Wescott v. Crowe

Background

This case concerns a contractual dispute between Carl A. Wescott and defendants including David Crowe and Mike Lyonette. Wescott originally sued in Maricopa County Superior Court, alleging breach of contract, promissory fraud, and negligent misrepresentation. He later amended the complaint to add claims for intentional interference with contract, negligent interference with economic advantage, and breach of the covenant of good faith and fair dealing.

Several defendants removed the case to the U.S. District Court for the District of Arizona based on diversity jurisdiction. The moving defendants then filed a motion under Federal Rule of Civil Procedure 12(b)(2), concerning personal jurisdiction, and Rule 12(b)(6), concerning whether the complaint stated a legally sufficient claim. The court explained that a motion enforcing a forum-selection clause is more properly treated as a Rule 12(b)(3) motion concerning improper venue.

Forum-selection clause

The August 11, 2018 contract contained a provision stating that the agreement would be governed by the laws of San Francisco, California, and that San Francisco would be the jurisdiction and venue for the contract. The court noted that forum-selection clauses are generally presumed valid. A party challenging such a clause must clearly show that enforcement would be unreasonable and unjust, such as because the clause resulted from fraud or overreaching, would deprive the party of a meaningful opportunity to be heard, or would violate a strong public policy.

Wescott did not challenge the validity of the clause. Instead, he argued that Arizona was the proper venue because the contract was orally agreed to, written, formed, and signed in Maricopa County. The court held that where a contract was written did not affect the agreed forum-selection clause. The court also rejected Wescott’s argument concerning his former residence in Maricopa County, noting that he had since moved to the United Arab Emirates, which made California and Arizona equally convenient according to the court. The court further found irrelevant Wescott’s contention that another contract contained an Arizona forum-selection clause because that contract was not the subject of the amended complaint.

Ruling

The court concluded that Wescott had not met his burden of showing that the forum-selection clause was unenforceable. It found that the Northern District of California was the proper venue and stated that it did not have jurisdiction over the claims in Arizona. Because of that conclusion, the court declined to address the merits of the defendants’ motion to dismiss.

The court ordered the clerk to transfer the case to the U.S. District Court for the Northern District of California for all further proceedings and ordered that the action be terminated in the District of Arizona. The opinion also states that Wescott and Peter Tierney had previously stipulated to dismissal and that Brian Putze and Sandra Winfrey had been dismissed after a settlement notice; those earlier rulings were not the disposition addressed by this order.