United States District Court, D. New Mexico
JENNIFER M. GALLEGOS, ARTHUR GALLEGOS, and all New Mexico Residents similarly situated, Plaintiffs,
TAX DEFENSE NETWORK, LLC, a Delaware limited liability company, RYAN LEE DAVIS, an attorney and resident of Florida, and CATHERINE KING O'CONNOR, an attorney and resident of Florida, Defendants.
MEMORANDUM OPINION AND ORDER
FASHING UNITED STATES MAGISTRATE JUDGE.
MATTER comes before the Court on Defendants Tax Defense
Network, LLC, Ryan Lee Davis, and Catherine King
O'Connor's (collectively “TDN”) Motion to
Dismiss for Improper Venue or in the Alternative, to Transfer
Venue, filed on July 31, 2018. Doc. 3.Plaintiffs
Jennifer M. Gallegos and Arthur Gallegos filed their response
on August 21, 2018. Doc. 11. TDN filed its reply on September
4, 2018. Doc. 14. The parties consented to proceed before me
as the presiding judge to conduct dispositive proceedings in
this matter, including motions and trial, and order the entry
of final judgment. Docs. 5, 7, 9. Having read the submissions
of the parties and the relevant law, and being fully advised,
the Court finds that the motion is well-taken and will GRANT
Background Facts and Procedural Posture
case arises out of a Client Services Agreement
(“Agreement”) between plaintiffs and TDN.
See Doc. 8-1. Plaintiffs are residents of New Mexico
who have tax disputes with the Internal Revenue Service
(“IRS”), the State of New Mexico Taxation and
Revenue Department (“NMTRD”), and the New Mexico
Worker's Compensation Administration (“WCA”).
Doc. 1-1 at 1-2, ¶ 2. TDN is a Delaware limited
liability company with its primary offices in Jacksonville,
Florida. Id. at 2, ¶ 3. Plaintiffs hired TDN to
represent them before the IRS, NMTRD, and the WCA in
connection with issues involving delinquent
taxes. Id. at 2, ¶ 2.
allege that TDN failed to represent them before the NMTRD,
including failing to appear at the NMTRD hearing and failing
to appeal the decision of the NMTRD. Id. at 6-8.
Plaintiffs allege that because of TDN's failures to act
on their behalf, they suffered an extra $130, 000.00 in tax
assessments by NMTRD. Id. at 9, ¶ 70.
Consequently, plaintiffs filed their Complaint for Damages
and Petition for Injunctive Relief in the State of New
Mexico, Second Judicial District Court. Id. TDN
removed the case to this Court based on diversity
jurisdiction. Doc. 1. Shortly after removal, TDN filed the
instant motion to dismiss or to transfer based on the forum
selection provision in the Agreement.
motion, TDN contends that this case either should be
dismissed or alternatively transferred to the Middle District
of Florida pursuant to 28 U.S.C. § 1406(a). TDN asserts
that the Agreement “contains a valid, unambiguous venue
selection clause requiring litigation of all disputes arising
from the contract in the courts of Duval County,
Florida.” Doc. 3 at 1. The Agreement between TDN and
plaintiffs includes a clause that states:
Choice of Law and Attorneys [sic] Fees: The
interpretation and enforcement of this Agreement shall be
construed in accordance with Florida law. Jurisdiction and
venue shall be in the Courts of Duval County, Florida. Should
any legal action become necessary, each Party shall be
responsible for its own court costs, attorney's fee and
any other related fees.
Doc. 8-1 at 4. Because this clause is a valid forum selection
provision, the Court will grant TDN's motion and transfer
this case to the Middle District of Florida pursuant to 28
U.S.C. § 1406(a).
motion to dismiss based on a forum selection clause
frequently is analyzed as a motion to dismiss for improper
venue under Fed.R.Civ.P. 12(b)(3).” K & V Sci.
Co. v. Bayerische Motoren Werke Aktiengesellschaft
(“BMW”), 314 F.3d 494, 497 (10th Cir. 2002)
(quoting Riley v. Kingsley Underwriting Agencies,
Ltd., 969 F.2d 953, 956 (10th Cir.1992)) (internal
quotations omitted). The Tenth Circuit has observed that
“[f]orum 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, 969 F.2d at 957. A “forum clause should
control absent a strong showing that it should be set
aside.” M/S Bremen v. Zapata Off-Shore Co.,
407 U.S. 1, 15 (1972). Thus, “absent some compelling
and countervailing reason [a forum selection clause] should
be honored by the parties and enforced by the courts.”
Id. at 12.
party seeking to avoid the forum selection clause bears
“a heavy burden of proof.” Id. at 17.
“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, 969 F.2d at 958. Even if some inconvenience
would result, that inconvenience would not justify
non-enforcement of the forum selection clause. See
Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585,
argument against enforcement of the forum selection clause
can be distilled into two main points. First, plaintiffs
argue that the forum selection clause is invalid because
enforcing it would be unreasonable and unjust. Doc. 11 at
1-7. Second, plaintiffs argue that the forum selection clause
is permissive and not mandatory. Id. at 7-9. The
Court will address these two issues in reverse order.
The Forum Selection Clause is Mandatory, not
difference between a mandatory and permissive forum selection
clause is that mandatory 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) (internal citation and quotations omitted).
“In contrast, permissive forum selection clauses
authorize jurisdiction in a designated forum, but do not
prohibit litigation elsewhere.” Id. at 926-27.
In K & V Sci. Co., 314 F.3d at 500, the Tenth
Circuit adopted the majority rule for enforcing forum
selection clauses. Specifically,
where 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.
Id. at 499 (citations omitted) (brackets in
original); see also Id. 499-500 (examples of
permissive and mandatory language). A forum selection clause
is mandatory only when the venue is specified with
“mandatory language.” See id. at 500.
Mandatory language is venue coupled with such terms as
“exclusive, ” “sole, ” or
“only.” Id. If the forum selection
clause is ambiguous-capable of being construed as either
permissive or mandatory-the clause is deemed to be
permissive. Id. Further, “if there is
ambiguity in the clause [the court] should construe it
against the drafter.” Milk ‘N' More, Inc.
v. Beavert, 963 F.2d 1342, 1346 (10th Cir. 1992).
forum selection clause in this case states,
“Jurisdiction and venue shall be in the Courts of Duval
County, Florida.” Doc. 8-1 at 4. This
provision is not ambiguous. The language is clear, and the
wording points to the courts of Duval County, Florida.
See Milk ‘N' More, 963 F.2d at 1346
(finding the language “venue shall be proper under this
agreement in Johnson County, Kansas” to be
“reasonably clear and the wording strongly points to
the state court of that county”).
argue that the language of the forum selection clause in this
case is permissive because it is ambiguous and non-exclusive.
Plaintiffs first argue that the clause is ambiguous because
the title of the provision-“Choice of Law and Attorneys
Fees”-“does not give fair notice to a reader that
this section would limit his or her claims to only one court,
” and renders the clause ambiguous. Doc. 11 at 8.
Plaintiffs cite no legal authority that the title of a
provision in a contract creates an ambiguity when the terms
set out in the body of the contract are clear and
unambiguous. See D.N.M.LR-Civ. 7.3 (“A ...