Guild Mortgage Company v. Welberg et al
OPINION AND ORDER. For these reasons, the Court construes that part of Defendants' Motion # 15 titled Alternative Motion to Transfer Venue as a Motion to Dismiss without prejudice, GRANTS that part of Defendants' Motion # 15 titled Motion to Compel Arbitration. The Court also DENIES as moot Plaintiff's Motion # 30 for Preliminary Injunction. Accordingly, the Court DISMISSES this matter without prejudice. As noted, the Court will enter a Judgment of Dismissal without prejudice in 30 days. IT IS SO ORDERED. Signed on 4/14/2017 by Judge Anna J. Brown. (pvh)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
GUILD MORTGAGE COMPANY,
a California corporation,
PATRICK WELBERG, an
individual; SCOTT STARR, an
individual; and ACADEMY
MORTGAGE CORPORATION, a Utah
PAUL C. BERG
DANIEL C. PETERSON
Cosgrave Vergeer Kester LLP
500 Pioneer Tower
888 S.W. Fifth Avenue
Portland, OR 97204
Attorneys for Plaintiff
AMY JOSEPH PEDERSEN
LAURA E. ROSENBAUM
Stoel Rives LLP
760 S.W. Ninth Ave
Portland, OR 97205
1 - OPINION AND ORDER
OPINION AND ORDER
JOSEPH A. KROEGER
Snell & Willmer LLP
One South Church Avenue
Tucson, AZ 85701
Attorneys for Defendants.
This matter comes before the Court on the Motion (#15) to
Compel Arbitration and, in the Alternative, Transfer Venue filed
by Defendants Patrick Welberg, Scott Starr, and Academy Mortgage
Corporation and Plaintiff Guild Mortgage Company’s Motion (#30)
for Preliminary Injunction.
The Court is satisfied the record is
sufficiently developed such that oral argument would not be
For the reasons that follow, the Court construes that part
of Defendants’ Motion (#15) titled Alternative Motion to Transfer
Venue as a Motion to Dismiss without prejudice, GRANTS that
Motion, and DENIES as moot that part of Defendants' Motion (#15)
titled Motion to Compel Arbitration.
The Court also DENIES as
moot Plaintiff’s Motion (#30) for Preliminary Injunction.
The following facts are taken from Plaintiff's Complaint and
the parties' materials filed in connection with the Motions and
are undisputed unless otherwise indicated.
2 - OPINION AND ORDER
Plaintiff is a mortgage-banking company with its principal
place of business in San Diego, California, and with branches
located in Oregon and other states.
Defendants Welberg and Starr are former employees of
Welberg began working for Plaintiff in approximately
April 2011 and eventually worked as a branch manager in
Plaintiff’s Lake Oswego, Oregon, office.
On June 6, 2012,
Welberg signed a Non-Producing Branch Manager Employment
Agreement with Plaintiff.
On October 30, 2014, Welberg signed an
Employee Confidentiality and Non-Disclosure Agreement with
Starr began working for Plaintiff on approximately June 23,
2011, and worked as a branch manager in Plaintiff’s Wilsonville,
On June 23, 2011, Starr signed a Producing
Branch Manager Employment Agreement1 with Plaintiff.
On July 15,
2015, Starr signed an Employee Confidentiality and Non-Disclosure
Agreement2 with Plaintiff.
On October 17, 2016, Plaintiff terminated Welberg’s
employment for performance reasons.
work for Academy.
Welberg immediately went to
Academy is also a mortgage-banking company
The relevant terms of the Employment Agreements are the
same for Welberg and Starr, and the Court need not distinguish
between the Agreements in its analysis.
The terms of the Non-Disclosure Agreements are the same
for Welberg and Starr, and the Court need not distinguish between
the Agreements in its analysis.
3 - OPINION AND ORDER
with its principal place of business in Utah and branches located
On November 7, 2016, Starr resigned from employment
with Plaintiff and also went to work for Academy.
On November 15, 2016, Plaintiff filed its Complaint in this
Plaintiff alleges Defendants Welberg and Starr violated
the terms of their Employment and Non-Disclosure Agreements by
using Plaintiff’s confidential information to solicit Plaintiff’s
employees to work for Academy.
Plaintiff asserts claims against
Defendants for injunctive relief, breach of contract, intentional
interference with business relations, and misappropriation of
On November 23, 2016, Defendants filed a Motion to Compel
Arbitration as to all of Plaintiff’s claims.
In the alternative,
Defendants seek to transfer venue of this case to the United
States District Court for the Southern District of California.
On February 2, 2017, Plaintiff filed a Motion for Preliminary
On March 30, 2017, in the course of its consideration of the
pending Motions, the Court requested the parties to file a joint
supplemental memorandum that clarified their positions as to the
meaning of the forum-selection language in the Employment
On April 7, 2017, the parties filed a Joint
Supplemental Statement (#125) providing their positions.
Because of the explicit forum-selection provisions in the
4 - OPINION AND ORDER
Employment Agreements that may govern the determination as to
which court should resolve Defendants’ Motion to Compel
Arbitration and Plaintiff’s Motion for Preliminary Injunction,
the Court will first address Defendants’ alternative Motion to
A motion to transfer venue is governed by 28 U.S.C.
§ 1404(a), which directs the Court to “weigh the relevant factors
and decide whether, on balance, a transfer would serve ‘the
convenience of parties and witnesses’ and otherwise promote ‘the
interests of justice.’”
Atlantic Marine Const. Co. v. U.S. Dist.
Court for W. Dist. of Texas, 134 S. Ct. 568, 581 (2013)(quoting
28 U.S.C. § 1404(a)).
When, however, the parties’ contract
contains a valid forum-selection clause, the “enforcement of
valid forum-selection clauses, bargained for by the parties,
protects their legitimate expectations and furthers vital
interests of the justice system.”
Atlantic Marine, 134 S. Ct. at
581 (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 33
Accordingly, a valid forum-selection clause should be
given “controlling weight in all but the most exceptional cases.”
Atlantic Marine, 134 S. Ct. at 581.
When a valid forum-selection clause applies, the
Court’s analysis under § 1404(a) is modified in three ways:
5 - OPINION AND ORDER
“First, the plaintiff’s choice of forum merits no weight and the
plaintiff bears the burden to establish that transfer to the
forum for which the parties bargained is unwarranted”; second,
the Court “should not consider arguments about the parties’
private interests” because the parties “waive the right to
challenge the preselected forum as inconvenient or less
convenient”; and third, “the transfer of venue will not carry
with it the original choice-of-law rules.”
As noted, in their alternative Motion to Transfer Venue
based on the terms of the Agreements, Defendants contend
(1) all of Plaintiff’s claims asserted against them are subject
to arbitration; (2) in the alternative, the proper forum for
resolution of these matters is the federal court in San Diego,
California; and (3) Plaintiff has waived any right to a jury
trial on its claims.
In response Plaintiff contends (1) its claims are exempt
from arbitration pursuant to the terms of the Agreements; (2) its
claims are not subject to the forum-selection clauses of the
Employment Agreements and, therefore, are properly filed in this
Court; and (3) even if the forum-selection clause is applicable,
the proper forum would be a California state court in San Diego,
The Court notes Plaintiff also concedes the Court
6 - OPINION AND ORDER
should strike Plaintiff’s request for a jury trial.
Applicable Contract Provisions.
The following contractual provisions are pertinent to
Defendants’ alternative Motion to Transfer Venue:
Section 6.6 of the Employment Agreements provides:
Governing Law; Venue; Waiver of Jury Trial. To
the maximum extent permitted under applicable law,
this Agreement shall be governed by and construed
in accordance with the substantive laws of Federal
law and the laws of the State of California,
without regard to provisions related to choice of
law or forum. Unless prohibited by applicable
law, or otherwise agreed to by the Parties, the
Parties expressly agree and consent that the
courts of San Diego, State of California, shall
have exclusive jurisdiction over all actions
arising from, out of, or with respect to this
Section 6.18 of the Employment Agreements provides:
Company and Employee recognize that in the event a
dispute should arise between them concerning this
Agreement or the employment relationship,
litigation will not afford a practical resolution
of the issues within a reasonable period of time
and at a reasonable cost. Consequently, with the
exceptions noted below, each Party agrees that all
disputes, disagreements and questions of
interpretation concerning this Agreement, the
entering into of this Agreement, the
enforceability of this provision regarding
arbitration of claims, the employment relationship
. . . and any other claim relating to the
employment relationship, shall be submitted for
resolution to the American Arbitration Association
(the “Association”) for resolution by a single
arbitrator, in accordance with the Association’s
then-current Rules for the Resolution of
Employment Disputes (“Rules”). To the maximum
extent permissible under applicable law, any and
7 - OPINION AND ORDER
all hearing or other proceedings shall be held at
a place in San Diego County, California that is
mutually agreeable to the Parties. For purposes
of this provision the following matters will not
be subject to arbitration:
(a) matters relating to enforcement of the
provisions under Article V, which the Company may
seek to enforce in any court of competent
Emphasis in original.
Article V of the Employment Agreements relates to nondisclosure of “Confidential Materials,” which includes but is not
limited to Plaintiff’s personnel names and contact information.
Article V prohibits disclosure of “Confidential Materials”
without Plaintiff’s prior written consent.
Section 5.3 of
Article V provides Plaintiff may seek injunctive relief “in any
court of competent jurisdiction” for violation of the
The Non-Disclosure Agreements provide the employee has
or will have access to Plaintiff’s “confidential, proprietary,
and/or trade secret information” and that Plaintiff intends such
materials to be kept confidential.
“Confidential Information” is
defined as “non-public information” and includes “lists of
present and future clients[,] client contracts, all data obtained
from or related to [Plaintiff’s] clients,” “personnel
information,” and “any other information that Employee receives”
that has not been authorized by Plaintiff "for disclosure to the
8 - OPINION AND ORDER
Section 8.1 of the Non-Disclosure Agreements sets forth
post-employment restrictions regarding nonsolicitation of
For a period of two years following the end, for
whatever reason, of Employee’s employment with
Company, Employee shall not, directly or
indirectly, induce or attempt to induce, any
employee of the Company to end or diminish his/her
relationship with the Company, or solicit or
attempt to solicit any Company employee for
outside employment. Employee shall also not
provide any information about the Company’s
employees to any other persons for the purpose of
assisting any third party to solicit the Company’s
employees for outside employment.
Section 11 of the Non-Disclosure Agreements provides
the remedies available to Plaintiff for breach of the NonDisclosure Agreements (including injunctive relief, liquidated
damages, and attorneys’ fees) and allows Plaintiff to obtain
injunctive and other equitable relief “from a court” in addition
to any liquidated or actual damages.
Section 15 provides the laws of California shall govern
the Non-Disclosure Agreements, and Section 17 provides the NonDisclosure Agreements are not employment contracts.
Defendants contend Plaintiff’s claims are subject to the
forum-selection clauses of the Employment Agreements.
also contend estoppel renders the forum-selection clauses
applicable to Plaintiff’s claims against Defendant Academy even
9 - OPINION AND ORDER
though it is not a signatory to the Agreements.
further contend the federal court in San Diego, California, has
exclusive jurisdiction over Plaintiff’s claims under the forumselection clauses of the Employment Agreements.
According to Plaintiff, however, its claims related to the
alleged misuse of confidential information are not subject to the
forum-selection clauses of the Employment Agreements because the
Non-Disclosure Agreements do not have forum-selection clauses.
Plaintiff also contends even if the forum-selection clauses of
the Employment Agreements are applicable to the claims against
Welberg and Starr, they do not apply to Plaintiff's claims
asserted against Academy.
Finally, Plaintiff argues even if the
forum-selection clauses of the Employment Agreements apply to
Plaintiff’s claims, the state court in San Diego, California,
would have exclusive jurisdiction, and because there is not a
procedural mechanism by which to transfer this action directly to
a California state court in San Diego, this Court should construe
Defendants’ alternative venue motion as a motion to dismiss and
dismiss the matter because it was commenced in the wrong forum.
The forum-selection clauses of the Employment
Agreements apply to Plaintiff’s claims against
Defendants Welberg and Starr.
Defendants contend the forum-selection clauses of the
Employment Agreements apply to Plaintiff’s claims on the ground
that those claims arise out of Plaintiff’s employment of Welberg
10 - OPINION AND ORDER
and Starr, and, therefore, the Employment Agreements and NonDisclosure Agreements should be construed together.
particular, Defendants point out that the Non-Disclosure
Agreements are titled “Exhibit B,” which supports Defendants’
contention that the Non-Disclosure Agreements were intended to be
part of the Employment Agreements.
According to Defendants,
therefore, the forum-selection clauses apply even if Plaintiff’s
claims are based on the Non-Disclosure Agreements.
Plaintiff, in turn, contends the forum-selection
clauses of the Employment Agreements do not apply to the NonDisclosure Agreements because the latter are separate, distinct
contracts that must be read and analyzed apart from the
Plaintiff points out that each document
was signed at a different time, each document is described as an
“Agreement,” none of the documents expressly reference nor
incorporate the others, and each document has a different remedy
in the event of a breach.
Plaintiff also argues the forum-
selection clauses in Section 6.6 of the Employment Agreements are
not applicable because the parties “otherwise agreed” that claims
related to the confidentiality provisions of Article V of the
Employment Agreements may be brought “in any court of competent
Plaintiff asserts this argument primarily in response to
Defendants’ Motion to Compel Arbitration, but Plaintiff also
incorporates the reasoning in its Response to the change-of-venue
11 - OPINION AND ORDER
Section 6.6 of the Employment Agreements, as well as
Section 15 of the Non-Disclosure Agreements, provide that the
Agreements shall be interpreted and governed by the law of the
state of California, without regard to provisions related to
choice of law or forum.
Under California law documents that relate to the same
subject matter and executed as part of the same transaction are
construed as part of the same instrument.
Holguin v. DISH
Network LLC, 187 Cal. Rptr. 3rd 100, 111 (Cal. App. 2014).
Moreover, California Civil Code § 1642 provides:
contracts relating to the same matters, between the same parties
and made as parts of substantially one transaction are to be
See also Fillpoint, LLC v. Maas, 146 Cal. Rptr.
3d 194, 200 (Ct. App. 2012)(employment agreement and purchase
agreement must be construed together under California law).
Here although Welberg and Starr executed the NonDisclosure Agreements sometime after signing the Employment
Agreements, all of the Agreements set out and relate to the terms
and conditions of their employment with Plaintiff, and,
therefore, the Agreements are properly construed together under
Thus, although the language of Section 6.18 of
the Employment Agreements exempts from arbitration a claim for
disclosure of confidential information under Article V, Section
12 - OPINION AND ORDER
6.18 does not specifically exempt such a claim from the forumselection clause in Section 6.6 of the Employment Agreements when
construed under California law.
Moreover, the designation of the
Non-Disclosure Agreements as “Exhibit B” supports the conclusion
that the parties intended the Agreements to be construed
Thus, even though the Non-Disclosure Agreements do not
specifically designate a forum for resolution of disputes, the
forum-selection clauses of the Employment Agreements govern under
On this record and for purposes of resolving
Defendants’ venue Motion, the Court concludes the forum-selection
clauses of the Employment Agreements are controlling, and,
therefore, all of Plaintiff’s claims against Welberg and Starr
must be litigated as specified in San Diego, California.
For purposes of Defendants’ venue Motion, the forumselection clauses of the Employment Agreements also
apply to Plaintiff’s claims against Defendant Academy.
Defendants contend the forum-selection clauses also
apply to Plaintiff’s claims asserted against Academy on the
grounds that those claims arise out of the relationship between
Academy and Welberg and Starr as Academy employees, and the
claims are sufficiently intertwined to justify enforcing the
provisions against a nonsignatory under either the doctrine of
13 - OPINION AND ORDER
alternative estoppel4 or equitable estoppel.
Plaintiff, however, contends the forum-selection
clauses are not applicable under either alternative or equitable
estoppel because Academy is not a signatory to the Agreements;
the relationships between Welberg, Starr, and Academy are not
sufficiently close to require arbitration of Plaintiff’s claims
against Academy; and Plaintiff’s claims asserted against Academy
are not sufficiently intertwined with its claims against Welberg
Plaintiff alleges claims against Academy, Welberg, and
Starr for tortious inference with business relations and
misappropriation of trade secrets.5
Plaintiff contends each of
these claims arises out of the alleged use of Plaintiff’s
confidential information by Welberg and Starr to solicit
Plaintiff’s employees to work for Academy and Academy “knowingly
acted in concert with Welberg and Starr to solicit employees in
violation of the Agreements.”
Compl. at ¶ 21.
The Court notes under California law arbitration
provisions may be enforced against a nonsignatory when the
nonsignatory is a third-party beneficiary of the agreement or
Defendants rely on the Eighth Circuit case of CD
Partners, LLC v. Grizzle, 424 F.3d 795 (8th Cir. 2005), to
support their theory of “alternative estoppel.” Although
instructive, the case is not controlling.
Plaintiff alleges claims for breach of contract against
Welberg and Starr only.
14 - OPINION AND ORDER
when a nonsignatory and one of the parties to the agreement have
a pre-existing agency relationship that makes it equitable to
impose the duty to arbitrate on either of them.
Tran, 157 Cal. App. 4th 1032, 1036-37 (2007).
See Nguyen v.
In Turner v.
Thorworks Industries, Inc., the California court held
nonsignatory defendants could enforce a forum-selection clause
against the signatory plaintiff under the theory of equitable
No. CIVS05-02653, 2006 WL 829142, at *3 (E.D. Cal.
March 28, 2006)(citing Comer v. Micor, 436 F.3d 1098, 1101 (9th
As noted, Plaintiff’s claims against Academy are based
on the alleged violations of the Agreements between Plaintiff and
Defendants Welberg and Starr that occurred in part after Welberg
and Starr left Plaintiff’s employment to work for Academy.
Plaintiff does not allege in its Complaint that Academy’s actions
were independent from the actions of Welberg and Starr.
Plaintiff appears to seek to hold Academy liable based solely on
the actions and conduct of Welberg and Starr as its employees.
Plaintiff’s claims against Academy, therefore, are “inextricably
intertwined” with the alleged misuse of Plaintiff’s confidential
information and the alleged improper solicitation by Welberg and
Starr of Plaintiff’s employees to work for Academy in violation
of the Employment and Non-Disclosure Agreements.
On this record as to Defendants’ venue Motion, the
15 - OPINION AND ORDER
Court finds Plaintiff’s claims against Academy are inextricably
intertwined with the conduct of Defendants Welberg and Starr
after they became employees of Academy.
Accordingly, the Court
concludes the forum-selection clauses of the Employment
Agreements are applicable to Plaintiff’s claims asserted against
Academy, and those claims, therefore, must be litigated as
specified in San Diego, California.
In summary, the Court concludes the forum-selection clauses
of the Employment Agreements apply to all of the claims Plaintiff
brings against Defendants, and, therefore, the proper forum for
this dispute is in the “courts of San Diego, California.”
Under the forum-selection clauses of the Employment
Agreements, “exclusive jurisdiction” over Plaintiff’s
claims rests in a California state court in San Diego,
As noted, the Court has concluded the forum-selection
clauses of the Employment Agreements apply to all claims that
Plaintiff asserts in this action and that these forum-selection
clauses specifically designate the “courts of San Diego,
California” as having “exclusive jurisdiction” over these claims.
As noted, the parties filed a Joint Supplemental Statement
setting out their positions as to the meaning of the forumselection language in the Employment Agreements.
In the Joint Supplemental Statement Defendants contend
the language of the forum-selection clauses is ambiguous and,
therefore, should be construed against Plaintiff as the drafter
16 - OPINION AND ORDER
and interpreted to include both the federal and state courts in
San Diego, California.
If the forum-selection clauses are
construed as ambiguous, Defendants assert this matter should be
transferred to the United States District Court for the Southern
District of California in San Diego.
According to Plaintiff, however, even if the forumselection clauses apply to its claims, the language designates
courts “of San Diego, California,” as having exclusive
jurisdiction, and applicable precedent holds such language
specifies only a state-court forum.
In Doe 1 v. AOL LLC the Ninth Circuit held when a
forum-selection clause designates the courts “of” a particular
state as having exclusive jurisdiction, the clause refers to the
state courts and does not include federal courts.
1081-82 (9th Cir. 2009).
552 F.3d 1077,
On the other hand, the court noted a
forum-selection clause referring to courts “in" a state imposes a
geographic limitation rather than a limitation as to sovereignty.
Id. at 1082 n.8.
The Ninth Circuit also held the fact that the
parties dispute the meaning of contract language does not
necessarily render the contract ambiguous.
In Simonoff v.
Expedia, Inc., the Ninth Circuit also held a forum-selection
clause that provided there was exclusive jurisdiction in “the
courts in King County” contemplated federal as well as state
courts as the proper courts for adjudication of the claims
17 - OPINION AND ORDER
asserted in that case.
643 F.3d 1202, 1206 (9th Cir.
2011)(emphasis in original).
Here, in contrast, the forum-
selection clauses of the Employment Agreements designate
exclusive jurisdiction over Plaintiff’s claims to the courts “of”
San Diego, California; in other words, to the state court in San
Diego, California, and not a federal court situated in San Diego.
Having concluded the forum-selection clauses in the
Employment Agreements apply to the Non-Disclosure Agreements and
to all of Plaintiff’s claims against all Defendants and that the
forum-selection clauses designate exclusive jurisdiction over
Plaintiff’s claims arising from the Agreements to the state court
in San Diego, California, the Court next addresses what action it
should take on the pending Motions to give effect to the
controlling forum-selection clauses.
This Court is not aware of any authority that would
permit it to grant Defendants’ alternative Motion to Transfer
Venue by directly transferring this case to a state court in San
Thus, the Court concludes the proper action
in response to Defendants’ alternative Motion to Transfer Venue
is to dismiss this action without prejudice in order to permit
the parties to litigate all of their disputes in the California
state forum they selected and as to which Academy is bound for
the reasons stated.
Accordingly, the Court construes the
alternative Motion to Transfer Venue as a Motion to Dismiss
18 - OPINION AND ORDER
without prejudice, which the Court now grants.
The Court emphasizes its analysis in this matter
focuses solely on the application of the forum-selection clauses
and does not reach the merits of the disputes as to arbitration
or other jurisdictional matters.
The Court will defer entering a
Judgment of Dismissal for 30 days to give the parties an
opportunity to file this matter in the proper California state
forum of San Diego, California, should a party choose to do so.
For these reasons, the Court construes that part of
Defendants' Motion (#15) titled Alternative Motion to Transfer
Venue as a Motion to Dismiss without prejudice, GRANTS that part
of Defendants' Motion, and DENIES as moot that part of
Defendants’ Motion (#15) titled Motion to Compel Arbitration.
The Court also DENIES as moot Plaintiff’s Motion (#30) for
Accordingly, the Court DISMISSES this
matter without prejudice.
As noted, the Court will enter a Judgment of Dismissal
without prejudice in 30 days.
IT IS SO ORDERED.
DATED this 14th day of April, 2017.
/s/ Anna J. Brown
ANNA J. BROWN
United States District Judge
19 - OPINION AND ORDER
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