United States District Court, D. South Dakota, Western Division
JEFFREY L. VIKEN CHIEF JUDGE
April 27, 2016, plaintiffs John and Kaye Duffield (“the
Duffields”) filed a lawsuit in South Dakota state
court. (Docket 1-2). Defendants Duffield Construction, LLC
(“Duffield Construction”), David Kinsella, MPC
Pipelines, Inc. (“MPC”) and Murphy Pipe and
Civil, LLC (“Murphy Pipe”), removed the case to
this court on May 31, 2016. (Docket 1). Plaintiffs filed an
amended complaint on June 6, 2016. (Docket 7). On June 20,
2016, defendants filed a motion to change venue pursuant to
28 U.S.C. § 1404(a). (Docket 11). Defendants also filed
a motion to dismiss the complaint for failure to state a
claim, or alternatively, a motion for a more definite
statement. (Docket 8). Plaintiffs filed briefs opposing
defendants' motions. (Dockets 15 & 16). Defendants
filed briefs in reply to plaintiffs' opposition briefs.
(Dockets 21 & 22).
and Kaye Duffield started the construction business Duffield
Construction in Rapid City, South Dakota, in 1991. (Docket 7
at p. 4). They grew the business for over two decades and
developed construction specialties. Id. In 2014,
MPC, a global pipeline business, approached the Duffields
about purchasing Duffield Construction. Id. at pp.
2015, the Duffields agreed to sell Duffield Construction to
MPC by executing a stock purchase agreement. Id. at
p. 5. Murphy Pipe, a business entity related to MPC, agreed
to employ John Duffield for three years by executing an
employment agreement. Id. at pp. 5-6. David
Kinsella, the General Manager and President of Murphy Pipe,
executed the employment agreement on behalf of the company.
(Docket 10-1). The employment agreement Mr. Duffield and
Murphy Pipe signed in 2015 entitled Mr. Duffield to specific
payments in addition to a salary: 3 percent of the revenue
from MPC's contracts in the United States up to $50
million in revenue, and 1 percent of the revenue beyond $50
million. (Docket 7 at p. 5). Plaintiffs refer to these
payments as equity payments. Id. at pp. 5-6.
in 2015, Mr. Kinsella terminated Mr. Duffield's
employment with Murphy Pipe. Id. at p. 8. Plaintiffs
allege Mr. Duffield stopped receiving equity payments from
Murphy Pipe on November 9, 2015. Id. Plaintiffs
claim during Mr. Duffield's employment with Murphy Pipe,
Mr. Kinsella made oral statements to third parties asserting
Mr. Duffield committed criminal acts, is dishonest and is a
thief. Id. at pp. 8-9.
defendants removed the lawsuit to federal court, plaintiffs
filed an amended complaint stating nine causes of action.
Id. at pp. 9-18. Plaintiffs allege fraud, negligent
misrepresentation, tortious interference, breach of contract,
constructive trust, unjust enrichment, money had and
received, aiding and abetting, and slander. Id.
MOTION TO CHANGE VENUE
Is the employment agreement's forum selection clause
their motion to change venue, defendants argue under the
employment agreement's forum selection clause and 28
U.S.C. § 1404(a) the court should transfer this case to
the United States District Court for the District of
Colorado. (Docket 12 at p. 1).
court has diversity jurisdiction over this case. 28 U.S.C.
§ 1332. Federal courts hearing cases in diversity apply
the forum state's choice of law rules. See Retail
Associates, Inc. v. Macy's East, Inc., 245 F.3d 694,
697 (8th Cir. 2001). South Dakota courts have
“generally recognized that parties may agree to be
bound by the law of a particular state, ” and are free
to choose which state's law will apply, subject to
“overriding public policy concerns.” See
Butler Mach. Co. v. Morris Const. Co., 682 N.W.2d 773,
776 (S.D. 2004) (citations omitted).
the parties dispute issues surrounding the employment
agreement's forum selection clause, they do not directly
contest the agreement's choice of law provision. The
employment agreement provides Colorado law will apply to
interpretation of the contract and litigation arising from
the contract. (Docket 22-2 at pp. 4-5). The court
considers any tension between Colorado law and South Dakota
public policy issue-by-issue.
court proceeds applying Colorado law.
parties disagree on whether to construe the employment and
stock purchase agreements together. The court addresses this
issue at the outset because it is central to plaintiffs'
argument against defendants' motion to change venue.
argue the court must construe the agreements as a whole.
(Docket 16 at p. 6). Plaintiffs point out each agreement
refers to the other at one point, and the parties executed
them on the same day. Id. at pp. 5-6. In
plaintiffs' view, the applicable law supports
interpreting both agreements as a whole. Id. at pp.
6-7. Plaintiffs go on to argue once the court reads the
agreements together, the forum selection clause in the
employment agreement becomes invalid because it conflicts
with the stock purchase agreement's forum selection
clause. Id. at pp. 7-8.
position is the agreements should not be read together as
plaintiffs request. (Docket 22 at pp. 4-7). Defendants claim
the proper reading of the cross-references between the
agreements does not lead to interpreting the documents as a
whole. Id. Defendants assert the applicable case law
goes against plaintiffs' position on contract
construction. Id. at p. 6.
Colorado law, “[i]f a simultaneously executed agreement
between the same parties, relating to the same subject
matter, is contained in more than one instrument, the
documents must be construed together to determine intent as
though the entire agreement were contained in a single
document.”O'Reilly v. Physicians Mut. Ins.
Co., 992 P.2d 644, 648 (Colo.App. 1999); see In re
Application for Water Rights of Estes Park v. Northern
Colorado Water Conservancy District, 677 P.2d 320, 327
(Colo. 1984). MPC and the Duffields executed the stock
purchase agreement. (Docket 22-1 at p. 1). Murphy Pipe,
through David Kinsella, and John Duffield executed the
employment agreement. (Docket 22-2 at p. 1). The parties
executed both agreements on April 30, 2015. (Docket 16 at p.
5). Each agreement mentions the existence of the other
agreement at a particular point. Id. at pp. 5-6.
Applying Colorado law to these facts, plaintiffs claim
interpreting the agreements together necessarily invalidates
the forum selection clauses because they call for different
jurisdictions in the event of litigation. Id. at pp.
even if the court reads the employment and stock purchase
agreements together, plaintiffs' argument does not
prevail. The purpose of the contract construction plaintiffs
seek is to determine the intent of the contracting parties.
See In re Application for Water Rights of Estes
Park, 677 P.2d at 327; Sterling Colo. Agency, Inc.
v. Sterling Ins. Co., 266 F.2d 472, 476 (10th Cir.
1959). Applying this general interpretation does not entail
fusing each provision of the separate instruments. See
Sterling, 266 F.2d at 476; LPG Holdings, Inc. v.
Casino America, Inc., No. 99-1037, 2000 WL 1637536, at
*8-9 (10th Cir. Nov. 1, 2000) (unpublished).
13 of the employment agreement states Colorado law shall
govern the agreement and any litigation arising under the
agreement shall take place “in the federal or state
courts located in Denver County, Colorado.” (Docket
22-2 at p. 4). Section 17 reiterates some of Section 13 but
is slightly broader, providing any legal theory
“arising out of or relating to [the employment
agreement] or [Mr. Duffield's] employment with [MPC]
shall” be litigated as Section 13 directs. Id.
at pp. 4-5. In the stock purchase agreement, Section 10.9