ART Janitorial Services, LLC v. Progressive Waste Solutions of LA, Inc.
Filing
21
ORDER and REASONS denying 11 Motion to Remand to State Court, as stated within document. Signed by Chief Judge Kurt D. Engelhardt on 12/8/2016. (cbs)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ART JANITORIAL SERVICES, L.L.C.
CIVIL ACTION
VERSUS
NO. 16-01292
PROGRESSIVE WASTE SOLUTIONS
OF LOUISIANA, INC.
SECTION "N" (5)
ORDER AND REASONS
Presently before the Court is a motion to remand (Rec. Doc. 11) filed by Plaintiff
ART Janitorial Services, L.L.C. ("Plaintiff" or "ART"). Having carefully considered the parties’
briefs and the applicable law, IT IS ORDERED that Plaintiff’s motion is DENIED for the reasons
stated herein.
BACKGROUND
Plaintiff filed the instant breach of contract action against Defendant Progressive
Waste Solutions of Louisiana, Inc. ("Defendant"), on December 30, 2015, in the Civil District Court
for the Parish of Orleans, State of Louisiana (“CDC”). On February 16, 2016, Defendant removed
the action from CDC to the docket of this Court, alleging federal diversity of citizenship jurisdiction,
pursuant to 28 U.S.C. §1332 and §1441.1 As stated in Defendant's notice of removal, Plaintiff and
Defendant are domiciled in different states and the matter in controversy exceeds $75,000, exclusive
1
See Rec. Doc. 1, pp. 1-2.
of interests and costs. Thereafter, Plaintiff filed the instant motion to remand, contending that
Defendant, by virtue of a forum selection clause incorporated by reference into a contract between
Plaintiff and Defendant's predecessor-in-interest, SDT Waste & Debris Services, L.L.C. (“SDT”),
waived its right of federal court removal "[i]n all cases whatsoever related to the Contract."2 In
response, Defendant contests the applicability of the forum selection clause on which Plaintiff
relies, urging that the contract between them lacks a clear and unequivocal waiver of the right of
removal of the claims made in this litigation. Defendant additionally contends that Plaintiff waived
any right it had to compel a CDC forum for certain of its claims by combining them with other
contractual claims not subject to a forum selection clause.
LAW AND ANALYSIS
Federal courts are courts of limited jurisdiction, and removal statutes are to be strictly
construed. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941). When a party removes an
action from state court, the removing party bears the burden of establishing federal jurisdiction over
the controversy at issue. Winters v. Diamond Shamrock Chem. Co., 149 F.3d 387, 397 (5th Cir.
1998). However, forum selection clauses are permissible and will prevent a party from removing
the case if the clause is a "clear and unequivocal" waiver of that party’s right to remove. City of New
Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501, 504 (5th Cir. 2004) (citing McDermott Int'l, Inc.
v. Lloyds Underwriters, 944 F.2d 1199 (5th Cir.1991)).
2
See Rec. Doc. 11-1, p. 1. Urging Defendant's awareness of the (alleged) exclusive
and mandatory nature of the forum selection clause, Plaintiff's motion also seeks costs, expenses,
and attorneys’ fees from Defendant, pursuant to 28 U.S.C. § 1447(c), for Defendant’s removal of
the instant action. Id. at p. 13.
2
A party may waive its right to remove by "explicitly stating that it is doing so, by
allowing the other party the right to choose venue, or by establishing an exclusive venue within the
contract." Id. Consent to proceed in a particular forum is not necessarily a waiver of a party's right
to remove, as a clear expression that the jurisdiction sought is the exclusive venue is required. Id.
(emphasis added). When presented with two reasonable and conflicting interpretations of a contract
term or provision, courts adopt the interpretation less favorable to the drafter. Alliance Health Grp.,
LLC v. Bridging Health Options, LLC, 553 F.3d 397, 399 (5th Cir. 2008).3
The right to enforce a forum selection clause that waives a defendant's right of federal
court removal may itself be implicitly waived. See, e.g., Brister v. Romanowski, Civil Action No.
14-2921, 2015 WL 2090236, *2-3 (E. D. La. May 4, 2015) (Engelhardt, J.); Jefferson Parish
Consol. Garbage Dist. No. 1 v. Waste Mgmt. of Louisiana, L.L.C., Civil Action No. 09-6270, 2010
WL 1731204, *2-3 (E.D. La. Apr. 28, 2010) (Lemelle, J.) This occurs when a plaintiff chooses to
combine claims that are subject to a forum waiver selection clause in the same proceeding with those
derived from a separate contract that lack a forum selection clause. Jefferson Parish Consol.
Garbage Dist. No. 1, 2010 WL 1731204 at * 2-3. Under those circumstances in a diversity case,
3
The Court does not know who drafted the Service Agreement. Further, § XIII of the
Service Agreement (Rec. Doc. 1-1, p. 93 of 160) specifically provides:
The parties each acknowledge that they have read and understand the
terms of this Agreement, have both been informed of the contents
thereof and willingly agree to the terms of this Agreement. The
parties further agree that each was free to negotiate the terms and
conditions of this Agreement and that this Agreement shall not be
construed or interpreted against either party as the drafter of this
Agreement.
3
the entire action becomes removable because partial remand is not permitted when federal removal
jurisdiction is based on diversity of citizenship. Id.
Applying these principles in the instant matter requires consideration of multiple
contractual documents. First, on December 18, 2006, Defendant's predecessor-in-interest, SDT
Waste & Debris Services, L.L.C. (“SDT”), entered into a contract (the “SDT Contract”)4 with the
City of New Orleans (“the City”) to provide curbside collection of solid waste and street/sidewalk
cleaning strictly according to Bid Proposal No. 3025-00156.5
In the SDT Contract, the "Contractor," SDT:
binds itself to perform this contract well and faithfully, strictly in
accordance with said Bid Proposal and its bid thereunder, to observe
and comply with all the conditions and stipulations contained in the
Bid Proposal in every particular, and at all times to abide by and be
held amendable and subject to the terms, penalties and conditions of
said Bid Proposal and this contract.6
The Bid Proposal stipulates that “the Contractor will commence the specified sanitation services and
related operations as specified in Exhibits A-1 and A-2” to the Bid Proposal.7
Exhibit A-2 to the Bid Proposal ("the Exhibit") states:8
4
See Rec. Doc. 1-1, p. 14 of 160 - p. 20 of 160.
5
See Rec. Doc. 1-1, p. 21 of 160 - p. 20 of 160.
6
See Rec. Doc. 1-1, p. 15 of 160.
7
See Rec. Doc. 1-1, p. 26 of 160.
8
See Rec. Doc. 1-1, p. 58 of 160 - p. 60 of 60.
4
Pertinent here,
4. Miscellaneous
A. General Responsibilities
(1) Contractor Responsibilities:
***
(e) The Contractor shall furnish, provide, and maintain
exclusive responsibility for all equipment, labor, fuel and any other
materials necessary to complete the required work in its entirety. The
Contractor shall be responsible for the maintenance and repair of its
own equipment, and the availability, presence, and supervision of its
employees.
(f) The Contractor is ultimately responsible for both his
individual actions, and for those of any agent, representative, and any
subcontractor entity performing services under the scope of the
Agreement. Failure to perform by any of these agents, subcontractors,
or by any other representatives of the Contractor, shall be deemed a
failure to perform by the Contractor , and any an all related liabilities
shall rest with the Contractor.
***
D. Contractor Responsibility: The Contractor shall be solely
responsible for the actions of all persons who provide labor, services,
equipment, or on behalf of the Contractor in connection with the
Contractor's obligations under the Contract, whether or not the person
and/or subcontractor has been approved by the City.
***
K. Applicable Law: The Agreement is to be applied according to
the laws of the State of Louisiana.
L. Jurisdiction: In all cases whatsoever related to the Contract,
the Agreement and the parties thereto are subject to the exclusive
jurisdiction of the State Civil Courts of the Parish of Orleans.9
***
5. Definitions
9
See Rec. Doc. 1-1, p. 60 of 160, §4.L. It is this forum selection clause that Plaintiff
contends establishes CDC as the exclusive jurisdiction for its claims against Defendant.
5
A. Agreement - The written contract between Owner and
Contractor covering the Work to be performed; other Contract
Documents are attached to the Agreement and made a part thereof as
provided therein.
***
C. City - The City of New Orleans.
***
E. Contract - The formal agreement between the City and the
Contractor for the performance of the specified services.
F. Contract Documents - The Bid Documents, Bidder's Bid,
General Specifications, Contract, Performance Bond, Payment Bond,
Bid Bond and any addenda or changes to the foregoing ocuments
agreed to by the City and the Bidder or Contractor.
G. Contractor - The person, individual firm, partnership, joint
venture, corporation or association awarded and performing
Sanitation Services under the Conditions of the Bid and these
Contract Documents.
Thereafter, on February 23, 2008, SDT, as prime contractor, entered into the Service
Agreement (“the Service Agreement”) with Plaintiff, as subcontractor, wherein Plaintiff agreed
to provide the mechanical sidewalk cleaning, manual street/sidewalk sweeping, and pressure
washing services required by the SDT Contract. The Service Agreement states, in pertinent part:10
SERVICE AGREEMENT
THIS MECHANICAL SIDEWALK CLEANING, MANUAL
STREET/SIDEWALK SWEEPING, AND PRESSURE WASHING
SERVICE AGREEMENT ("Agreement") is entered into on
February ____, 2008, but effective as of February ____, 2008
("Effective Date" by and between: SDT Waste & Debris, L.L.C. []
("Contractor"); and ART Janitorial Services, L.L.C.
[]("Subcontractor").
***
10
See Rec. Doc. 101, pp. 85-86 of 160 and pp. 93-94 of 160 (emphasis added).
6
RECITALS
1.
Contractor has entered into a contract with the City of New
Orleans (“the City”) to provide certain services strictly
according to bid proposal number 3025-00156 (the
"Proposal") and contract number K06-619 (the
"Contract") which terms and conditions are hereby
incorporated herein as if copied in extenso.
2.
Contractor and Subcontractor agree to enter an agreement
whereby Subcontractor will perform certain sanitation
services as specified in Exhibit "A-2" (the "Exhibit") titled
"Street/Sidewalk Cleaning Specifications" of the Proposal.
***
I. TERM
The term of this Agreement shall commence on the Effective
Date and shall continue for the remainder of the term of Contractor's
Contract with the City. This Agreement may only be terminated as
provided for in Section VII hereunder.
II. SCOPE OF SERVICES
A.
The scope of services to be provided by Subcontractor per
this Agreement shall be that same scope of services described
in the Exhibit . . . .
***
XIII. ACKNOWLEDGMENT
The parties each acknowledge that they have read and understand
the terms of this Agreement, have both been informed of the contents
thereof and willingly agree to the terms of this Agreement. The
parties further agree that each was free to negotiate the terms and
conditions of this Agreement and that this Agreement shall not be
construed or interpreted against either party as the drafter of this
Agreement.
***
7
XV. GOVERNING LAW
This Agreement shall be construed, interpreted, and enforced
in accordance with the law of the State of Louisiana.
XVI. CONFLICT/CONTROLLING PROVISIONS
If there is any conflict between the provisions, terms and
conditions of this Agreement and those of the Contract, the
Proposal, and the Exhibit, then the provisions, terms and conditions
of the Contract, the Proposal, and the Exhibit shall control.
Whether or not there is a conflict, this Agreement is subject to all of
the provisions, terms and conditions of the Contract, the Proposal,
and the Exhibit.11
***
On April 25, 2008, SDT and Plaintiff entered into a "Louisiana Agreement to Lease
Equipment" (the "Lease Agreement") and a "Reimbursement Agreement" (the "Reimbursement
Agreement"). The Lease Agreement obligated SDT to provide Plaintiff with certain equipment for
use in fulfilling SDT's contracted services.12 The Reimbursement Agreement "in connection with
said rentals and services proved by SDT to ART" allowed for "associated rentals, reimbursements,
and compensation, due from ART to SDT [to] be offset from the monthly compensation due to ART
under the Service Agreement."13
In June 2011, Defendant acquired SDT. Thereafter, Plaintiff and Defendant signed
a Second Amendment to the Equipment Lease and an Amendment to the 2008 Service Agreement
(the “2011 Amendment”), which Plaintiff alleges (wrongfully) decreased its monthly compensation
11
See Rec. Doc. 1-1, p. 93 of 160 - p. 94 of 160 (emphasis added).
12
See Rec. Doc. 16-3, p. 2 of 15.
13
See Rec. Doc. 16-3, p. 7 of 15.
8
by $13,066.85.14 Subsequently, in 2014, following the expiration of the initial contract terms,
Defendant entered into a Second Amendment to the SDT Contract with the City, and a Second
Amendment to the 2008 Service Agreement (the “2014 Amendment”) with Plaintiff, extending
both the original SDT Contract and the 2008 Service Agreement for the year 2014. Both amended
agreements terminated in 2014 without renewal.
In its state court petition, Plaintiff alleges that Defendant (1) breached the 2008
Service Agreement by using strong-arm tactics to force Plaintiff into signing the 2011 Amendment;
(2) that, in the alternative, if the 2011 Amendment be found not void due to duress, Defendant
breached the 2011 Amendment in bad faith in violation of Louisiana Civil Code article 1770; (3)
that Defendant was unjustly enriched because it required Plaintiff to perform litter can patrol
services without paying Plaintiff for those services; (4) that Defendant breached the 2014
Amendment to the Service Agreement by failing to pay Plaintiff the full amount due under that
contract; and (5) that Defendant breached the Equipment Lease and Reimbursement Agreement by
failing to provide Plaintiff with the agreed upon equipment.15
As stated above, in seeking remand, Plaintiff contends that the forum selection clause
included in Section 4. K of the Exhibit16 has been incorporated into the SDT Contract with the City,
and into the Service Agreement, and thus establishes CDC as the exclusive forum for resolution of
the claims it has asserted in this action against Defendant. Defendant disagrees, urging that none
of the contracts between it and Plaintiff – the Service Contract, the Equipment Lease, the
14
See Rec. Doc. 1-1, p. 4 of 160, ¶10.
15
See Rec. Doc. 1-1, p. 4 of 160, ¶¶ 10-11, 13, 18-33.
16
See, supra, p. 5; see also Rec. Doc. 1-1, p. 60 of 160, §4.L.
9
Reimbursement Agreement, and the amendments thereto – includes a provision constituting a clear
and unequivocal waiver of its right to remove the claims made in this litigation to federal court.
Defendant additionally contends that Plaintiff waived any right it had to compel a CDC forum for
its Service Agreement claims by combining them with its Equipment Lease and Reimbursement
Agreement claims, which Defendant contends are not subject to a forum selection clause.
The Court has carefully reviewed the parties' submissions and the authorities on
which they rely. Both parties present sound and compelling arguments in support of their competing
positions. In the end, however, the Court agrees with Defendant that, in this instance, remand is
unavailable to Plaintiff. In reaching this conclusion, the Court accepts Plaintiff's contention that
the forum selection clause set forth in Section 4.L of the Exhibit was incorporated by reference into
the Service Agreement. Even so, the forum selection clause's applicability to the instant dispute
between Plaintiff and Defendant is far from "clear and unequivocal." As such, it fails to waive
Defendant's right of removal.
Specifically, the forum selection clause states: "In all cases whatsoever related to the
Contract, the Agreement and the parties thereto are subject to the exclusive jurisdiction of the State
Civil Courts of the Parish of Orleans."17 Taking into account the definitions assigned by the Exhibit
17
See, supra, p. 5; see also Rec. Doc. 1-1, p. 60 of 160, §4.L.
10
and Service Agreement to the terms "Agreement"18 and "Contract,"19 and by the Exhibit, SDT
Contract, and Service Agreement to the term "Contractor,"20 it thus is only the "written contract
between Owner and SDT covering the Work to be defined," and the parties to that agreement, that
are subjected to the exclusive jurisdiction of CDC, in all "cases whatsoever related to the "formal
agreement between the City and the SDT for the performance of the specified services." The
definition of the term "Owner" as it is used in the Exhibit, however, remains unclear.21 And, even
if the Court assumes the term "Owner" might have been intended to refer to the City, the City is not
a party to this action. Nor, significantly, do Plaintiff's claims arise from an allegedly unfulfilled
contractual duty owed by the City. Rather, Plaintiff's claims are premised upon payment obligations
18
The Exhibit defines the term "Agreement" as "[t]he written contract between Owner
and Contractor covering the Work to be performed; other Contract Documents are attached to the
Agreement and made a part thereof as provided therein." See Rec. Doc. 1-1, p. 60 of 160, §5.A. In
the Service Agreement, however, the term "Agreement" refers to the Service Agreement itself. See
Rec. Doc. 1-1, p. 85 of 160 ("This Mechanical Sidewalk Cleaning, Manual Street/Sidewalk
Sweeping, and Pressure Washing Service Agreement ('Agreement') [] entered into on February ___,
2008, but effective as of February ___ 2008, by and between: SDT Waste & Debris, L.L.C. []
('Contractor'); and ART Janitorial Services, L.L.C. []('Subcontractor').").
19
The Exhibit defines the term "Contract" as "[t]he formal agreement between the City
and the Contractor for the performance of specified services." See Exhibit, Rec. Doc. 1-1, p. 60 of
160, §5.E. In the Service Agreement, the term "Contract" refers to "contract number K06-619",
which is the number reflected on the SDT Contract. See Rec. Doc. 1-1, p. 14 of 160 and p. 85 of
160.
20
See Exhibit, Rec. Doc. 1-1, p. 60 of 160, §5. G. ("Contractor - The person, individual
firm, partnership, joint venture, corporation or association awarded and performing Sanitation
Services under the Conditions of the Bid and these Contract Documents"); see SDT Contract, Rec.
Doc. 1-1, p. 15 of 160 ("SDT Waste & Debris, L.L.C. [] ('Contractor')"); see Service Agreement,
Rec. Doc. 101, p. 85 of 160 ("SDT Waste & Debris, L.L.C. [] ('Contractor')").
21
See Rec. Doc. 1-1, p. 60 of 160, §5.A. Unless it has been overlooked, the parties'
submissions do not include a citation to a particular provision in the Exhibit defining the term
"Owner" as it used therein. Nor has the Court been successful in locate one in the particularly blurry
version of that document that has been provided to the Court. See Rec. Doc. 1-1, p. 21 of 160 - p.
84 of 160.
11
undertaken by SDT, and then Defendant, in the 2008 Service Agreement and the amendment(s)
thereto.
Finally, had either SDT or Plaintiff desired to establish CDC as the court of exclusive
jurisdiction (and venue) for any disputes between them relative to the Service Agreement, they could
have easily included an unambiguous mandatory forum selection clause, expressly waiving federal
court diversity jurisdiction, in that document. Indeed, Plaintiff and SDT expressly acknowledge in
the Service Agreement that they were both free to negotiate the document's terms and conditions,22
and no doubt had assistance of counsel (or the opportunity to consult counsel). And, as Defendant
emphasizes, the parties chose to include provisions in the Service Agreement expressly addressing
matters such as the scope of Plaintiff's duties as subcontractor, termination, indemnity, default,
governing law, SDT's rights and remedies, and conflicting or controlling provisions in the various
contract documents.23 They could have done the same with respect to forum selection. They,
however, did not.
22
See Rec. Doc. 1-1, p. 93 of 160, § XVI.
23
See Rec. Doc. 1-1, p. 85 of 160 - p. 94 of 160.
12
CONCLUSION
It is undisputed that diversity removal jurisdiction exists in this matter unless it has
been validly waived. For the foregoing stated reasons, the Court finds Defendant's otherwise
applicable right of removal has not been waived by means of a clear and unequivocal forum
selection clause mandating exclusive use of a state court forum in the instant action.24 Accordingly,
IT IS ORDERED that Plaintiff’s Motion to Remand (Rec. Doc. 11) is hereby DENIED.
New Orleans, Louisiana, this 8th day of December 2016.
________________________________
KURT D. ENGELHARDT
United States District Judge
24
As stated above, Defendant additionally contends that Plaintiff waived any right it
had to compel a CDC forum for its Service Agreement claims by combining them with its claims
under contracts lacking a forum selection clause, i.e., the Equipment Lease and Reimbursement
Agreement. Given the Court's ruling herein in Defendant's favor relative to the forum selection
clause, it is unnecessary for the Court to rule on this alternative argument. The Court does note,
however, that the three agreements are not completely unrelated. Furthermore, given the offset
authorized in the Reimbursement Agreement, the Court understands Plaintiff to claim that
Defendant's alleged breach of the Equipment Lease resulted in a breach of its payment obligations
under the Service Agreement. See Rec. Doc. 1-1, ¶¶ 30 and 32.
13
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