LFP Consulting v. Leighton

542 P.3d 188

2024 WY 12

LFP CONSULTING, LLC, a North Dakota limited liability company, Appellant (Plaintiff),

v.David Edward LEIGHTON, Appellee (Defendant).

S-23-0125

Supreme Court of Wyoming.

January 30, 2024

Appeal from the Chancery Court, The Honorable Steven K. Sharpe, Judge

Representing Appellant: Rick Koehmstedt, Judith Studer of Schwartz, Bon, Walker & Studer, LLC, Casper, Wyoming. Argument by Ms. Studer.

Representing Appellee: Keith J. Dodson, Thomas W. Rumpke of Williams, Porter, Day & Neville, P.C., Casper, Wyoming; Mark Western of Fremstad Law Firm, Fargo, North Dakota. Argument by Mr. Western.

Before FOX, C.J., and KAUTZ, BOOMGAARDEN, GRAY, and FENN, JJ.

KAUTZ, Justice.

[¶1] LFP Consulting, LLC (LFP), a financial advisory company, employed David Edward Leighton as a financial advisor. After Mr. Leighton resigned, LFP sued him in Wyoming chancery court for breach of contract and various torts. The chancery court dismissed LFP’s complaint for improper venue based upon a clause in the parties’ contract selecting Minnesota as the forum for disputes between them (forum selection clause). We reverse and remand because the chancery court erroneously concluded LFP did not have the right to unilaterally waive the forum selection clause.

ISSUE

[¶2] The dispositive issue on appeal is: Did the chancery court err by dismissing LFP’s complaint for improper venue based on its conclusion that LFP could not unilaterally waive the forum selection clause in the parties’ contract?¹

FACTS

[¶3] LFP hired Mr. Leighton in June 2018 to work as a "paraplanner" financial advisor in its Worland office. Because Mr. Leighton was not licensed as a financial advisor and had no financial planning clients, LFP arranged for him to become licensed through a Minnesota company, Ameriprise Financial Services, Inc. (Ameriprise Financial). Once licensed, Mr. Leighton entered into an Associate Financial Advisor Agreement (AFA) with Ameriprise Financial, which provided him with a securities registration and the right to act as its agent.²

[¶4] Mr. Leighton agreed in the AFA that the records and materials associated with his financial planning activities belonged to Ameriprise Financial and must be returned to it upon termination of their contractual relationship. He promised in Section 8 of the AFA not to divulge Ameriprise Financial’s trade secrets or confidential information or use them except to perform his duties to Ameriprise Financial. He also agreed that, for one year after termination of his relationship with Ameriprise Financial, he would not contact, solicit, or provide services to any of Ameriprise Financial’s clients. Ameriprise Financial was permitted to seek an injunction "to keep [Mr. Leighton] from violating" the confidentiality and non-compete provisions of the AFA. Section 11 of the AFA stated it was governed by Minnesota law, and Mr. Leighton agreed to litigate "any action at law" "related to" the AFA in "the State of Minnesota," which was where Ameriprise Financial principally conducted business.

[¶5] On November 9, 2021, Mr. Leighton resigned from LFP and Ameriprise Financial. He immediately began conducting financial advising business through Heart Mountain Wealth Management (HMWM), a limited liability company he had already registered in Wyoming. HMWM associated itself with Golden State Wealth Management.

[¶6] Ameriprise Financial assigned some of its rights under the AFA to LFP, including the right to waive the forum selection clause. LFP filed a complaint against Mr. Leighton in Wyoming chancery court and attached an express waiver of the forum selection clause. According to LFP’s complaint, "HMWM perform[ed] the same essential financial planning and wealth management services as LFP" and was its "direct competitor." LFP stated five causes of action against Mr. Leighton including: 1) injunctive relief to restrain Mr. Leighton from violating the AFA; 2) breach of the AFA by improperly using LFP’s and Ameriprise Financial’s confidential information and trade secrets, providing financial planning services to LFP’s clients, and soliciting LFP’s existing and potential clients; 3) misappropriation of trade secrets in violation of the Uniform Trade Secrets Act, enacted in Wyoming at Wyo. Stat. Ann. §§ 40-24-101 through 110 (2023); 4) interference with contract or prospective advantage; and 5) unfair competition.

[¶7] Mr. Leighton moved to dismiss LFP’s complaint on multiple grounds including, as relevant here, for improper venue under the AFA’s forum selection clause. The chancery court dismissed LFP’s complaint, concluding LFP did not have the right to unilaterally waive the forum selection clause and the clause required LFP to litigate matters arising from, or related to, the AFA in Minnesota. It also ruled that, "[f]or the purposes of judicial economy and efficiency," all of LFP’s claims should be decided together in Minnesota. LFP filed a timely notice of appeal from the chancery court’s dismissal.

STANDARD OF REVIEW

[1] [¶8] The AFA is governed by Minnesota law, but Wyoming law applies to procedural matters including the standard of review. Denbury Onshore, LLC v. APMTG Helium LLC, 2020 WY 146, ¶ 24, 476 P.3d 1098, 1105 (Wyo. 2020) (citing Smithco Eng’g, Inc. v. Int’l Fabricators, Inc., 775 P.2d 1011, 1018 (Wyo. 1989) ("Clearly, the law of the forum controls procedural matters.")).

[¶9] Mr. Leighton moved to dismiss LFP’s complaint under Wyoming Rule of Civil Procedure (W.R.C.P.) 12(b)(6) for "failure to state a claim upon which relief can be granted[.]" He presented several grounds for dismissal, but the chancery court dismissed LFP’s complaint for improper venue.

W.R.C.P. 12(b)(3) governs motions to dismiss for improper venue. W.R.C.P. 12(b)(3) (a party may present the defense of improper venue by motion); Ecocards v. Tekstir, Inc., 2020 WY 38, ¶ 10, 459 P.3d 1111, 1115 (Wyo. 2020) (Rule 12(b)(3) governs motions to dismiss for improper venue).

[2–4] [¶10] To determine whether a case should be dismissed for improper venue, the court accepts "the well-pleaded allegations in the plaintiff’s complaint as true." Ecocards, ¶ 12, 459 P.3d at 1116 (citing Saunders v. Saunders, 2019 WY 82, ¶ 11, 445 P.3d 991, 996 (Wyo. 2019), Espinoza v. Evergreen Helicopters, Inc., 359 Or. 63, 376 P.3d 960, 982 (2016), and 5B Fed. Prac. & Proc. Civ. § 1352 (3d. ed. 2019) (discussing identical federal rule)). The court also draws all reasonable inferences and resolves all factual conflicts in favor of the plaintiff. Ecocards, ¶ 12, 459 P.3d at 1116; Saunders, ¶ 11, 445 P.3d at 996. It may examine affidavits presented by the defendant which contradict the facts stated in the complaint regarding venue. Ecocards, ¶ 12, 459 P.3d at 1116; Saunders, ¶ 11, 445 P.3d at 996. In this case, the chancery court considered only the complaint and incorporated attachments. See SH v. Campbell Cnty. Sch. Dist., 2018 WY 11, ¶ 5, 409 P.3d 1231, 1233 (Wyo. 2018) (reviewing complaint and attachments when deciding a motion to dismiss).

[5–7] [¶11] We generally review for an abuse of discretion a district court’s ruling on a motion to dismiss based on improper venue. Saunders, ¶ 10, 445 P.3d at 996; Bourke v. Grey Wolf Drilling Co., 2013 WY 93, ¶ 14, 305 P.3d 1164, 1167 (Wyo. 2013). However, this case requires that we answer the legal question of whether LFP could unilaterally waive the AFA’s forum selection clause. We review the trial court’s determinations on questions of law de novo. Ecocards, ¶ 11, 459 P.3d at 1116 (citing Saunders, ¶ 10, 445 P.3d at 996, and BTU W. Res., Inc. v. Berenergy Corp., 2019 WY 57, ¶ 14, 442 P.3d 50, 54-55 (Wyo. 2019)).

DISCUSSION

[8] [¶12] The AFA contains a provision directing that Minnesota law governs its "validity, interpretation, performance and enforcement[.]" We stated in Ecocards that "‘when the contract contains a choice-of-law clause, a court can effectuate the parties’ agreement concerning the forum only if it interprets the forum [selection] clause under the chosen law.’" Ecocards, ¶ 26, 459 P.3d at 1119 (quoting Yavuz v. 61 MM, Ltd., 465 F.3d 418, 428 (10th Cir. 2006)). Thus, "Wyoming courts will enforce choice-of-law provisions and apply foreign law when doing so is not ‘contrary to the law, public policy, or the general interests of [our] citizens.’" Finley Res., Inc. v. EP Energy E&P Co., L.P., 2019 WY 65, ¶ 9, 443 P.3d 838, 842 (Wyo. 2019) (quoting Res. Tech. Corp. v. Fisher Sci. Co., 924 P.2d 972, 975 (Wyo. 1996)). Consistent with this precedent, the chancery court applied Minnesota law to the "threshold" choice-of-forum issues. The parties do not dispute that Minnesota law applies to the issue on appeal. We will, therefore, use Minnesota law to determine whether LFP could unilaterally waive the AFA’s forum selection provision.

[¶13] The forum selection clause, which is found in Section 11(A) of the AFA, reads:

You expressly (i) consent to personal jurisdiction in the state and federal courts located in the State of Minnesota, (ii) waive any argument that venue in any such forum is not convenient, and (iii) agree that any action at law, suit in equity, judicial proceeding, or arbitration arising directly, indirectly, or otherwise in connection with, out of, related to or from this agreement or any provision hereof, shall be litigated only in the appropriate state or federal court in the State of Minnesota, County of Hennepin.

[¶14] LFP executed a document, which it attached to the complaint, waiving "the forum selection and venue provisions stated in Section 11(A) of the AFA[.]" The chancery court ruled LFP was not entitled to unilaterally waive the forum selection clause because the clause benefited Mr. Leighton. Since Mr. Leighton did not agree to waive the requirement that disputes under the AFA be litigated in Minnesota, the chancery court ruled Wyoming was not the proper forum for LFP’s action and dismissed the case "without prejudice to LFP refiling in the appropriate jurisdiction." LFP claims the chancery co...