Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_14-cv-01645/USCOURTS-caed-1_14-cv-01645-8/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

INTERNATIONAL CHEMICAL 

SUPPLIES (ICS), INC., a Delaware 

corporation, and PETROVERDE 

CARIBE, S.A., a Panamanian 

Corporation,

Plaintiffs,

v.

RESTORATION ENERGY, LLC, a 

limited liability company, SOUTHWEST 

EOR OPERATING, LLC, a Texas 

limited liability company; and DOES 1 

through 10 inclusive,

Defendants.

No. 1:14-cv-01645-MCE-JLT 

MEMORANDUM AND ORDER

Plaintiffs International Chemical Supplies (“ICS”) and Petroverde Caribe, S.A. 

(“Petroverde”) (collectively, “Plaintiffs”) allege several causes of action against 

Defendants Restoration Energy (“RELLC”) and Southwest EOR Operating (“SWEOR”) 

(collectively, “Defendants”) stemming from an alleged breach of contract. Currently 

before the Court is Defendants’ Motion to Dismiss (ECF No. 27), which seeks dismissal 

of the action on the grounds of forum non conveniens. For the reasons set forth below,

Defendants’ Motion to Dismiss is GRANTED and this action is DISMISSED.

1

 

 1 Because oral argument would not have been of material assistance, the Court ordered this 

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BACKGROUND2

Petroverde develops and produces environmentally friendly degreasers. In 

January 2014, Petroverde and RELLC reached an oral agreement for the completion 

and financing of a pre-production facility of a degreaser known as “ICS-0509.” 

Petroverde and RELLC subsequently memorialized their agreement in a Memorandum 

of Understanding (“MOU”).3 

RELLC partnered with SWEOR to assist in securing the pre-production facility in 

Bakersfield, California; Petroverde partnered with ICS to manufacture the degreaser and 

to obtain a license to conduct business in California.

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 ICS began producing the 

degreaser at the Bakersfield facility on February 25, 2014. Between then and March 17, 

2014, ICS produced approximately fifty totes of the degreaser on behalf of Petroverde. 

On March 17, 2014, however, SWEOR, on its own behalf and as authorized by RELLC, 

forcibly took control and locked Plaintiffs out of the Bakersfield production facility. 

Defendants have refused to pay for forty-seven totes of finished product that remain at 

the Bakersfield facility, and they have offered to sell the product to third parties without 

compensating Plaintiffs.

Plaintiffs seek damages, declaratory relief, and injunctive relief on causes of 

action for breach of contract, unjust enrichment, conversion, promissory estoppel, and 

negligent misrepresentation. Defendants seek dismissal of the action on the grounds of 

forum non conveniens because the forum selection clause in the MOU requires that 

“[a]ny dispute arising under [the] Agreement will be resolved exclusively by submission 

to the courts of the State of New York . . . .” MOU, ECF No. 28-1, ¶ 54. 

///

 matter submitted on the briefs. E.D. Cal. Local R. 230(g). 

2 The following statement of facts is based on the allegations in Plaintiffs’ Complaint (ECF No. 2). 

3

 The MOU is attached as Exhibit A to the Declaration of Peter Schaefer (ECF No. 28). 

4

 None of the parties have their principal place of business in California. 

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STANDARD

“[T]he appropriate way to enforce a forum-selection clause pointing to a state or 

foreign forum is through the doctrine of forum non conveniens.” Atlantic Marine Const. 

Co., Inc. v. U.S. Dist. Ct. for W. Dist. of Tex., ___ U.S. ___, 134 S. Ct. 568, 580 (2013). 

Generally, when a defendant seeks dismissal of an action on grounds of forum non 

conveniens, the court must consider both private and public-interest factors. Id. at 581. 

However, when the defendant establishes that the parties agreed to a contractually valid 

forum-selection clause,5 a court should (1) give no weight to the plaintiff’s choice of 

forum, (2) not consider arguments about the parties’ private interests, and (3) “consider 

arguments about public-interest factors only.” Id. at 581-82. 

“Public-interest factors may include the administrative difficulties flowing from 

court congestion; the local interest in having localized controversies decided at home; 

and the interest in having the trial of a diversity case in a forum that is at home with the 

law.” Id. at 581 n.6 (internal bracketing and quotation marks omitted). As the party 

defying the forum-selection clause, the plaintiff bears the burden of establishing that 

dismissal is unwarranted. Id. at 581.

ANALYSIS

A. Validity of the MOU

Plaintiffs do not dispute that the MOU contains a forum-selection clause that 

designates the New York state courts as the exclusive forum. Plaintiffs, however,

contend that the MOU is unenforceable because it is merely “an agreement to agree”

and because neither ICS nor SWEOR were parties to the MOU. 

///

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 “A forum selection clause is presumptively valid; the party seeking to avoid a forum selection 

clause bears a ‘heavy burden’ to establish a ground upon which [the court] will conclude the clause is 

unenforceable.” Doe 1 v. AOL LLC, 552 F.3d 1077, 1083 (9th Cir. 2009) (per curiam). 

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Although the MOU indicates that the parties contemplated a future finalized 

agreement, the MOU also provides that it “shall be binding upon and inure to the benefit 

of the Parties, and to each party’s successors, and permitted assigns.” MOU, ECF 

No. 28-1, ¶ 57 (emphasis added); see also id. at ¶ 58 (“All parties acknowledge that a 

facsimile copy of this Agreement may be executed and shall have the same binding 

force and effect”). Additionally, although only the chief executive officers of Petroverde 

and RELLC signed the MOU, Plaintiff’s factual allegations indicate that ICS and SWEOR 

are sufficiently related to the contractual relationship to justify subjecting those parties to 

the forum-selection clause. See Holland Am. Line, Inc. v. Wartsila N.A., Inc., 485 F.3d 

450, 456 (9th Cir. 2007) (“The forum selection clauses apply equally to BVNA and BV 

Canada because any transactions between those entities and Holland America took 

place as part of the larger contractual relationship between Holland America and Bureau 

Veritas.”); Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 n.5 (9th Cir. 1988) 

(“We agree with the district court that the alleged conduct of the non-parties is so closely

related to the contractual relationship that the forum selection clause applies to all 

defendants.”).

Accordingly, the MOU is enforceable as to both Defendants. 

B. Public-Interest Factors

The public-interest factors weigh in favor of dismissing this action. As to

administrative difficulties flowing from court congestion, judges in the Eastern District of 

California carry the heaviest caseloads in the nation. Although the parties have not 

made any representations about the congestion of the New York state courts, this factor 

likely favors dismissal.

As to the second public-interest factor identified in Atlantic Marine, there is little 

local interest in this action. Although the pre-production facility is in the Eastern District 

of California, all of the parties in this case have their principle place of business in a 

foreign state or country. See Compl. at 2. Nevertheless, because this action would not 

be any more of a local interest for the New York state courts, this factor is neutral. 

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The third public-interest factor identified in Atlantic Marine also favors dismissal of 

this action. In addition to the forum-selection clause providing the New York state courts

as the mandatory forum, the MOU provides that “[t]his Agreement shall be governed by 

and construed and interpreted in accordance with the laws of the State of New York.” 

MOU, ECF No. 28-1, ¶ 54. The New York state courts are indisputably more “at home” 

with New York state law than this Court. Accordingly, this factor favors dismissal. 

Thus, one public-interest factor is neutral and the two other factors favor 

dismissal. Because Plaintiffs have not established that the forum-selection clause in the 

MOU is unenforceable or that dismissal is unwarranted, the Court must dismiss this 

action. 

CONCLUSION

Accordingly, Defendants’ Motion to Dismiss (ECF No. 27) is GRANTED, and this 

action is DISMISSED. The Clerk of the Court is directed to close this action.

IT IS SO ORDERED.

Dated: July 28, 2015

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