Inc. v. Mewhinney

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.

SUMMARY
August 22, 2019

2019COA129

No. 18CA1331, Avicanna Inc. v. Mewhinney — Contracts —
Forum Selection — Unilateral Waiver

A division of the court of appeals holds that a plaintiff cannot

unilaterally waive a forum selection clause when the clause was not

included exclusively for the plaintiff’s benefit.
COLORADO COURT OF APPEALS 2019COA129

Court of Appeals No. 18CA1331
Pitkin County District Court No. 17CV30089
Honorable Christopher G. Seldin, Judge

Avicanna Inc.,

Plaintiff-Appellant,

v.

Timothy Mewhinney, Steven Garcia, and The Laughing Dog Group, LLC, a
Colorado limited liability company,

Defendants-Appellees.

JUDGMENT AFFIRMED

Division I
Opinion by JUDGE GROVE
Taubman and Hawthorne, JJ., concur

Announced August 22, 2019

Dentons US 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
¶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 “topsy-

turvy expression of incentives” in which a Canadian plaintiff filed

1 Most of the time a dismissal without prejudice is not a final,
appealable order. Norby v. Charnes, 764 P.2d 407, 408 (Colo. App.
1988). Where, as here, however, the circumstances of the case
indicate that the action cannot be saved and that the district court’s
order precludes further proceedings, dismissal without prejudice
qualifies as a final judgment for the purposes of appeal. Id.; see
also Brody v. Bock, 897 P.2d 769, 777 (Colo. 1995).

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 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.

2 The individual defendants each executed subsidiary independent
contractor agreements. These agreements each included a forum
selection clause that was materially identical to the clause that
appears in the asset purchase agreement, so we only conduct a
single analysis of the forum selection question in this opinion.

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¶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,

3The Laughing Dog Group, LLC was owned and/or managed by one
or more of the members of St. J. Distribution LLC.

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 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

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 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 protections and file suit in

Colorado. We disagree.

A. Standard of Review

¶9 We review de novo a district court’s application of a forum

selection clause. Adams Reload Co. v. Int’l Profit Assocs., Inc., 143

P.3d 1056, 1058 (Colo. App. 2005).

B. Analysis

¶ 10 Our goal in interpreting a contract is “to determine and give

effect to the intention of the parties.” USI Props. E., Inc. v. Simpson,

938 P.2d 168, 173 (Colo. 1997). To discern the parties’ intent, we

look first to “the language of the instrument itself.” City of Aurora v.

N. Colo. Water Conservancy Dist., 236 P.3d 1222, 1226 (Colo. 2010).

If that language is unambiguous, we will enforce the contract

consistent with the plain and ordinary meanings of its terms. Id.

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¶ 11 A forum selection clause will be enforced unless the party

seeking to avoid its effect — Avicanna in this case — proves that

enforcement of the clause would be unfair or unreasonable. Edge

Telecom, Inc. v. Sterling Bank, 143 P.3d 1155, 1159 (Colo. App.

2006). Avicanna likewise carries the burden of demonstrating that

it was entitled to unilaterally waive the forum selection clause. See

ABC Mobile Sys., Inc. v. Harvey, 701 P.2d 137, 139 (Colo. App.

1985). “[T]he mere fact that a defendant seeking to enforce the

forum selection clause is a resident of the state where the action is

commenced will not render the clause ineffective.” Id. at 139-40

(citing Societe Jean Nicholas Et Fils v. Mosseux, 597 P.2d 541 (Ariz.

1979)). Rather, the contractual forum must be so gravely difficult

and inconvenient that parties seeking to escape their contract will

for all practical purposes be deprived of their day in court. Id.

¶ 12 Avicanna does not contend that the forum selection clause is

ambiguous. Nor does it assert that enforcement of the clause would

be unfair or unreasonable. Instead, relying in large part on the

analysis in Rizas v. Vail Resorts, Inc., No. 08-CV-139-J, 2009 WL

10664834 (D. Wyo. Oct. 1, 2009), Avicanna argues that it was

entitled to unilaterally waive enforcement of the forum selection

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 clause because that provision was included in the contract

exclusively for its benefit.

¶ 13 It is well-settled that a party may waive a provision that was

included in a contract for that party’s sole benefit. See Fravert v.

Fesler, 11 Colo. App. 387, 391, 53 P. 288, 290 (1898) (“Any person

may waive a formal condition inserted in a contract for his benefit,

and the waiver need not be express.”); see also 13 Williston on

Contracts § 39:24, Westlaw (4th ed. database updated May 2019).

But it is equally true that “a waiver of contract requirements and

conditions may not be made unilaterally when it would deprive the

nonwaiving party of a benefit under the provision in question.” 13

Williston on Contracts at § 39:24. Accordingly, Avicanna could

unilaterally waive the forum selection clause if — but only if — it

demonstrated that the clause was intended to benefit Avicanna

alone.

¶ 14 Because the forum selection clause is unambiguous, Avicanna

may not rely on extrinsic evidence to show that it was the sole

beneficiary of that provision. ABC Mobile, 701 P.2d at 140.

Instead, Avicanna argues that its sole beneficiary status may be

gleaned from the four corners of the contract itself — and in

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 support of its position it points out that it was the only signatory

that was a resident of Ontario, while all the other parties were from

Colorado. Thus, Avicanna argues, “the Ontario choice of forum

clauses were drafted for the sole benefit of Avicanna, the only party

that is an Ontario resident.”

¶ 15 For three reasons, we disagree that Avicanna’s status as the

only Canadian resident, standing on its own, is enough to show

that the parties incorporated the forum selection clause into this

complex arm’s-length agreement exclusively for Avicanna’s benefit.

¶ 16 First, inferring the substance of the parties’ negotiations from

the four corners of the contract is impossible. Mewhinney and

Garcia may have agreed to the forum selection clause as drafted —

or perhaps even requested it in the first instance — for any number

of reasons. For example, they may have believed that Canadian

courts resolve disputes quicker, more fairly, or more efficiently. Or

perhaps they concluded that, in the event of a breach, substantive

Ontario law would be more favorable to them than Colorado law.

Or they might have reluctantly agreed to a bilateral forum selection

clause in exchange for the inclusion of more favorable terms

elsewhere in the contract.

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¶ 17 Second, the forum selection clause, by its plain terms, applies

to “Each Party.” As demonstrated by the differing outcomes in

Open Text Corp. v. Grimes, 262 F. Supp. 3d 278 (D. Md. 2017), and

Imperium Insurance Co. v. Allied Insurance Brokers, Inc., No. CIV.

CCB-12-1373, 2012 WL 4103889 (D. Md. Sept. 17, 2012), two

cases that considered forum selection clauses with substantial

similarities to the clause in dispute here, this language of mutuality

signals an intent to apply the forum selection clause to every

signatory to the contract.

¶ 18 In Open Text, the court considered an employment contract

between a Maryland-based employee (Grimes) and a Canadian

corporation (Open Text) that was based in Ontario. The contract

included a promise by the employee that “I hereby irrevocably

attorn to the jurisdiction of the courts of the Province of Ontario.”

262 F. Supp. 3d at 281. After the corporation sued the employee in

Maryland, the employee moved to dismiss, arguing that the forum

selection clause required suit to be filed in Ontario. Relying on “the

specific language of the Grimes Agreement,” which “only include[d]

a promise by Grimes,” the court concluded that “[t]he mere fact that

Grimes agreed to ‘irrevocably attorn to the jurisdiction of the courts

9
 of the Province of Ontario’ did not foreclose Open Text’s ability to file

suit in Grimes’ home state.” Id. at 286.

¶ 19 In reaching this conclusion, the Open Text court distinguished

Imperium, a case involving a forum selection clause that, instead of

including a promise by only one of the litigants, bound “each party.”

The clause at issue in Imperium stated as follows:

Each party . . . stipulates that the State and
Federal courts located in the County of New
York, State of New York shall have in
personam jurisdiction and venue over each of
them for the purpose of litigating any dispute,
controversy, or proceeding arising out of or
related to this Agreement.

Imperium, 2012 WL 4103889, at *1. This clause, the court

determined, was “bilateral” — that is, intended to benefit both

parties — particularly when it was considered together with other

portions of the contract that specifically allotted authority and

responsibilities to one party or the other. Id. And because the

clause was a “mutually beneficial provision,” it could not be

unilaterally waived by either party. Id. at *3.

¶ 20 We agree with the reasoning in Open Text and Imperium. And,

taking the same approach that the courts applied in those cases, we

conclude that Rizas — the centerpiece of Avicanna’s argument —

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actually supports the district court’s conclusion in this case. Most

importantly, as in Open Text, the provision at issue in Rizas, which

included both forum selection and choice of law clauses, did not

purport to protect “each party.” To the contrary, it provided in

pertinent part that

[i]t is agreed by [the tour operator] and
the Tour Member that all legal claims,
actions, and proceedings against [the
tour operator] under, in connection with,
resulting from or incident to a tour may
be instituted, if at all, only in a state or
federal court within the State of
Connecticut, USA, to the exclusion of the
courts of or in any other state or
jurisdiction. It is further agreed that all
such claims, actions and proceedings
shall be governed by and decided in
accordance with the laws of the State of
Connecticut.

Rizas, 2009 WL 10664834, at *2. While this clause prescribed the

forum and governing law for lawsuits filed against the tour

operator, it did not designate the forum or governing law for a

lawsuit that might be filed by the tour operator against a tour

member. In other words, the provision at issue in Rizas protected

only one party to the transaction and, as a result, was the very

definition of a provision that is not mutually beneficial. Because it

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 protected only the tour operator, the Rizas court correctly found

that the forum selection clause and choice of law language were

included for the tour operator’s sole benefit. And because the

provision at issue protected only the tour operator, that party was

permitted to unilaterally waive it.

¶ 21 Third, we find significant the forum selection clause’s proviso

that each party “irrevocably attorns and submits to the exclusive

jurisdiction of the courts of Ontario.” (Emphasis added.)

“Irrevocable” means “[u]nalterable; committed beyond recall.”

Black’s Law Dictionary 994 (11th ed. 2019). Allowing Avicanna to

sidestep the forum selection clause — that is, to revoke its

ostensibly irrevocable commitment to abide by its terms — would

render this language meaningless, a result we strive to avoid. See

Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310, 1313 (Colo.

1984) (“An integrated contract in the first instance is to be

interpreted in its entirety with the end in view of seeking to

harmonize and to give effect to all provisions so that none will be

rendered meaningless.”).

¶ 22 For these reasons, we agree with the district court’s

conclusion that Avicanna failed to carry its burden of showing by a

12
 preponderance of the evidence that it was the sole beneficiary of the

forum selection clause.

III. The Mewhinney Defendants Did Not Waive the Forum
Selection Clause

¶ 23 Avicanna next contends that the Mewhinney defendants

waived any opportunity to enforce the forum selection clause by

failing to timely raise the issue in the district court. We disagree.

A. Standard of Review

¶ 24 Ordinarily, waiver is a factual matter determined by the trial

court. Vessels Oil & Gas Co. v. Coastal Ref. & Mktg., Inc., 764 P.2d

391, 392 (Colo. App. 1988). But where, as here, the facts bearing

on waiver are uncontested and the evidence before the trial court is

entirely documentary, waiver becomes a matter of law, and we are

not bound by the trial court’s findings. Id.

B. Analysis

¶ 25 Waiver is the intentional relinquishment of a known right.

Vanderbeek v. Vernon Corp., 25 P.3d 1242, 1248 (Colo. App. 2000),

aff’d, 50 P.3d 866 (Colo. 2002). A party waives a contractual right,

including the right to rely on a forum selection clause, if the party

acts inconsistently with the right and prejudice accrues to the other

13
 parties to the contract. Id. (holding that plaintiffs waived the right

to rely on forum selection clause when they filed an action in a

different forum); see also Gallagher’s NYC Steakhouse Franchising,

Inc. v. 1020 15th St., Inc., Nos. 08-cv-01639-PAB-BNB, 08-cv-

01896-PAB-BNB, 2009 WL 1796297, at *4 (D. Colo. June 23, 2009)

(unpublished opinion) (holding that plaintiff waived the right to

enforce Florida forum selection clause when it filed the case in

Colorado); cf. Vessels Oil & Gas Co., 764 P.2d at 392 (holding that

merely filing an answer, commencing discovery, and engaging in

settlement negotiations outside selected venue did not constitute

waiver of forum selection clause). “Waiver may be express, or it

may be implied when a party’s actions manifest an intent to

relinquish a right or privilege.” Venard v. Dep’t of Corr., 72 P.3d

446, 450 (Colo. App. 2003). However, in establishing implied waiver

by conduct, “the conduct itself should be free from ambiguity and

clearly manifest the intention not to assert the benefit.” Dep’t of

Health v. Donahue, 690 P.2d 243, 247 (Colo. 1984).

¶ 26 In Vessels, a division of this court considered whether a

defendant had relinquished its right to enforce a forum selection

clause by failing to raise the issue for three months after the

14
 complaint was filed. During that period, the defendant filed its

answer to the complaint, engaged in settlement negotiations, and

served discovery requests on the plaintiff. Vessels, 764 P.2d at 392.

In rejecting the plaintiff’s waiver argument, the division noted that

“filing an answer on the merits, or commencing discovery, without

more, does not constitute a waiver as a matter of law.” Id.

¶ 27 Here, the district court looked to Vessels to conclude that,

while it was a “close case . . . the only substantive acts in the

litigation actually initiated by” the Mewhinney defendants were their

various motions to dismiss. The court also noted the Mewhinney

defendants’ “noncompliance with certain features of the Rules [of

Civil Procedure],” their procedural motions practice, and their

answers to the cross-claims filed by the St. J defendants, but the

court ultimately concluded that “only the motions to dismiss

potentially constitute sufficient engagement with this forum to

support a finding of waiver.”

¶ 28 Next, turning to the requirements for a finding of waiver — the

intentional relinquishment of a known right and prejudice — the

district court pointed out that the Mewhinney defendants had first

raised the forum selection issue in the replies that they submitted

15
 in support of their motions to dismiss, rather than in separate

papers after briefing was closed. These circumstances, the court

noted, “suggest[ed] not so much an intentional relinquishment of a

known right by a party as it [did] an oversight by counsel in the

early stages of the case.” With respect to prejudice, the court found

that the fee shifting provision of the contract, together with the

possibility that “fees will be recoverable . . . in the Canadian courts,

where fee-shifting is apparently the rule,” were enough to overcome

Avicanna’s claim that it would be unfairly harmed if the forum

selection clause were enforced.

¶ 29 We agree with the district court. To be sure, the Mewhinney

defendants waited longer than the defendant in Vessels to raise the

forum selection issue, but their level of engagement in the case —

which is a more important factor in our view — was actually less.

Importantly, the Mewhinney defendants never independently

attempted to invoke the district court’s jurisdiction by, for example,

filing counterclaims against Avicanna, cross-claims against St. J, or

impleading third parties who were not named in either complaint.

Indeed, the only reason that the Mewhinney defendants filed

anything in the district court was because Avicanna attempted to

16
 unilaterally contravene the forum selection clause in the first place

by filing suit in Colorado.

¶ 30 Given the Mewhinney defendants’ limited substantive

engagement in the case and the possibility of fee-shifting under the

terms of the contract or pursuant to Canadian law, we conclude

that the prejudice suffered by Avicanna is not sufficient to support

a finding of waiver by the Mewhinney defendants. While counsel

certainly should have been more attentive, we decline to hold that

his tardiness in recognizing the issue was a clear manifestation of

the Mewhinney defendants’ intent to waive the choice of forum

provision.

¶ 31 We are not persuaded otherwise by the fact that the

Mewhinney defendants relied on Colorado law in their motions to

dismiss. At the threshold, for many of the reasons that we have

already discussed in the context of the forum selection clause, it is

doubtful that either party could have unilaterally waived the choice

of law provision. The contract reflects the parties’ mutual

agreement to apply Canadian law. And because nothing within the

four corners of the contract suggests that provision was included

17
 solely for the benefit of the Mewhinney defendants, it follows that

the Mewhinney defendants could not unilaterally waive it.

¶ 32 In any event, nothing in the record suggests that the

Mewhinney defendants’ failure to assert defenses under Canadian

law was intentional, rather than yet another oversight on the part of

counsel. Under the circumstances here, we decline to infer from

counsel’s initial reliance on Colorado law an intention on the part of

the Mewhinney defendants to waive the choice of law provision of

the parties’ contract.

IV. Appellate Attorney Fees

¶ 33 The Mewhinney defendants request an award of attorney fees

and costs pursuant to C.A.R. 38(b) and 39.1. Although Avicanna

did not succeed in this appeal, it advanced cogent and

well-supported arguments. See Mission Denver Co. v. Pierson, 674

P.2d 363, 365 (Colo. 1984) (“Standards for determining whether an

appeal is frivolous should be directed toward penalizing egregious

conduct without deterring a lawyer from vigorously asserting his

client’s rights.”); see also Janicek v. Obsideo, LLC, 271 P.3d 1133,

1140 (Colo. App. 2011) (“[A] claim is not frivolous ‘if it is meritorious

but merely unsuccessful[.]’” (quoting Hamon Contractors, Inc. v.

18
 Carter & Burgess, Inc., 229 P.3d 282, 299 (Colo. App. 2009))). We

therefore decline to award appellate attorney fees.

V. Conclusion

¶ 34 We affirm the district court’s judgment and deny the

Mewhinney defendants’ request for attorney fees and costs.

JUDGE TAUBMAN and JUDGE HAWTHORNE concur.

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