KEITH NICHOLSON SERVICES, LLC v. AMERICAN PETROLEUM PARTNERS OPERATING, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

Wheeling

KEITH NICHOLSON SERVICES, LLC,

Plaintiff,

v. Civil Action No. 5:19-CV-205

Judge Bailey

AMERICAN PETROLEUM PARTNERS

OPERATING, LLC; ALPHA INTEGRITY

MANAGEMENT, LLC; APP MIDSTREAM, LLC;

LESLIE B. SCHABER, LORI D. SCHABER;

ROSEMARY M. BROWN; and ATLANTIC

CONSTRUCTION FABRICS, INC.,

Defendants.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

Wheeling

AMERICAN PETROLEUM PARTNERS

OPERATING, LLC and APP MIDSTREAM, LLC,

Plaintiffs,

v. Civil Action No. 5:19-CV-251

Judge Bailey

KEITH NICHOLSON SERVICES, LLC,

Defendant.

MEMORANDUM OPINION AND ORDER GRANTING

IN PART AND DENYING IN PART MOTION TO TRANSFER

VENUE AND MOTION TO CONSOLIDATE AND SEVERING CLAIMS

Pending before this Court in Civil Action No. 5:19-CV-205 is the Motion to Transfer

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Venue Or, in the Alternative, to Dismiss Defendants, American Petroleum Partners

Operating, LLC, App Midstream, LLC and Rosemary M. Brown [Doc. 28]. Pending in both

of the above cases is a Motion to Consolidate filed by Keith Nicholson Services, LLC

(“Nicholson”) [Doc. 33 in 5:19-CV-205; Doc. 4 in 5:19-CV-251]. Both Motions have been

fully briefed and are ripe for decision.

On June 25, 2019, Nicholson filed a Complaint in this Court against defendants and

Chevron U.S.A., Inc. (“Chevron”), Chesapeake Appalachia, L.L.C. (“Chesapeake”),

Company Wrench, LTD. (“Company Wrench”), Atlantic Construction Fabrics, Inc., Alpha

Integrity Management, LLC, Leslie B. Schaber and Lori D. Schaber. [Doc. 1, 5:19-CV-205].

To date, Chesapeake, Chevron, and Company Wrench have been dismissed pursuant to

Stipulations of Dismissal filed July 18, 2019, July 25, 2019, and August 06, 2019,

respectively. [Docs. 20, 23 & 27, 5:19-CV-205].

The above-referenced Complaint asserts five causes of action:

Count I: Breach of Contract;

Count II: Account Stated and Open Account;

Count III: Unjust Enrichment and Quantum Meruit;

Count IV: Fraud and/or Promissory Estoppel;

Count V: Foreclosure of Mechanic’s Lien.

Counts I – IV are directed solely at APP Petroleum Partners Operating, LLC (“APP

Operating”), while Count V charges all the defendants. All of the defendants other than

APP Operating appear to have only been added for the purpose of foreclosing two

mechanic’s liens that Nicholson filed in the Circuit Court of Marshall County, West Virginia.

Each of Nicholson’s claims arise from a Master Services Contract dated July 13,

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2018 (“MSC”), wherein the Nicholson and Defendant APP Operating set forth terms under

which Nicholson would perform certain construction services on an oil and gas drilling pad

(“Casterly Rock Well Pad”) for APP Operating. It is undisputed that Nicholson and APP

Operating entered into an express written contract, the MSC, to govern the rights and

obligations of the parties related to construction on the Casterly Rock Well Pad.

Nicholson alleges that pursuant to the MSC and at APP Operating’s request, it bid

for certain labor, services and materials in connection with the Casterly Rock Well Pad

construction project and that its bid was ultimately accepted by APP Operating. Nicholson

further alleges that upon acceptance of the bid, it promptly began providing the services

contemplated by the MSC and the bid. Then, APP Operating allegedly failed to pay

invoices due Plaintiff related to the Casterly Rock Well Pad construction project in breach

of the MSC.

However, the MSC contains certain express provisions that dictate where and how

contractual disputes must be resolved. Paragraph 32 of the MSC provides, in pertinent

part:

32. CHOICE OF LAW; VENUE

THIS CONTRACT SHALL BE GOVERNED BY THE LAWS OF THE

COMMONWEALTH OF PENNSYLVANIA, WITHOUT REFERENCE TO

CONFLICT OF LAW RULES THAT WOULD DIRECT THE APPLICATION

OF LAWS OF ANOTHER JURISDICTION. . .. BOTH PARTIES HERETO

CONSENT TO THE EXERCISE OF JURISDICTION IN PERSONAM BY THE

FEDERAL COURTS OF THE UNITED STATES LOCATED IN

WASHINGTON COUNTY, PENNSYLVANIA OR THE STATE COURTS

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LOCATED IN WASHINGTON COUNTY, PENNSYLVANIA FOR ANY

ACTION ARISING OUT OF THIS CONTRACT OR ANY TRANSACTION

CONTEMPLATED HEREBY. ALL ACTIONS OR PROCEEDINGS WITH

RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION

WITH, OUT OF, RELATED TO, OR FROM THIS CONTRACT OR ANY

TRANSACTION CONTEMPLATED HEREBY SHALL BE EXCLUSIVELY

LITIGATED IN SUCH COURTS DESCRIBED ABOVE HAVING SITES IN

WASHINGTON COUNTY, PENNSYLVANIA AND EACH PARTY

IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS

SOLELY IN RESPECT OF ANY PROCEEDING ARISING OUT OF OR

RELATED TO THIS CONTRACT. IN ANY DISPUTE BETWEEN

THEMSELVES, EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE

FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL

BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED

TO THIS CONTRACT.

[Doc. 28-2].

Notwithstanding the foregoing provision, Nicholson filed suit against the defendants

in this Court.

Pursuant to 28 U.S.C. § 1404(a), “[f]or the convenience of parties and witnesses,

in the interest of justice, a district court may transfer any civil action to any other district or

division where it might have been brought . . ..” 28 U.S.C. § 1404(a). “Factors commonly

considered in ruling on a transfer motion include: (1) ease of access to sources of proof;

(2) the convenience of parties and witnesses; (3) the cost of obtaining the attendance of

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witnesses; (4) the availability of compulsory process; (5) the possibility of a view; (6) the

interest in having local controversies decided at home; and (7) the interests of justice.” P.M.

Enters. v. Color Works, Inc., 946 F.Supp. 435, 440 (S.D. W.Va. 1996) (Haden, CJ)(citing

AFA Enters., Inc. v. Am. States Ins. Co., 842 F.Supp. 902, 908 (S.D. W.Va.

1994)(Haden, CJ)).

When a motion to transfer venue is based on a forum-selection clause, however, the

“plaintiff’s choice of forum merits no weight” and the court “should not consider arguments

about the parties’ private interests.” Atl. Marine Constr. Co. v. U.S. Dist. Court for

W.Dist. of Tex., 571 U.S. 49, 63 (2013). “A valid forum-selection clause [should be] given

controlling weight in all but the most exceptional cases.” Id. at 62 (quoting Stewart Org.,

Inc. v. Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring)).

The Atlantic Marine decision altered the traditional Section 1404(a) analysis when

a forum-selection clause is present. Adkins v. Deangelo Bros., 2016 WL 3982529, at *

2 (S.D. W.Va. July 22, 2016) (Chambers, J). First, the plaintiff’s choice of an alternative

forum is given no weight. Id. (citing Atl. Marine Constr. Co., 571 U.S. at 63). Second, the

court will no longer give weight to private factors, such as convenience for the parties or

witnesses. Instead, it will only consider the public factors, but “it will be unusual for the

public interest to outweigh the forum-selection clause.” Adkins, 2016 WL 3982529, at *2;

see Atl. Marine Constr. Co., 571 U.S. at 64 (“Because [the public interest] factors will

rarely defeat a transfer motion, the practical result is that forum-selection clauses should

control except in unusual cases.”). Third, when a party “files an action in contravention to

the [forum-selection clause] ‘the contractually selected venue should not apply the law of

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the transferor venue to which the parties waived their right.’” Adkins, 2016 WL 3982529,

at *2 (quoting Atl. Marine Constr. Co., 571 U.S. at 65-66). The Supreme Court summed

up the district court’s role in deciding the proper venue when a forum selection clause is

present as follows:

When parties have contracted in advance to litigate disputes in a particular

forum, courts should not unnecessarily disrupt the parties’ settled

expectations. A forum-selection clause, after all, may have figured centrally

in the parties’ negotiations and may have affected how they set monetary

and other contractual terms; it may, in fact, have been a critical factor in their

agreement to do business together in the first place. In all but the most

unusual cases, therefore, “the interest of justice” is served by holding parties

to their bargain.

Atl. Marine Constr. Co., 571 U.S. at 66.

The forum-selection clause is presumptively valid and enforceable unless

enforcement would be “unreasonable under the circumstances.” Adkins, 2016 WL

3982529, at *2 (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972)).

Nicholson argues that APP Operating waived its right to enforce the forum-selection

clause by filing a suit in Marshall County, West Virginia to quiet title and remove the

mechanics liens filed by Nicholson. This action was removed to this Court and assigned

case number 5:19-CV-251.

APP Operating counters that West Virginia law requires an action to clear title to be

brought in the court where the land is located, citing Ray v. Hey, 183 W.Va. 521, 524-25,

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396 S.E.2d 702, 705-06 (1990) (citing Syl. pt. 3, Tennant’s Heirs v. Fretts, 67 W.Va. 569,

68 S.E. 387 (1910) (“a suit to remove cloud and quiet title is local in its nature, and the

jurisdiction of the court is determined by the situs of the land”)). This Court must agree.

A suit to quiet title to real estate is an in rem proceeding and must be brought where the

land is located. In re: Plyburn, 2014 WL 2118047 (Bankr. N.D. W.Va. May 21, 2014)

(Flatley, J). See also Meltzer v. C. Buck LeCraw & Co., 402 U.S. 937, 957 n. 2 (1971).

A party can waive an otherwise valid forum-selection clause, but a waiver of a

forum-selection clause “will not be found lightly.” Whiting-Turner Contracting Co. v.

Westchester Fire Ins. Co., 2013 WL 3177881, at *4 (D. Md. June 20, 2013) (Motz, J)

(citing Wachovia Bank Nat. Ass'n v. EnCap Golf Holdings, LLC, 690 F.Supp.2d 311,

327 (S.D. N.Y. 2010)). Waiver will be found only where (1) the party invoking the clause

acts inconsistent with it or delays its enforcement; and (2) the other party would be

prejudiced by enforcement. Id.

“Because forum selection clauses may result in a waiver of substantive and

procedural rights, it would be unfair to infer such a significant waiver absent clear indication

of intent through the party’s action.” Wachovia Bank Nat. Ass'n, 690 F.Supp.2d at 327-28

(quoting Ferraro Foods Inc. v. M/V Izzet Incekara, 2001 WL 940562, at *4 (S.D. N.Y.

Aug. 20, 2001)). There is no bright-line rule when deciding whether waiver has occurred,

and the determination is fact specific. Id., citing Krape v. PDK Labs Inc., 194 F.R.D. 82,

86 (S.D. N.Y. 1999)). “The intent to waive must be clear, as conduct with ambiguous

meaning will not support a waiver defense.” Bartels by & through Bartels v. Saber

Healthcare Grp., LLC, 880 F.3d 668, 678–79 (4th Cir. 2018) (citing Hassett v. Dixie

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Furn.Co., 333 N.C. 307, 425 S.E.2d 683, 687 (1993)).

Based on the foregoing, this Court finds the filing of the suit to quiet title in Marshall

County to be insufficient to constitute a waiver of the forum-selection clause, especially with

regard to any claims unrelated to the validity of the mechanics liens filed by Nicholson.

“[W]hen a party disregards a forum selection clause and sues on a contract in an

unauthorized forum, it waives the forum selection clause only for the specific claim it

pursues.” Pirolo Bros., Inc. v. Angelo Maffei & Figli, SAS, 1989 WL 20945, at *2 (S.D.

N.Y. Mar. 2, 1989); Wachovia Bank Nat. Ass'n, 690 F.Supp.2d at 327-28; see Keller

Intern., Inc. v. Stabucks Corp., 55 F.Supp.2d 839, 850 (E.D. Va. 2014); Estate of

Popovich v. Sony Music Entertainment, 202 WL 892531 (N.D. Ohio March 14, 2012);

Silverman v. Carvel Corp., 192 F.Supp.2d 1, 7 (S.D. N.Y. 2001).

Based upon consideration of the foregoing, this Court does ORDER as follows:

1. The Motion to Transfer Venue Or, in the Alternative, to Dismiss Defendants,

American Petroleum Partners Operating, LLC, App Midstream, LLC and Rosemary M.

Brown [Doc. 28 in 5:19-CV-205] is GRANTED IN PART AND DENIED IN PART;

2. Counts I through IV of the Complaint in 5:19-CV-205 are severed from Count

V;

3. Counts I through IV of the Complaint in 5:19-CV-205 are hereby

TRANSFERRED to the Western District of Pennsylvania. Inasmuch as it is the only

defendant cited in Counts I through IV, the only defendant affected by the transfer is APP

Operating;

4. The Motion to Consolidate filed by Keith Nicholson Services, LLC

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(“Nicholson”) [Doc. 33 in 5:19-CV-205; Doc. 4 in 5:19-CV-251] is GRANTED IN PART

AND DENIED IN PART;

5. Count V of the Complaint in 5:19-CV-205 is hereby CONSOLIDATED with

Civil Action No. 5:19-CV-251, with the LEAD CASE to be 5:19-cv-205.

It is so ORDERED.

The Clerk of this Court is directed to transmit copies of this Order to counsel of

record herein and to the Clerk of the Western District of Pennsylvania.

DATED: September 20, 2019.

UNI ATES DISTRICT JU