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Baypack Fisheries LLC v. Nelbro Packing Company (12/17/99) sp-5221
Baypack Fisheries LLC v. Nelbro Packing Company (12/17/99) sp-5221
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
BAYPACK FISHERIES, L.L.C., )
) Supreme Court No. S-9036
Appellant, )
) Superior Court No.
v. ) 3AN-96-07530 CI
)
NELBRO PACKING COMPANY, a ) O P I N I O N
Washington corporation, and )
BRITISH COLUMBIA PACKERS, )
LTD., a Canadian corporation, )
)
Appellees. ) [No. 5221 - December 17, 1999]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Sen K. Tan, Judge.
Appearances: James T. Brennan, Amy L.
Vaudreuil, Hedland, Brennan, Heideman & Cooke, Anchorage for
Appellant. Michael Jungreis, Heller, Ehrman, White & McAuliffe,
Anchorage, Frederick P. Corbit, Heller, Ehrman, White & McAuliffe,
Seattle, Dexter A. Washburn, Law Offices of Dexter A. Washburn,
Seattle, for Appellees.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
MATTHEWS, Chief Justice.
I. INTRODUCTION
Baypack Fisheries, L.L.C., a Washington company formed by
fishermen who fish Alaska waters, sued Nelbro Packing Company, a
Washington corporation with fish processing plants in Alaska, for
breach of contract, fraud, and other related claims. Late in
discovery, Nelbro renewed a motion to dismiss the case for forum
non conveniens, arguing that Alaska is a seriously inconvenient
forum and that the case should be in Washington. The superior
court granted the motion to dismiss. Because it was an abuse of
discretion to grant a forum non conveniens dismissal so late in the
case and because the facts did not support the conclusion that
Alaska is a seriously inconvenient forum, we reverse.
II. FACTS AND PROCEEDINGS
A. Facts
In early 1995, a group of fishermen formed Baypack
Fisheries as a Washington limited liability company. Although most
of Baypack's members were Washington residents, almost all of them
were professional fishermen who made their living fishing in
Alaskan waters. Their plan was to purchase the RED SEA, a 360-foot
processing vessel, moor the ship in Alaska, and process salmon
caught by their members and other fishermen. The business office
and financial dealings of Baypack remained in Washington.
Baypack's members contributed substantial financial
resources towards the purchase of the RED SEA. The company
borrowed the remainder of the purchase price from a Washington
bank, West One Bank, now the U.S. Bank of Washington. The Bank's
loan was secured by a first mortgage on the RED SEA.
On May 10, 1995, Baypack entered into a five-year
exclusive marketing agreement with Nelbro Packing Company. Nelbro
is a Washington corporation that owns and operates four fish
processing plants in Alaska and markets Alaskan fish to Japanese
buyers. In exchange for a sales commission, Nelbro agreed to
market Baypack's fish and provide on-site training and technical
assistance. Nelbro also agreed to provide Baypack with a $1.5
million line of credit to be repaid from the delivery and sale of
the fish. Three months later, on August 10, 1995, Nelbro loaned
Baypack an additional $343,928.
The relations between Baypack and Nelbro quickly soured.
Baypack claims that Nelbro's promise to provide on-site technical
expertise never materialized and that Baypack's operations suffered
as a result. Baypack also claims that Nelbro sabotaged Baypack's
relationship with the Bank in retaliation for Baypack's refusal to
participate in Nelbro's price-fixing scheme. In July 1995, in a
meeting at Nelbro's processing plant in Naknek, Alaska, Nelbro
president Trevor Beeston allegedly accused Baypack's manager of
paying too high a price for fish and "stealing"fishermen from
other processors. When Baypack's manager refused to discuss
lowering its prices, Nelbro allegedly retaliated by refusing to
give a visiting Bank official access to information about the value
of Baypack's fish. The Bank then suspended Baypack's line of
credit and called for an immediate repayment of Baypack's entire
balance.
In January 1996, Baypack terminated the marketing
agreement with Nelbro because of its perception that Nelbro had
breached the agreement. A new marketing agreement was then formed
whereby Nelbro agreed to help finance Baypack's 1996 operations and
its retrofitting of the RED SEA so that the ship could process
herring and salmon more efficiently. Baypack claims that soon
after it began renovating the RED SEA, Nelbro reneged on its
promise to provide financial assistance. Without money to complete
the renovations, Baypack was unable to make the RED SEA seaworthy
in time for the 1996 fishing season.
Unable to pay its creditors, Baypack filed for Chapter 11
bankruptcy in the United States Bankruptcy Court for the Western
District of Washington in April 1996. The bankruptcy led to the
foreclosure sale of the RED SEA, the primary proceeds of which went
to the Bank.
B. Proceedings
On September 20, 1996, Baypack initiated this lawsuit
against Nelbro, Nelbro's parent corporations, British Columbia
Packers, Weston Resources, Inc., and George Weston, Ltd. Baypack's
complaint sought damages for breach of contract, breach of the
covenant of good faith and fair dealing, tortious interference with
business and economic relationships, lender liability, and fraud.
In its answer, Nelbro counterclaimed for the balance due
on the $1.5 million May 1995 loan. Nelbro also moved to dismiss
the case on forum non conveniens grounds. The superior court
denied the motion on July 31, 1997. The court found that although
the cost and convenience of obtaining witnesses supported a
Washington forum, the balance of private and public interests did
not strongly favor rejecting the plaintiff's choice of an Alaska
forum.
Substantial discovery followed the court's initial denial
of the forum non conveniens motion. During discovery, the parties
filed numerous important motions. Baypack moved to amend its
complaint. Nelbro moved for summary judgment on its counterclaim.
George Weston, Ltd., and Weston Resources, Inc., moved to dismiss
for lack of personal jurisdiction. Finally, Nelbro moved for
summary judgment on Baypack's claims for tortious interference,
lender liability, and fraud. The superior court ruled on some of
these motions, granting summary judgment in favor of Nelbro on its
$1.5 million counterclaim and dismissing the claims against George
Weston, Ltd., and Weston Resources, Inc., for lack of personal
jurisdiction.
In preparation for trial, the parties filed their initial
disclosures and agreed to deadlines for exchanging final witness
lists. The parties agreed to a three-week trial, scheduled to
commence on April 19, 1999.
On April 10, 1998, Nelbro renewed its motion for a forum
non conveniens dismissal, arguing that discovery had demonstrated
that Alaska was a seriously inconvenient forum and that the case
should be tried in Washington where the majority of witnesses,
documents, and parties were located. This time, the superior court
agreed with Nelbro's arguments. On September 30, 1998 -- fourteen
months after its initial decision denying dismissal and two years
after the case was originally filed -- the superior court dismissed
the case for forum non conveniens. On January 21, 1999, the
superior court entered final judgment on the forum non conveniens
dismissal, the counterclaim summary judgment, and the Weston
dismissal for lack of personal jurisdiction.
This appeal followed.
III. STANDARD OF REVIEW
We review a superior court's decision regarding dismissal
on forum non conveniens grounds for abuse of discretion. [Fn. 1]
Such a decision is
committed to the sound discretion of the trial
court. It may be reversed only when there has been a clear abuse
of discretion; where the court has considered all relevant public
and private interest factors, and where its balancing of these
factors is reasonable, its decision deserves substantial
deference.[ [Fn. 2]]
If the trial court has examined all relevant factors, an abuse of
discretion exists only where the trial court's determination is
"manifestly unreasonable."[Fn. 3]
IV. DISCUSSION
A. It was an Abuse of Discretion to Dismiss the Case for
Forum Non Conveniens.
Under the doctrine of forum non conveniens, a court
should decline to exercise its jurisdiction only if the selected
forum is a seriously inconvenient place to conduct litigation. [Fn.
4] We have previously held that this doctrine has "only an
extremely limited application"in cases where a plaintiff is a
resident of the forum state. [Fn. 5] Moreover, in all cases, a
plaintiff's choice of forum should rarely be disturbed unless the
balance of private and public interests weighs strongly in favor of
dismissing the case. [Fn. 6]
In Crowson v. Sealaska Corp., we identified five factors
relevant to the forum non conveniens determination:
[T]he ease of access of proof, the
availability and cost of obtaining witnesses, the possibility of
harassment of the defendant in litigating in an inconvenient forum,
the enforceability of the judgment, [and] the burden on the
community in litigating matters not of local concern . . . .[ [Fn.
7]]
Reviewing the superior court's analysis of these five factors, we
conclude that it was an abuse of discretion to find that these
factors weighed strongly in favor of dismissing the case.
In this case, only two of the five factors were even
marginally relevant to the forum non conveniens determination.
Unlike the situation in Bromley v. Mitchell, [Fn. 8] the superior
court found no evidence that Baypack chose the Alaska forum in
order to harass the defendants. Nor did the superior court find
that there would be any problem enforcing an Alaska judgment
against the defendants.
The superior court found that ease of access to proof
weighed in favor of dismissing the case since the majority of
witnesses and most documents were located in Washington. The court
also found that the availability and cost of obtaining witnesses
weighed in favor of dismissing the case. But these factors had
lost much of their force at the time the motion was granted.
The status of a case with respect to discovery, motion
practice, and trial scheduling can be a critical factor in
determining a forum non conveniens motion. "[I]f extensive
discovery on the merits has taken place or if the court has
expended significant resources on the case, considerations of
judicial economy weigh in favor of retaining the action."[Fn. 9]
Similarly, "whenever discovery in a case has proceeded substanti-
ally so that the parties already have invested much of the time and
resources they will expend before trial, the presumption against
dismissal . . . greatly increases."[Fn. 10]
When this case was dismissed, trial was scheduled to
begin in less than seven months. A discovery master had actively
supervised extensive discovery in Washington and was ready to serve
as needed in the discovery that remained. Moreover, the critical
documents had already been produced and numerous depositions had
been taken. [Fn. 11] Nelbro's attorneys had expended more than
three thousand hours of professional time on the case, for which
the attorneys had billed more than $500,000. We assume Baypack's
efforts were of a similar magnitude. The court had already ruled
on a number of issue-narrowing motions and numerous others had been
submitted and awaited the court's rulings. Given this level of
case development, circumstances would have to be truly
extraordinary to justify a forum non conveniens dismissal.
Extraordinary circumstances did not exist. The factor
relating to ease of access to proof had been largely mooted,
because most of the evidence that would be relied upon at trial had
already been obtained by discovery. The same is true regarding the
availability and cost of obtaining witnesses. If non-party
witnesses residing outside the state refuse to attend the trial,
their depositions may be used. Moreover, Nelbro failed to show, as
required by Crowson, [Fn. 12] that there were specific critical
non-party witnesses who would refuse to appear voluntarily.
Nelbro estimated the extra cost of transporting non-
resident witnesses to an Alaska trial as $50,000. While this sum
may appear significant, it is a relatively small amount in the
context of this multi-million dollar case. For example, it is less
than half of the court-awarded attorney's fees that Nelbro sought
after it obtained the dismissal. [Fn. 13]
Finally, the superior court found that Alaska's interest
in this case is minimal compared to Washington's interest and that
litigating the case in Alaska would burden an Alaska jury with
matters of non-local concern. We disagree. This case involves
allegations of fraud, price-fixing, and unfair business practices
in the Alaska fishing industry. Although the primary parties,
Baypack and Nelbro, are technically Washington-based companies,
both companies conduct significant operations in Alaska. In
addition, although the contracts and loans were negotiated and
signed in Washington, the events giving rise to this lawsuit
occurred both in Washington and in Alaska. Thus, the issues in
this case are of local concern and Alaska's interest is at least as
strong as that of Washington.
We hold that it was manifestly unreasonable to conclude
that the balance of factors weighed heavily in favor of dismissal.
There is nothing in the record to suggest that litigating this case
in Alaska posed an undue hardship to the defendants or that the
plaintiff purposely brought this case in Alaska to harass the
defendants. Most importantly, by the time the superior court
dismissed the case for forum non conveniens, the question as to
whether Alaska was a "seriously inconvenient forum"was largely a
moot issue. At that point, the parties had already invested
significant time and resources litigating the case in the Alaska
forum. Absent an extremely compelling showing by Nelbro that it
would be unduly prejudiced by an Alaska trial, the superior court
should have retained jurisdiction. Because Nelbro failed to make
such a showing, we hold that it was an abuse of discretion to grant
a forum non conveniens dismissal.
B. The Summary Judgment on Nelbro's Counterclaim and the
Dismissal of the Weston Defendants for Lack of Personal
Jurisdiction
Because we are reversing the superior court's dismissal
for forum non conveniens, we need not reach the merits of Baypack's
appeal of summary judgment for Nelbro's $1.5 million counterclaim.
We note only that under the original grant of summary judgment,
Nelbro could not enforce the $1.5 million judgment until Baypack
litigated its own claims on their merits, the resolution of which
might count as an offset against the $1.5 million judgment. [Fn.
14] Now that the final judgment has been vacated, Nelbro will
similarly be restrained from enforcing the $1.5 million judgment
until the entire case has concluded and the appropriate offsets
have been resolved.
Baypack abandoned its appeal related to the dismissal of
Weston Resources, Inc. However, Baypack argues that the trial
court abused its discretion in refusing to allow Baypack additional
discovery time before the court ruled on the motion to dismiss
George Weston, Ltd. We agree. On remand, the superior court
should allow Baypack additional discovery regarding George Weston,
Ltd.'s, jurisdictional ties to Alaska.
V. CONCLUSION
Because this case was dismissed for forum non conveniens
after extensive discovery and the expenditure of significant
judicial resources, and because the balance of relevant factors did
not then weigh in favor of dismissal, we conclude it was an abuse
of discretion to dismiss Baypack's case. The decision of the
superior court is REVERSED and this case is REMANDED for further
proceedings.
FOOTNOTES
Footnote 1:
See Bromley v. Mitchell, 902 P.2d 797, 800 (Alaska 1995).
Footnote 2:
Id. (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257
(1981)).
Footnote 3:
Id. at 801.
Footnote 4:
See Crowson v. Sealaska Corp., 705 P.2d 905, 907-08 (Alaska
1985).
Footnote 5:
Bromley, 902 P.2d at 800 (quoting Crowson, 705 P.2d at 908).
Footnote 6:
See Crowson, 705 P.2d at 908.
Footnote 7:
Id. (citations omitted).
Footnote 8:
902 P.2d at 801-02.
Footnote 9:
17 James Wm. Moore et al., Moore's Federal Practice 111.90,
at 111-245 to 111-246 (3d ed. 1999).
Footnote 10:
Lony v. E.I. Du Pont de Nemours & Co., 935 F.2d 604, 614 (3d
Cir. 1991).
Footnote 11:
Nelbro does not dispute that discovery was considerably
advanced by the time the trial court granted the dismissal.
Footnote 12:
705 P.2d at 908.
Footnote 13:
Most of the fees requested by Nelbro were covered by Civil
Rule 82, which provides for partial reimbursement of fees expended
by the prevailing party. Washington has no similar rule routinely
awarding fees to the prevailing party.
Footnote 14:
The superior court conditioned its original grant of summary
judgment on the requirement that its order "shall not foreclose
plaintiff from pursuing the contractual and non-contractual claims
it has asserted against the defendants . . . ."
