The plaintiff, Hansa Consult of North America, LLC (HCNA), appeals an order of the Superior Court {McHugh, J.) granting the motion to dismiss of the defendant, hansaconsult Ingenieurgesellschaft mbH (hansaconsult). We affirm in part, reverse in part, and remand.
I
HCNA, an American company based in Portsmouth, and hansaconsult, a German company, are both involved in the business of detecting fuel leaks at airports. The two companies began their relationship on cooperative terms, having entered into a distribution agreement in 2001 that made HCNA the exclusive distributor of hansaconsult’s products and services throughout the United States and Canada. That relationship broke down, however, and the parties terminated their agreement on December 31, 2005.
In 2006, hansaconsult commenced litigation against HCNA in New Hampshire and Germany. The New Hampshire action, filed in March 2006, alleged that HCNA violated various New Hampshire statutes and committed various common-law torts. HCNA asserted several similar counterclaims in its answer. The German action, filed in June 2006, alleged that HCNA had violated the terms of the distribution agreement, whose forum selection clause specified that “Place of Jurisdiction is only Hamburg.” In August 2006, however, the parties entered into a settlement protocol agreement (SPA), which included a provision dismissing both the German and New Hampshire actions without prejudice to pending settlement negotiations.
After years of fruitless settlement efforts, in January 2009 hansaconsult again sued HCNA for breaching the 2001 distribution agreement, but this time only in Germany. Believing this lawsuit to violate the SPA, HCNA moved in superior court, in June 2009, to enjoin hansaconsult’s German lawsuit and to enforce the SPA. Before the superior court responded to that motion, apparently out of concerns that the statute of limitations would run on its claims, HCNA filed its own lawsuit against hansaconsult in New Hampshire on December 11,2009, asserting the same claims it had brought as counterclaims in hansaconsult’s original March 2006 New Hampshire action against HCNA. Hansaconsult moved to dismiss that action, and both parties agreed to stay resolution of hansaconsult’s motion to dismiss pending the trial court’s decision on HCNA’s June 2009 motion to enforce
On October 28, 2010, having denied HCNA’s motion to enforce the SPA, the trial court granted hansaconsult’s motion to dismiss HCNA’s 2009 lawsuit. HCNA moved to reconsider, arguing: (1) that the motion to dismiss had been withdrawn and thus was not yet ready for adjudication; (2) that, as a result, granting the motion to dismiss deprived HCNA of notice and an opportunity to be heard; and (3) that its 2009 claims against hansaconsult do not arise under the distribution agreement and may therefore be litigated in New Hampshire. The trial court denied HCNA’s motion because “the plaintiff cannot separate this case from the provisions of the Distribution Agreement.” This appeal followed.
II
HCNA first argues that the trial court erred in adopting hansaconsult’s argument that HCNA’s 2009 claims are barred under principles of res judicata and collateral estoppel. Hansaconsult argues that HCNA’s claims are barred because the court had decided precisely the same issues and/or causes of action in its September 28, 2010 final order in the previous litigation. The applicability of res judicata is a question of law, which we review de novo. Brooks v. Trustees of Dartmouth College, 161 N.H. 685, 690 (2011).
“Res judicata prevents the parties from relitigating matters actually litigated and matters that could have been litigated in the first action.” Morgenroth & Assoc’s v. State, 126 N.H. 266, 269 (1985) (quotation omitted). The doctrine applies if three elements are met: (1) the parties are the same
Examination of this doctrine reveals that it does not apply here. A cause of action is “the underlying right that is preserved by bringing a suit or action.” Morgenroth, 126 N.H. at 270 (quotation omitted). HCNA did not bring the same cause of action in this litigation as it did in the 2009 motion to enforce the SPA; there, it sought to enforce the terms of the August 2006 settlement agreement and enjoin hansaconsult’s action against it in Germany. And to the extent that the original causes of action between the parties in the 2006 New Hampshire litigation — both hansaconsult’s claims and HCNA’s counterclaims — mirror HCNA’s claims in this action, those claims had been voluntarily non-suited by the parties pursuant to the terms of the SPA. Thus, res judicata does not prevent HCNA from arguing, in this action, that its claims against hansaconsult should be litigated in New Hampshire.
Equally inapposite is the doctrine of collateral estoppel. That doctrine bars a party to a prior action, or a person in privity with such a party, from relitigating any issue or fact actually litigated and determined in the prior action. Petition of Kalar, 162 N.H. 314, 320 (2011). Under certain circumstances, collateral estoppel may preclude the relitigation of findings made by a previous court when: (1) the issue subject to estoppel is identical in each action; (2) the first action resolved the issue finally on the merits; (3) the party to be estopped appeared in the first action or was in privity with someone who did; (4) the party to be estopped had a full and fair opportunity to litigate the issue; and (5) the finding at issue was essential to the first judgment. Id. Even assuming the first four requirements have been met in this instance, the trial court’s conclusion in its judgment on the motion to enforce the SPA that all of the parties’ underlying legal claims should be heard in Germany was unnecessary to dispose of the issue before it — namely, whether hansaconsult should be required to re-enter settlement negotiations under the SPA. Without having been asked to determine whether the underlying disputes fell within the scope of the forum selection clause, the trial court had no need to answer that question in its final judgment in the SPA enforcement action. Thus, doing so was not essential to the judgment and cannot be given preclusive effect. See Restatement (Second) of Judgments § 27(h), at 258 (1982) (“If issues are determined but the judgment is not dependent upon the determinations, relitigation of those issues in a subsequent action between the parties is not precluded.”).
HCNA’s primary argument on appeal is that the trial court erred when it concluded that HCNA’s claims against hansaconsult in this action fall within the ambit of the 2001 distribution agreement’s forum selection clause and must therefore be brought in Germany. HCNA contends that, although disputes arising out of the distribution agreement must be resolved in Germany, its claims in this action do not so arise. Hansaconsult argues that the forum selection clause language — “Place of Jurisdiction is only Hamburg” — is broad enough to cover “all disputes between the parties arising out of their commercial dealings.” The superior court concluded that all of HCNA’s claims should be brought in Germany because, “[t]ry as it might, the plaintiff cannot separate this case from the provisions of the Distribution Agreement.”
When the trial court has relied on the pleadings to grant a motion to dismiss based upon a question of contract interpretation, such as the scope and application of a forum selection clause, our review is de novo. See In the Matter of Taber-McCarthy & McCarthy, 160 N.H. 112, 115 (2010).
Disposition of this case requires a precise recitation of the legal claims HCNA has asserted in this action and the underlying allegations upon which those claims are predicated. In its 2009 writ of summons, HCNA makes two general factual allegations, from which it derives five legal claims. First, it alleges that hansaconsult hired John Birnie, a fuel maintenance technician employed by HCNA before the expiration of the distribution agreement, who stole information from HCNA’s computer server, including HCNA’s trade secrets, relating to “virtually the entire business of HCNA” (the “misappropriation allegation”). Second, it alleges that, after the distribution agreement had expired, hansaconsult wrongfully told market participants, including customers and prospective customers of HCNA, that HCNA lacked authority to deal in any leak detection systems that use TCS software — derived from “a once-patented method for checking pipes for fuel leaks” — when in fact HCNA did have such authority (“market representations allegation”). Two of HCNA’s legal claims rest solely on the misappropriation allegation: count I, RSA chapter 350-B (violation of the Uniform Trade. Secrets Act); and count III, common-law conversion. Two other legal claims rest on both the misappropriation and the market representations allegations: count II, RSA chapter 358-A (violation of the Consumer Protection Act (CPA)), and count V, common-law unfair competition. And one legal claim rests solely on the market representations allegation: count IV, tortious interference with contractual and otherwise advantageous business relations. Our task on review is to determine whether the forum selection clause covers any or all of these claims and their predicate facts.
The clause at issue here — “Place of Jurisdiction is only Hamburg” — provides little guidance as to the scope of possible non-contract-based disputes the parties intended to litigate in Hamburg. In the first instance, we decline hansaconsult’s invitation to read that clause to cover “all disputes between the parties arising out of their commercial dealings,” as that expansive reading would require any “commercial” disputes arising between these two businesses to be litigated in Germany, regardless of either the logical relation of those disputes to the contract or even the continued existence of a binding agreement between the parties. In the absence of language signaling which, if any, extra-contractual disputes are to be heard in a foreign tribunal, courts have generally assumed an intent that only disputes “arising under” the contract are subject to the forum selection clause. See, e.g., Terra International, 119 F.3d at 693; cf. Stewart Organization, Inc. v. Ricoh Corp., 810 F.2d 1066, 1070 (11th Cir. 1987) (en
Our review of the law in other jurisdictions reveals several predominant approaches to the question of whether non-contractual claims “arise under” the contract for the purposes of a forum selection provision. The First Circuit Court of Appeals, in Lambert v. Kysar, 983 F.2d 1110, 1121-22 (1st Cir. 1993), adopted a rule in 1993 that “contract-related tort claims involving the same operative facts as a parallel claim for breach of contract should be heard in the forum selected by the contracting parties.” In that case, Lambert, a Massachusetts-based Christmas tree retailer, asserted in a Massachusetts forum both contract and tort claims against the Kysars, Washington State-based tree farmers. The two parties had signed a contract containing a forum selection provision designating Washington as the exclusive place of jurisdiction for their disputes. Applying its “same operative facts” test, the court rejected Lambert’s attempt to evade the forum selection clause by alleging tortious conduct relating to the formation, rather than the performance, of the contract. Id. at 1121-22.
Somewhat differently, the Second Circuit focuses on whether the plaintiff’s rights originate from the contract; if the plaintiff has not asserted a right or duty under the contract, then the claims fall outside the scope of the forum selection clause. Phillips v. Audio Active Ltd., 494 F.3d 378, 391-92 (2d Cir. 2007). In Phillips, an American musician and an English recording studio entered into an agreement containing a forum selection clause designating England as the place of jurisdiction for “any legal proceedings that may arise out of [the agreement].” Id. at 382. The musician, known as “Pete Rock,” sued under a copyright theory in an American court, arguing that the defendants released his copyrighted work under their label without his permission. Id. at 390. The defendants argued that the contract itself permitted their use of his songs and invoked the forum selection clause as a bar to venue in the American forum. Id. at 391. The court allowed the plaintiff to proceed with his copyright claim:
The Seventh Circuit phrases its test in a way that likely encompasses a wider range of non-contractual claims and facts within a contract’s forum selection provision than do the First and Second Circuits; that circuit asks whether resolution of a dispute “arguably depend[s] on the construction of an agreement.” Omron Healthcare, Inc. v. Maclaren Exports Ltd,., 28 F.3d 600, 603 (7th Cir. 1994). The American company in that case had sued a British company with whom it had recently ended a distribution agreement, asserting that the British company violated its trademark. In contrast to Phillips, the Omron court looked beyond the plaintiffs asserted claims and factual allegations, noting that the underlying facts, though taking place after the expiration of the contract, were tied up in contract law. See id. at 602 (observing that, although the contract itself did not specify how to wrap up the parties’ relations after the contract expired, common-law gap-filling rules nevertheless applied). Because the plaintiffs claims arguably depended on the construction of the contract, the dispute had to be heard entirely in the selected forum. See id.; see also Sweet Dreams Unlimited v. Dial-A-Mattress Intern., 1 F.3d 639, 642-43 (7th Cir. 1993) (applying the same test to the scope of arbitration clauses).
Other circuits and jurisdictions have adopted slightly different tests in this context. The Ninth Circuit, analyzing somewhat broader language than that contained in the contract here, asks whether the plaintiffs claims “cannot be adjudicated without analyzing whether the parties were in compliance with the contract.” Manila Industries, Inc. v. Ondovo Ltd. Co., 334 Fed. Appx. 821, 823 (9th Cir. 2009); Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 514 (9th Cir. 1988). The Third Circuit concluded that a forum selection clause applied to a plaintiffs tort claims when they “ultimately depend on the existence of a contractual relationship.” Coastal Steel v. Tilghman Wheelabrator Ltd., 709 F.2d 190, 203 (3d Cir. 1983), overruled on other grounds by Lauro Lines S.R.L. v. Chasser, 490 U.S. 495 (1989). But see Jitterswing, Inc. v. Francorp, Inc., 311 S.W.3d 828, 830 (Mo. App. 2010) (holding that a forum selection clause does not require tort claims between parties to a contract to be litigated in the selected forum despite the plaintiffs allegation that the defendant had committed tortious actions “under the agreement”).
We conclude that the First Circuit’s analysis best effectuates the legitimate expectations of contracting parties and adopt its reasoning in this state. The Second Circuit’s test, by asking whether the rights of the claims originate in the contract, may allow savvy plaintiffs to disguise what
Applying this test to the instant case, we conclude that the superior court correctly determined that HCNA’s misappropriation allegations, and the claims originating from them, arise under the contract and should be brought in a German forum. The contract contains the following provision entitled “Business and Trade Secrets”:
Both parties must not use nor inform third parties about business and trade secrets of each other getting known to them during the cooperation without prior written approval of the referring party. This term remains in effect after termination of contract.
The misappropriation allegations in HCNA’s writ state that, before he left HCNA but after he was hired by hansaconsult, Birnie downloaded the contents of HCNA’s computer server, and, with this information in hand, hansaconsult “undertook ... to compete with HCNA for U.S. business.” Although HCNA has used the misappropriation allegation to level four non-contract-based tort and statutory claims (counts I, II, III and V), the very same set of operative facts — stealing HCNA’s proprietary information, i.e. trade secrets, during the course of their contractual relationship and using them in the marketplace — could have been brought as a claim for breaching the above-quoted provision of the contract. That some of the underlying facts, such as hansaconsult’s allegedly wrongful use of that information, occurred after the termination of the distribution agreement
In contrast, we perceive no parallel breach of contract claim involving the same operative facts underlying the market representations allegations. In its writ, HCNA alleges that hansaconsult told HCNA’s customers and potential customers that HCNA lacked authority to “supply, maintain, support, test and certify leak detection systems that contain, as one of their component parts, the TCS software.” On that basis, HCNA advanced three legal theories: count II, violation of the CPA; count IV, tortious interference with contractual and otherwise advantageous business relations; and count V, common-law unfair competition. Although the distribution agreement contains a provision stating that HCNA must stop referring to itself as a dealership of hansaconsult after the expiration of the contract, that provision does not provide HCNA with a parallel claim for breach of contract against hansaconsult based on the market representations allegations. In any case, viewed in a light most favorable to the nonmoving party, that provision does not, on its face, provide a defense to the specific allegation that hansaconsult wrongfully told other market participants that HCNA lacked authority to deal in TCS software. Thus, HCNA’s market representations claims cannot be said to arise under the contract for the purpose of the forum selection clause.
Three additional considerations support our conclusion as to the market representations allegation. The first is that HCNA could not fairly have anticipated, when it signed the contract containing the forum selection clause, litigating a claim against hansaconsult arising solely out of their relationship as market competitors rather than as business co-venturers. In contrast, HCNA could have anticipated litigating its misappropriation-based claims, involving as they do allegations that hansaconsult stole HCNA’s trade secrets, because the contract expressly imposed obligations on both parties as to the use of trade secrets before and after the contract. The second consideration is that HCNA could not have used its market representations allegations to evade the forum selection clause through artful pleading because no alternative pleading of those facts and then-attendant legal theories would give rise to a claim for breach of the distribution agreement. See Farmland Industries v. Frazier-Parrott Commodities, 806 F.2d 848, 852 (8th Cir. 1986). While courts should take care not to reward artful pleading of disputes that, in reality, could be brought as contract claims and should be litigated in the forum selected by the parties, they must also avoid extending forum selection provisions beyond their intended scope. The final consideration is that contracting parties
In light of the foregoing discussion, we affirm the superior court’s dismissal of the plaintiffs misappropriation-based claims, but reverse its dismissal of the plaintiffs market representations-based claims and remand those claims for trial.
IV
HCNA also argues that it was denied due process when the court granted hansaconsult’s motion to dismiss sua sponte and without HCNA having had an opportunity to oppose the motion. Even assuming that the trial court’s sua sponte disposition of hansaconsult’s stayed motion to dismiss was error, however, it would not follow that HCNA’s right to due process had been violated. HCNA had sufficient notice and an opportunity to be heard when it filed its motion for reconsideration. Cf. Exeter Hospital v. Hall, 137 N.H. 397, 399-400 (1993).
Affirmed in part; reversed in part; and remanded.