United States District Court, D. Colorado
OCEANSIDE TEN HOLDINGS.COM, LLC, and MARKETONCE.COM, LLC, Plaintiffs,
MKTG, INC., SAMPLE SOLUTIONS, LLC, and STEVEN H. GITTELMAN, Defendants.
OPINION AND ORDER GRANTING MOTION TO
S. KRIEGER CHIEF UNITED STATES DISTRICT JUDGE.
MATTER comes before the Court pursuant to the
Defendants' Motion to Transfer Venue (#
30), the Plaintiffs' response (#
35), and the Defendants' reply (#
40). Also pending is the Defendants' Motion to
Stay (# 31) proceedings pending a ruling on
the Motion to Transfer, which is denied as moot as a result
of this Order.
to the Complaint (# 1), the Plaintiffs are
businesses involved in conducting market research. Defendants
Mktg, Inc. and Sample Solutions, LLC (collectively,
“Sample”) are involved in the same business and
have devised software that assists in performing market
2016, the parties began discussing the Plaintiffs purchasing
the rights to market research software owned by Sample, known
as “ISIS” and “Crop Duster”
(“the Software”). The Plaintiffs intended to
modify the Software somewhat before reselling it, and
emphasized to Sample that, as part of the sale, they would
require access to Raymond Nicoletti, a Sample employee and
the Software's author, for assistance in making the
modifications. Sample, through Defendant Gittelman, its
officer, promised to make Mr. Nicoletti available to the
Plaintiffs: he would remain a nominal employee of Sample, but
would spend 3/4 of his work time on the Plaintiffs'
projects, with the Plaintiffs paying 3/4 of his salary. The
parties also agreed that this arrangement would not violate
an agreement between them not to solicit each others'
employees. However, the Plaintiffs contend that, despite
these promises, Mr. Gittelman never had any intention of
making Mr. Nicoletti available to the Plaintiffs.
parties formalized and executed a written agreement for the
sale of the Software (the “software sales
agreement”) in April 2017, although it is important to
note that the agreement does not contain any provisions
regarding Mr. Nicoletti and that it contains an integration
clause excluding any parol agreements. Almost immediately
thereafter, the Defendants “delayed in fulfilling their
obligations under that agreement, ” such as delaying
the handoff of the Software itself for a period of several
months and failing to provide additional data that was
included in the Plaintiffs' purchase of the Software. The
parties apparently resolved these disputes eventually, but
the Plaintiffs contend that the Defendants continued to
withhold the services of Mr. Nicoletti.
October 2017, Mr. Nicoletti resigned from employment with
Sample, stating that he wanted to “follow the
code” and joined the Plaintiffs to continue working on
the Software. However, in November 2017, Sample's counsel
wrote to Mr. Nicoletti, threatening to sue him if he
continued to work for the Plaintiffs. Fearing the cost and
risk of litigation, Mr. Nicoletti tendered his resignation to
the Plaintiffs. Mr. Nicoletti's resignation caused delay
in the Plaintiffs' intended sale of the modified
Software, causing the Plaintiffs to suffer business losses.
on these allegations, the Complaint alleges five claims
against the Defendants, all sounding in tort: (i)
“fraudulent inducement” against all Defendants,
in that the Defendants induced the Plaintiffs to purchase the
Software by falsely representing their intention to make Mr.
Nicoletti available to the Plaintiffs; (ii) tortious
interference with contract against all Defendants, in that
the Defendants wrongfully interfered with the Plaintiffs'
employment contract with Mr. Nicoletti; (iii) tortious
interference with prospective relations against all
Defendants, in that the Defendants' actions prevented the
Plaintiffs from completing their modifications to the
Software so that it could be marketed to the Plaintiffs'
customers as anticipated; (iv) unjust enrichment against all
Defendants in that the “Defendants received numerous
benefits ranging from consideration under the software sales
agreement, to decreased compensation from the Plaintiffs, to
resultant increases profits for Defendants, ” all at
the Plaintiffs' expense; and (v) promissory estoppel
against all Defendants, in that the Plaintiffs detrimentally
relied upon the Defendants' representations about making
Mr. Nicoletti available when deciding to purchase the
instant motion, the Defendants move (# 30)
to transfer this action to a court in New York State,
consistent with a forum-selection clause included in the
software sales agreement. That clause provides that
“any judicial action or proceeding arising hereunder or
relating hereto shall be brought in . . . the state or
federal courts of Suffolk County, State of New York.”
In response, the Plaintiffs contend that the forum selection
clause does not apply to the claims asserted herein, because
those claims do not “arise under or relate to”
the software sales agreement itself.
selection clause that states that a case “shall
be” brought in a certain location is a mandatory one.
American Soda, LLP v. U.S. Filter Wastewater Group,
Inc., 428 F.3d 921, 927 n. 4 (10th Cir.
2005). Court will enforce a mandatory forum selection clause
unless the party challenging it “clearly shows that
enforcement would be unreasonable or unjust, or that the
clause was invalid for such reasons as fraud or
overreaching.” Niemi v. Lasshoffer, 770 F.3d
1331, 1351 (10th Cir. 2014), citing M/S Bremen
v. Zapata Off-Shore Co., 407 U.S. 1 (1972). The
interpretation of a forum selection clause is governed by
ordinary principles of contractual analysis. Milk N'
More, Inc. v. Beavert, 963 F.2d 1342, 1345-46
(10th Cir. 1992).
the parties' dispute concerns whether the Plaintiffs'
claims in this case “arise under” or
“relate to” the software sales agreement. The
Plaintiffs argue that none of their claims “arise
under” the software sales agreement because none of
those claims allege a breach of any contractual provision
within the agreement. The Plaintiffs further contend that, to
“relate to” the sales agreement, their claims
must “involve the same operative facts as a parallel
breach of contract claim” in order to fall within the
scope of the forum selection clause. Citing Xantrex Tech,
Inc. v. Advanced Energy Indus., Inc., 2008 WL 2185882
(D. Colo. May 23, 2008). In essence, the Plaintiffs contend
that tort claims are governed by the forum selection clause
only if a breach of contract claim could be (and perhaps is)
brought on the same set of facts implicated by the tort
Plaintiffs' reading of Xantrex and other cases
is too narrow; none stand for the proposition that
only tort claims that duplicate or parallel a breach
of contract claim “relate to” a contract for
purposes of a forum selection claims. Rather, a tort claim
“relates to” a contract if it is “connected
by reason of an established or discoverable relation”
between the tort and the contract. Huffington v. T.C.
Group, LLC, 637 F.3d 18, 21-22 (1st Cir.
2011). This is “broader than the concept of a causal
connection.” Id. In Huffington, the
plaintiff contracted to purchase securities based on
representations by a broker about the securities' risk
profile. When the securities underperformed, the plaintiff
sued the broker for misrepresentation (but, notably, not for
breach of contract), alleging that the representations about
the securities' risk were false. The broker invoked the
forum selection clause in the securities sale agreement that
required disputes “with respect to” the sales
agreement to be litigated in another forum. After finding
that “with respect to” is functionally-identical
to the term “relating to, ” the First Circuit
concluded that the misrepresentation claims related to the
securities sale agreement because the misrepresentations in
question “proximately caused the agreement.”
Id. at 22. As the court noted, “[e]ach cause
of action Huffington asserted has as a prerequisite the loss
that flowed from the agreement and acquisition.”
Id. Thus, the court found the contractual forum
selection clause to apply to the plaintiff's tort claims,
notwithstanding the absence of any breach of contract claim.
as true that the false promises by Mr. Gittelman about making
Mr. Nicoletti available to the Plaintiffs were not
incorporated into the actual software sales agreement -- much
like the misrepresentations about the risk profile of the
securities in Huffington were not incorporated into
the securities sales agreement - the injury that underlies
the Plaintiffs' tort claims nevertheless arises,
inexorably and proximately, from the Plaintiffs' decision
to purchase the Software, and the Plaintiffs' decision to
purchase the software was predicated upon Mr. Gittelman's
promise of access to Mr. Nicoletti. The Complaint repeatedly
makes clear that the Plaintiffs insisted on access to Mr.
Nicoletti as a condition of purchasing the Software, and
would not have entered into the agreement if they had
believed that the Defendants would not produce Mr.
Nicoletti. See Complaint, ¶ 37
(“Plaintiffs made it abundantly clear to Defendants
that they would require Defendants' agreement to let
Nicoletti work with Plaintiffs in relation to any potential
purchase of the software”); ¶ 113, 116 (Plaintiffs
“relied upon” the false statements