F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
November 7, 2005
UNITED STATES COURT OF APPEALS
Clerk of Court
TENTH CIRCUIT
AMERICAN SODA, LLP, a Colorado
corporation,
Plaintiff-Appellee, No. 03-1492
v.
U.S. FILTER WASTEWATER
GROUP, INC., a Delaware
corporation,
Defendant-Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 03-MK-1579 (CBS))
Submitted on the briefs: *
Michael G. Bohn, Griffith A. Kundahl, and Bret M. Heidemann, Campbell, Bohn,
Killin, Brittan & Ray, LLC, Denver, Colorado for Defendant-Appellant.
Lawrence R. Green, Balcomb & Green, P.C., Glenwood Springs, Colorado, for
Plaintiff-Appellee.
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
Before KELLY, SEYMOUR, and MURPHY, Circuit Judges.
SEYMOUR, Circuit Judge.
Defendant U.S. Filter Wastewater Group, Inc. (U.S. Filter) appeals the
district court’s order remanding this breach of contract action to state court based
on a mandatory forum selection clause in the parties’ contract. U.S. Filter also
appeals the district court’s award of attorneys’ fees and costs to plaintiff
American Soda, LLP (American Soda). Because we agree with the district court
that the parties’ contract contained a mandatory forum selection clause
designating Colorado state court as the exclusive forum for resolution of disputes
arising out of their contract, we affirm the remand order. We also conclude this
court lacks jurisdiction to review the district court’s order concerning attorneys’
fees.
Background
In July 2003, American Soda, a mining company, filed a breach of contract
action against U.S. Filter in the Garfield County District Court in Glenwood
Springs, Colorado. American Soda alleges that U.S. Filter failed to perform
under an April 13, 2001, contract pursuant to which U.S. Filter was to construct
and integrate a Deca Crystallizer system into American Soda’s processing
facilities in Garfield County, Colorado. The purpose of the Deca Crystallizer was
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to enhance the production rate and product quality of American Soda’s mining
operations. U.S. Filter timely removed the action to the United States District
Court for the District of Colorado based on diversity jurisdiction pursuant to 28
U.S.C. § 1332, §1441 and § 1446. On October 20, 2003, upon motion by
American Soda, the district court remanded the case to state court, finding that
U.S. Filter waived its right to remove by a mandatory forum selection clause in
the parties’ contract. The clause at issue is contained in paragraph 20.0 of
Exhibit B to the parties’ agreement. It provides:
Both Contractor and Company hereby submit to the
jurisdiction of the Courts of the State of Colorado and
agree that the Courts of the State of Colorado/Arbitrator
shall be the exclusive forum for the resolution of any
disputes related to or arising out of this Term
Agreement.
Aplt. App. at 59.
The district court held that by using this language the parties unequivocally
and exclusively designated any court of the State of Colorado for the resolution of
disputes arising out of the contract and that the United States District Court was
not a court of the State of Colorado. The court further held that enforcement of
the forum selection clause was not unreasonable under the circumstances.
Accordingly, the district court concluded that remand was proper.
In addition, pursuant to 28 U.S.C. §1447(c), the court ordered U.S. Filter to
pay all costs and attorneys’ fees incurred by American Soda in connection with
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the removal. Thereafter, American Soda filed an attorneys’ fees affidavit.
However, to date, the district court has not fixed the amount of attorneys’ fees
and costs to be awarded.
Appellate Jurisdiction
On December 2, 2003, we issued an order directing the parties to show
cause why this appeal should not be dismissed for lack of appellate jurisdiction.
Following briefing, we reserved judgment on the issues of whether the district
court’s remand order is appealable and whether the award of attorneys’ fees and
costs is appealable where no amount certain has been determined by the district
court. We now hold that the remand order is appealable, but that the portion of
the district court’s order regarding attorneys’ fees and costs is not.
As we have previously stated, the threshold question in an appeal of a
remand order is whether the district court’s decision is reviewable
notwithstanding the proscription set forth in 28 U.S.C. § 1447(d). SBKC Serv.
Corp. v. 1111 Prospect Partners, L.P., 105 F.3d 578, 580 (10th Cir. 1997).
Section 1447(d) provides that “[a]n order remanding a case to the State court
from which it was removed is not reviewable on appeal or otherwise, except [in
civil rights cases] . . . .” 28 U.S.C. § 1447(d). However, it is well settled that
§ 1447(d) prohibits only the review of remands based on grounds specified in
§ 1447(c). See SBKC, 105 F.3d at 580. Thus, the only remands immune to
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appellate review are those based on lack of subject matter jurisdiction and defects
in the removal procedure. Id; Quackenbush v. Allstate Ins. Co., 517 U.S. 706,
711-12 (1996). Remands based on a merits determination of a nonjurisdictional
issue are fully appealable. SBKC, 105 F.3d at 580. We have held specifically
that a remand based on a district court’s decision to honor a forum selection
clause is appealable under the collateral order doctrine. Milk ‘N’ More, Inc. v.
Beavert, 963 F.2d 1342, 1344 (10th Cir. 1992). Accordingly, we are satisfied that
appellate review of the district court’s remand order is proper here.
Conversely, this court lacks jurisdiction to entertain U.S. Filter’s appeal
from the district court’s order awarding attorneys’ fees and costs. An award of
attorneys’ fees is not final and appealable within the meaning of 28 U.S.C. § 1291
until it is reduced to a sum certain. Phelps v. Washburn Univ. of Topeka,
807 F.2d 153, 154 (10th Cir. 1986) (per curiam). Since the district court has not
fixed the amount of fees in this case, that portion of the award is neither final nor
appealable within the meaning of 28 U.S.C. § 1291 and is therefore not
reviewable by this court. Phelps, 807 F.2d at 155. This, however, does not
preclude our review of the district court’s remand order. It is well settled that “a
decision on the merits is a final decision for purposes of § 1291 whether or not
there remains for adjudication a request for attorney’s fees attributable to the
case.” Budinich v. Becton Dickinson & Co., 486 U.S. 196, 202-03 (1988)
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(quotation omitted). Consequently, we will not review the award of attorneys’
fees, and turn our attention instead to the district court’s interpretation of the
forum selection clause.
The Forum Selection Clause
U.S. Filter’s arguments as to why the district court’s remand order was
erroneous can be distilled to two main points. First, U.S. Filter contends the
contract clause at issue is not a mandatory forum selection clause as defined by
this court because the clause is ambiguous, does not specify a particular county
for venue, and does not express a clear and unequivocal waiver of its right to
remove the action to federal court. Second, U.S. Filter contends removal was
proper because the language “Courts of the State of Colorado,” as used in the
parties’ contract, could include the federal district court sitting in Colorado.
We review the enforceability of a forum selection clause de novo. See
K & V Scientific Co. v. BMW, 314 F.3d 494, 497 (10th Cir. 2002). We must first
determine whether the clause at issue, “Courts of the State of Colorado,” is
ambiguous. U.S. Filter contends the clause could include the federal court sitting
in Colorado. If we conclude this language does, in fact, include the federal court,
there will be no need to decide whether the forum selection clause is mandatory
or permissive.
Whether the U.S. district courts are courts of the various states in which
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they are located is an issue of first impression in this circuit. Other courts have
described the issue as a question of sovereignty versus geography. If the contract
language refers to the state courts to the exclusion of the federal courts, it is a
term of sovereignty. If, on the other hand, it encompasses Colorado state courts
and the federal court sitting in the State of Colorado, it is a term of geography.
See LFC Lessors, Inc. v. Pac. Sewer Maint. Corp., 739 F.2d 4, 6 (1st Cir. 1984);
City of New York v. Pullman Inc., 477 F. Supp. 438, 442 (S.D.N.Y. 1979).
The court in LFC Lessors was charged with interpreting contractual
language providing for the resolution of disputes “in accordance with the law, and
in the courts, of the Commonwealth of Massachusetts.” 739 F.2d at 6. The court
concluded that the phrase “courts of Massachusetts” was ambiguous, finding that
it “could mean all the courts physically within the state or only those courts that
trace their origin to the state, i.e., the Massachusetts state courts.” Id. at 7 (citing
B LACK ’ S L AW D ICTIONARY (5th ed. 1979)). However, reading the phrase in
context, the court concluded that the parties must have intended the latter
meaning because it was the only meaning that made sense in light of the phrase’s
parallel structure. Id. “[T]he word ‘of’ as it appears in the phrase in question
must have been intended to restrict the meaning of both ‘law’ and ‘courts’ to
those that trace their origin to the state.” Id. The court therefore held that all
actions on the contract at issue had to be brought in the Massachusetts state
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courts. Id.
More recently, the Fifth Circuit interpreted similar language as implicitly
unambiguous, holding that the phrase “Courts of Texas” referred exclusively to
Texas state courts. See Dixon v. TSE Int’l Inc., 330 F.3d 396, 398 (5th Cir. 2003)
(per curiam). The contract clause at issue in Dixon provided,
The Courts of Texas, U.S.A., shall have jurisdiction over
all controversies with respect to the execution,
interpretation or performance of this Agreement, and the
parties waive any other venue to which they may be
entitled by virtue of domicile or otherwise.
Id. at 397. Like U.S. Filter here, the defendant argued that this provision could
be read to include both state and federal courts in Texas. Id. The court rejected
that argument, concluding that although federal district courts may be in Texas,
they are not of Texas. Id. at 398. As in LFC Lessors, the court in Dixon relied on
the definition of the word “of” in B LACK ’ S L AW D ICTIONARY . 1 The court
reasoned that “Federal courts indisputably proceed from, and find their origin in,
the federal government, though located in particular geographic regions.” Id.
Since the parties agreed to litigate their dispute solely in the “Courts of Texas,”
the court held that the defendant was bound to defend the suit in the Texas state
1
“Of” is defined as a term “denoting that from which anything proceeds;
indicating origin, source, descent, and the like . . . . Associated with or connected
with, usually in some causal relation, efficient, material, formal, or final. The
word has been held equivalent to after; at, or belonging to; in possession of;
manufactured by; residing at; from.” B LACK ’ S L AW D ICTIONARY 1080 (6th ed.
1991).
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court system. Id.
We are persuaded by the reasoning of Dixon and agree with the district
court’s holding in this case that the federal court located in Colorado is not a
court of the State of Colorado but rather a court of the United States of America.
In other words, the contract language at issue refers to sovereignty rather than
geography. 2 Although located in the various states, the U.S. district courts
“indisputably proceed from, and find their origin in, the federal government,”
Dixon, 330 F.3d at 398, not in the governments of the states in which they are
located. We therefore conclude that the forum selection clause in the parties’
agreement designates the Colorado state court system as the forum for resolution
of disputes arising out of the contract, and does not include the federal district
court. 3 Consequently we must determine whether this selection was mandatory or
2
Cf. Basicomputer Corp. v. Scott, 973 F.2d 507, 510 (6th Cir. 1992) (holding
that a forum selection clause requiring disputes to be brought “in courts in the
State of Ohio” did not exclude the federal district court for the Northern District
of Ohio, which the court noted was unquestionably in Ohio) (quotation marks
omitted).
3
We do not find persuasive cases cited by the parties interpreting language
other than “courts of the State.” See, e.g., Basicomputer Corp., 973 F.2d at 510
(holding that “courts in the State of Ohio” could include the federal district court)
(emphasis added); Regis Assocs. v. Rank Hotels (Mgmt.) Ltd., 894 F.2d 193, 195
(6th Cir. 1990) (holding that “Michigan Courts” could include federal courts);
Carrano v. Harborside Healthcare Corp., 199 F.R.D. 459, 462 (D. Conn. 2001)
(holding that the phrase “litigation . . . shall be brought in Pinellas county” could
mean state or federal court in Pinellas County); City of New York v. Pullman Inc.,
477 F. Supp. 438, 443 (S.D.N.Y. 1979) (holding that the phrase “New York
(continued...)
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permissive.
The difference between a mandatory and permissive forum selection clause
is that “[m]andatory forum selection clauses contain clear language showing that
jurisdiction is appropriate only in the designated forum.” Excell, Inc. v. Sterling
Boiler & Mech., Inc., 106 F.3d 318, 321 (10th Cir. 1997) (alteration and internal
quotation marks omitted). “In contrast, permissive forum selection clauses
authorize jurisdiction in a designated forum, but do not prohibit litigation
elsewhere.” Id. (internal quotation marks omitted). U.S. Filter argues that the
forum selection clause at issue is permissive because it does not specify a county
or tribunal for venue. We reject this argument. In K & V Scientific, 314 F.3d at
499, we adopted the majority rule for enforcing forum selection clauses. We held
that when venue is specified, such as when the parties designate a particular
county or tribunal, and the designation is accompanied by mandatory or obligatory
language, a forum selection clause will be enforced as mandatory. Id. 4 Where
only jurisdiction is specified, we will nonetheless enforce a forum selection
clause if there is some additional language indicating the parties’ intent to make
3
(...continued)
courts” could include state and federal courts in New York).
4
For example, under the rule, the forum selection clause at issue in Excell,
Inc. v. Sterling Boiler & Mech., Inc., 106 F.3d 318, 320 (10th Cir. 1997), which
stated “[j]urisdiction shall be in the State of Colorado, and venue shall lie in the
County of El Paso, Colorado,” is mandatory because of its specific county
designation and use of the obligatory word “shall.”
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venue exclusive. Id.
The clause at issue in this case falls squarely within the latter category.
The parties not only consented to the jurisdiction of the Colorado state courts,
they went a step further by designating the state courts or arbitration as “the
exclusive forum for the resolution of any disputes related to or arising out of [the
contract].” Aplt. App. at 59 (emphasis added). We conclude that by consenting
to state court jurisdiction and selecting the state courts as the “exclusive forum,”
the parties indicated their intent to make venue exclusive in state court with
respect to any disputes not resolved in arbitration. 5 Cf. K & V Scientific, 314 F.3d
at 500 (calling the forum selection clause in that case permissive because it
referred only to jurisdiction and did not include terms such as “exclusive,” “sole,”
or “only”). Because the forum selection clause at issue is mandatory, U.S. Filter
unequivocally waived its right to remove this lawsuit to federal court. See Milk
‘N’ More, Inc., 963 F.2d at 1346 (“[A] waiver of one’s statutory right to remove a
case from a state to a federal court must be clear and unequivocal.” (internal
quotation marks omitted)).
We also conclude, and U.S. Filter does not dispute, that enforcement of the
forum selection clause is fair and reasonable. There is certainly nothing in the
5
We are not persuaded by U.S. Filter’s argument that the inclusion of
“Arbitrator” in the forum selection clause renders the clause ambiguous. We
agree with the district court that the clause at issue reflects an exclusive forum
selection of Colorado state court unless arbitration is selected.
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record before us to show that “enforcement would be unreasonable and unjust, or
that the clause [is] invalid for such reasons as fraud or overreaching.”
M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972).
The district court properly remanded this case to the state court. The
judgment of the district court is AFFIRMED and the case is REMANDED to the
district court for a final determination regarding attorneys’ fees.
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