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Avicanna Inc. v. Mewhinney

Court of Appeals of Colorado, First Division

August 22, 2019

Avicanna Inc., Plaintiff-Appellant,
v.
Timothy Mewhinney, Steven Garcia, and The Laughing Dog Group, LLC, a Colorado limited liability company, Defendants-Appellees.

          Pitkin County District Court No. 17CV30089 Honorable Christopher G. Seldin, Judge.

          Dentons U.S. LLP, Karen Ashley Phillips, Robert A. Hammeke, Denver, Colorado, for Plaintiff-Appellant

          Law Office of Corry & Associates, Robert J. Corry, Jr., Abbey G. Moffitt, Denver, Colorado, for Defendants-Appellees

          OPINION

          GROVE JUDGE.

         ¶ 1 In this commercial dispute, we consider whether plaintiff, Avicanna Inc., should have been permitted to sue defendants in Pitkin County District Court or whether, as the district court found, Avicanna was bound by a forum selection clause that designated the courts of Ontario, Canada, as the forum for the resolution of any disputes between Avicanna and its contractual counterparties. Because nothing in the parties' contract showed that the forum selection clause was included exclusively for Avicanna's benefit, we conclude that Avicanna could not unilaterally waive that provision. We therefore affirm the district court's order enforcing the forum selection clause and dismissing Avicanna's complaint without prejudice.[1]

         I. Background

         ¶ 2 As the district court described it, this case involves a "topsyturvy expression of incentives" in which a Canadian plaintiff filed suit in Colorado against Colorado defendants, and then unsuccessfully opposed a motion by those Colorado defendants to move the litigation off of their home turf and back to Canada.

         ¶ 3 Avicanna is a Canadian corporation with its principal place of business in Ontario, Canada. It contracted with St. J Distribution LLC, a Colorado limited liability company, and several of its members to purchase certain assets from that business.[2] Among other things, the asset purchase agreement included the following choice of law and forum selection provision:

9.10 Governing Law; Attornment
This Agreement will be construed, interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each Party irrevocably attorns and submits to the exclusive jurisdiction of the courts of Ontario and irrevocably waives objection to the venue of any proceeding in those courts or that those courts provide an inconvenient forum.

         ¶ 4 Alleging breach of contract, Avicanna sued all of the contractual counterparties, along with Laughing Dog Group, LLC, [3]in Pitkin County. Two of the defendants, St. J Distribution LLC and John David Robinson (collectively, St. J), then filed cross-claims against the remaining defendants - Timothy Mewhinney, Steven Garcia, and The Laughing Dog Group, LLC (collectively, the Mewhinney defendants).

         ¶ 5 The Mewhinney defendants moved to dismiss both the complaint and St. J's cross-claims for failure to state a claim on which relief may be granted. Neither motion mentioned the forum selection clause. Instead, the Mewhinney defendants kept quiet about the issue until filing their reply in support of their motion to dismiss Avicanna's complaint, when they argued that the forum selection clause deprived the trial court of jurisdiction over the dispute.

         ¶ 6 Because the Mewhinney defendants raised it for the first time in a reply (and because it did not implicate the district court's subject matter jurisdiction, see Nickerson v. Network Sols., LLC, 2014 CO 79, ¶ 13), the district court declined to consider the Mewhinney defendants' forum selection argument as part of the motions to dismiss. In a subsequent sua sponte order, however, the court stated that "the issue is significant, and if a party wishes to enforce [the forum selection clause] . . . it should be afforded an opportunity to present argument to that effect." The court invited briefing on the issue and, shortly thereafter, the Mewhinney defendants moved to enforce the forum selection clause.

         ¶ 7 In a detailed written order, the district court ruled that the forum selection clause "unambiguously states that each party submits to the jurisdiction of [the courts of] Ontario," and that because nothing in the parties' agreement showed that the clause was included "solely for Avicanna's benefit," Avicanna could not unilaterally waive it. The district court also rejected Avicanna's argument that the Mewhinney defendants "relinquished any right to enforce the clause by failing to raise it earlier," thereby waiving their right to invoke its protections. Although the court stated that the Mewhinney defendants' tardiness in raising the issue made it "a close case," the court ultimately concluded that Avicanna was not prejudiced by the delay. As a result, the court granted the Mewhinney defendants' motion to enforce the forum selection clause and dismissed the case without prejudice.

         II. Avicanna Could Not Unilaterally Waive the Forum Selection Clause

         ¶ 8 Avicanna argues that the forum selection clause in the contract was intended for its sole benefit, and that it was therefore entitled to unilaterally waive its ...


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