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Prestige Oilfield Services, LLC v. Devon Energy Production Co.

United States District Court, D. New Mexico

February 21, 2019




         THIS MATTER comes before the Court on Defendant's Opposed Motion to Transfer Venue to the Western District of Oklahoma. Doc. 5. Having reviewed the Motion, the attendant briefing (docs. 10, 15), and all applicable law, the Court hereby GRANTS Defendant's Motion for the reasons detailed below.

         I. Background

         This case arises out of a contract (hereinafter, “the Agreement”) between Plaintiff Prestige Oilfield Services, LLC (“Prestige”) and Defendant Devon Energy Production Company, L.P. (“Devon”). See doc. 1-1 at 1-2. Prestige acted as a contractor, providing Devon with certain services and materials including salt water removal, disposal services, and equipment. See doc. 5 at 2.

         The parties are in agreement as to virtually all facts relevant for purposes of the instant Motion. See doc. 10 at 2 (“Prestige agrees with the majority of the factual statements set forth by Devon.”). Prestige and Devon entered into the Agreement on October 12, 2012. Doc. 5 at 2. Their dispute arises out of services and materials provided pursuant to the Agreement. Id. Specifically, Devon refused to pay Prestige for its services and materials after uncovering alleged irregularities and errors in Prestige's invoices. See doc. 1-1 at 2; doc. 5 at 1. Prestige responded by recording liens against Devon's properties that were benefited by its services and materials. Doc. 1-1 at 2.

         Prestige filed suit in the Fifth Judicial District of New Mexico on November 12, 2018. Devon removed the case to this Court on December 13, 2018, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332. Doc. 1. Devon then filed the instant Motion to Transfer Venue on December 14, 2018. Doc. 5. Devon urges the Court to transfer the case to the Western District of Oklahoma based on the forum-selection clause contained in the Agreement. See id. at 3. Prestige does not deny the existence or enforceability of the forum-selection clause, but argues that the forum-selection clause is limited in scope and does not apply to the parties' disagreement. See generally doc. 10.

         II. Legal Standard

         The Supreme Court has held that “a forum-selection clause may be enforced by a motion to transfer under § 1404(a).” Atlantic Marine Constr. Co. v. United States Dist. Court, 571 U.S. 49, 52 (2013). Section 1404(a), the federal change of venue statute, permits a district court to “transfer any civil action to another district or division where it might have been brought or to any district or division to which all parties have consented.” 28 U.S.C. § 1404(a).

         Where a valid forum-selection clause exists, the § 1404(a) motion should be denied only under “extraordinary circumstances, ” and the plaintiff bears the burden of demonstrating that such circumstances exist. Atlantic Marine, 571 U.S. at 62, 64. The parties' private interests carry no weight in the analysis, so the district court “may consider arguments about public-interest factors only.” Id. at 63-64. “[A] proper application of § 1404(a) requires that a forum-selection clause be ‘given controlling weight in all but the most exceptional cases.'” Id. at 59-60 (quoting Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring)).

         III. Analysis

         I. Choice of Law

         As a preliminary matter, the parties disagree about what law the Court should apply to interpret the forum-selection clause. See Presidential Hospital, LLC v. Wyndham Hotel Grp., LLC, F.Supp. 1179, 1211 (D.N.M. 2018) (noting the distinction between enforceability of forum-selection clauses, which is determined by federal law, and interpretation of forum-selection clauses, which is an area of some confusion). Plaintiff urges the Court to apply Oklahoma state law to interpret the clause (doc. 10 at 5), while Defendant argues that interpretation of the Agreement is governed by federal common law (doc. 15 at 5).

         A federal court sitting in diversity applies state substantive law and federal procedural law. See Erie R.R. v. Tompkins, 304 U.S. 64 (1938). Whether forum-selection clauses are considered substantive or procedural for Erie purposes is a “daunting question” that the Tenth Circuit has so far declined to answer. Excell, Inc. v. Sterling Boiler & Mech., 106 F.3d 318, 321 (10th Cir. 1997) (quoting Lambert v. Kysar, 983 F.2d 1110, 1116 (1st Cir. 1993)). Instead, the Tenth Circuit has regularly found that there is no need to decide the Erie question because both federal and state law lead to the same outcome. See Id. at 320 (“Because we believe there are no material discrepancies between Colorado law and federal common law on these matters…we find it unnecessary to decide the issue.”) (internal citations omitted); Presidential Hospital, 333 F.Supp. at 1211 (describing the Tenth Circuit's avoidance of this issue).

         For two reasons, it is ultimately unnecessary to determine whether the forum- selection clause in the Agreement is substantive or procedural. First, this Court finds that the Agreement's choice-of-law provision should be enforced in any event, meaning that Oklahoma law applies. Second, the contract principles that determine the resolution of this Motion are not materially different whether one applies federal common law, New Mexico law, or Oklahoma law.

         The Agreement contains the following choice-of-law provision:

In the event General Maritime Law of the United States is determined by a court of competent jurisdiction to be inapplicable, [1] and except as otherwise provided under the Articles “Independent Contractor, ” “Insurance, ” and “Indemnity and Defense” herein, the laws of the State of Oklahoma govern the interpretation of ...

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