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ADT Security Services, Inc. v. Apex Alarm

March 13, 2006

ADT SECURITY SERVICES, INC., PLAINTIFF,
v.
APEX ALARM, LLC; KEITH NELLESEN; TODD PEDERSON; AND CHANCE ALLRED, DEFENDANTS.



The opinion of the court was delivered by: Lewis T. Babcock, Chief Judge

ORDER

The parties in this action for breach of contract and unfair trade practices, removed here pursuant to 28 U.S.C. §§ 1441 and 1446, proffer ostensibly competing dispute resolution agreements and dispute the proper venue. The plaintiff, ADT Security Services, Inc. ("ADT), moves for remand to state court in Colorado. The defendants, Apex Alarm, LLC ("Apex"), Keith Nellesen, Todd Pederson, and Chance Allred, move for dismissal, arguing that venue lies in Idaho and that, in any event, I lack personal jurisdiction over Messrs. Nellesen and Pederson. The issues are inadequately briefed. For the reasons stated below, I DENY ADT's motion to remand and HOLD IN ABEYANCE the defendants' motions to dismiss, pending further briefing.

I. Allegations

The allegations of the Complaint are the following. ADT, a Delaware corporation with principle offices in Florida, vends its electronic security services through dealers, with whom it contracts. On May 24, 2000, ADT entered into a dealer agreement ("Dealer Agreement") with RS&I Security, Inc. ("RS&I"), whereby RS&I agreed, inter alia, to sell ADT's services and to refrain from jeopardizing ADT's intellectual property. Pursuant to an agreement dated December 14, 2000 ("Subcontract"), RS&I retained Apex, of which Messrs. Nellesen and Pederson are owners, to assist its sales of ADT's services. ADT, RS&I and Apex together entered into a confidentiality and audit agreement dated February 10, 2000 ("C&A Agreement"), by which RS&I and Apex agreed to refrain from injuring ADT's proprietary interests and to make certain timely disclosures. The C&A Agreement also prohibits RS&I and Apex from soliciting, advertising to, or receiving money from ADT customers for 25 years after the date of the Agreement.

The parties have provided the three agreements and do not dispute the contents of them. The Dealer Agreement provides, inter alia, "Any action or proceeding brought by either party against the other arising out of or relating to this Agreement shall only be brought in a court of competent jurisdiction located in Arapaho (sic) County, Colorado." Dealer Agreement ¶ 17.7. The Subcontract provides, inter alia, "Any action or proceeding brought by either party against the other arising out of or relating to this Agreement shall only be brought in a court of competent jurisdiction located in Bonneville County, Idaho." Subcontract ¶ 16.9. A guarantee executed by Messrs. Nellesen and Pederson, attached to the Subcontract as Exhibit B, also requires the parties to resolve their disputes in Idaho. Though the C&A Agreement is expressly governed by the laws of the State of Colorado, it contains no venue provision.

ADT alleges that, after the termination of the Subcontract and C&A Agreement, Apex used ADT proprietary information to lure ADT customers to a competitor. By these exploits Apex allegedly breached the C&A Agreement and the Subcontract. ADT purports to be a third-party beneficiary of the Subcontract, entitled to enforce its terms against Apex and it agents.

ADT also alleges that Apex breached the Dealer Agreement, though Apex's putative obligations under that contract are not demonstrated in the Complaint and none of the defendants is alleged to be a party to it. ADT presses claims for breach of contract, interference with prospective business advantage, intentional interference with contractual relations, unfair trade practices in violation of Colo. Rev. Stat. § 6-1-101 et seq., and civil conspiracy. It seeks money damages and injunctive relief.

ADT here desires enforcement of the forum selection clause from the Dealer Agreement, to which Apex is not a party. Apex asks me to enforce the language from the Subcontract, to which ADT is not a party. The former course would end with remand, the latter, dismissal. If neither provision is enforceable, both ADT's and Apex's motions must be denied; the parties dispute neither the existence of citizenship diversity nor the sufficiency of the amount in controversy for the purposes of 28 U.S.C. § 1332.

II. Discussion

The proliferation of motions here betrays captious counsel. In addition to the competing motions to remand and to dismiss, I have already denied a motion by ADT to stay consideration of the defendants' motions to dismiss until I disposed of its subsequently-filed motion to remand and I now have an objection by the defendants to a form of order proffered by ADT with its motion to remand. Both maneuvers amount to litigation of the litigation. Having culled the objection for helpful and relevant argument, I overrule it and turn to the issues at hand.

A motion to remand for lack of subject matter jurisdiction pursuant to 28 U.S.C. § 1447 must be resolved by reference first to the complaint and notice of removal and second to extraneous materials. Martin v. Franklin Capital Corp., 251 F.3d 1284, 1290 (10th Cir. 2001).

The burden to establish jurisdiction rests with the defendant. Id. Similarly, I resolve a motion to dismiss for improper venue pursuant to Rule 12(b)(3) based first upon the allegations of the complaint and then upon the material record. See, Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 960 (10th Cir. 1992), cert. denied, U.S. 1021, 113 S.Ct. 658, 121 L.Ed. 2d 584 (1992). The Complaint and Notice of Removal demonstrate diversity jurisdiction and the parties do not dispute the contents or circumstances of the operative documents. It remains, therefore, only to determine the legal effect upon my jurisdiction of the three contracts.

A. ADT's Motion to Remand

ADT urges three alternative grounds for remand. First, it argues that remand is required no matter which forum selection clause controls, because in any event the parties have waived their right to remove to federal court. Second, it argues that the forum selection clause from the Dealer Agreement is incorporated by reference into the C&A Agreement. Third, it asserts that a "flow down" provision in the Dealer Agreement binds Apex to the forum-selection provision contained in that document.

ADT's waiver argument begs two questions, for which ADT has made no answer: one, whether I have jurisdiction to resolve the forum-selection issue and two, on what ground might I determine that Apex waived the very right for which it specifically contracted. As to the first question, it is axiomatic that I have jurisdiction to determine whether I may exercise jurisdiction over this case. Oklahoma Tax Com'n v. Graham, 822 F.2d 951, 955 (10th Cir. 1987), vacated on other grounds, 484 U.S. 973, 108 S.Ct. 481, 98 L.Ed. 2d 480 (1987). This determination turns on the very question to which ADT has assumed an answer. Depending on which, if either, clause controls, the appropriate course could be remand, dismissal, or retention of jurisdiction.

As to the second question, Apex's purported acquiescence to resolution of this dispute in Idaho cannot be read to constitute a waiver of its right to remove from Colorado; such a reading of the Subcontract language would render it a nullity. Assuming that Apex waived its right to have substantive disputes resolved in federal courts, the present motions do not pose a substantive dispute. No clear and unequivocal waiver by Apex of its right to remove this case from an ...


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