329 P.3d 1264
Mont.2014Background
- San Diego Gas & Electric (San Diego) and NaturEner entered two contracts (Purchase Agreement and Contribution Agreement) concerning energy/credits from the Rim Rock wind farm; the Purchase Agreement specified California law and litigation in San Diego; the Contribution Agreement specified New York law and non-exclusive New York jurisdiction.
- Dispute centered on whether NaturEner satisfied contract "Avian Conditions;" San Diego sued first in San Diego Superior Court; NaturEner filed a nearly identical suit in Montana (Ninth Judicial District) the next day.
- Montana district court denied San Diego’s motion to dismiss or stay the Montana action; San Diego petitioned the Montana Supreme Court for supervisory control to correct that ruling.
- Montana Supreme Court considered choice-of-law, the nature (mandatory vs permissive) of the Purchase Agreement’s forum selection clause, and forum non conveniens / judicial economy concerns.
- Court concluded California law governs interpretation of the Purchase Agreement’s forum clause, held the clause to be mandatory ("conduct all" litigation in San Diego), and found related Contribution Agreement issues should also be litigated in California to avoid inconsistent judgments.
- Court granted supervisory control, vacated the district court’s denial, and remanded with instructions to dismiss the Montana action.
Issues
| Issue | Plaintiff's Argument (San Diego) | Defendant's Argument (NaturEner) | Held |
|---|---|---|---|
| Validity / choice of law clause | California law governs; clause valid | Agreed choice of law not disputed | Choice-of-law clause valid; apply California law to interpret forum clause |
| Nature of Purchase Agreement forum clause | "Conduct all" litigation in San Diego is mandatory and exclusive | "Consent" language makes clause permissive (allows Montana) | Clause is mandatory — "conduct all" limits litigation to San Diego |
| Interaction of Contribution Agreement (New York) with Purchase Agreement | Purchase Agreement mandatory forum controls related issues; litigate both in California for consistency | Contracts should be read together; Contribution Agreement’s non-exclusive NY submission makes both permissive | Treat agreements independently; separate forum clauses survive; related Contribution Agreement issues should be tried in California for judicial economy |
| Forum non conveniens / judicial economy | Montana action should be dismissed to avoid duplicate litigation, inconsistent judgments, and undue burden on Montana resources | Montana has substantial interest; witnesses/site visit and Montana court can apply California law | Montana court should decline; forum non conveniens and risk of inconsistent results favor dismissal and litigation in California |
Key Cases Cited
- Stokes v. Montana Thirteenth Judicial District Court, 259 P.3d 754 (Mont. 2011) (supervisory control is extraordinary and limited to legal errors causing gross injustice)
- Polzin v. Appleway Equipment Leasing, Inc., 191 P.3d 476 (Mont. 2008) (apply Restatement factors when a contract has both choice-of-law and forum clauses)
- Smith, Valentino & Smith, Inc. v. Superior Court of Los Angeles County, 551 P.2d 1206 (Cal. 1976) (California enforces forum selection clauses unless enforcement is unreasonable)
- Cal-State Business Products & Services, Inc. v. Ricoh, 16 Cal. Rptr. 2d 417 (Cal. Ct. App.) (party attacking clause must show the selected forum would be unable to accomplish substantial justice)
- Nutter v. Permian Corp., 727 P.2d 1338 (Mont. 1986) (possibility of conflicting results and duplicate trials supports changing place of trial for convenience and ends of justice)
- Haug v. Burlington Northern Railroad, 770 P.2d 517 (Mont. 1989) (forum non conveniens permits a court to resist jurisdiction even when venue is technically proper)