Jersey contract law. See Motion at 11. The Defendants admit that, should the Court
transfer this action, a New Jersey court will be required to interpret two New Mexico UPA
claims and two New Mexico tort claims, but they argue that transfer is still proper, because the
“majority of claims will still be governed by New Jersey law and the outcome will depend on
facts rather than novel or difficult legal issues.” Motion at 11.
The Defendants argue that many of the remaining factors favor transfer. Specifically
they contend that: (i) “many of the witnesses are located in New Jersey”; (ii) “[b]oth sides may
have to travel regardless of the venue”; (iii) both districts “would provide for fair trials”; and
(iv) “there is no evidence that the District of New Jersey is more congested than the District of
New Mexico.” Motion at 11-12. Finally, the Defendants contend that the interests-of-justice
factor favors transfer “primarily due to the first filed rule,” as it would “waste judicial resources”
for two federal courts to adjudicate separate cases with “the same nucleus of operative facts.”
Motion at 12-13.

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2.

The Response.

The Plaintiffs respond. See Plaintiffs’ Response to Defendants’ Brief in Support of
Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), filed October 13, 2017
(Doc. 23)(“Response”). The Plaintiffs contend that the Franchise Agreement, the Assignment
Agreement, and the Dev. Incentive Note are related to construction, and, accordingly, under New
Mexico law, the forum selection clause is void as against public policy. See Response at 2
(citing N.M. Stat. Ann. § 57-28A-1). See id. at 9. In support of that contention, the Plaintiffs
highlight language that mentions construction from the Franchise Agreement, Assignment
Agreement, and the Dev. Incentive Note. See Response 3-11; id. at 3 (quoting Franchise
Agreement at 1)(“We have the exclusive right . . . to establish and operate all new
construction.”)(emphasis in Response)); Response at 4 (quoting Franchise Agreement at
2)(“[W]e hereby grant to you a non-exclusive license . . . to build and operate the
Hotel.”)(emphasis in Response)); Response at 5 (quoting Franchise Agreement at 16)(“In
connection with the construction or any material renovations of the Hotel, you also agree to
cause your general contractor to maintain comprehensive liability insurance.”)(emphasis in
Response)); Response at 6 (quoting Assignment Agreement at 3)(“Notwithstanding any other
provision of this Agreement, the deadline for completion of the Hotel shall be no later than
April 5, 2014.”)(emphasis in Response)).

The Plaintiffs also argue that the operative

agreements are construction agreements, because the “Plaintiffs were required to construct a
new hotel,” otherwise Microtel Inn could terminate the Contract. Response at 8-9 (emphasis in
Response).

- 21 -

The Plaintiffs’ second argument is that 28 U.S.C. § 1404(a)’s factors do not favor
transfer. First, they argue that the case could not have been brought in New Jersey, because New
Mexico law requires construction-contract disputes to be conducted in New Mexico.

See

Response at 12. Second, they contend that the first-filed rule does not apply, because the service
was defective in New Jersey, and because the Plaintiffs challenge whether New Jersey has
personal jurisdiction over them. See Response at 12. They also contend that, even if New Jersey
can assert personal jurisdiction, the first-filed rule is inapplicable, because the operative
agreements are construction contracts, so are a “special circumstance sufficient” to supplant “the
first filed rule.” Response at 13. They argue that conflicts of law issues favor a New Mexico
forum, because the operative agreements are construction contracts. See Response at 13. The
Plaintiffs assert that the other factors counsel against transfer, because: (i) litigation would be
costly for the Plaintiffs; (ii) the Defendants are part of a hotel conglomerate that can easily travel
and defend themselves in New Mexico; (iii) two key witnesses, Blue and Koffler, reside in New
Mexico and in Arizona respectively, so travel to New Jersey as opposed to Albuquerque, New
Mexico would be costlier; (iv) New Jersey law is inapplicable as to every claim; and (v) the New
Jersey docket is more congested than the New Mexico docket.

See Response at 13-14.

Accordingly, the Plaintiffs request that this Court deny the Motion. See Response at 15.
3.

The Reply.

The Defendants reply. See Defendants’ Reply Brief In Further Support of Motion to
Transfer Venue Pursuant to 28 U.S.C. § 1404(a), filed October 27, 2017 (Doc. 26)(“Reply”).
The Defendants contend that Presidential Hospitality and Blue waived their rights to challenge
venue and personal jurisdiction by entering into the Franchise Agreement and the Assignment

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Agreement. See Reply at 2. According to the Defendants, because Presidential Hospitality and
Blue do not contend that their consent was procured by fraud, the Court may properly transfer
the case to New Jersey. See Reply at 2 (citing Riley v. Kingsley Underwriting Agencies, Ltd.,
969 F.2d 953, 957 (10th Cir. 1992)). The Defendants argue that the Franchise Agreement and
Assignment Agreement are licensing agreements and not construction contracts. See Reply at 3
(“Plaintiffs have not identified any case from any court in which a hotel license agreement was
construed as a construction contract merely because the licensee built the facility.”).

The

Defendants also assert that, even if the operative agreements are construction contracts, their
provisions about venue and jurisdiction cannot be voided under N.M. Stat. Ann. § 57-28A-1.
See Reply at 4. They argue that N.M. Stat. Ann. § 57-28-1(A) voids provisions that “require[]
any litigation arising from the construction contract to be conducted in another state,” but the
Franchise Agreement’s and Assignment Agreement’s provisions do not require that litigation be
brought in New Jersey, Reply at 4 (emphasis added); rather, according to the Defendants, they
merely allow litigation to be brought in New Jersey, see Reply at 4.
The Defendants argue that, because the Plaintiffs’ construction-contract argument fails,
the first-filed doctrine applies. See Reply at 5. They contend that, contrary to the Plaintiffs’
assertion, defective service does not negate the first-filed rule. See Reply at 5-6. They conclude
that the discretionary factors and the interests of justice favor transfer, because the Plaintiffs
consented to a New Jersey forum, and because judicial economy would be served if the Court
transferred this action, so that the two actions could be consolidated. See Reply at 7-8.

- 23 -

4.

The New Jersey Action.

In the New Jersey Action, Presidential Hospitality and Blue moved to stay, dismiss, or
transfer the action to the United States District Court for the District of New Mexico. See
Microtel Inns and Suites Franchising, Inc. v. Presidential Hospitality, LLC, Opinion and Order
on Motion to Transfer, 2018 WL 1221160, at *1 (D.N.J. March 8, 2018)(Mannion, M.J.). The
Honorable Steven C. Mannion, Magistrate Judge for the United States District Court for the
District of New Jersey, declined to stay or transfer the action. See Microtel Inns and Suites
Franchising, Inc. v. Presidential Hospitality, LLC, 2018 WL 1221160, at *2-3.4 He denied the
request for a stay, because the two actions are “nearly identical,” so, according to Magistrate
Judge Mannion, the first-filed rule favored the action continuing in New Jersey. See 2018 WL
1221160, at *2-3. Magistrate Judge Mannion denied the request for transfer, even though a
substantial part of the events giving rise to the action occurred in New Mexico, because:
(i) Microtel Inn -- the plaintiff in the New Jersey Action -- chose New Jersey as a venue, and
“the plaintiff’s choice of venue should not be lightly disturbed”; (ii) “[w]hile [Presidential
Hospitality and Blue] argue that the books and records and witnesses are located in New
Mexico,” there is no evidence that producing that evidence in New Jersey will burden
Presidential Hospitality and Blue; (iii) the first-filed rule counsels toward denying transfer;
(iv) although New Jersey has a “higher average number of civil cases per judge than the District
of New Mexico,” that fact does not mean the District of New Jersey would be “less expeditious”;
and (v) Presidential Hospitality and Blue, who hold the burden of demonstrating transfer, do not
make a sufficient showing that the District of New Jersey lacks personal jurisdiction over them.
4

The Defendants filed a notice of supplemental authority, alerting the Court of this
decision. See Notice of Supplemental Authority at 1-2, filed March 13, 2018 (Doc. 32).

- 24 -

2018 WL 1221160, at *3. Finally, Magistrate Judge Mannion ordered additional discovery to
determine whether he should dismiss the case for lack of personal jurisdiction. See 2018 WL
1221160, at *4. He noted that, if the forum selection clause is valid, “then Defendants have
consented to venue and jurisdiction in this District,” but he needed more information to
determine if that consent exists, more facts to determine whether N.M. Stat. Ann. § 57-28A-1
applies, and, if the forum selection clause is invalid, whether Presidential Hospitality and Blue
had minimum contacts with New Jersey. 2018 WL 1221160, at *4.
5.

The Hearing.

The Court held a hearing. See Draft Transcript of Motion Proceedings at 1:5 (dated June
4, 2018)(Court)(“Tr.”).5

The Defendants argued briefly that the Franchise Agreement and

Assignment Agreement are not construction contracts, as the Plaintiffs’ FAC has no
construction-based claims. See Tr. at 4:11-5:1 (Sager). They argued that transfer would achieve
efficiency “having all of the issues relating to this franchise relationship litigated in one forum at
one time.” Tr. at 5:1-6 (Sager).
The Plaintiffs emphasized that transfer to New Jersey was improper, because “New
Jersey has not yet determined whether there is jurisdiction over my client.” Tr. at 5:20-21
(Enriquez). The Plaintiffs argued that the operative agreements were construction contracts,
because, under N.M. Stat. Ann. § 57-28A-1, a contract merely has to relate to construction to be
a construction contract. See Tr. at 6:1-11 (Enriquez)(“There is nothing in the statute, Your
Honor, that states that claims must be[] of a construction nature.”). They asserted that the

5

The Court’s citations to the hearing transcript refer to the court reporter’s original,
unedited version. Any final transcript may contain slightly different page and/or line numbers.

- 25 -

Franchise Agreement “dictated h[ow the] hotel should be built,” indicating that it is a
construction contract. Tr. at 8:9-21 (Enriquez). The Plaintiffs also argue that one of their
fraudulent inducement theories relates to the Dev. Incentive Note, which does not have a forum
selection clause, so, according to the Plaintiffs, even if the forum selection clause in the
Franchise Agreement is valid, New Jersey would not have personal jurisdiction over that claim.
See Tr. at 9:19-10:7 (Enriquez).

The Court expressed doubt that, once a party consents to

personal jurisdiction, such jurisdiction had to be litigated claim-by-claim, see Tr. at 11:11
(Court), to which the Plaintiffs argued that it is the scope of consent that matters, see Tr. at
11:21-12:5 (Enriquez). The Plaintiffs contended that, if the forum selection clause is valid, they
consent to jurisdiction only to claims arising out of the Franchise Agreement and not claims
arising out of the Dev. Incentive Note. See Tr. at 11:23-12:5 (Enriquez).
The Plaintiffs also argued that, in terms of witness convenience, every relevant Plaintiffs’
witness resides in New Mexico, Arizona, or Colorado, so it would be hard for them to travel to
New Jersey. See Tr. 6:18-7:2 (Enriquez). The Plaintiffs asserted that, in terms of docket
congestion, 28 U.S.C. § 1404(a) favors New Mexico, because the District of New Jersey has
more civil cases per judge, but the Court noted that the civil statistics do not capture the District
of New Mexico’s criminal docket, which is one of the busiest in the nation. See Tr. at 7:3-8:2
(Court).
The Defendants argued that the Franchise Agreement’s forum selection clause covers
“any litigation arising out of or related to this agreement,” which, according to the Defendants,
includes any litigation on the Dev. Incentive Note. Tr. at 12:19-13:3 (Sager). They contended
that, in terms of convenience to witnesses, keeping the case in New Mexico would

- 26 -

inconvenience the defense witnesses -- who reside in New Jersey -- and that the first-filed rule
favors New Jersey as a forum. See Tr. at 13:16-24 (Sager). The Defendants asserted that, if
N.M. Stat. Ann. § 57-28A-1 was applied to “any contract that has in any way relation to
construction, alteration, repair, or maintenance,” there would be no limiting principle. Tr. at
14:13-17 (Sager). They argued that the operative contracts “in no way relate to or require the
building of a facility, the alteration of a facility, the repair or maintenance of a facility. . . .
Wyndham is not a construction company [and] [M]icrotel[] is not a construction company.” Tr.
at 14:17-24 (Sager). The Defendants added:
I think the fair limitation that can be drawn is that . . . where you’re dealing with
nails and hammers and actual construction mechanisms, and those issues relating
to the quality or the competency of the actual construction . . . itself are at issue,
New Mexico courts want to make sure that a New Mexico plaintiff has the
opportunity to litigate [in New Mexico].
Tr. at 15:1-9 (Sager). The Defendants conceded that the Franchise Agreement mandates that the
hotel look a certain way, see Tr. at 17:8-13 (Sager)(“So a McDonalds looks like a McDonalds
and a Microtel looks like a Microtel”), but they asserted that the Franchise Agreement does not
“tell them how to construct or what materials they have to use,” so, according to the Defendants
N.M. Stat. Ann. § 57-28A-1 does not encompass the Franchise Agreement, Tr. at 17:14-18:13
(Sager). The Plaintiffs rejoined that the Franchise Agreement gives the Defendants the power to
ensure that the hotel is “built according to their specification,” so the Franchise Agreement is a
construction agreement. Tr. at 19:19-25 (Enriquez).
The Defendants noted that the Plaintiffs have gone beyond the briefing, so made an
additional argument that N.M. Stat. Ann. § 57-28A-1 does not apply to the Franchise Agreement,
which was executed on 2010, because the statute applies “to contracts entered into or after July

- 27 -

1st, 2011.” Tr. at 20:14-21:13 (Sager). The Plaintiffs countered that the Assignment Agreement
was signed in 2013, which incorporates the Franchise Agreement, so N.M. Stat. Ann. § 57-28A1 applies to both contracts. See Tr. at 21:17-22:1 (Enriquez). The Defendants rejoined that none
of the construction provisions upon which the Plaintiffs rely come from the Assignment
Agreement. See Tr. at 22:4-10 (Sager).
LAW REGARDING PERSONAL JURISDICTION
When contested,6 the party asserting the claim has the burden of proving personal
jurisdiction. See Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). To assert
personal jurisdiction over a nonresident defendant, federal courts must satisfy state law and
federal due process. See Doering v. Copper Mountain, Inc., 259 F.3d 1201, 1209-10 (10th
Cir. 2001). Under due process, the Court’s jurisdiction exists if the defendants have “minimum
contacts” with the forum state, which may rest on specific or general personal jurisdiction, and
the exercise of personal jurisdiction must comport with “traditional notions of fair play and
substantial justice.” Dudnikov v. Chalk & Vermilion Fine Arts Inc., 514 F.3d 1063, 1070 (10th
Cir. 2008)(quotation marks omitted).

See Bristol-Myers, Squibb Co. v. Superior Court of

California, San Francisco Cty., 137 S. Ct. 1773, 1779-80 (2017)(“Bristol-Myers”); Daimler AG
v. Bauman, 134 S. Ct. 746, 754 (2014).
1.

Burden of Proof.

As already noted, the Plaintiff bears the burden of proving personal jurisdiction. See
Wenz v. Memery Crystal, 55 F.3d at 1505. When jurisdiction is “decided on the basis of
affidavits and other written materials, the plaintiff need only make a prima facie showing” of
6

Personal jurisdiction can be waived. See Ins. Corp. of Ireland, Ltd. v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 703 (1982).

- 28 -

facts that would support the assertion of jurisdiction. Wenz v. Memery Crystal, 55 F.3d at 1505.
“The allegations in the complaint must be taken as true to the extent they are uncontroverted by
the defendant’s affidavit.” Behagen v. Amateur Basketball Ass’n, 744 F.2d 731, 733 (10th
Cir. 1984). When, however, a defendant presents credible evidence through affidavits or other
materials suggesting the absence of personal jurisdiction, the plaintiff must come forward with
sufficient evidence to create a genuine dispute of material fact on the issue. See Doe v. Nat’l
Med. Servs., 974 F.2d 143, 145 (10th Cir. 1992). Only if the plaintiff meets the obligation of
contesting the credible evidence that the defendant presents does the court resolve the factual
disputes in the plaintiff’s favor. See Wenz v. Memery Crystal, 55 F.3d at 1505; Behagen v.
Amateur Basketball Ass’n, 744 F.2d at 733; Clark v. Meijer, Inc., 376 F. Supp. 2d 1077, 1082
(D.N.M.2004)(Browning, J.).
2.

Due Process and Personal Jurisdiction.

The personal-jurisdiction due process analysis is two-fold. See Fabara v. GoFit, LLC,
308 F.R.D. 380, 400 (D.N.M. 2015)(Browning, J.). First, the defendant must have “minimum
contacts” with the forum state such that it “should reasonably anticipate being haled into court
there.” Burger King Corp. v. Rudzewicz, 471 U.S. at 473-76. Second, exercising personal
jurisdiction over the defendant must comport with “traditional notions of fair play and substantial
justice.” Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d at 1070 (quotation marks
omitted). A defendant may have “minimum contacts” with the forum state in one of two ways,
providing a court with either general or specific personal jurisdiction. Trierweiler v. Croxton &
Trench Holding Corp., 90 F.3d 1523, 1532-33 (10th Cir. 1996)(citations omitted).
General jurisdiction is based on an out-of-state defendant’s “continuous and
systematic” contacts with the forum state, and does not require that the claim be

- 29 -

related to those contacts. Specific jurisdiction, on the other hand, is premised on
something of a quid pro quo: in exchange for “benefitting” from some purposive
conduct directed at the forum state, a party is deemed to consent to the exercise of
jurisdiction for claims related to those contacts.
Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d at 1078. Thus, “[s]uch contacts may
give rise to personal jurisdiction over a non-resident defendant either generally, for any lawsuit,
or specifically, solely for lawsuits arising out of particular forum-related activities.” Shrader v.
Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011).
For a court to exercise specific jurisdiction “‘the suit’ must ‘aris[e] out of or relat[e] to
the defendant’s contacts with the forum.” Bristol-Myers, 137 S. Ct. at 1780 (quoting Daimler
AG v. Bauman, 134 S. Ct. at 754)(alterations and emphasis in Bristol-Myers). See BristolMyers, 137 S. Ct. at 1781 (“[T]here must be an ‘affiliation between the forum and the underlying
controversy, principally, [an] activity or an occurrence that takes place in the forum
State.”)(quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919
(2011)(“Goodyear”)); Burger King Corp. v. Rudzewicz, 471 U.S. at 472 (ruling that a court may
assert specific jurisdiction “if the defendant has purposefully directed his activities at residents of
the forum, and the litigation results from alleged injuries that arise out of or relate to those
activities.”)(citations and quotation marks omitted). The Tenth Circuit has characterized this
inquiry as a two part test: “[F]irst . . . the out-of-state defendant must have ‘purposefully
directed’ its activities at residents in the forum state, and second, . . . the plaintiff’s injuries must
‘arise out of’ defendant’s forum-related activities.” Dudnikov v. Chalk & Vermilion Fine Arts,
Inc., 514 F.3d at 1071. The Supreme Court of the United States of America has recently
emphasized that, “[f]or specific jurisdiction, a defendant’s general connections with the forum
are not enough.”

Bristol-Myers, 137 S. Ct. at 1781.

- 30 -

In the tort context, a defendant has

“purposefully directed” his activities at New Mexico or its residents when he or she has: (i) taken
intentional action; (ii) the action was “expressly aimed” at New Mexico; and (iii) the action was
taken with the knowledge that “the brunt of th[e] injury” would be felt in New Mexico.
Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d at 1072 (quoting Calder v. Jones, 465
U.S. 783, 789-90 (1984)).
Although agreements alone are likely to be insufficient to establish minimum contacts,
“‘parties who reach out beyond one state and create continuing relationships and obligations with
citizens of another state are subject to regulation and sanctions in the other state for the
consequences of their activities.’” TH Agric. & Nutrition, LLC v. Ace Eur. Grp. Ltd., 488 F.3d
1282, 1287-88 (10th Cir. 2007)(quoting Burger King Corp. v. Rudzewicz, 471 U.S. at 473, 478).
The mere foreseeability of harm occurring in a particular forum will not support a finding of
minimum contacts. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S.at 295 (holding
that, although “an automobile is mobile by its very design and purpose,” thus indicating that it is
foreseeable that a particular automobile may cause injury in a forum state, “‘foreseeability’ alone
has never been a sufficient benchmark for personal jurisdiction under the Due Process Clause”).
“[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a
product will find its way into the forum State. Rather, it is that the defendant’s conduct and
connection with the forum State are such that he should reasonably anticipate being haled into
court there.” World–Wide Volkswagen Corp. v. Woodson, 444 U.S. at 297. As the Tenth
Circuit has further explained, because “mere foreseeability” is not sufficient to establish
minimum contacts, a plaintiff “must establish . . . not only that defendants foresaw (or knew) that
the effects of their conduct would be felt in the forum state, but also that defendants undertook

- 31 -

intentional actions that were expressly aimed at that forum state.”

Dudnikov v. Chalk &

Vermilion Fine Arts, Inc., 514 F.3d at 1077.
General personal jurisdiction jurisprudence has “followed a markedly different
trajector[y]” than specific personal jurisdiction. Daimler AG v. Bauman, 134 S. Ct. at 757. The
test for general personal jurisdiction turns on whether the defendant is “at home” within the
forum State. Daimler AG v. Bauman, 134 S. Ct. at 760. For individuals, “the paradigm forum
for the exercise of general jurisdiction is the individual’s domicile.” Daimler AG v. Bauman,
134 S. Ct. at 760 (quoting Goodyear, 564 U.S. at 924).

For corporations, “the place of

incorporation and principal place of business are ‘paradig[m] . . . bases for general jurisdiction.”
Daimler AG v. Bauman, 134 S. Ct. at 760 (quoting Goodyear, 564 U.S. at 924). In Daimler AG
v. Bauman, the Supreme Court rejected an argument that “continuous or systematic” contacts
within a forum state were, in and of themselves, sufficient to subject a corporation to general
personal jurisdiction. See Daimler AG v. Bauman, 134 S. Ct. at 761-62. In so doing, the
Supreme Court reemphasized that a corporation is most often exposed to general personal
jurisdiction only if that entity is incorporated in the forum state or if the forum state hosts the
entity’s principal place of business. See Daimler AG v. Bauman, 134 S. Ct. at 761.
If [the defendant] is found to have the requisite minimum contacts with [the
forum state], then we proceed to the second step in the due process analysis:
ensuring that the exercise of jurisdiction over him does not offend “traditional
notions of fair play and substantial justice.” See World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 292 (1980)(quoting Int’l Shoe Co. v. Washington, 326
U.S. 310, 316 (1945)). [The defendant] bears the burden at this stage to “present a
compelling case that the presence of some other considerations would render
jurisdiction unreasonable.” See Dudnikov v. Chalk & Vermilion Fine Arts, Inc.,
514 F.3d 1063, 1080 (10th Cir. 2008). We consider the following five factors, .
. . in deciding whether the exercise of jurisdiction would be fair:
(1) the burden on the defendant, (2) the forum state’s interests in resolving

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the dispute, (3) the plaintiff’s interest in receiving convenient and effectual
relief, (4) the interstate judicial system’s interest in obtaining the most
efficient resolution of controversies, and (5) the shared interest of the
several states or foreign nations in furthering fundamental social policies.
Id. (brackets omitted); see also OMI Holdings, Inc., 149 F.3d at 1095 (applying
these factors in a case involving a Canadian corporation). “[T]he reasonableness
prong of the due process inquiry evokes a sliding scale: the weaker the plaintiff’s
showing on minimum contacts, the less a defendant need show in terms of
unreasonableness to defeat jurisdiction.” TH Agric. & Nutrition, LLC, 488 F.3d
at 1292 (internal quotation marks and brackets omitted).
Marcus Food Co. v. DiPanfilo, 671 F.3d 1159, 1167 (10th Cir. 2011). The Supreme Court has
recently emphasized that, among these factors, the primary concern “is ‘the burden on the
defendant.’”

Bristol-Myers, 137 S. Ct. at 1780 (quoting World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 292 (1980)). “Assessing this burden obviously requires a court to
consider the practical problems resulting from litigating in the forum, but it also encompasses the
more abstract matter of submitting to the coercive power of a State that may have little legitimate
interest in the claims in question.” Bristol-Myers, 137 S. Ct. at 1780.
Even if the defendant would suffer minimal or no inconvenience from being
forced to litigate before the tribunals of another State; even if the forum State has
a strong interest in applying its law to the controversy; even if the forum State is
the most convenient location for litigation, the Due Process Clause, acting as an
instrument of interstate federalism, may sometimes act to divest the State of its
power to render a valid judgment.
Bristol-Myers, 137 S. Ct. at 1780-81 (quoting World-Wide Volkswagen Corp. v. Woodson, 444
U.S. at 294).
In Silver v. Brown, 678 F. Supp. 2d 1187 (D.N.M.2009)(Browning, J.), aff’d in part and
rev’d in part, 382 F. App’x. 723 (10th Cir. 2010)(unpublished),7 the Court considered whether it

7

Silver v. Brown is an unpublished Tenth Circuit opinion, but the Court can rely on an
unpublished Tenth Circuit opinion to the extent its reasoned analysis is persuasive in the case

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had personal jurisdiction over defendants who allegedly slandered, defamed, and caused the
plaintiff -- Michael Silver -- distress, by posting a blog on the internet that portrayed him in a
negative light. See 678 F. Supp. 2d at 1204. The Court determined that it did not have personal
jurisdiction over defendant Jack McMullen, because Silver failed to demonstrate that McMullen
“was significantly associated with the blog or controlled it in any way.” 678 F. Supp. 2d at 1212.
The Court also concluded that it did not have personal jurisdiction over the blog post’s author -Matthew Brown -- because he was not domiciled in New Mexico, had not traveled to New
Mexico, and did not transact business there. See 678 F. Supp. 2d at 1211. The Court said that
Brown’s blog posts similarly did not establish personal jurisdiction, because
the blog is closer to an informative website than a commercial website. No
services are offered, and Brown is not collecting revenue from the website.
Brown does not interact with the people who post information on the blog.
Brown, to the Court’s knowledge, did not solicit negative postings on the website.
Further, even though people in New Mexico can view the website, the blog is not
a website that is directed solely at the people of New Mexico. The number of
people who can access the website in New Mexico in comparison to those who
are able to access the website throughout the world, or even in the United States,
according to the statistics that Silver provided at the hearing, is nominal.
678 F. Supp. 2d at 1211-12.
On appeal, the Tenth Circuit affirmed the Court’s holding as to McMullen, but reversed
its decision as to Brown. See Silver v. Brown, 382 F. App’x. at 727-32. In an opinion that the

before it. See 10th Cir. R. 32.1(A), 28 U.S.C. (“Unpublished opinions are not precedential, but
may be cited for their persuasive value.”). The Tenth Circuit has stated: “In this circuit,
unpublished orders are not binding precedent, . . . and . . . citation to unpublished opinions is not
favored. . . . However, if an unpublished opinion . . . has persuasive value with respect to a
material issue in a case and would assist the court in its disposition, we allow a citation to that
decision.” United States v. Austin, 426 F.3d 1266, 1274 (10th Cir. 2005). The Court concludes
that Silver v. Brown, Driggers v. Clark, King v. PA Consulting Grp., Inc.,, and Georgacarakos v.
Nalley have persuasive value with respect to a material issue, and will assist the Court in its
preparation of this Memorandum Opinion and Order.

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Honorable Monrow G. McKay, United States Circuit Judge for the Tenth Circuit, authored, and
Judges Brorby and Ebel joined, the Tenth Circuit applied the three-part test from Calder v. Jones
to conclude that the Court had personal jurisdiction over Brown. See Silver v. Brown, 382 F.
App’x. at 727-32. Judge McKay first explained that the posting of the blog was “clearly an
intentional act” designed to damage the plaintiff’s reputation. 382 F. App’x. at 729. Second,
Judge McKay said that Brown had “expressly aimed his blog at New Mexico,” where Silver, his
business, and the majority of his customers were located. 382 F. App’x. at 729. Judge McKay
noted: “It was about a New Mexico resident and a New Mexico company. The blog complained
of Mr. Silver’s and [his business’] actions in the failed business deal. Those actions occurred
mainly in New Mexico.” 382 F. App’x. at 729-30. Third, Judge McKay explained that Brown
knew Silver would suffer the brunt of his injury in New Mexico, as the state was
“unquestionably the center of his business activities.” 382 F. App’x. at 730.
In several other recent cases, the Court grappled with whether it could assert general or
specific jurisdiction over non-individual entities. In Fabara v. GoFit, LLC, 308 F.R.D. 380
(D.N.M.2015)(Browning, J.), a plaintiff -- injured by an allegedly defective exercise ball in New
Mexico -- brought suit against the manufacturer, which was incorporated and headquartered in
Oklahoma. See 308 F.R.D. at 408. The manufacturer moved to dismiss the complaint, under
rule 12(b)(2), arguing that the Court lacked general jurisdiction because its contacts with New
Mexico were neither continuous nor systematic. See 308 F.R.D. at 384. The plaintiff responded
with photographs of the manufacturers’ products in several stores, arguing that the manufacturer
delivered the exercise balls into the stream of commerce with the expectation that New Mexico
customers would purchase and use them. See 308 F.R.D. at 389. The Court rejected this theory,

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explaining that the manufacturer’s contacts with New Mexico were not “so systematic and
continuous as to make it essentially at home here.” 308 F.R.D. at 397. The Court noted that the
manufacturer had almost no physical connections with New Mexico, and that its New Mexico
internet sales -- roughly $20,000.00 over nine years -- were insufficiently “substantial” to
support general jurisdiction. 308 F.R.D. at 402-03.
In

Diener

v.

Trapeze

Asset

Management,

Inc.,

2015

WL

8332933

(D.N.M.)(Browning, J.), the Court considered whether it had specific jurisdiction over a
Canadian asset-management firm that maintained a passive website, placed its name in a third
party’s money-manager listing, mailed marketing materials to New Mexico, had telephone
conversations with plaintiffs located in New Mexico, and ultimately entered into a contract with
plaintiffs located in New Mexico. See 2015 WL 8332933, at *1. The Court concluded that it did
not have specific jurisdiction for four primary reasons. See 2015 WL 8332933, at *1. First, the
website was wholly passive and did not allow visitors “the opportunity to invest or interact with
the site.” 2015 WL 8332933, at *15. Second, the third-party listing was similarly passive. See
2015 WL 8332933, at *15.

Third, the Court noted that “phone calls and letters are not

necessarily sufficient in themselves to establish minimum contacts,” noting that the alleged torts
occurred in Canada. 2015 WL 8332933, at *17 (quoting Benton v. Cameco Corp., 375 F.3d
1070, 1077 (10th Cir. 2004)). Fourth, the plaintiffs reached out to the defendants to create the
contractual relationship, distinguishing the case from others finding purposeful availment. See
2015 WL 8332933, at *17 (citing Burger King Corp. v. Rudzewicz, 471 U.S. at 473).
Finally, in Resource Associates Grant Writing & Evaluation Servs., Inc. v. Southampton
Union Free School Dist., 193 F. Supp. 3d 1200 (D.N.M. 2016)(Browning, J.), the Court

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considered whether it had personal jurisdiction over a union that had never conducted any
business in New Mexico, had never sent a representative to New Mexico, and its only contacts
with a New Mexico entity were via telephone and email correspondence that the New Mexico
company had initiated. See 193 F. Supp. 3d at 1239. Highlighting the contractual nature of the
particular contacts at issue, and that due process may be satisfied in contractual relations if the
defendant “‘reache[s] out’ to the forum state,” the Court concluded it could not exercise personal
jurisdiction over the union, because the union did not “not reach out to New Mexico to enter into
an agreement”; rather, the New Mexico entity had initiated the communications and contract.
193 F. Supp. 3d at 1241-43 (citing Burger King Corp. v. Rudzewicz, 471 U.S. at 479-85).
LAW REGARDING VENUE
“Venue is defined as the appropriate district court in which to file an action.” Whiting v.
Hogan, 855 F. Supp. 2d 1266, 1282 (D.N.M. 2012)(Browning, J.)(citing NLRB v. Line, 50 F.3d
311, 314 (5th Cir. 1995)).

The purpose of venue is to assure that lawsuits are filed in

appropriately convenient courts for the matters raised and for the parties involved in the action.
See Leroy v. Great W. United Corp., 443 U.S. 173, 185 (1979). Venue should not be confused
with subject-matter jurisdiction, see Wachovia Bank v. Schmidt, 546 U.S. 303, 315-16 (2006), or
with personal jurisdiction, see Leroy v. Great W. United Corp., 443 U.S. 173, 185 (1979)(“The
question of personal jurisdiction, which goes to the court’s power to exercise control over the
parties, is typically decided in advance of venue, which is primarily a matter of choosing a
convenient forum.”). “To the extent that they are relevant, the laws relating to venue give added
protection to defendants beyond those that are provided by the statutory and constitutional

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prerequisites of personal jurisdiction.” 14D C. Wright, A. Miller & E. Cooper, Federal Practice
and Procedure § 3801, at 15 (3d ed. 2007)(“Wright and Miller”).
The federal venue provision allows a plaintiff to file in: (i) “a judicial district in which
any defendant resides, if all defendants are residents of the State in which the district is located”;
(ii) “a judicial district in which a substantial part of the events or omissions giving rise to the
claim occurred, or a substantial part of property that is the subject of the action is situated.”; or,
(iii) “if there is no district in which an action may otherwise be brought as provided in this
section, any judicial district in which any defendant is subject to the court’s personal jurisdiction
with respect to such action.” 28 U.S.C. § 1391(b).
LAW REGARDING TRANSFER OF VENUE
In 1948, Congress enacted the federal change-of-venue statute, codified at 28 U.S.C.
§ 1404, to allow a district court to transfer an action filed in a proper, though not necessarily
convenient, venue to a more convenient district. That statute provides, in pertinent part: “For the
convenience of the 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 division to
which all parties have consented.” 28 U.S.C. § 1404(a). Section 1404(a) affords a district court
broad discretion to adjudicate motions to transfer based on a case-by-case review of convenience
and fairness. See Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1167 (10th Cir.
2010); Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir. 1991).
“Recognizing that what is convenient for one litigant may not be convenient for the other, the
Supreme Court has taught that section 1404(a) ‘is intended to place discretion in the district court
to adjudicate motions for transfer according to [a] . . . case-by-case consideration of convenience

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and fairness.’” Research Automation, Inc. v. Schrader-Bridgeport Int’l, Inc., 626 F.3d 973, 977
(7th Cir. 2010)(quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988)). “The
statutory language guides the court’s evaluation of the particular circumstances of each case and
is broad enough to allow the court to take into account all factors relevant to convenience and/or
the interests of justice.” Research Automation, Inc. v. Schrader-Bridgeport Int’l, Inc., 626 F.3d
at 977. The statute permits a “flexible and individualized analysis,” and affords district courts
the opportunity to look beyond a narrow or rigid set of considerations in their determinations.
Stewart Org., Inc. v. Ricoh Corp., 487 U.S. at 29. In considering a motion to transfer, a court
weighs the following discretionary factors:
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.
Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d at 1167. See Tex. Gulf Sulphur v.
Ritter, 371 F.2d 145, 147 (10th Cir. 1967)(stating the factors that courts consider in making a
venue determination under § 1404(a)).
28 U.S.C. § 1406 permits transfer to cure a venue defect. It provides: “The district court
of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or
if it be in the interest of justice, transfer such case to any district or division in which it could
have been brought.” 28 U.S.C. § 1406(a). Although both § 1404(a) and § 1406(a) “were
broadly designed to allow transfer instead of dismissal, § 1406(a) provides for transfer from
forums in which venue is wrongly or improperly laid.” Van Dusen v. Barrack, 376 U.S. 612,

- 39 -

634 (1964). 28 U.S.C. § 1631 addresses transfer to cure want of jurisdiction and provides that,
when a
court finds that there is a want of jurisdiction, the court shall, if it is in the interest
of justice, transfer such action or appeal to any other such court in which the
action could have been brought at the time it was filed or noticed, and the action
or appeal shall proceed as if it had been filed in or noticed for the court to which it
was transferred on the date upon which it was actually filed in or noticed for the
court from which it was transferred.
28 U.S.C. § 1631. The Tenth Circuit has held that 28 U.S.C. § 1631 was “specifically designed
for cases transferred from one federal court to another for lack of jurisdiction,” and that it
“served to simplify the process and streamline its application.” Ross v. Colo. Outward Bound
Sch., Inc., 822 F.2d 1524, 1527 (10th Cir. 1987). It has held that, although many courts have
interpreted § 1406(a) to permit transfer where personal jurisdiction is lacking, the enactment of
§ 1631 makes such a “strained” construction “no longer necessary.” Viernow v. Euripides
Devel. Corp., 157 F.3d 785, 793 (10th Cir. 1998).
The “interest of justice” is a separate element of the transfer analysis that relates to the
court system’s efficient administration. Van Dusen v. Barrack, 376 U.S. at 626-27. “For this
element, courts look to factors including docket congestion and likely speed to trial in the
transferor and potential transferee forums; each court’s relative familiarity with the relevant law;
the respective desirability of resolving controversies in each locale; and the relationship of each
community to the controversy.” Research Automation, Inc. v. Schrader-Bridgeport Int’l, Inc.,
626 F.3d at 977 (citations omitted). In some circumstances, “[t]he interest of justice may be
determinative, warranting transfer or its denial even where the convenience of the parties and
witnesses points toward the opposite result.” Research Automation, Inc. v. Schrader-Bridgeport
Int’l, Inc., 626 F.3d at 977 (citing Coffey v. Van Dorn Iron Works, 796 F.2d, 220-21 (7th Cir.

- 40 -

1986)). The Tenth Circuit has interpreted the phrase -- “if it is in the interest of justice” -- to
grant a district court discretion in making the decision to transfer the action. Driggers v. Clark,
422 F. App’x 747, 749-50 (10th Cir. 2011)(unpublished)(citing Trujillo v. Williams, 465 F.3d
1210, 1222 (10th Cir. 2006)).
The Court has previously granted motions to transfer. See e.g., Montoya v. Financial
Federal Credit, Inc., 872 F. Supp. 2d 1251, 1281 (D.N.M. 2012)(Browning, J.)(“Montoya”). In
Montoya, the Court transferred the case under 28 U.S.C. § 1406(a), because (i) “there are
potential statute-of-limitations problems for the Plaintiffs if the Court were to dismiss their
case”; (ii) “there is no indication that the Plaintiffs filed their Complaint in this forum to harass”
the other party; and (iii) the Plaintiffs were not forum shopping. Montoya, 872 F. Supp. 2d at
1281-82. The Court has also denied motions to transfer. See, e.g., Navajo Health Foundation -Sage

Hosp.,

Inc.

v.

Burwell,

86

F. Supp. 3d

1211,

1248-51

(D.N.M.

2015)(Browning, J.)(“Navajo Health”). In Navajo Health, the Court weighed the § 1404(a)
factors and concluded that transfer was inappropriate, in large part, because “the parties’
convenience, the witnesses’ convenience, and the location of physical evidence” weighed
“heavily against transfer.” Navajo Health, 86 F. Supp. at 1250. In that case, the evidence and
the parties were more closely located to Albuquerque than to Phoenix -- the forum the
Defendants wanted -- so the Court denied transfer. Navaho Health, 86 F. Supp. at 1250-51.
LAW REGARDING FORUM SELECTION CLAUSES
The Court has previously stated:
Contrary to the general rule that a defendant’s removal of the action from state
court waives or cures any objection to improper venue in the federal court, an
objection to the lack of proper venue based on a clause designating a court of

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another state or a foreign court as the exclusive forum is not waived or cured if
the defendant removes the action from state court.
Knight Oil Tools, Inc. v. Unit Petrol. Co., 2005 WL 2313715, at *2 (D.N.M. Aug. 31, 2005)
(Browning, J.)(citations omitted)(citing 17 James Wm. Moore, Moore’s Federal Practice
§§ 111.04[3][d], 111.36[5][a], at 111-42 to 111-43, 111-179 (3d ed. 2004)(“Moore’s”)). Accord
Lambert v. Kysar, 983 F.2d 1110, 1113 n.2 (1st Cir. 1993)(“[A] valid forum selection clause
operates to render venue improper, not only under 28 U.S.C. § 1391 [the general venue statute]
but also under 28 U.S.C. § 1441(a) [the removal statute].”). See Int’l Software Sys., Inc. v.
Amplicon, Inc., 77 F.3d 112, 113-15 (5th Cir. 1996)(without discussing removal issue, affirming
dismissal on improper venue grounds of action removed from state court when forum selection
clause specified state courts of another state as exclusive forum); Spradlin v. Lear Siegler Mgmt.
Servs. Co., 926 F.2d 865, 866 (9th Cir. 1991)(without discussing removal issue, affirming
dismissal of removed action on improper venue grounds based on clause making Saudi Arabia
the exclusive forum).
“In the typical case not involving a forum-selection clause, a district court considering a
§ 1404(a) motion (or a forum non conveniens motion) must evaluate both the convenience of the
parties and various public-interest considerations.” Atlantic Marine Const. Co., Inc. v. U.S. Dist.
Court for Western Dist. of Texas, 571 U.S. 49, 62 (2013)(“Atlantic Marine”)(footnote omitted).
“Ordinarily, the district court would weigh the relevant factors and decide whether, on balance,
transfer would serve ‘the convenience of parties and witnesses’ and otherwise promote ‘the
interests of justice.’” Atlantic Marine, 571 U.S. at 62-63 (quoting 28 U.S.C. § 1404(a)). “The
calculus changes, however, when the parties’ contract contains a valid forum-selection clause.”
Atlantic Marine, 571 U.S. at 63.

- 42 -

The “enforcement of valid forum-selection clauses, bargained for by the parties,
protects their legitimate expectations and furthers vital interests of the justice
system.”
[Stewart Organization, Inc. v. Ricoh Corp., 487 U.S.] at
33 . . . (KENNEDY, J., concurring). For that reason, and because the overarching
consideration under § 1404(a) is whether a transfer would promote “the interest of
justice,” “a valid forum-selection clause [should be] given controlling weight in
all but the most exceptional cases.” [Stewart Organization, Inc. v. Ricoh Corp.,
487 U.S.] at 33 ([Kennedy, J., concurring)).
Atlantic Marine, 571 U.S. at 63.
“The presence of a valid forum-selection clause requires district courts to adjust their
usual § 1404(a) analysis in three ways.” Atlantic Marine, 571 U.S. at 63. “First, the plaintiff’s
choice of forum merits no weight.” Atlantic Marine, 571 U.S. at 63 (“[A]s the party defying the
forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for
which the parties bargained for is unwarranted.”). “Second, a court evaluating a defendant’s
§ 1404(a) motion to transfer based on a forum-selection clause should not consider arguments
about the parties’ private interests.” Atlantic Marine, 571 U.S. at 64 (“[A] district court may
consider arguments about public-interest factors only.”). “Third, when a party bound by a
forum-selection clause flouts its contractual obligation and files a suit in a different form, a
§ 1404(a) transfer of venue will not carry with it the original venue’s choice-of-law rules -- a
factor that in some circumstances may affect public-interest considerations.” 571 U.S. at 64.
Given these modifications to the 28 U.S.C. § 1404(a) factor analysis, the Supreme Court held
that, “[w]hen the parties have agreed to a valid forum-selection clause, a district court should
ordinarily transfer the case to the forum specified in that clause.” Atlantic Marine, 571 U.S. at
62. See id. at 66 (“In all but the most unusual cases, therefore, ‘the interest of justice’ is served
by holding parties to their bargain.”); Niemi v. Lasshofer, 770 F.3d 1331, 1351 (10th Cir.
2014)(“We will enforce a mandatory forum selection clause unless the party challenging it

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‘clearly show[s] that enforcement would be unreasonable and unjust, or that the clause was
invalid for such reasons as fraud or overreaching.’”)(quoting M/S Bremen v. Zapata Off-Shore
Co., 407 U.S. 1, 15 (1972)). “[T]he proper mechanism for enforcement of a forum selection
clause is a motion to transfer under 28 U.S.C. § 1404(a).”

Niemi v. Lasshofer, 770 F.3d at

1351. See Atlantic Marine, 571 U.S. at 60.
1.

Choice-of-Law Issues and interpreting Forum Selection Clauses.

In Stewart Organization v. Ricoh Corp., the Supreme Court held: “Federal law,
specifically 28 U.S.C. § 1404(a), governs the District Court’s decision whether to give effect to
the parties’ forum selection clause.” 487 U.S. at 32. See Atlantic Marine, 571 U.S. at 52 (“[A]
forum selection clause may be enforced by a motion to transfer under § 1404(a).”). There is a
distinction, however, between what law governs the enforceability of a forum selection clause
and what law governs the interpretation of a forum selection clause. See Yavuz v. 61 MM, Ltd.,
465 F.3d 418, 430 (10th Cir. 2006). See also Weber v. PACT XPP Technologies, AG, 811 F.3d
758, 770 (5th Cir. 2016)(“[A]s several circuits have explicitly recognized, the question of
enforceability is analytically distinct from the issue of interpretation.”); Martinez v. Bloomberg
LP, 740 F.3d 211, 220 (2d Cir. 2014)(“Distinguishing between the enforceability and the
interpretation of forum selection clauses, moreover, accords with the traditional divide between
procedural and substantive rules developed under Erie Railroad Co. v. Tompkins, 304 U.S.
64 . . . (1938)[“Erie”].”).
Notably, the Tenth Circuit has not drawn rigid distinctions between state and federal law
when interpreting forum selection clauses, and has applied federal law when interpreting these
clauses when “there are no material discrepancies between [state] law and federal common law

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on these matters.” Excell, Inc. v. Sterling Boiler & Mech., Inc., 106 F.3d 318, 320-21 (10th Cir.
1997)(not deciding the choice-of-law issue between Colorado law and federal law). In contrast,
the United States Court of Appeals for the Third Circuit has ruled that federal law cannot apply
to forum selection-clause interpretation, because that would “frustrate[] the principles of Erie.”
Collins on behalf of herself v. Mary Kay, Inc., 874 F.3d 176, 182 (3d Cir. 2017)(“Applying
federal common law to these issues would generate a sprawling federal general common law of
contracts.”). See Weber v. PACT XPP Technologies, AG, 811 F.3d at 770 (“A choice-of-law
analysis to determine what substantive law should guide this court’s interpretation of the [forum
selection clause] is proper under ordinary principles governing diversity litigation.”); Martinez v.
Bloomberg LP, 740 F.3d at 221 (“Erie . . . warns against an approach that would force federal
courts to generate a sprawling federal general common law of contracts to govern such questions
[of interpretation] whenever they arise in the context of forum selection clauses.”). But see
Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 513 (9th Cir. 1988)(“Moreover,
because enforcement of a forum clause necessarily entails interpretation of the clause before it
can be enforced, federal law also applies to interpretation of forum selection clauses.”). Since
the Tenth Circuit’s decision in Excell, Inc. v. Sterling Boiler & Mech., Inc., it has not confronted
whether state or federal law should be used to interpret a forum selection clause, but, when
confronted with a contract between foreign citizens with a forum selection clause, the Tenth
Circuit has held that, “under federal law, the courts should ordinarily honor an international
commercial agreement’s forum-selection provision as construed under the law specified in the
agreement’s choice-of-law provision.” Yavuz v. 61 MM, Ltd., 465 F.3d at 430 (emphasis in
original).

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2.

Enforceability of Forum Selection Clauses.

The Supreme Court has noted that there is substantial overlap between precedent
interpreting the enforceability of arbitration agreements and forum selection clauses. See Scherk
v. Alberto-Culver Co., 417 U.S. 506, 518-19 (1974)(“An agreement to arbitrate before a
specified tribunal is, in effect, a specialized kind of forum-selection clause that posits not only
the situs of suit but also the procedure to be used in resolving the dispute.”). The Supreme Court
has stated that “an arbitration or forum-selection clause in a contract is not enforceable if the
inclusion of that clause in the contract was the product of fraud or coercion.”

Scherk v.

Alberto-Culver Co., 417 U.S. at 518-19 (emphasis added). Reiterating this rule, the Tenth
Circuit has stated: “A plaintiff seeking to avoid a choice provision on a fraud theory must, within
the confines of Fed. R. Civ. P. 9(b) and 11, plead fraud going to the specific provision; the
teachings of Scherk, interpreting M/S Bremen, require no less.” Riley v. Kingsley Underwriting
Agencies, Ltd., 969 F.2d at 960. Thus, the Tenth Circuit requires that a party seeking to avoid a
forum selection clause produce evidence showing that the arbitration provision is a product of
fraud or coercion. See Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d at 960 (“Third,
at no time did Riley offer any evidence on the stipulated issues tending to show that the
arbitration provision (or any other choice provision, for that matter) was a product of fraud or
coercion.” (emphasis in original)). The Honorable Lourdes A. Martinez, former United States
Magistrate Judge for the District of New Mexico, has similarly stated that “[a] general claim of
fraud or misrepresentation concerning an entire contract does not affect the validity of a forum
selection clause.” Mann v. Auto. Protection Corp., 777 F. Supp. 2d 1234, 1240 (D.N.M. 2011)
(Martinez, J.).

- 46 -

The Supreme Court has rejected the notion that the parties must specifically negotiate a
forum selection clause for it to be enforceable. See Carnival Cruise Lines, Inc. v. Shute, 499
U.S. at 593 (“[W]e do not adopt the Court of Appeals’ determination that a nonnegotiated
forum-selection clause in a form ticket contract is never enforceable simply because it is not the
subject of bargaining.”). Accord Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 221
(5th Cir. 1998)(holding that a forum selection clause in a seaman’s employment contract was
enforceable even when the parties did not negotiate for the provision).

Magistrate Judge

Martinez has similarly held:
This argument also fails because unequal bargaining position and form contracts
do not invalidate forum selection provisions. The fact that Plaintiff is an
individual and the contract was presented to him as a form contract does not
invalidate the forum selection provision, and Plaintiff’s belief that he could not
negotiate or change the terms of the Agreement does not rise to the level of
overreaching that would make it unreasonable or unfair to enforce the forum
selection provision.
Mann v. Auto. Protection Corp., 777 F. Supp. 2d at 1240 (citations omitted)(citing Carnival
Cruise Lines, Inc. v. Shute, 499 U.S. at 593-94).
Courts have also imposed a high standard for negating a forum selection clause on the
basis that it is inconvenient. The Tenth Circuit has, for instance, stated:
Finally, in Carnival Cruise Lines, the Court relied on M/S Bremen in
enforcing a domestic forum selection clause, despite inconvenience to the
plaintiffs. Only a showing of inconvenience so serious as to foreclose a remedy,
perhaps coupled with a showing of bad faith, overreaching or lack of notice,
would be sufficient to defeat a contractual forum selection clause.
Riley suggests that enforcement of the choice of forum and law provisions
is unreasonable because he effectively will be deprived of his day in court. The
basis underlying this contention is his perception that recovery will be more
difficult under English law than under American law. Riley will not be deprived
of his day in court. He may, though, have to structure his case differently than if
proceeding in federal district court. The fact that an international transaction may

- 47 -

be subject to laws and remedies different or less favorable than those of the
United States is not a valid basis to deny enforcement, provided that the law of the
chosen forum is not inherently unfair. English law does not preclude Riley from
pursuing an action for fraud and we agree with the Defendants that the Lloyd’s
Act does not grant statutory immunity for such claims. We have been shown
nothing to suggest than an English court would not be fair, and in fact, our courts
have long recognized that the courts of England are fair and neutral forums.
Given the international nature of the insurance underwriting transaction, the
parties’ forum selection and choice of law provisions contained in the agreements
should be given effect.
Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d at 958 (citations omitted). Magistrate
Judge Martinez similarly held that, “[t]o invalidate a forum selection provision for reasons of
inconvenience, however, a party must show that enforcement of the provision would cause an
inconvenience ‘so serious as to foreclose a remedy.’” Mann v. Auto. Protection Corp., 777
F. Supp. 2d at 1240 (quoting Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d at 958).
3.

Permissive and Mandatory Forum Selection Clauses.

“The difference between a mandatory and permissive forum selection clause is that
‘[m]andatory forum selection clauses contain clear language showing that jurisdiction is
appropriate only in the designated forum.’” Am. Soda, LLP v. U.S. Filter Wastewater Grp., Inc.,
428 F.3d 921, 926 (10th Cir. 2005). “In contrast, permissive forum selection clauses authorize
jurisdiction in a designated forum, but do not prohibit litigation elsewhere.” Am. Soda, LLP v.
U.S. Filter Wastewater Grp., Inc., 428 F.3d at 926-27 (citation omitted). In K & V Scientific Co.
v. BMW, the Tenth Circuit adopted the majority rule for enforcing forum selection clauses. See
314 F.3d at 500. Specifically, it concluded that, when venue is specified, such as when the
parties designate a particular county or tribunal, and mandatory or obligatory language
accompanies the designation, a forum selection clause will be enforced as mandatory. See K &
V Scientific Co. v. BMW, 314 F.3d at 499.

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In Milk ‘N’ More, Inc. v. Beavert, 963 F.2d 1342 (10th Cir. 1992), the Tenth Circuit held
that the forum selection clause was mandatory and precluded removal of the case to federal
court. See 963 F.2d at 1343. In that case, the defendant appealed an order remanding the
breach-of-contract action to a Kansas state court. See 963 F.2d at 1343. The federal district
court concluded that an enforceable forum selection clause in the agreement required the remand.
See 963 F.2d at 1343. The clause in the Milk ‘N’ More, Inc. v. Beavert agreement provided:
“The parties herein have mutually agreed that said lease and the purchase option agreement
contained herein, where applicable, shall be governed by the laws of the State of Kansas and the
parties further agree that venue shall be proper under this agreement in Johnson County,
Kansas.” 963 F.2d at 1343. The federal district court granted the motion to remand on the
ground that the contractual agreement contained an enforceable forum selection clause, relying
on the principle that forum selection clauses are “prima facie valid and should be enforced”
unless shown to be unreasonable. 963 F.2d at 1344 (quoting M/S Bremen v. Zapata Off-Shore
Co., 407 U.S. at 10). On appeal, the defendant contended that the federal district judge erred in
construing the clause as a mandatory agreement between the parties to resolve any dispute under
the contract exclusively in the state court in Johnson County, Kansas; he said instead that the
court should have construed the clause as merely a permissive designation on venue. See Milk
‘N’ More, Inc. v. Beavert, 963 F.2d at 1344. The defendant contended that the district court
erroneously construed the contract language as an agreement making Johnson County, Kansas,
the exclusive forum in which the parties could resolve disputes that arose under the agreement.
See 963 F.2d at 1345. The Tenth Circuit affirmed, stating that the clause’s dispositive portion
provided that “venue shall be proper under this agreement in Johnson County, Kansas.” 963

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F.2d at 1345-46. The Tenth Circuit held: “We are persuaded that the district judge made the
proper interpretation and correctly enforced the clause.” 963 F.2d at 1346.
In Milk ‘N’ More, Inc. v. Beavert, the Tenth Circuit stated that it was mindful that a
waiver of one’s statutory right to be in federal court must be “clear and unequivocal.” 963 F.2d
at 1346 (quoting Regis Assocs. v. Rank Hotels (Mgmt.) Ltd., 894 F.2d 193, 195 (6th Cir. 1990)).
The Tenth Circuit acknowledged that, if there is ambiguity in the clause, the court should
construe it against the drafter.

See Milk ‘N’ More, Inc. v. Beavert, 963 F.2d at 1346.

Nevertheless, the Tenth Circuit said that “[s]uch clauses are prima facie valid and should be
enforced unless enforcement is shown by the resisting party to be unreasonable under the
circumstances.” 963 F.2d at 1346. The Tenth Circuit stated that the provision that “venue shall
be proper under this agreement in Johnson County, Kansas” was “reasonably clear and the
wording strongly points to the state court of that county.” 963 F.2d at 1346. The Tenth Circuit
said the use of the word “shall” generally indicates a mandatory intent unless a convincing
argument to the contrary is made. 963 F.2d at 1346. In Milk ‘N’ More, Inc. v. Beavert, the
Tenth Circuit cited with approval Intermountain Systems, Inc. v. Edsall Construction Co., 575
F. Supp. 1195, 1198 (D. Colo. 1983)(Kane, J.), stating that the case was particularly persuasive,
because it held enforceable a similar clause: “It is agreed for purposes of this agreement, venue
shall be in Adams County, Colorado.” Milk ‘N’ More, Inc. v. Beavert, 963 F.2d at 1346. In K
& V Scientific Co. v. BMW, the parties entered into a new agreement which, unlike their earlier
agreement, contained a jurisdictional and choice-of-law provision, which stated: “Jurisdiction for
all and any disputes arising out of or in connection with this agreement is Munich. All and any
disputes arising out of or in connection with this agreement are subject to the laws of the Federal

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Republic of Germany.” 314 F.3d at 496. The plaintiff filed suit, asserting various contract, tort,
and statutory causes of action. See 314 F.3d at 497. The defendant removed the case to federal
court, and moved to dismiss under to rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil
Procedure for lack of personal jurisdiction and improper venue. See 314 F.3d at 497. The
district court granted the defendant’s motion to dismiss for improper venue. See 314 F.3d
at 497. The district judge concluded that the forum selection clause contained in the second
confidentiality agreement was “unambiguous and enforceable,” and demonstrated “[t]he parties’
intent to locate jurisdiction for this action solely in the courts of Munich.” 314 F.3d at 497. On
appeal, the plaintiff argued that the clause’s language contained no reference to venue, contained
no language designating the courts in Munich as exclusive, and contained no language indicating
that suit elsewhere is impermissible.

See 314 F.3d at 497.

The Tenth Circuit made the

distinction between a venue provision which fixes venue in a certain location -- a mandatory
clause -- versus one which merely grants jurisdiction to a certain place -- a permissive clause.
The Tenth Circuit set forth an analysis for determining whether forum selection clauses within a
contract are mandatory or permissive:
This court and others have “frequently classified” forum selection clauses “as
either mandatory or permissive.” Excell, 106 F.3d at 321. “Mandatory forum
selection clauses contain clear language showing that jurisdiction is appropriate
only in the designated forum.” Id. (internal quotations omitted). “In contrast,
permissive forum selection clauses authorize jurisdiction in a designated forum,
but do not prohibit litigation elsewhere.” Id. (internal quotations omitted).
K & V Scientific Co. v. BMW, 314 F.3d at 498. The Tenth Circuit cited Milk ‘N’ More, Inc. v.
Beavert, stating that the Tenth Circuit there had concluded that a forum selection clause stating
“venue shall be proper under this agreement in Johnson County, Kansas” was mandatory. K &
V Scientific Co. v. BMW, 314 F.3d at 498. The Tenth Circuit concluded, however, that no

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Tenth Circuit case had yet dealt with a forum selection clause similar to the one at issue. K & V
Scientific Co. v. BMW, 314 F.3d at 501.
The Tenth Circuit stated that, “generally speaking,” the Courts of Appeals are in
“agreement” that the following formula is to be used in determining whether the selection clause
is mandatory or permissive: “[W]here venue is specified [in a forum-selection clause] with
mandatory or obligatory language, the clause will be enforced; where only jurisdiction is
specified [in a forum selection clause], the clause will generally not be enforced unless there is
some further language indicating the parties’ intent to make venue exclusive.” K & V Scientific
Co. v. BMW, 314 F.3d at 499 (alterations in original)(quoting Paper Express, Ltd. v. Pfankuch
Maschinen GmbH, 972 F.2d 753, 757 (7th Cir. 1992)). The Tenth Circuit analyzed language
from six forum selection clauses considered permissive, including four different forum selection
clauses wherein the provision used the word “shall” together with the name of a court. K & V
Scientific Co. v. BMW, 314 F.3d at 499. The K & V Scientific Co. v. BMW formula for the
four clauses using the word “shall” and considered permissive are:
* “Any dispute arising between the parties hereunder shall come within the
jurisdiction of the competent Greek Courts, specifically of the Thessaloniki
Courts.” John Boutari [& Son, Wines & Spirits, S.A. v. Attiki Imp. & Distribs.
Inc.], 22 F.3d [51,] 52 [(2d Cir. 1994)].
....
* “The courts of California, County of Orange, shall have jurisdiction over the
parties in any action at law relating to the subject matter or the interpretation of
this contract.” Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 76 (9th
Cir. 1987).
....
* “This agreement shall be construed and enforceable according to the law of the
State of New York and the parties submit to the jurisdiction of the courts of New

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York.” Keaty [v. Freeport Indon., Inc.], 503 F.2d [955,] 956 [(5th Cir. 1974)]
(concluding phrase was ambiguous and, when construed against drafter, was
permissive).
* “This agreement shall be governed by and construed in accordance with the
laws of the Federal Republic of Germany. * * * Place of jurisdiction shall be
Dresden.” Hull 753 Corp. v. Elbe Flugzeugwerke GmbH, 58 F. Supp. 2d 925,
926 (N.D. Ill. 1999).
K & V Scientific Co. v. BMW, 314 F.3d at 499. The other two examples of permissive clauses
are:
* “The laws and courts of Zurich are applicable.”
Willingham, 17 F.3d 123, 127 (5th Cir. 1994).

Caldas & Sons, Inc. v.

....
* “Place of jurisdiction is Sao Paulo/Brazil.” Citro Florida[, Inc. v. Citrovale,
S.A.], 760 F.2d 1231, 1231 (11th Cir. 1985)(concluding phrase was ambiguous
and, when construed against drafter, was permissive).
K & V Scientific Co. v. BMW, 314 F.3d at 499. The Tenth Circuit in K & V Scientific Co. v.
BMW also noted that the courts had held the following clauses to be mandatory:
* “[P]lace of jurisdiction . . . is the registered office of the trustee [in Germany], to
the extent permissible under the law.” Frietsch v. Refco, Inc., 56 F.3d 825, 827
(7th Cir. 1995); see id. at 829 (concluding that the phrase “to the extent
permissible under the law” “would have no function if the [forum selection]
clause were not mandatory -- if, in other words, a party could sue anywhere he
wanted”).
* “In all disputes arising out of the contractual relationship, the action shall be
filed in the court which has jurisdiction for the principal place of business of the
supplier . . . . The supplier also has the right to commence an action against the
purchaser at the purchaser’s principal place of business.” Paper Express[, Ltd. v.
Pfankuch Maschinen GmbH], 972 F.2d at 755; id. at 756 (concluding the last
sentence “would be appropriate and meaningful only if the clause were in fact
mandatory”).
* “Licensee hereby agrees and consents to the jurisdiction of the courts of the
State of Virginia. Venue of any action brought hereunder shall be deemed to be

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in Gloucester County, Virginia.” Docksider[, Ltd. v. Sea Tech., Ltd.,] 875 F.2d
[762,] 763 (9th Cir. 1989).
K & V Scientific Co. v. BMW, 314 F.3d at 499-500 (footnote omitted).
Using the majority rule, the Tenth Circuit had little trouble concluding that the forum
selection clause at issue in K & V Scientific Co. v. BMW was permissive. See 314 F.3d at 500.
The clause referred only to jurisdiction and did so in non-exclusive terms. See 314 F.3d at 500.
A clause is mandatory, in accordance with K & V Scientific Co. v. BMW, only when the venue
is specific with mandatory language. See 314 F.3d at 500. Mandatory language is venue
coupled with such terms as “exclusive,” “sole,” or “only.” 314 F.3d at 500. If the paragraph is
ambiguous -- capable of being construed as either permissive or mandatory -- the paragraph is
deemed to be permissive. The Tenth Circuit in K & V Scientific Co. v. BMW states:
Even if the clause were deemed to be ambiguous (i.e., capable of being construed
as either permissive or mandatory), the rule in this circuit and others is that the
clause must be construed against the drafter, in this case defendant. See Milk ‘N’
More, 963 F.2d at 1346 (holding “if there is any ambiguity in the clause [the
court] should construe it against the drafter”). Accordingly, the clause would be
deemed permissive.
344 F.3d at 500-01 (citations omitted).
In an unpublished decision that followed K & V Scientific Co. v. BMW, the Tenth
Circuit clarified that the K & V Scientific Co. v. BMW decision addresses the issue
whether a recognition-of-jurisdiction provision implies an exclusive selection of
venue. Use of mandatory language like “shall” in a clause dealing directly with
venue carries stronger implications regarding the intent to designate an exclusive
forum. See Milk ‘N’ More, 963 F.2d at 1346 (holding clause stating that “venue
shall be proper . . . in” effected an exclusive designation of forum). When, as
here, the relation of such language to the question of venue is at most derivative,
through a jurisdictional provision, decisions such as “Milk ‘N’ More . . . are of
little assistance in resolving the . . . dispute.” K & V Scientific, 314 F.3d
at 498-99.

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King v. PA Consulting Grp., Inc., 78 F. App’x 645, 648 n.2 (10th Cir. 2003)(unpublished)
(emphasis in original). The Tenth Circuit, in American Soda, LLP v. U.S. Filter Wastewater
Group, Inc., has also recognized that a party to a contract can waive venue in federal court in a
forum selection clause, thus requiring remand the dispute to state court:
The parties not only consented to the jurisdiction of the Colorado state courts,
they went a step further by designating the state courts or arbitration as “the
exclusive forum for the resolution of any disputes related to or arising out of [the
contract].” We conclude that by consenting to state court jurisdiction and
selecting the state courts as the “exclusive forum,” the parties indicated their
intent to make venue exclusive in state court with respect to any disputes not
resolved in arbitration. Because the forum selection clause at issue is mandatory,
U.S. Filter unequivocally waived its right to remove this lawsuit to federal court.
428 F.3d at 927.
The Court has concluded that a forum selection clause is mandatory when the clause
states that a certain district or county is “the exclusive jurisdiction” for litigation. See Montoya,
872 F. Supp. at 1276 (emphasis in original)(“The word exclusive in relation to Harris County as
a venue indicates the parties’ intent that Harris County be the exclusive venue for any suits.”).
The Court has also determined that a forum selection clause with “shall” language was
mandatory. See Presbyterian Healthcare Servs. v. Goldman, Sachs & Co., 122 F. Supp. 3d 1157,
1211 (D.N.M. 2015)(Browning, J.).

Although acknowledging the Tenth Circuit’s rule that

“shall” language does not automatically make a forum selection clause mandatory, it determined
that the forum selection clause at issue strongly “parallels [the] structure of the clause in
Docksider, Ltd v. Sea Technology, Ltd.,” so concluded that the

clause was mandatory.

Presbyterian Healthcare Servs. v. Goldman, Sachs & Co., 122 F. Supp. 3d at 1211.

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LAW REGARDING DIVERSITY JURISDICTION AND ERIE
Under Erie, a federal district court sitting in diversity applies “state law with the objective
of obtaining the result that would be reached in state court.” Butt v. Bank of Am., N.A., 477
F.3d 1171, 1179 (10th Cir. 2007). Accord Mem. Hosp. v. Healthcare Realty Trust Inc., 509 F.3d
1225, 1229 (10th Cir. 2007). The Court has held that if a district court exercising diversity
jurisdiction cannot find a Supreme Court of New Mexico “opinion that [governs] a particular
area of substantive law . . . [the district court] must . . . predict how the Supreme Court of New
Mexico would [rule].” Guidance Endodontics, LLC v. Dentsply Int’l., Inc., 708 F. Supp. 2d
1209, 1224-25 (D.N.M. 2010)(Browning, J.).

“Just as a court engaging in statutory

interpretation must always begin with the statute’s text, a court formulating an Erie prediction
should look first to the words of the state supreme court.” 8 Peña v. Greffet, 110 F. Supp. 3d

8

In performing its Erie-mandated duty to predict what a state supreme court would do if
faced with a case, see Comm’r v. Estate of Bosch, 387 U.S. 456 (1987), a federal court may
sometimes contradict the state supreme court’s own precedent if the federal court concludes that
the state supreme court would, given the opportunity, overrule its earlier holding, see Anderson
Living Trust v. WPX Energy Prod., LLC, 27 F. Supp. 3d at 1247 n.30. Courts should,
obviously, be reticent to formulate an Erie prediction that conflicts with state-court precedent;
even if the prediction turns out to be correct, such predictions produce disparate results between
cases filed in state and federal courts, as the old state supreme court precedent usually binds state
trial courts. The factors to which a federal court should look before making an Erie prediction
that a state supreme court will overrule its prior precedent vary depending upon the case, but
some consistent ones include: (i) the age of the state supreme court decision from which the
federal court is considering departing -- the younger the state case is, the less likely it is that
departure is warranted; (ii) the amount of doctrinal reliance that the state courts -- especially the
state supreme court -- have placed on the state decision from which the federal court is
considering departing; (iii) apparent shifts away from the doctrine that the state decision
articulates, especially if the state supreme court has explicitly called an older case’s holding into
question; (iv) changes in the composition of the state supreme court, especially if mostly
dissenting justices from the earlier state decision remain on the court; and (v) the decision’s
patent illogic or its inapplicability to modern times. See Peña v. Greffet, 110 F. Supp. 3d at 1132
n.17. In short, a state supreme court case that a federal court Erie predicts will be overruled is
likely to be very old, neglected by subsequent state-court cases -- perhaps because it is in a dusty

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1103, 1132 (D.N.M. 2015)(Browning, J.)(“Peña”).9 If the Court finds only an opinion from the
Court of Appeals of New Mexico, while “certainly [the Court] may and will consider the Court
of Appeal[s’] decision in making its determination, the Court is not bound by the Court of
Appeal[s’] decision in the same way that it would be bound by a Supreme Court decision.”
Mosley v. Titus, 762 F. Supp. 2d 1298, 1332 (D.N.M. 2010)(Browning, J.)(noting that, where
the only opinion on point is “from the Court of Appeals, [] the Court’s task, as a federal district
court sitting in this district, is to predict what the Supreme Court of New Mexico would do if the
case were presented to it”)(citing Wade v. EMCASCO Ins. Co., 483 F.3d 657, 666 (10th Cir.
2007)(explaining that, “[w]here no controlling state decision exists, the federal court must
attempt to predict what the state’s highest court would do” and that, “[i]n doing so, it may seek
guidance from decisions rendered by lower courts in the relevant state”)).10 The Court may also

corner of the common law which does not get much attention or have much application -- and
clearly wrong.
9

The Supreme Court of New Mexico later adopted and cited heavily the Court’s
reasoning from Peña. See Spurlock v. Townes, 2016-NMSC-014, ¶¶ 16-20, 368 P.3d 1213,
1217-18. That kind of result is what federal courts should strive for when making Erie
predictions.
10
The Supreme Court has addressed what the federal courts may use when there is not a
decision on point from the state’s highest court:
The highest state court is the final authority on state law, but it is still the duty of
the federal courts, where the state law supplies the rule of decision, to ascertain
and apply that law even though it has not been expounded by the highest court of
the State. An intermediate state court in declaring and applying the state law is
acting as an organ of the State and its determination, in the absence of more
convincing evidence of what the state law is, should be followed by a federal
court in deciding a state question. We have declared that principle in West v.
American Telephone and Telegraph Co., 311 U.S. 223 (1940), decided this day.
It is true that in that case an intermediate appellate court of the State had
determined the immediate question as between the same parties in a prior suit, and
the highest state court had refused to review the lower court’s decision, but we set

- 57 -

rely on Tenth Circuit decisions interpreting New Mexico law. See Anderson Living Trust v.
WPX Energy Prod., LLC, 27 F. Supp. 3d at 1243 & n.30.11 Ultimately, “the Court’s task is to

forth the broader principle as applicable to the decision of an intermediate court,
in the absence of a decision by the highest court, whether the question is one of
statute or common law.
. . . We have held that the decision of the Supreme Court upon the construction of
a state statute should be followed in the absence of an expression of a
countervailing view by the State’s highest court, and we think that the decisions
of the Court of Chancery [the New Jersey trial court] are entitled to like respect as
announcing the law of the State.
....
The question has practical aspects of great importance in the proper
administration of justice in the federal courts. It is inadmissible that there should
be one rule of state law for litigants in the state courts and another rule for
litigants who bring the same question before the federal courts owing to the
circumstance of diversity of citizenship. In the absence of any contrary showing,
the rule [set forth by two New Jersey trial courts, but no appellate courts] appears
to be the one which would be applied in litigation in the state court, and whether
believed to be sound or unsound, it should have been followed by the Circuit
Court of Appeals.
Fid. Union Trust Co. v. Field, 311 U.S. 169, 177-80 (1940)(footnotes and citations omitted).
The Supreme Court has softened this position over the years; federal courts are no longer bound
by state trial or intermediate court opinions, but “should attribute [them] some weight . . . where
the highest court of the State has not spoken on the point.” Comm’r v. Estate of Bosch, 387 U.S.
at 465 (citing King v. Order of United Commercial Travelers, 333 U.S. 153, 159 (1948)). See
17A Moore’s § 124.20, at 75, 83 (3d ed. 1999)(“Decisions of intermediate state appellate courts
usually must be followed . . . [and] federal courts should give some weight to state trial courts
decisions.”)(emphasis and title case omitted).
11

In determining the proper weight to accord Tenth Circuit precedent interpreting New
Mexico law, the Court must balance the need for uniformity between federal court and state
court interpretations of state law with the need for uniformity among federal judges. If the Court
adheres too rigidly to Tenth Circuit case law, ignoring changes undergone by a state’s law in the
ensuing years, then parties litigating state law claims will be subject to a different body of
substantive law, depending on whether they litigate in state court or federal court. This result
frustrates the purpose of Erie, which holds that federal courts must apply state court
interpretations of state law, rather than their own, in part so that parties achieve a consistent

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result regardless of the forum. This consideration pulls the Court toward according Tenth Circuit
precedent less weight, and according state court decisions issued in the ensuing years more
weight. On the other hand, when the state law is unclear, it is desirable for there at least to be
uniformity among federal judges as to its proper interpretation. Otherwise, different federal
judges within the same circuit -- or even the same district, as district courts’ decisions are not
binding, even upon themselves -- would be free to adopt differing interpretations of a state’s law.
This consideration pulls the Court towards a stronger respect for vertical stare decisis, because a
Tenth Circuit decision on point -- regardless whether it accurately reflects state law -- at least
provides consistency at the federal level, so long as federal district judges are required to follow
it.
The Court must decide how to weigh Tenth Circuit case law against more-recent state
court decisions, choosing a point on the spectrum between the two extremes: rigidly adhering to
Tenth Circuit precedent unless there is intervening case law directly on point from the state’s
highest court, on one end; and independently interpreting the state law, regarding the Tenth
Circuit precedent as no more than persuasive authority, on the other. In striking this balance, the
Court notes that it is generally more concerned about systemic inconsistency between the federal
courts and the state courts than it is about inconsistency among federal judges. Judges, even
those within a jurisdiction with ostensibly identical governing law, sometimes interpret and
apply the law differently from one another; this inconsistency is part and parcel of a commonlaw judicial system. More importantly, litigants seeking to use forum selection to gain a
substantive legal advantage cannot easily manipulate such inconsistency: cases are assigned
randomly to district judges in this and many federal districts; and, regardless, litigants cannot
know for certain how a given judge will interpret the state law, even if they could determine the
identity of the judge pre-filing or pre-removal. All litigants know in advance is that whomever
federal district judge they are assigned will look to the entirety of the state’s common law in
making his or her determination -- the same as a state judge would. Systemic inconsistency
between the federal courts and state courts, on the other hand, not only threatens the principles of
federalism, but litigants may more easily manipulate the inconsistency. When the Tenth Circuit
issues an opinion interpreting state law, and the state courts subsequently shift away from that
interpretation, litigants -- if the district courts strictly adhere to the Tenth Circuit opinion -- have
a definite substantive advantage in choosing the federal forum over the state forum, or vice
versa.
The Court further notes that district courts may be in a better position than the Tenth
Circuit to be responsive to changes in state law. Tenth Circuit decisions interpreting a particular
state’s law on a specific issue are further apart in time than the collective district courts’
decisions are. More importantly, the Tenth Circuit does not typically address such issues with
the frequency that the state’s courts themselves do. Accordingly, Tenth Circuit precedent can lag
behind state law developments -- developments that the district courts may be nimble enough to
perceive and adopt. Additionally, much of the benefit of having a consistent Tenth Circuit-wide
interpretation of a particular state’s law is wasted. Other than Oklahoma, every state
encompassed by the Tenth Circuit contains only one federal judicial district, and there is
relatively little need for federal judges in Wyoming and Kansas to have a uniform body of New
Mexico law to which to look. Last, the Court notes, respectfully, that district courts may be in a

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better position than the Tenth Circuit to develop expertise on the state law of the state in which
they sit. Every federal judicial district in the nation, except the District of Wyoming, covers at
most one state. It is perhaps a more workable design for each district court to keep track of legal
developments in the state law of its own state(s) than it is for the Tenth Circuit to monitor
separate legal developments in eight states. The Court, for example, gets the New Mexico Bar
Bulletin and at least glances at every published Supreme Court of New Mexico case and some of
the published Court of Appeals of New Mexico cases.
The Tenth Circuit used to follow this rationale in applying a clearly erroneous standard of
review to district judge decisions of state law with no controlling state Supreme Court precedent.
See Weiss v. United States, 787 F.2d 518, 525 (10th Cir. 1986); See Rawson v. Sears, Roebuck,
& Co., 822 F.2d 908, 923 (10th Cir. 1987)(McKay, J., dissenting)(collecting cases). Since the
mid-1980s, however, the Tenth Circuit has abandoned that rationale and applied a de novo
standard of review to district judge decisions applying state law with no governing state Supreme
Court precedent. See Rawson v. Sears, Roebuck, & Co., 822 F.2d at 908. See also id. at 923
(McKay, J., dissenting)(noting that the majority had abandoned the “sanctified” clearly
erroneous standard or, the “so-called local-judge rule” in its analysis). The Court regrets the
Tenth Circuit’s retreat from the clearly erroneous standard.
Having outlined the relevant considerations, the Court thinks the proper stance on vertical
stare decisis in the context of federal court interpretations of state law is as follows: the Tenth
Circuit’s cases are binding as to their precise holding -- what the state law was on the day the
opinion was published -- but lack the positive precedential force that its cases interpreting a
federal statute or the Constitution of the United States of America possess. A district court
considering a state law issue after the publication of a Tenth Circuit opinion on point may not
come to a contrary conclusion based only on state court cases available to and considered by the
Tenth Circuit, but it may come to such a conclusion based on intervening state court cases.
When interpreting state law, the Tenth Circuit does not and cannot issue a case holding
that x is the law in New Mexico; it holds that the proper interpretation of New Mexico law, at the
time the opinion is released, is x. Its holdings are descriptive, not prescriptive -- interpretive, not
normative. Because federal judicial opinions lack independent substantive force on state law
issues, but possess such force regarding federal law issues, the Court thinks the following is not
an unfair summary of the judicial interpretive process: (i) when interpreting federal law, the
federal appellate courts consider the existing body of law, and then issue a holding that both
reflects and influences the body of law; that holding subsequently becomes a part of the body of
law; but (ii) when interpreting state law, the federal appellate courts consider the existing body of
law, and then issue a holding that only reflects the body of law; that holding does not
subsequently become a part of the body of law. The federal district courts are bound to conclude
that the Tenth Circuit’s reflection of the then-existing body of law was accurate. The question is
whether they should build a doctrine atop the case and use the existence of the Tenth Circuit’s
case to avoid any responsibility to independently consider the whole body of state law that exists
when the time comes that diversity litigants raise the issue in their courtrooms. Giving such
effect to the Tenth Circuit’s interpretations of state law is at tension with Erie, giving
independent substantive effect to federal judicial decisions -- i.e., applying federal law -- in a
case brought in diversity.

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The purpose of Erie is well-known and simple, and the Court should not complicate it
beyond recognition: it is that the same substantive law governs litigants’ cases regardless
whether they are brought in a federal or state forum. For simplicity’s sake, most courts have
settled on the formulation that “the federal court must attempt to predict how the states’ highest
court would rule if confronted with the issue.” Moore’s § 124.22[3], at 90 n.7.3 (citing Comm’r
v. Estate of Bosch, 387 U.S. at 465 (“[A]n intermediate appellate state court [decision] is a
datum for ascertaining state law which is not to be disregarded by a federal court unless it is
convinced by other persuasive data that the highest court of the state would decide
otherwise.”)(citation and internal quotation marks omitted). This may not be the most precise
formulation if the goal is to ensure identical outcomes in state and federal court -- the Honorable
Milton I. Shadur, United States District Judge, looks to state procedural rules to determine in
which state appellate circuit the suit would have been filed were it not in federal court, and then
applies the state law as that circuit court interprets it, see Abbott Laboratories v. Granite State
Ins. Co., 573 F. Supp. 193, 196-200 (N.D. Ill. 1983)(noting that the approach of predicting the
state supreme court’s holdings will often lead to litigants obtaining a different result in federal
court than they would in state court, where only the law of the circuit in which they filed -- and
certainly not nonexistent, speculative state supreme court law -- governs) -- but it is a workable
solution that has achieved consensus. See Allstate Ins. Co. v. Menards, Inc., 285 F.3d 630, 637
(7th Cir. 2002)(“[W]e adhere today to the general rule, articulated and applied throughout the
United States, that, in determining the content of state law, the federal courts must assume the
perspective of the highest court in that state and attempt to ascertain the governing substantive
law on the point in question.”). This formulation, built out of ease-of-use, does not relieve courts
of their Supreme Court-mandated obligation to consider state appellate and trial court decisions.
To the contrary, even non-judicial writings by influential authors, statements by state supreme
court justices, the closeness of the vote on a prior case addressing the issue, the Restatements of
Law, and personnel changes on the court -- considerations that would not remotely inform a
federal court’s analysis of federal law -- may validly come into play. The question is whether the
district courts must abdicate, across-the-board, the “would decide” aspect of the Erie analysis to
their parent appellate courts when the Court of Appeals has declared an interpretation of state
law.
The Erie doctrine results in federal cases that interpret state law withering with time.
While cases interpreting federal law become more powerful over time -- forming the
groundwork for doctrines, growing upward from one application (Congress may create a national
bank) to many (Congress may set quotas on wheat-growing for personal consumption),
expanding outward from the general (states must grant criminal jury trials) to the specific (the
jury need not be twelve people, nor must it be unanimous) -- federal cases interpreting state law
often become stale. New state court cases -- even when not directly rebuking the federal court’s
statement of law -- alter the common-law legal landscape with their dicta, their insinuations, and
their tone. The Supreme Court, which picks its cases sparingly and for maximum effect, almost
never grants certiorari to resolve issues of state law.
The Court’s views on Erie, of course, mean little if the Tenth Circuit does not agree. In
Wankier v. Crown Equipment Corp., the Tenth Circuit said that,

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[w]here no controlling state decision exists, the federal court must attempt to
predict what the state’s highest court would do. In performing this ventriloquial
function, however, the federal court is bound by ordinary principles of stare
decisis. Thus, when a panel of this Court has rendered a decision interpreting
state law, that interpretation is binding on district courts in this circuit, and on
subsequent panels of this Court, unless an intervening decision of the state’s
highest court has resolved the issue.
Wankier v. Crown Equip. Corp., 353 F.3d 862, 866 (10th Cir. 2003)(McConnell, J.). From this
passage, it seems clear the Tenth Circuit permits a district court to deviate from its view of state
law only on the basis of a subsequent case “of the state’s highest court.” The American Heritage
Dictionary of the English Language 1402 (William Morris ed., New College ed. 1976)(defining
“unless” as “[e]xcept on the condition that; except under the circumstances that”). A more
aggressive reading of the passage -- namely the requirement that the intervening case “resolv[e]
the issue” -- might additionally compel the determination that any intervening case law must
definitively and directly contradict the Tenth Circuit interpretation in order to be considered
“intervening.”
It is difficult to know whether Judge McConnell’s limitation of “intervening decision” to
cases from the highest state court was an oversight or intentional. Most of the Tenth Circuit’s
previous formulations of this rule have defined intervening decisions inclusively as all
subsequent decisions of “that state’s courts,” a term which seems to include trial and
intermediate appellate courts. Even Koch v. Koch Industries, Inc., 203 F.3d 1202, 1231 (10th
Cir. 2000), the primary authority upon which Wankier v. Crown Equipment Corp. relies, uses the
more inclusive definition. In fact, Wankier v. Crown Equipment Corp. quotes its relevant
passage:
In the absence of intervening Utah authority indicating that a plaintiff is not
required to prove a safer, feasible alternative design, we are bound to follow the
rule of Allen [v. Minnstar, Inc., 8 F.3d 1470 (10th Cir. 1993), a Tenth Circuit case
interpreting an issue of Utah law], as was the district court. “Following the
doctrine of stare decisis, one panel of this court must follow a prior panel’s
interpretation of state law, absent a supervening declaration to the contrary by that
state’s courts or an intervening change in the state’s law.” Koch v. Koch Indus.,
Inc., 203 F.3d at 1231.
Wankier v. Crown Equip. Corp., 353 F.3d at 867.
Regardless whether the decision to limit the intervening authority a district court can
consider was intentional, the Tenth Circuit has picked it up and run with it. In Kokins v.
Teleflex, Inc., the Tenth Circuit, quoting Wankier v. Crown Equipment Corp., refused to
consider an opinion from the Court of Appeals of Colorado holding directly the opposite of an
earlier Tenth Circuit interpretation of Colorado law. See Kokins v. Teleflex, Inc., 621 F.3d
1290, 1297 (10th Cir. 2010)(Holmes, J.)(“[T]he Colorado Court of Appeals decided Biosera[,
Inc. v. Forma Scientific, Inc., 941 P.2d 284 (Colo. Ct. App. 1998)], so it is not an ‘intervening

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predict what the state supreme court would do.” Wade v. EMCASCO Ins. Co., 483 F.3d at 666.
Accord Mosley v. Titus, 762 F. Supp. 2d at 1332 (citation omitted); Rimbert v. Eli Lilly & Co.,
577 F. Supp. 2d 1174, 1188-89 (D.N.M. 2008)(Browning, J.)(quoting Wade v. EMCASCO Ins.
Co., 483 F.3d at 665-66).
ANALYSIS
The Court will sever Presidential Hospitality’s and Blue’s claims and transfer them to the
District of New Jersey. As an initial matter, the Court concludes that the forum selection clause
is contractually valid, as the Plaintiffs do not challenge the provision’s validity specifically and
there is no evidence in the record to suggest that it is invalid. The Court further concludes, as
another initial matter, that, should the Court transfer Presidential Hospitality’s and Blue’s claims,
the District of New Jersey may assert personal jurisdiction over those two parties, because
Presidential Hospitality and Blue consented to New Jersey as a forum for claims arising from the
Franchise Agreement. The Court determines, however, that Ace Development did not consent to
a New Jersey forum and that there is no evidence that Ace Development is otherwise subject to
suit in New Jersey. Accordingly, the Court may not soundly transfer Ace Development’s claims
to New Jersey. See Chrysler Credit Corp. v. Country Chrysler, 928 F.2d at 1515 (“1404(a) does
not allow a court to transfer a suit to a district which lacks personal jurisdiction.”). Nevertheless,
decision of the state’s highest court.’”)(emphasis in original)(quoting Wankier v. Crown Equip.
Corp., 353 F.3d at 866).
The Tenth Circuit has set forth a stringent restriction on its district courts’ ability to
independently administer the Erie doctrine. More importantly, the Tenth Circuit’s view may be
at tension with the above-quoted Supreme Court precedent, as well as its own prior case law.
Moore’s lists the Tenth Circuit as having been, at one time, a “court[ that] hold[s] that a prior
federal appellate decision [interpreting state law] is persuasive.” Moore’s § 124.22[4], at 94
(citing State Farm Mut. Auto. Ins. Co. v. Travelers Indem. Co., 433 F.2d 311, 312 (10th Cir.
1970)). Still, the Court is bound to abide by the Tenth Circuit’s interpretation of Erie.

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given the strong policy preference for honoring forum selection clauses, the Court concludes
that, if the 28 U.S.C. § 1404(a) factors counsel toward transferring Presidential Hospitality’s and
Blue’s claims, severance of Ace Development’s claims and transfer of Presidential Hospitality’s
and Blue’s claims is proper.
Next, the Court concludes that, under Stewart Organization, Inc. v. Ricoh Corporation,
the Court cannot properly consider state statutes voiding forum selection clauses when a party
moves for a 28 U.S.C. § 1404(a) transfer. See 487 U.S. at 30-31. Moreover, even if the Court
could properly consider New Mexico’s public policy, it would conclude that the Franchise
Agreement and the Assignment Agreement are not construction contracts as N.M. Stat. Ann.
§ 57-28A-1 contemplates.

Those agreements are license agreements and not contractor-

subcontractor agreements. Thus, the proper inquiry is guided only by 28 U.S.C. § 1404(a) and,
as the Supreme Court has recently commanded, “[w]hen the parties have agreed to a valid forum
selection clause, a district court should ordinarily transfer the case to the forum specified in that
clause.”

Atlantic Marine, 571 U.S. at 62.

The Court discerns no unusual circumstances

suggesting that it should buck the Supreme Court’s command, so the Court will transfer
Presidential Hospitality’s and Blue’s claims to New Jersey.
I.

THE FORUM SELECTION CLAUSE IS CONTRACTUALLY VALID.
When faced with a forum selection clause that covers the dispute, a preliminary question

is whether that clause is contractually valid. See Atlantic Marine, 571 U.S. at 62 n.5. “Forum
selection provisions are prima facie valid and a party resisting enforcement carries a heavy
burden of showing that the provision itself is invalid due to fraud or overreaching or that
enforcement would be unreasonable and unjust under the circumstances.” Riley v. Kinglsey

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Underwriting Agencies, Ltd., 969 F.2d at 957. “A plaintiff seeking to avoid a choice provision
on a fraud theory must, within the confines of Fed. R. Civ. P. 9(b) and 11, plead fraud going to
the specific provision.” Riley v. Kinglsey Underwriting Agencies, Ltd., 969 F.2d at 960. “Thus,
the Tenth Circuit requires that a party seeking to avoid a forum selection clause or arbitration
provision produce evidence showing that the forum selection clause or arbitration provision was
a product of fraud or coercion.” Juaire v. T-Mobile West, LLC, 2013 WL 6504326, at *11
(D.N.M. Oct. 31, 2013)(Browning, J.)(citing Riley v. Kingsley Underwriting Agencies, Ltd., 969
F.2d at 960).
The Plaintiffs present no evidence that the forum selection clause was induced by fraud
or coercion. See generally Response at 1-15. They contend that the “Defendants’ reliance on the
forum selection clause is misplaced because Plaintiffs contend . . . that they were fraudulently
induced to enter into the Microtel Franchise Agreement,” Response at 2; see Tr. at 10:21-22
(Enriquez), but attacks on the contract in general do not amount to attacks on specific contract
provisions, see Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d at 960. “Riley’s
complaint alleges that he was induced generally to enter the contracts in question as a result of
fraud. . . . However, Riley never pleaded that the specific choice provisions at issue were
obtained by fraud.” Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d at 960 (emphasis
in original). See Weber v. PACT XPP Technologies, AG, 811 F.3d at 773 (“Arguments that go
to the validity of the contract as a whole do not prevent enforcement of an FSC.”). Indeed, as in
Riley v. Kingsley Underwriting Agencies, Ltd., the Plaintiffs’ FAC alleges that they were
fraudulently induced into entering the Franchise Agreement, Assignment Agreement, and
Guaranty in general, but not that they were fraudulently induced to enter the forum selection

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clause in particular. See, e.g., FAC ¶ 2, at 2 ( alleging that “Wyndham and Microtel . . . induced
Mr. Blue to purchase a Microtel Franchise”); id. ¶ 42, at 9 (alleging that “[t]o induce Mr. Blue
into purchasing the Microtel franchise. . . “); id. ¶¶ 94-95, 113(a)-(i), 118-20, at 21, 24-26. The
FAC, in fact, does not once mention the forum selection clause. See generally FAC ¶¶ 1-137, at
1-29. Accordingly, because the Plaintiffs have not met their “heavy burden” to demonstrate that
the forum selection clause is contractually invalid, the Court concludes that the forum selection
clause is contractually valid. Riley v. Kinglsey Underwriting Agencies, Ltd., 969 F.2d at 957.
II.

THE DISTRICT OF NEW JERSEY HAS PERSONAL JURISDICTION OVER
PRESIDENTIAL HOSPITALITY AND BLUE, BUT NOT ACE DEVELOPMENT.
Another threshold matter to consider is whether the transferee court has jurisdiction over

the transferred parties. See Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d at 1515
(requiring transferor court to determine that transferee court has personal jurisdiction over parties
before it may transfer); Georgacarakos v. Nalley, 356 F. App’x 210, 212 (10th Cir.
2009)(unpublished). Presidential Hospitality and Blue consented to personal jurisdiction in New
Jersey by signing the Franchise Agreement and Assignment Agreement.

See Franchise

Agreement at 29 (“You expressly agree that you are subject to the jurisdiction and venue of
[New Jersey state or federal] courts for purposes of such litigation.”); Assignment Agreement at
2; Response at 2 n.1 (conceding that the Assignment Agreement “incorporates the forumselection clause”).12 Therefore, should the 28 U.S.C. § 1404(a) test favor transfer of those two

12

The Plaintiffs argue that New Jersey cannot assert personal jurisdiction over the parties
for any of those parties’ claims as they relate to the Dev. Incentive Note, because there is no
forum selection clause in the Dev. Incentive Note. See Tr. at 9:19-10:7 (Enriquez). The Court
disagrees, because the Dev. Incentive Note, as an amendment to the Franchise Agreement, is
“related to” the Franchise Agreement, so is covered by the Franchise Agreement’s forum
selection clause. Franchise Agreement at 29(“Any litigation arising out of or related to this

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Plaintiffs, the Court may transfer them. See United States v. Vreeken, 803 F.2d 1085, 1089
(10th Cir. 1986)(“[P]arties can consent to personal jurisdiction.”).
A separate issue is whether the District of New Jersey may assert personal jurisdiction
over Ace Development. The FAC alleges that Ace Development and Blue both guaranteed
Presidential Hospitality’s obligations, see FAC ¶ 2, at 2, but the Guaranty filed with the Court
has only Blue as a signatory, see Guaranty at 1 (acknowledging that the forum selection clause in
the Franchise Agreement applies to the Guaranty). Thus, it appears that Ace Development has
not expressly consented to a New Jersey forum. Under some Courts of Appeals precedent that
fact would not end the issue, because many have held that a non-party to a forum selection clause
may still be bound to that clause if the non-party is “closely related to the dispute such that it
becomes foreseeable that it will be bound.” Hugel v. Corporation of Lloyd’s, 999 F.2d 206, 209
(7th Cir. 1993)(“Hugel”). See Magi XXI, Inc. v. Stato della Citta del Vaticano, 714 F.3d 714,
722 (2d Cir. 2013); Holland America Line Inc. v. Wartsila North America, Inc., 485 F.3d 450,
456 (9th Cir. 2007); Marano Enterprises of Kansas v. Z-Teca Restaurants, L.P., 254 F.3d 753,
757 (8th Cir. 2001); Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285, 1299 (11th Cir.
1998).13 Thus, for example, in Hugel, the United States Court of Appeals for the Seventh Circuit
determined that two corporations -- Gulf Coast Marine, Inc. and Ocean Marine Indemnity, Co.,
companies that were non-signatories to a forum selection clause -- could be bound by that clause,
because the clause’s signatory, Dieter Hugel, was chairman and president of both corporations
Agreement . . . shall be instituted . . . in the state or federal court . . . closest to our then-current
principal business address.”). See Assignment Agreement at 4 (noting that the Dev. Incentive
Note amends the Franchise Agreement).
13

For an opinion exploring this rule’s rationale, see Adams v. Raintree Vacation
Exchange, LLC, 702 F.3d 436, 440-41 (7th Cir. 2012)(Posner, J.).

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and Hugel owned ninety-nine percent of Gulf Coast Marine, and Gulf Coast Marine owned onehundred percent of Ocean Marine Indemnity Company. See Hugel, 999 F.2d at 209-10 (“[T]he
corporations owned and controlled by Hugel are so closely related to the dispute that they are
equally bound by the forum selection clause.”). Confronted with similar facts, the United States
Court of Appeals for the Eight Circuit concluded comparably:
As for Leon Marano, the plaintiffs jointly represented to the District Court that he
is a shareholder, officer director of Marano Enterprises, which was a party to the
agreements. As such, he is, without question, “closely related” to the disputes
arising out of the agreements and properly bound by the forum-selection
provisions.
Marano Enterps. of Kansas v. Z-Teca Restaurants, L.P., 254 F.3d at 757 (quoting Hugel, 999
F.2d at 209)(emphasis in Marano Enterps of Kansas v. Z-Teca Restaurants, L.P).
The Tenth Circuit has never considered whether a forum selection clause can bind a nonparty. The Court has, however, encountered such a situation before. It noted the prevailing
winds from those United States Courts of Appeals, stating that their rule is that a forum selection
clause may bind a non-signatory “if the connection between the agreement and the non-signatory
is sufficiently strong -- i.e., if the party is closely related to the dispute such that it becomes
foreseeable that it will be bound.” Presbyterian Healthcare Servs. v. Goldman, Sachs & Co., 122
F. Supp. 3d 1157, 1211 (D.N.M. 2015)(Browning, J.). “Under this standard, courts have, for
example, applied forum-selection clauses to corporations owned and controlled by the
signatory.” Presbyterian Healthcare Servs. v. Goldman Sachs Co., 122 F. Supp. 3d at 1211. The
Court, nevertheless, rejected the rule noting that it is wary of “applying contracts and forum
selection clauses to people who did not sign the contract.” Presbyterian Healthcare Servs. v.
Goldman Sachs Co., 122 F. Supp. 3d at 1211 (citing Smith/Enron Cogeneration Ltd. P’ship, Inc.

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v. Smith Cogeneration Int’l, 198 F.3d 88, 97 (2d Cir. 1999)). The Third Circuit has adopted the
same rule that the Court has chosen. See In re: Howmedica Osteonics Corp., 867 F.3d 390, 407
(3d Cir. 2017)(“We have held, however, that a forum-selection clause can be enforced only by
the signator[y] to [the] agreement[].”)(alterations in original). See also Dayhoff Inc. v. Heinz
Co., 86 F.3d 1287, 1293-96 (3d Cir. 1996)(determining that a “forum selection clause . . . can be
enforced only by the signatories to those agreements” because of Supreme Court
precedent)(citing First Options of Chicago, Inc. v. Kaplan, 518 U.S. 938, 945-46 (1995)).
The Court is inclined to stick with its previous holding. It notes, however, that should it
adhere to its previous holding, it appears at first glance that judicial inefficiency would result.
The New Jersey Action and this action arise from a common nexus of fact. The Defendants
assert that the Plaintiffs owe damages under the Franchise Agreement; the Plaintiffs assert that
they do not owe damages, because the Franchise Agreement was induced by fraud. See supra at
18. Accordingly, two courts’ work could be reduced to one court’s work should the Court
transfer all of the Plaintiffs’ claims. That efficiency is seemingly stymied if the Court sticks with
its previous ruling, because that holding results in the Court keeping Ace Development’s claims
and thus two courts would adjudicate nearly identical cases.
A curious aberration results if the Court scraps its previous holding, however: the Court
would conclude that New Jersey has personal jurisdiction over Ace Development by virtue of the
forum selection clause, but the New Jersey court would be forced to conclude that it does not
have personal jurisdiction over Ace Development, because the Third Circuit -- which includes
the District of New Jersey -- has rejected the theory that forum selection clauses can bind non-

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signatories. See In re: Howmedica Osteonics Corp., 867 F.3d at 407.14 Accordingly, after
transfer to New Jersey, the Defendants could likely secure a dismissal of Ace Development’s
claims. The ultimate result is that Ace Development would likely re-file its claims here. Thus,
transferring Ace Development would not produce judicial efficiency. The Court, therefore, sees
no reason to depart from its previous determination that forum selection clauses do not bind nonsignatories, and the Court will not transfer Ace Development and its claims to the District of
New Jersey.
Although the Court concludes that it cannot transfer Ace Development and its claims to
New Jersey, the Court contemplates severing Ace Development’s claims and transferring
Presidential Hospitality’s and Blue’s claims to New Jersey. See Presbyterian Healthcare Serv. v.
Goldman, Sachs & Co., 122 F. Supp. 3d at 1214 (“[A] district court may sever a case under Rule
21 to ‘transfer one action while retaining jurisdiction over another.’”)(quoting Chrysler Credit
Corp. v. Country Chrysler, Inc., 928 F.2d at 1519). See also Fed. R. Civ. P. 21; Wright and
Miller, § 3846, at 104 (“[I]n cases involving multiple plaintiffs or defendants, the district court
has discretion to sever under Civil Rule 21 and transfer the case as to some parties while
retaining jurisdiction over the case as to other parties.”). In considering whether severance and
transfer is appropriate, the Court has noted “that it should not sever and transfer cases when the
cost to judicial efficiency outweighs the benefit to the parties, particularly in light of § 1404(a)’s

14

This argument assumes that New Jersey cannot assert personal jurisdiction over Ace
Development under a minimum-contacts analysis. The Court has no evidence or even argument
about Ace Development’s contacts with New Jersey. Should the Defendants demonstrate to the
Court that New Jersey has personal jurisdiction via that or some other avenue, the Court would
be willing to reconsider its conclusion here. The Court also would be willing to reconsider this
conclusion if the Defendants demonstrate that Ace Development signed a separate guaranty that
incorporated the Franchise Agreement’s forum selection clause.

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purpose to minimize inefficiency.” Presbyterian Healthcare Services v. Goldman Sachs & Co.,
122 F. Supp. 3d at 1214 (citing Cont’l Grain Co. v. The FBL-585, 364 U.S. 19, 26 (1960)). This
normal efficiency principle, however, has little bearing on the Court’s decisionmaking here. No
matter what the Court does, two courts will decide highly similar issues. If the Court severs and
transfers Presidential Hospitality’s and Blue’s claims, both New Jersey and the Court will have
to adjudicate facts surrounding the parties’ various agreements; if the Court declines to sever,
both New Jersey and the Court will still have to adjudicate facts surrounding the parties’ various
agreements. Some efficiency might result from severing Ace Development from the rest, as Ace
Development is not a party in the New Jersey Action. Thus, if the Court severs and transfers
Presidential Hospitality and Blue, one court may hear all of the facts specific to those two
parties. If efficiency would result, however, it would likely be slight. Given that efficiency
concerns do not give the Court a clear signal either way, the Court determines that the forum
selection clause points toward severance and transfer. See In re Rolls Royce Corp., 775 F.3d
671, 681 (5th Cir. 2014)(concluding that, in light of Atlantic Marine, severance and transfer is
proper if the private parties’ choices -- as expressed through a forum selection clause -- outweigh
the judicial efficiency of adjudicating all the claims in one forum); Ashley Furniture Indus., Inc.
v. Packaging Corp. of Amer., 275 F. Supp. 3d 957, 961-62 (W.D. Wis. 2017)(Conley, J.)(“‘[I]f
the Court were to conclude that the pertinent factors render transfer appropriate under § 1404(a),
then severance, too, would be proper.’”)(quoting Paduano v. Express Scripts, Inc., 55
F. Supp. 3d 400, 431-32 (E.D.N.Y. 2014)(Spatt, J.)) The Court therefore turns to the 1404(a)
factors to determine whether it should transfer Presidential Hospitality’s and Blue’s claims.

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III.

THE COURT, SITTING IN DIVERSITY, MAY NOT PROPERLY CONSIDER
NEW MEXICO PUBLIC POLICY WHEN CONSIDERING A TRANSFER
MOTION UNDER § 1404(a), BUT, EVEN IF IT COULD, THE FORUM
SELECTION CLAUSE IS NOT VOID UNDER NEW MEXICO LAW, BECAUSE
THE OPERATIVE AGREEMENTS ARE NOT CONSTRUCTION CONTRACTS.
At the outset, the Court notes that, when considering transfer under 28 U.S.C. § 1404(a),

it cannot properly consider whether the forum selection clause is void under New Mexico public
policy. As Stewart Organization, Inc. v. Ricoh Corporation instructs, when a federal court sits in
diversity and construes a 28 U.S.C. § 1404(a) transfer motion requesting transfer to another
federal court pursuant to a forum selection clause, 28 U.S.C. 1404(a) trumps any state-law voidunder-public-policy arguments. See Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. at 3031. In that case, the Supreme Court considered whether the United States District Court for the
Northern District of Alabama properly denied a motion to transfer under 28 U.S.C. § 1404(a),
despite a forum selection clause designating Manhattan as the proper forum, when the district
court reasoned that Alabama public policy voided the forum selection clause. See Stewart
Organization, Inc. v. Ricoh Corp., 487 U.S. at 24. In adjudicating the matter, the Supreme Court
analogized to Hanna v. Plumer, 380 U.S. 460, 471 (1965) to frame the inquiry. It reasoned that
so long as 28 U.S.C. § 1404(a), “covers the point in dispute,” and § 1404(a) is a “a valid exercise
of Congress’ authority under the Constitution . . . that is the end of the matter.”

Stewart

Organization, Inc. v. Ricoh Corp., 487 U.S. at 27. The Supreme Court held that, because the
issue was whether to transfer the case, 28 U.S.C. § 1404(a) “governs the parties’ venue dispute,”
487 U.S. at 28, and that the statute was a valid exercise of Congressional power “under Article
III as augmented by the Necessary and Proper Clause,” see id. at 31-32. Accordingly, it

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determined that Alabama’s public policy invalidating the forum selection clause was of no
moment:
The premise of the dispute between the parties is that Alabama law may refuse to
enforce forum-selection clauses providing for out-of-state venues as a matter of
state public policy. If that is so, the District Court will have either to integrate the
factor of the forum-selection clause into its weighing of considerations as
prescribed by Congress, or else to apply, as it did in this case, Alabama’s
categorical policy disfavoring forum-selection clauses. Our cases make clear that,
as between these two choices in a single field of operation, the instructions of
Congress are supreme.
487 U.S. at 30. The Plaintiffs’ argument that New Mexico public policy invalidates the forum
selection clause is almost identical to the plaintiff’s argument that the Supreme Court rejected in
Stewart Organization, Inc. v. Ricoh Corporation.

Congress has commanded that “multiple

considerations govern transfer within the federal court system,” but, if the Court follows New
Mexico law, which “focus[es] on a single concern” New Mexico law would “defeat that
[Congressional] command.” Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. at 31. Thus,
the Court cannot properly apply N.M. Stat. Ann. § 57-28A-1 and instead must apply 28 U.S.C.
§ 1404(a).
Even if the Court could consider N.M. Stat. Ann. § 57-28A-1, however, it determines that
the statute does not invalidate the forum selection clause in the Franchise Agreement and
incorporated in the Assignment Agreement, because the Franchise Agreement and the
Assignment Agreement are not construction contracts. N.M. Stat. Ann. § 57-28A-1 provides:
A provision of a construction contract, agreement, understanding, specification or
other documentation that is made part of a construction contract for an
improvement to real property in New Mexico is void, unenforceable and against
the public policy of the state if the provision:
(1)

makes the construction contract subject to the laws of another
states; or

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(2)

requires any litigation arising from the construction contract to be
conducted in another state.

N.M. Stat. Ann. § 57-28A-1(A). The statute also details:
As used in this section, ‘construction contract’ means a public, private, foreign or
domestic contract or agreement relating to construction, alteration, repair or
maintenance of any real property in New Mexico and includes agreements for
architectural services, demolition, design services, development, engineering
services, excavation or other improvement to real property including buildings,
shafts, wells and structures, whether on, above or under real property.
N.M. Stat. Ann. § 57-28A-1(C). No New Mexico court or any other court has interpreted this
statute.
Although the Supreme Court of New Mexico has not considered the meaning of
construction contract pursuant to N.M. Stat. Ann. § 57-28A-1(C), it has considered the meaning
of a construction contract pursuant to N.M. Stat. Ann. § 56-7-1(E), which uses the same
definition of construction contracts as N.M. Stat. Ann. § 57-28A-1(C). See United Rentals
Northwest, Inc. v. Yearout Mechanical, Inc., 2010-NMSC-030, ¶ 8, 237 P.3d 728, 731 (“United
Rentals”). In United Rentals, the Supreme Court of New Mexico considered whether a rental
contract for construction equipment sufficiently “relat[es] to construction” such that the rental
contract is a construction contract under N.M. Stat. Ann. § 56-7-1(E) -- a sub-provision of a
statute which voids indemnification clauses in construction contracts. United Rentals, 2010NMSC-030, ¶ 1, 237 P.3d at 730. The Supreme Court of New Mexico began with N.M. Stat.
Ann. § 56-7-1(E)’s language and noted that the New Mexico Legislature did not write “a narrow
anti-indemnification statute that addresses only contracts for construction”; rather “the
Legislature defined the statutory scope as including all contracts relating to construction.”
United Rentals, 2010-NMSC-030, ¶ 10, 237 P.3d at 732 (emphasis in original). The parties in

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United Rentals, much like the parties here, argued whether that “relating to construction”
language was sufficiently broad to cover the contract in question, but the Supreme Court of New
Mexico in United Rentals held that the “relating to construction” language was not controlling.
2010-NMSC-030, ¶ 12, 237 P.3d at 732.

Instead, it determined that the “relating to

construction” clause was “an uncertain term with no clear end to its reach,” so was too
ambiguous a term to dictate the case’s outcome. 2010-NMSC-030, ¶ 12, 237 P.3d at 732. See
California Div. of Labor Standards Enforcement v. Dillingham Const., N.A., Inc., 519 U.S. 316,
335 (1997)(Scalia, J., concurring)(“But applying the ‘relate to’ provision according to its terms
was a project doomed to failure, since, as many a curbstone philosopher has observed,
everything is related to everything else.”). The Supreme Court of New Mexico also considered
other language within N.M. Stat. Ann. § 56-7-1(E), specifically the general list of constructioncontract examples, e.g., “construction contract . . . includes agreements for architectural services,
demolition, design services, development, . . .” and determined that such language did not
resolve the case either, because the list was non-exhaustive and could plausibly be interpreted to
include or exclude equipment-rental agreements. See United Rentals, 2010-NMSC-030, ¶¶ 1315, 237 P.3d at 732-33. Accordingly, the Supreme Court of New Mexico turned to the statue’s
legislative purpose to determine whether the New Mexico Legislature meant to capture
equipment-rental agreements within N.M. Stat. Ann. § 56-7-1’s scope. See 2010-NMSC-030,
¶¶ 16-17, 237 P.3d at 733. It ruled that the law’s purpose is to “promot[e] safety in construction
projects by holding each party to the contract accountable for injuries caused by its own
negligence.” 2010-NMSC-030, ¶ 18, 237 P.3d at 733. Accordingly, the Supreme Court of New
Mexico held that the good repair of construction equipment sufficiently implicated the safety of a

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construction workplace that equipment-rental agreements were construction contracts under
N.M. Stat. Ann. § 56-7-1(E). See 2010-NMSC-030, ¶ 21, 237 P.3d at 734.
The Plaintiffs invoke the same vague “relating to construction” language as the Supreme
Court of New Mexico interpreted in United Rentals to argue that the Franchise Agreement is
related to construction, and thus is a construction contract under N.M. Stat. Ann. § 57-28A-1.
Response at 9. There is no meaningful difference between the two “relating to construction”
clauses in N.M. Stat. Ann. § 56-7-1(E) and § 57-28A-1(C), so the Court concludes that, under
United Rentals, the “relating to” language is too ambiguous to resolve whether the Franchise
Agreement and Assignment Agreement are construction contracts. The Court also concludes
that N.M. Stat. Ann. § 57-28A-1(C)’s nonexhaustive list of examples, i.e. construction contracts
“include[] agreements for architectural services, demolition, design services, development,
engineering services, excavation or other improvement to real property including buildings,
shafts, wells and structures, whether on, above or under real property,” does not determine this
case’s outcome either. N.M. Stat. Ann. § 57-28A-1(C). Although the Court is of the opinion
that “franchise agreements” is unlike the other items on that list, the Court is also of the opinion
that, given United Rentals, the Supreme Court of New Mexico would conclude that the statute’s
“list of non-obvious examples” is too ambiguous to resolve whether the Franchise Agreement
and the Assignment Agreement are construction contracts. 2010-NMSC-030, ¶¶ 13-15, 237 P.3d
at 732-33.

Accordingly, the statute’s language does not resolve whether the Franchise

Agreement and the Assignment Agreement is a construction contract, so, under New Mexico

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law, the Court turns to the statute’s legislative purpose. United Rentals 2010-NMSC-030,
¶¶ 16-17, 237 P.3d at 733.15
In deciphering legislative purpose, the Court may look to caselaw stating what that
purpose is, to other statutes in the same jurisdiction on the same subject matter, and to similar
statutes, with their accompanying caselaw, in other jurisdictions. See United Rentals, 2010NMSC-030, ¶¶ 17-39, 237 P.3d at 733-38. As the Court already noted, there is no caselaw on
this statute. In addition, N.M. Stat. Ann. § 57-28A-1 appears to be the first statute that the New
Mexico Legislature passed voiding forum selection clauses in construction contracts. There is no
legislative history and no stated statutory purpose. There are also relatively few New Mexico
statutes on the books outlawing forum selection clauses, suggesting both that the general New
Mexican rule is that forum selection clauses are valid and that the New Mexico Legislature had a
distinct purpose for selecting construction contracts for this uncommon protection. See N.M.
Stat. Ann. § 24-1i-2(B).16 The Court notes that, in other contexts, New Mexico has defined
franchise agreements and has not singled them out for forum selection clause protection. See
N.M. Stat. Ann. §§ 57-16-1 to 16; N.M. Stat. Ann. §§ 57-23-1 to 8. Although this suggests that
the New Mexico Legislature may not have meant to void the forum selection clause in the

15

If the Court were not bound by Erie, it would take the statute’s language as it is. The
“relating to” language is broad, but that is how the New Mexico Legislature drafted it. Thus, the
Court would conclude that the law voids forum selection clauses in any contract that relates to
construction. The Court concludes, however, that the Supreme Court of New Mexico would
follow its approach from United Rentals, so the Court, accordingly, turns to legislative purpose
as the Supreme Court of New Mexico did in United Rentals.
16

Apart from N.M. Stat. Ann. § 57-28A-1, the only other New Mexico statute the Court
located voiding forum selection clauses is N.M. Stat. Ann. § 21-1i-2(B), which voids forum
selection clauses in agreements for clinical health care services. See N.M. Stat. Ann. § 21-1i2(B).

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Franchise Agreement and Assignment Agreement, the Court concludes that those statutes are not
dispositive, because a contract can be more than one type of contract. See Shaeffer v. Kelton,
1980-NMSC-117, ¶¶ 11, 619 P.2d 1226, 1230 (concluding that a contract could be both one to
construct a building and to convey property).

Thus, with little guidance from intra-state

authority, the Court turns to other jurisdictions’ statutes and caselaw to decode the New Mexico
Legislature’s intent.
Many states outlaw forum selection clauses in construction contracts. See, e.g., Minn.
Stat. § 337.10; N.Y. Gen. Bus. Law § 757; Or. Rev. Stat. § 701.640(1). See generally 7 Philip L.
Bruner & Patrick J. O’Connor on Construction Law § 21:30.10, n.2 (collecting statutes). Several
of these states outlaw such clauses, because large multi-state general contractors were forcing
local sub-contractors into them, thus compelling those local sub-contractors to resolve disputes at
great cost in the large general-contractor’s home state. See, e.g., Vita Planning and Landscape
Architecture, Inc. v. HKS Architects, Inc., 192 Cal. Rptr. 3d 838, 847 (Cal. Ct. App. 2015); Ill.
Senate Trans., 2002 Reg. Sess. No. 94, p. 24 (“And apparently what happens is some gigantic,
behemoth national companies, sort of in an adhesion-type fashion, thrust this language upon
Illinois contractors.”).

See also, Neb. Statement of Intent, 2009 Reg. Sess. L.B. 552,

(2009)(stating that the Nebraska Construction Prompt Pay Act, which includes the provision
outlawing forum selection clauses in construction contracts, is meant to “address the payment of
contractors and subcontractors on construction projects”); Testimony of Richard Peel, 73 Nev.
Assembly Comm. Min., (2005)(prohibiting “contractor[s] and subcontractor[s]” from having
forum selection clauses in their contracts).

Commentators have identified the same force

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compelling legislators to pass such laws protecting construction contracts from forum selection
clauses:
Large general contractors perform work in many states. Given the budget
restraints under which most construction projects operate, much of the work is
performed by local subcontractors. Subcontractors and the organizations that
support them long have complained about the common practice of requiring
subcontractors to resolve their disputes in the home states of the general
contractors employing them. Many subcontractors believe this practice puts them
at a distinct disadvantage, as it costs them more to pursue or defend claims. State
legislatures have been receptive to subcontractor concerns on this score, and
generally are in favor of local courts resolving in-state construction disputes. As a
consequence, many states have enacted laws that prohibit enforcement of contract
provisions that require the resolution of construction disputes in foreign forums.
7 Philip L. Bruner & Patrick J. O’Connor on Construction Law § 21:30.10. See Deborah J.
Mackay & Jason Greves, Foreign Forum Selection Clauses in Construction Contracts and State
Attempts to Limit Their Enforcement, Construction Briefings No. 2004-7 (2004)(“State
legislators, usually encouraged by local contractors’ associations, seem eager to pass this type of
protective legislation.”). See V. Frederic Lyon & Douglas W. Ackerman, Controlling Disputes
by Controlling the Forum: Forum Selection Clauses in Construction Contracts, 22-FALL
Construction Law. 15, (2002)(“Although absent legislative history, [Fla. Stat. § 47.025]
apparently resulted from the lobbying of the contracting community increasingly opposed to
going out of state to resolve disputes involving projects in a rapidly growing Florida.”). New
Mexico passed N.M. Stat. Ann. § 57-28A-1 in 2011 later than most other states that passed
similar laws. See e.g., Cal. Civ. Proc. § 410.42 (passed in 1991); Fla. Stat. § 47.025 (passed in
1999); 815 Ill. Comp. Stat. 665/10 (passed in 2002); Neb. Rev. St. § 45-1209 (passed in 2010);
Nev. Rev. Stat. § 108.2453 (passed in 2005).

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Given these analogous state laws’ purposes, and given that New Mexico passed its law
after the other states passed theirs, the Court concludes that the New Mexico Legislature
intended, with N.M. Stat. Ann. § 57-28A-1, to protect local subcontractors from forum selection
clauses. The statute’s text supports this interpretation. When listing examples of construction
contracts protected, each one is an example of a contractor-subcontractor contract. See N.M.
Stat. Ann. § 57-28A-1(C)(“As used in this section, construction contract . . . includes agreements
for architectural services, demolition, design services, development, engineering services,
excavation or other improvement to real property, including buildings, shafts, wells and
structures.”). Accordingly, the operative question is whether the Franchise Agreement and the
Assignment Agreement can be characterized as a contractor-subcontractor contract.
The Court concludes that the Supreme Court of New Mexico would determine that the
Franchise Agreement and the Assignment Agreement cannot fairly be characterized as
contractor-subcontractor contracts.

To determine whether those agreements are contractor-

subcontractor contracts, the Court looks to their text. See Shaeffer v. Kelton, 1980-NMSC-117,
¶¶ 7-8, 619 P.2d 1226, 1229 (instructing that, to classify a contract, a court must “enforce the
intent of the parties as shown by the contents of the instrument.”).

A typical contractor-

subcontract contract is an agreement that the subcontractor will carry out some subset of a
project’s construction to which the contractor has agreed with a third party to carry out the
project’s entire construction. See Romero Excavation and Trucking, Inc. v. Bradley Const., Inc.,
1996-NMSC-010, ¶ 2, 913 P.2d 659, 660-61 (describing a contractor-subcontractor relationship
in a bid to construct a building for New Mexico State University). See also Chavez v. Sundt
Corp., 1996-NMSC-046, ¶ 2, 920 P.2d 1032, 1034; Sierra v. Garcia, 1987-NMSC-116, ¶ 1, 746

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P.2d 1105, 1106; C & D Plumbing, Inc v. Armstrong, 1987-NMSC-068, ¶¶ 2-3, 740 P.2d 705,
705-06.
The Franchise Agreement’s and the Assignment Agreement’s text do not support a
conclusion that the parties entered into such a contractor-subcontractor agreement. First, the
Franchise Agreement is characterized as a “license agreement” and not a contractor agreement.
See Franchise Agreement at 1 (“The license agreement (‘Agreement’ or ‘License Agreement’),
dated March 18, 2011, is entered into . . .”). Moreover, the majority of the clauses in the
Franchise Agreement demonstrate that it is a license agreement. See Sonic Indus. v. New
Mexico, 2006-NMSC-038, ¶ 2, 141 P.3d 1266, 1268 (characterizing a license agreement as a
contract in which one party gives the other party the right to “registered trademarks, trade names,
and service marks” in exchange for royalty payments). See also N.M. Stat. Ann. § 57-16-3
(defining a franchise, in the motor vehicle context, as an agreement “in which a manufacturer,
distributor or representative grants to a motor vehicle dealer a license to use a trade name,
service mark or related characteristic”). For example, the Franchise Agreement’s first section is
entitled “The License” and provides that Microtel Inn has “the exclusive right to license a unique
concept and system (the ‘Hotel System’)” and that Blue “wish[es] to enter into this Agreement
to obtain a license to use the Hotel System.” Franchise Agreement at 1. The Hotel System
described to be licensed bears the hallmarks of a licensing agreement, and includes
(i) the trade names, trademarks, service marks ‘Microtel Inn,’ ‘Microtel Inn and
Suites’ and ‘Microtel Suites’ and such other trade names, trademarks, service
marks, collective certification marks, logos, slogans, trade dress, domain names,
and all other designations of source and origin, and all derivatives of the
foregoing, that we designate and develop for use in connection with the Hotel
System . . . ; (ii) all copyrightable materials developed in connection with our
business, including the Manual (as defined below), videotapes, marketing
materials . . . , architectural drawings . . . , building designs, and business and

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marketing plans . . . ; (iii) all materials of any kind and other information that are
designated ‘Confidential’ . . . ; (iv) a national toll free number for the central
reservation system . . . ; (v) the national Microtel directory of Hotels . . . ;
(vi) management, personnel and operational training programs, materials and
procedures; (vii) standards and specifications for operations, marketing,
construction, equipment and furnishings described in our confidential
manuals . . . ; and (viii) marketing, advertising and promotional programs.
Franchise Agreement at 1-2.

Additionally, Blue’s responsibilities under the Franchise

Agreement do not demonstrate that he is a subcontractor. See, e.g., Chavez v. Sundt Corp.,
1996-NMSC-046, ¶ 2, 920 P.2d at 1034 (explaining that a subcontractor’s job was to complete
the electrical work on a renovation project). To the contrary, they show that his responsibilities
primarily entail operating a hotel and paying Microtel Inn. See Franchise Agreement at 2-6.
While the Franchise Agreement mentions construction and building the hotel, the Court
concludes that those phrases do not transfigure this licensing agreement into a contractorsubcontractor contract. See, e.g., Franchise Agreement at 1 (“We have the exclusive right to
license a unique concept and system (the ‘Hotel System’) to establish and operate all new
construction,

budget

hotels. . .”);

id.

(licensing

“standards

and

specifications

for . . . construction”); id. at 2 (“[W]e hereby grant to you a non-exclusive license (the ‘License’)
to use the Hotel System to build and operate the Hotel. . .”). As explained above, a typical
contractor-subcontract contract is an agreement that the subcontractor will carry out some subset
of a project’s construction to which the contractor has agreed with a third party to carry out the
project’s entire construction. See supra, at 80. The relationship between Microtel Inn and Blue,
as embodied in the Franchise Agreement, is not one of Blue agreeing to build a hotel so that
Microtel Inn can fulfill some larger construction obligation to a third party. Instead, it is one of
Microtel Inn granting Blue the right to use Microtel Inn’s intellectual property in operating a

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hotel. Although the Franchise Agreement also requires Blue to build a hotel in compliance with
certain Microtel Inn specifications, that reality does not change the fundamental agreement
between the two parties to such a degree that it becomes a contractor-subcontractor agreement.
The Assignment Agreement is also not a contractor-subcontractor agreement. Based on
its language, the Assignment Agreement is meant to transfer Blue’s rights and obligations under
the Franchise Agreement to Presidential Hospitality.

See Assignment Agreement at 1

(“Assignor assigns, transfers, bargains, sells, and delegates to Assignee all of its rights . . .”); id.
at 1 (“Assignee accepts and assumes the rights, benefits and obligations of the Licensee. . .”).
Again, that there are references to the hotel that needs to be completed, does not make this
assignment a contractor-subcontractor relationship.17

Accordingly, even if the Court could

consider N.M. Stat. Ann. § 57-28A-1 in its transfer analysis, it would conclude that the forum
selection clauses in these contracts are valid.

17

The Plaintiffs also argue that the Dev. Incentive Note, which, under the Assignment
Agreement, amends the Franchise Agreement, demonstrates that the Assignment Agreement and
Franchise Agreements are construction contracts. See Response at 8; Assignment Agreement at
4. The Dev. Incentive Note is, however, a loan agreement, in which Presidential Hospitality
promises to repay $105,000.00 to Microtel Inn over a period of time. See Dev. Incentive Note at
1. Although one of the conditions which Microtel Inn requires of Presidential Hospitality before
fund disbursement is that the hotel is completed in compliance with the Franchise Agreement’s
standards, see Dev. Incentive Note at 1, that condition does not transform the Dev. Incentive
Note into a contractor-subcontractor contract. Microtel Inn is not an overseer of a construction
project to be completed for a third party. There is no third party expecting a structure.
Accordingly, the Court concludes that the Dev. Incentive Note is not a construction contract, nor
does it make the Franchise Agreement and Assignment Agreement a construction contract under
N.M. Stat. Ann. § 57-28A-1.

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IV.

THE COURT WILL TRANSFER PRESIDENTIAL HOSPITALITY’S AND
BLUE’S CLAIMS UNDER 28 U.S.C. § 1404(a).
The Court will transfer Presidential Hospitality’s and Blue’s claims. When deciding

whether to transfer a case under 28 U.S.C. § 1404(a), the Court considers several discretionary
factors:
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.
Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d at 1167. Because there is a valid forum
selection clause, however, “[t]he calculus changes.” Atlantic Marine, 571 U.S. at 63. Under
Atlantic Marine, the analysis changes in three ways: (i) “[f]irst, the plaintiff’s choice of forum
merits no weight”; (ii) “[s]econd, a court evaluating a defendant’s § 1404(a) motion to
transfer . . . should not consider arguments about the parties private interests.”; and
(iii) “[t]hird . . . a § 1404(a) transfer of venue will not carry with it the original venue’s choiceof-law rules -- a factor that in some circumstances may affect public-interest considerations.”
Atlantic Marine, 571 U.S. at 63-64. In light of these three changes to the typical analysis, the
Supreme Court has said that “‘a valid forum-selection clause [should be] given controlling
weight in all but the most exceptional cases.’” Atlantic Marine, 571 U.S. at 63 (quoting Stewart
Organization, Inc. v. Ricoh Corp., 487 U.S. at 33 (Kennedy, J. concurring)(bracketed language
only in Atlantic Marine)).

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Given Atlantic Marine and given a valid forum selection clause, the Court considers only
the following “public” factors: (i) questions as to the enforceability of a judgment if one is
obtained; (ii) relative advantages and obstacles to a fair trial; (iii) difficulties that may arise from
congested dockets; (iv) questions under conflict-of-laws; (v) the advantage of having a local
court determine questions of local law; and (vi) all other considerations of a practical nature that
make a trial easy, expeditious and economical.
The Plaintiffs have not raised any questions about the enforceability of a judgment or the
relative advantages New Mexico might provide over New Jersey vis-à-vis a fair trial. See
Response at 1-15. The Court independently does not see why a New Jersey judgment would be
more difficult to enforce than a New Mexico judgment, nor does it see how New Mexico would
provide a fairer trial than New Jersey. Accordingly, those factors do not counsel either way.
Concerning the congested-dockets factor, the Plaintiffs argue that the New Jersey civil
docket is, on average, more congested than the New Mexico docket, so a New Mexico forum is
favorable. See Response at 14. The Court stands by its observation at the hearing that the “civil
statistics” do not “tell the full story, given the tremendous criminal load we have out here.” Tr.
at 7:15-17 (Court). Indeed, examining the same document to which the Plaintiffs cite to support
that New Jersey district judges have more civil cases than New Mexico district judges, the Court
notes that New Jersey district judges have 26 criminal felony filings per judge, whereas New
Mexico district judges have 639 criminal felony filings per judge. See United States District
Courts - National Judicial Caseload Profile, June 2017 Federal Court Management Statistics, at
15, 81 http://www.uscourts.gov/sites/default/files/data_tables/fcms_na_distprofile0331.2017.pdf.
The Court’s criminal docket in particular has been busy of late, given that it has just finished two

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multi-defendant seven-week criminal trials and has another lengthy criminal trial scheduled for
the month of July. See United States v. DeLeon, No. 15-4268 (D.N.M.)(Browning, J.); United
States v. Baca, No. 16-1613 (D.N.M.)(Browning, J.). Moreover, the District of New Mexico has
had or will have at least two district judges take senior status this year, and their replacements
will take some time to be nominated and confirmed. The Court expects a concomitant rise in all
of the remaining district judges’ caseloads until new judges can take their places. The Court
does suggest in any way that New Jersey district judges are not busy.18 Nevertheless, given the
above realities in this border state, the Court concludes that the congested-docket factor does not
weigh for transfer.
Conflicts of law issues and the advantage of having a local court determine questions of
local law counsels only mildly against transfer. The Tenth Circuit has defined the conflict-oflaws factor as the principle that “courts prefer the action to be adjudicated by a court sitting in
the state that provides the governing substantive law.” Employees Mut. Cas. Co v. Bartile
Roofs, Inc., 618 F.3d at 1169. The local-court-advantage factor weighs against transfer “[w]hen
the merits of an action are unique to a particular locale.” Employees Mut. Cas. Co v. Bartile
Roofs, Inc., 618 F.3d at 1170. The Plaintiffs allege violations under the New Mexico UPA,
fraudulent inducement, and negligent misrepresentation. See FAC ¶¶ 77-132, at 19-28. One of
the Plaintiffs’ theories of liability under the UPA, however, is that the Defendants violated
federal law, which also happens to be a violation of the UPA. See FAC ¶¶ 84-85, at 19 (“A
violation of Section 436.1(a) of the Franchise Rule and section 5(a) of the FTC Act constitutes a
violation of the New Mexico Unfair Practices Act.”).; id. at ¶¶ 103-04, at 22. There is no local
18

The Court clerked on the Third Circuit. It knows that the District of New Jersey is a
busy district.

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court advantage in adjudicating that theory of liability, as, at bottom, it is a federal issue. There
is a portion of their UPA theory, however, that turns only on New Mexico law, see FAC ¶¶ 8689, at 20; id. ¶¶ 105-08, at 22-23, but that theory is premised on false or misleading statements,
which is not all that unique of a theory. New Jersey courts deal with unfair practice claims
premised on misleading statements all of the time. See, e.g., N.J. Stat. Ann. § 56:8-2 (declaring
unlawful any fraud or material misstatements in connection with the sale of merchandise or real
estate); Meade v. Kiddie Academy Domestic Franchising, 2012 WL 1043120, at *1-2
(D.N.J. March 28, 2012)(Cavanaugh, J.)(adjudicating, among other things, an unfair practice
claim, which involved “alleged fraudulent statements and misrepresentations made in connection
with a franchise agreement”).

The remaining claims are negligent misrepresentation and

fraudulent inducement, see FAC ¶¶ 110-32, at 23-28, which are likewise common claims under
New Jersey law, see, e.g., RNC Systems, Inc. v. Modern Technology Grp., Inc., 861 F. Supp. 2d
436, 451 (D.N.J. 2012)(Simandle, C.J.); Dewey v. Volkswagen AG, 558 F. Supp. 2d 505, 529
(D.N.J. 2008)(Hochberg, J.); Karu v. Feldman, 574 A.2d 420, 425 (N.J. 1990); Jewish Center of
Sussex County v. Whale, 432 A.2d 521 (N.J. 1981).

Any advantage the Court has in

adjudicating those familiar common law claims over a New Jersey court is slight.

See

Employees Mut. Cas. Co v. Bartile Roofs, Inc., 618 F.3d at 1170 (concluding that, although
Wyoming law “provides the substantive law,” the factor weighed only slightly against transfer
away from Wyoming, “because the action does not involve complex legal issues, the substantive
laws of Wyoming and Utah are essentially equivalent with respect to the relevant issues, and the
judges in each potential forum are qualified to decide the state-law issues”). Accordingly, the
Court concludes that this factor weighs, slightly, against transfer.

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The Court may also consider all other practical considerations that make a trial easy,
expeditious, and economical. Had the Court been able to transfer all parties and all claims, this
consideration would weigh towards transfer. The facts in both actions center on the Franchise
Agreement, so judicial economy would be served if one forum heard all issues about that
agreement. Because the Court cannot properly transfer Ace Development at this juncture, that
judicial-economy consideration does not weigh as heavily as it otherwise would. The Court
notes, nevertheless, that some judicial economy is served by severing and transferring
Presidential Hospitality’s and Blue’s claims to New Jersey. Ace Development is not a plaintiff
in the New Jersey Action. Thus, by severing and transferring Presidential Hospitality’s and
Blue’s claims, one forum -- New Jersey -- can hear all of the arguments and evidence as to those
two parties. Accordingly, the Court concludes that this factor weighs slightly toward transfer.
With several factors landing neutrally on the scale and other factors weighing slightly one
way or the other, the determinative factor -- indeed, the one-thousand pound gorilla destroying
the scale -- is the forum selection clause. Atlantic Marine, 571 U.S. at 63 (“[A] valid forumselection clause [should be] given controlling weight in all but the most exceptional cases.”).
The Court sees no exceptional circumstances authorizing it to rip up the valid forum selection
clause.19 Accordingly, the Court will sever and transfer Presidential Hospitality’s and Blue’s
claims to the United States District Court for the District of New Jersey.

19

If the Court could consider some of the private factors in § 1404(a) balancing, the Court
agrees that the cost to the Plaintiffs of transporting their material witness -- all of whom live in
the Southwest -- to New Jersey weighs toward keeping this action here. The Court is also
receptive to the argument that Wyndham Hotel, the parent company of the other Defendants, is a
multi-national conglomerate that can ably -- and without too great a burden -- defend itself in
New Mexico. The Court must abide, however, the Supreme Court’s command to favor greatly

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IT IS ORDERED that the requests in the Defendants’ Brief in Support of Motion to
Transfer Venue Pursuant to 28 U.S.C. § 1404(a), filed September 29, 2017 (Doc. 19), are granted
in part and denied in part. The Court severs Plaintiff Ace Development, Inc.’s claims, and
transfers Plaintiff Presidential Hospitality, LLC and Plaintiff Sam Blue and their claims to the
United States District Court for the District of New Jersey.

______________________________
UNITED STATES DISTRICT JUDGE

Counsel:
Bobbie Jo Collins
Lewis Roca Rothgerber Christie LLP
Albuquerque, New Mexico
-- and -E. Martin Enriquez
Anovven Law
Greenwood Village, Colorado
Attorneys for the Plaintiffs
Rufus E. Thompson
Elizabeth Ann Martinez
Modrall, Sperling, Roehl, Harris & Sisk, PA
Albuquerque, New Mexico

forum selection clauses. It therefore determines that, under Atlantic Marine, the proper course is
to sever and transfer Presidential Hospitality’s and Blue’s claims.

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-- and -David S. Sager
Steven R. Marino
DLA Piper
Short Hills, New Jersey
Attorneys for the Defendants

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