United States District Court, D. Idaho
EXERGY DEVELOPMENT GROUP OF IDAHO, LLC, and Idaho limited liability company, Plaintiff,
FAGEN, INC., a Minnesota corporation; MIDWEST ETHANOL TRANSPORT, LLC, a Minnesota limited liability company, BIG BLUE WIND FARM, LLC, a Minnesota limited liability company, and JOHN AND JANE DOES 1-10, Defendants.
MEMORANDUM DECISION AND ORDER
J. Lodge United States District Judge
before the Court are Defendants' Motions to Dismiss.
(Dkt. 19, 24.) The parties filed responsive briefing and the
motions are now ripe. Having fully reviewed the record
herein, the Court finds that the facts and legal arguments
are adequately presented in the briefs and record.
Accordingly, in the interest of avoiding further delay, and
because the Court conclusively finds that the decisional
process would not be significantly aided by oral argument,
the Motions shall be decided on the record before this Court
without oral argument. The Court grants Defendants'
AND PROCEDURAL BACKGROUND
Exergy Development Group of Idaho, LLC
(“Exergy”), is in the business of renewable
energy. (Dkt. 13.) Between 2006 and 2012, Exergy was
developing and assembling a wind-power renewable energy
generation project in Minnesota, known as the Big Blue
Project. (Dkt. 13.) Defendant, Big Blue Wind Farm, LLC
(“Big Blue”), owned all assets of that project.
(Dkt. 13.) From 2006 to 2011, Exergy advanced money
to Big Blue to fund development of the project. (Dkt. 13.)
Promissory Notes were signed annually from 2006 to 2011
memorializing the amounts Exergy advanced for development of
the project. (Dkt. 13.) No promissory note was signed in
2012. (Dkt. 13.)
Fagen, Inc. (“Fagen”) began advancing funds to
Exergy for the Big Blue Project in 2011 through a series of
Term Loans. (Dkt. 13.) In 2012, Exergy requested more
financing, which led to Fagen and Exergy signing a Purchase
Agreement, among other documents. (Dkt. 13.) The Agreement
required Exergy to convey 99 of the 100 units of membership
in Exergy Minnesota in exchange for Fagen reducing the
principal and accrued interest due under the Term Loans by
$11, 447, 503.03. In addition to the Purchase Agreement, the
parties also signed a Member Control Agreement that gave
Exergy a repurchase option. (Dkt. 13.) When Exergy did not
exercise the repurchase option, the final unit of Exergy
Minnesota was transferred and Fagen assumed managerial
control over Exergy Minnesota and ownership of Big Blue.
(Dkt. 13.) Fagen transferred ownership of Big Blue to
Defendant Midwest Ethanol Transport, LLC (“MET”)
in late 2012.
and Exergy entered into a Memorandum of Understanding
(“MOU”) on December 20, 2011, which related to
several projects including the Big Blue
Project. (Dkt. 13.) In the MOU, Exergy agreed to
continue using Fagen as the contractor on its projects. (Dkt.
13, 19.) Exergy then began developing a collection of
projects with Fagen as its contractor. (Dkt. 13.) Fagen
ceased performance on further financing under the MOU when
Exergy failed to pay Fagen for its work. (Dkt. 13, 19.) Fagen
and MET sued Exergy in Minnesota federal district court for
its failure to pay, which remains pending.
December 4, 2015, Exergy filed a Complaint in this matter and
then later filed its Amended Complaint alleging: (1) breach
of contract against all named defendants; (2) unjust
enrichment/quantum meruit against all defendants; (3) breach
of contract against Fagen; and (4) breach of fiduciary duties
against Fagen. Defendants filed a Motion to Dismiss all
counts on various theories, which the Court now takes up.
Defendants' Motion to Dismiss Breach of Contract claim
Count I, Exergy claims Defendants committed a breach of
contract by failing to pay back the full principal and
interest owed under the Promissory Notes when Fagen
transferred ownership of Big Blue to MET. Defendants seek
to dismiss Exergy's claim under Rule 12(b)(3) arguing the
venue provision of the Promissory Note requires any claims
arising from the Notes be brought in a state court
in Ada County. (Dkt. 19, 24.) In reply, Exergy contends venue
is proper because Idaho law will be applied, this Court is in
Ada County, and the venue provision does not limit venue to a
state court. (Dkt. 25, 26.)
Standard of Law
motion to enforce a forum selection clause is treated as a
motion to dismiss pursuant to Rule 12(b)(3); pleadings need
not be accepted as true, and facts outside the pleadings may
be considered." Doe 1 v. AOL LLC, 552 F.3d
1077, 1081 (9th Cir. 2009)(citing Argueta v. Banco
Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996)).
"[B]ecause enforcement of a forum clause necessarily
entails interpretation of the clause before it can be
enforced, . . . federal law applies to interpretation of
forum selection clauses." Doe v. Network Solutions,
LLC, 2008 WL 191419 *5 (quoting Manetti-Farrow, Inc.
v. Gucci America, Inc., 858 F.2d 509, 513 (9th Cir.
federal law, the general principles for interpreting
contracts guide the court and "[c]ontract terms are to
be given their ordinary meaning . . . [and w]henever
possible, the plain language of the contract should be
considered first." Klamath Water Users Protective
Ass'n v. Patterson, 204 F.3d 1206, 1210 (9th Cir.
1999)). "The fact that the parties dispute a
contract's meaning does not establish that the contract
is ambiguous; it is only ambiguous if reasonable people could
find its terms susceptible to more than one
interpretation." Id. at 1210 (citing
Kennewick Irrigation Dist. v. United States, 880
F.2d 1018, 1032 (9th Cir. 1989)).
contractual forum selection clause is 'prima facie valid
and should be enforced unless enforcement is shown by the
resisting party to be ‘unreasonable' under the
circumstances.'" Docksider, Ltd. v. Sea
Technology, Ltd., 875 F.2d 762, 763 (9th Cir.
1989)(quoting M/S Bremen v. Zapata Offshore Co., 407
U.S. 1, 10 (1972)).
the Court is a question of interpretation. The forum
selection clause reads: “The courts of Idaho shall have
exclusive jurisdiction, and Ada County is the proper
venue." (Dkt. 1, Ex. A.)
contends the words "the courts of Idaho" refers to
both federal and state courts in Idaho while Defendants argue
the phrase refers only to state courts in Idaho. (Dkt. 19,
24, 25, 26.) The Court holds that the forum selection clause
refers only to state courts in Idaho.
Doe 1, the issue was the meaning of a forum
selection clause that read in pertinent part, the parties
"expressly agree that exclusive jurisdiction for any
claim or dispute . . . resides in the courts of
Virginia." 552 F.3d at 1080. On appeal, the court
rejected the district court's interpretation of the
clause as referring to state and federal courts. The Doe
1 court interpreted the contractual clause by focusing
on the word “of.” Id. at 1081. Which
Black's Law Dictionary defines as "denoting
that from which anything proceeds; indicating origin, source,
descent, and the like. . . ." Id. at
1081(quoting Black's Law Dictionary 1080 (6th
ed. 1990)). Looking at the plain meaning, the court reasoned
the phrase "courts 'of' Virginia" refers to
courts proceeding from, with their origin in, Virginia --
i.e., the state courts of Virginia. Federal district
courts, in contrast, proceed from, and find their origin in,
the federal government." Id. at
forum selection clause at issue in this case parallels the
language of the forum selection clause in Doe 1.
Applying the Doe 1 court's reasoning, this Court
finds "the courts of Idaho" refers to Idaho state
courts and not to federal courts in Idaho. "[W]hen the
proper forum is a state court, upon the determination that
the case was not brought in the proper forum, the court's
only option is to dismiss the case." Professional
Courier & Logistics, Inc. v. NICA, Inc., 2012 WL
1120675, at *4 (E.D. Cal. 2012).
Defendants' Motions to Dismiss Count I of Exergy's
Amended Complaint under Rule 12(b)(3) are
Defendants' Motions to Dismiss Unjust Enrichment/Quantum