American Petroleum Partners Operating, LLC v. Keith Nicholson Services LLC
5:19-cv-00251
N.D.W. Va.Sep 20, 2019Background
- Plaintiff Keith Nicholson Services, LLC (Nicholson) performed work under a written Master Services Contract (MSC) dated July 13, 2018 for APP Petroleum Partners Operating, LLC (APP Operating) on the Casterly Rock well pad and alleges breach for unpaid invoices.
- The MSC contains an express forum-selection and choice-of-law clause: Pennsylvania law and exclusive jurisdiction in courts (federal or state) located in Washington County, Pennsylvania.
- Nicholson sued in the Northern District of West Virginia (5:19-CV-205) asserting Counts I–IV (contract, account stated, quantum meruit/unjust enrichment, fraud/promissory estoppel) against APP Operating and Count V (foreclosure of mechanics’ lien) against multiple defendants; several non-party defendants were later dismissed.
- APP Operating had filed a Marshall County, West Virginia action to quiet title/remove the mechanics’ liens (removed as 5:19-CV-251); Nicholson argued that filing that action waived the MSC forum-selection clause.
- Defendants moved to transfer venue (or dismiss) under the MSC/forum-selection clause and § 1404(a); Nicholson moved to consolidate the two federal cases.
- Court applied Atlantic Marine’s altered § 1404(a) framework for forum-selection clauses, found the clause presumptively enforceable, concluded the Marshall County action did not amount to a broad waiver, severed Counts I–IV and transferred them to the Western District of Pennsylvania, and consolidated Count V with 5:19-CV-251 (lead case 5:19-CV-205).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability and effect of MSC forum-selection clause (transfer under §1404(a)) | Forum clause should not control; case can proceed in NDWV | Clause is valid, enforceable, and controls; transfer appropriate under Atlantic Marine | Clause enforced; Counts I–IV transferred to Western District of Pennsylvania |
| Whether filing the Marshall County quiet-title action waived the forum-selection clause | APP waived the clause by filing the quiet-title action in Marshall County | No waiver — quiet-title is a local in rem action required at the land situs and does not show clear intent to waive | No broad waiver; filing insufficient to waive clause except possibly for claims directly pursuing lien validity |
| Severance of contract claims from mechanics’ lien claim | Consolidate all claims in one forum | Sever the contract-based claims tied to the MSC and leave lien issues separate | Counts I–IV severed from Count V; Counts I–IV transferred; Count V retained/ consolidated with related case |
| Request to consolidate the two federal actions | Nicholson sought consolidation of 5:19-CV-205 and 5:19-CV-251 | Defendants opposed full consolidation given differing venues and forum clause | Motion granted in part/denied in part: Count V consolidated with 5:19-CV-251 but lead case designated 5:19-CV-205 |
Key Cases Cited
- Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49 (2013) (forum-selection clauses alter the § 1404(a) transfer analysis and are presumptively enforceable)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses are presumptively valid absent unreasonableness)
- Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988) (discussion of forum-selection clause weight in transfer context)
- Bartels by & through Bartels v. Saber Healthcare Grp., LLC, 880 F.3d 668 (4th Cir. 2018) (waiver of contractual rights requires clear indication; ambiguous conduct insufficient)
- Ray v. Hey, 183 W. Va. 521, 396 S.E.2d 702 (W. Va. 1990) (quiet-title actions are local/in rem and must be brought where the land is located)
- Meltzer v. C. Buck LeCraw & Co., 402 U.S. 937 (1971) (in rem nature of real property actions and situs rules)
- P.M. Enters. v. Color Works, Inc., 946 F. Supp. 435 (S.D. W. Va. 1996) (factors commonly considered in transfer motions)
- Wachovia Bank Nat. Ass'n v. EnCap Golf Holdings, LLC, 690 F. Supp. 2d 311 (S.D.N.Y. 2010) (waiver of forum-selection clauses is not lightly inferred)