United States of America v. Travelers Casualty and Surety Company of America et al
MEMORANDUM-DECISION AND ORDERED, that Defendants Motions (Dkt. No. 10) are GRANTED in part as to the request to strike Driscolls jury demand against Serviam, and DENIED in all other respects. Signed by Senior Judge Lawrence E. Kahn on August 25, 2017. (sas)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA, for the
use and benefit of CHARLES T.
DRISCOLL MASONRY RESTORATION,
TRAVELERS CASUALTY AND
SURETY COMPANY OF AMERICA,
MEMORANDUM-DECISION AND ORDER
Plaintiff Charles T. Driscoll Masonry Restoration, Co., Inc. (“Driscoll”) commenced this
action against defendants Travelers Casualty and Surety Company of America (“Travelers”) and
Serviam Construction, LLC, pursuant to the Miller Act, 40 U.S.C. § 3131 et seq., and various
state law causes of action. Dkt. No. 1 (“Complaint”). Presently before the Court is Defendants’
motion to dismiss or transfer and motion to strike. Dkt. No. 10 (“Motions”); see also Dkt.
No. 10-3 (“Memorandum”); Dkt. No. 10-2 (“Orr Affidavit”). Driscoll opposes the Motions, Dkt.
No. 17 (“Response”), and Defendants filed a reply, Dkt. No. 23 (“Reply”). For the reasons that
follow, the Court grants in part and denies in part Defendants’ Motions.
A. Factual History
Driscoll is a New York corporation whose principal place of business is Skaneateles,
New York. Compl. ¶ 3. Travelers, which “is in the business of writing performance and payment
bonds,” is a Connecticut corporation with a principal place of business in Hartford, Connecticut.
Id. ¶ 4. Serviam is a Pennsylvania limited liability company whose principal place of business is
Altoona, Pennsylvania. Id. ¶ 5.
This case stems from a construction project overseen by the Department of Veterans
Affairs (“VA”) in Syracuse, New York. Id. ¶ 6. Serviam contracted with the VA to perform work
related to “the federal project commonly known as ‘Building Facade and Parapet Repairs.” Id.
¶ 7. On October 2, 2015, Travelers issued Serviam a payment bond1 in the amount of $2,444,652.
Id. ¶ 8; see also Orr Aff. Ex. 2. Then, on November 16, 2015, Serviam entered a subcontract with
Driscoll in which Driscoll agreed “to furnish labor, materials and equipment to
complete . . . masonry and abatement work . . . for the agreed sum of $1,080,106.” Compl. ¶ 9;
see also Orr Aff. Ex. 1.2 The subcontract contains the following clause: “The construction,
interpretation, enforcement and all other matters relating to this Subcontract and any amendments
or modifications hereto shall be governed by the laws of the Commonwealth of Pennsylvania,
and jurisdiction and venue for any litigation arising under this Subcontract shall lie within the
appropriate court in Blair County, Pennsylvania.” Orr Aff. Ex. 1, § 11. The subcontract also
“A payment bond is a surety bond issued by an insurance company or bank to guarantee
that all subcontractors and material suppliers on a project will be paid.” Travelers Cas. & Sur.
Co. of Am. v. Frederick (In re Frederick), No. 09-BR-72336, 2012 WL 465857, at *1 n.3 (Bankr.
N.D. Ala. Feb. 13, 2012).
As a result of several change orders and additional work performed by Driscoll, the
subcontract balance is now $1,092,264.53. Compl. ¶¶ 12–13.
states that Driscoll “waives the right to trial by jury on any issues relating to this Subcontract.”
Driscoll began working on the project around July 2016. Id. ¶ 11. At some point, Serviam
accused Driscoll of causing “damage to existing roofs at . . . several project work sites.” Id.
¶¶ 14–15. Driscoll claims it had nothing to do with the damage. Id. ¶ 19. Nevertheless, Serviam
has told Driscoll it will back charge the cost of repairing the roofs against Driscoll’s subcontract
balance, and Driscoll alleges that the repairs will cost over $300,000. Id. ¶¶ 16–17. Serviam has
also informed Driscoll that “it will make no further payments under the Subcontract until the roof
repairs are completed, and the total amount of cost of the repairs has been deducted from
Driscoll’s Subcontract.” Id. ¶ 18. Driscoll has sought payment from Serviam for work valued at
$932,258.53, but Serviam has paid only $487,579.34. Id. ¶ 20. According to Driscoll, it “has duly
performed the Subcontract,” and “Serviam has breached the Subcontract by failing to pay
Driscoll the amount due under the Subcontract.” Id. ¶¶ 24–25.
B. Procedural Background
Driscoll began this action on April 25, 2017. Compl. It brings five causes of action:
breach of contract and quantum meruit against Serviam, id. ¶¶ 27–35, a Miller Act claim against
Travelers, id. ¶¶ 36–41, a request for attorney’s fees, id. ¶¶ 42–44, and a claim under 48 C.F.R.
§ 52.232–27, which is titled “Prompt Payment for Construction Contracts,” id. ¶¶ 45–47.
Driscoll seeks $451,614.49 plus prejudgment interest in damages. Id. ¶ 48.
Defendants, pointing to the forum selection clause quoted above, ask the Court to transfer
this case to the Western District of Pennsylvania. Mem. at 3–6.3 They concede that there is no
federal courthouse in Blair County, Pennsylvania, but they note that there is such a courthouse in
Johnstown, a city in Cambria County, which is “adjacent to Blair County.” Id. at 6. Thus,
Defendants argue, transferring this case to the Western District of Pennsylvania would best
effectuate the parties’ intent. Id. Defendants also seek to strike Driscoll’s jury demand on the
ground that Driscoll agreed to waive its right to a jury trial in the subcontract. Id. at 6–7.
According to Driscoll, the Court cannot enforce the forum selection clause because the
Miller Act provides for exclusive federal jurisdiction, and the clause mandates venue in a county
in which no federal courthouse is located. Resp. at 2–4. Since the clause thus requires this case to
be heard in state court, the argument goes, it is unenforceable. Id. at 4. Driscoll also claims that
Travelers, as a nonsignatory to the subcontract, cannot enforce either the forum selection clause
or the jury waiver. Id. at 7–10.
Defendants purport to bring their motion to dismiss or transfer under 28 U.S.C.
§§ 1404(a) and 1406(a), and Federal Rule of Civil Procedure 12(b)(3). Mem. at 1. But “the
Supreme Court has expressly held that parties may not enforce forum-selection clauses through
Rule 12(b)(3) motions to dismiss.” City of Benkelman v. Baseline Eng’g Corp., No. 16-194,
2017 WL 3442390, at *4 (8th Cir. Aug. 11, 2017) (citing Atl. Marine Constr. Co. v. U.S. Dist.
Court for the W. Dist of Tex., 134 S. Ct. 568, 577 (2013)). And “a motion pursuant
to . . . § 1406(a) cannot rely upon a forum-selection clause.” Volks USA Inc. v. A2 Hosting, Inc.,
No. 16-CV-4277, 2016 WL 6808113, at *4 n.3 (citing Atl. Marine, 134 S. Ct. at 577). Rather, a
forum selection clause may be enforced “only through a motion to transfer venue under 28
U.S.C. § 1404(a).” Rudgayzer v. Google, Inc., No. 13-CV-120, 2014 WL 12676233, at *1
(E.D.N.Y. Feb. 10, 2014) (citing Atl. Marine, 134 S. Ct. at 575).
A. The Forum Selection Clause
“When assessing a motion to transfer on the basis of a forum-selection clause, a court
must first determine whether the forum-selection clause is valid and enforceable.” Vulcan Capital
Corp. v. Miller Energy Res., Inc., No. 13-CV-8751, 2014 WL 4384159, at *2 (S.D.N.Y. Sept. 4,
2014). “The enforceability of forum-selection clauses is determined by federal law, while
interpretive questions going to their ‘meaning and scope’ ‘are resolved under the substantive law
designated in an otherwise valid contractual choice-of-law clause.’” Id. (quoting Martinez v.
Bloomberg LP, 740 F.3d 211, 217–18 (2d Cir. 2014)).
In evaluating the enforceability of a forum selection clause, courts ask
1) whether the clause was reasonably communicated to the party
resisting enforcement; 2) whether the clause is mandatory or
permissive, i.e. whether the parties are required to bring the dispute
to the designated forum or simply permitted to do so; and 3) whether
the claims and parties involved in the suit are subject to the forum
Sick Kids (Need) Involved People of N.Y., Inc. v. 1561599 Ontario, Inc., No. 15-CV-3756, 2015
WL 5672042, at *1 (S.D.N.Y. Sept. 2015) (quoting Martinez, 740 F.3d at 217). A forum
selection clause is “presumptively enforceable” if it “was communicated to the resisting party,
has mandatory force and covers the claims and parties involved in the dispute.” Martinez, 740
F.3d at 217 (quoting Phillips v. Audio Active Ltd., 494 F.3d 378, 383 (2d Cir. 2007)). “A party
can overcome this presumption only by . . . ‘making a sufficiently strong showing that
enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as
fraud or overreaching.’” Id. (quoting Phillips, 494 F.3d at 383–84).
Defendants argue that the forum selection clause at issue here is enforceable under
Martinez. Mem. at 5–6. Driscoll does not dispute Defendants’ Martinez analysis. Instead, it
points to “a more fundamental problem: even if [the clause] were valid under Martinez,
[it] . . . fails for the independent reason that it impermissibly pre-empts exclusive federal court
jurisdiction [over Miller Act claims].” Resp. at 2. The Court agrees with Driscoll.
“The Miller Act is designed to provide an alternate remedy to subcontractors on
government contracts, who cannot pursue traditional remedies, such as suing directly on the
contract or securing a mechanic’s lien against the improved property.” United States ex rel. QSR
Steel Corp. v. Safeco Ins. Co. of Am., No. 14-CV-1017, 2015 WL 4393576, at *1 (D. Conn. July
16, 2015) (collecting cases). Accordingly, the Miller Act provides that a recipient of a “contract
of more than $100,000 . . . for the construction, alteration, or repair of any public building or
public work of the Federal Government” must give the government a “payment bond . . . for the
protection of all persons supplying labor and material in carrying out the work provided for in the
contract.” § 3131(b). “The Miller Act confers on ‘[e]very person that has furnished labor or
material in carrying out work provided for in a contract for which a payment bond is furnished’ a
right to ‘bring a civil action on the payment bond for the amount unpaid at the time the civil
action is brought’” if certain conditions are met. United States ex rel. Krol v. Arch Ins. Co., 46 F.
Supp. 3d 347, 351 (S.D.N.Y. 2014) (alteration in original) (quoting § 3133(b)(1)).
Venue under the Miller act lies “in the United States District Court for any district in
which the contract was to be performed and executed, regardless of the amount in controversy.”
§ 3133(b)(3)(B). Because “[t]his provision is a venue requirement and not a jurisdictional
limitation,” it “may be varied by a valid forum selection clause.” United States v. Liberty Mut.
Ins. Co., No. 15-CV-2767, 2016 WL 1664906, at *2 (E.D.N.Y. Apr. 26, 2016) (collecting cases).
But “such a clause may not alter the exclusive jurisdiction of the federal courts over Miller Act
claims.” Id. (collecting cases); see also United States for Use and Benefit of Bryan Elec. Co. v.
Aetna Cas. & Sur. Co., 297 F.2d 665, 667 (2d Cir. 1962) (noting that the Miller Act “vests
exclusive jurisdiction over suits on Miller Act bonds in the federal courts”). Thus, courts hearing
Miller Act claims will not enforce a forum selection clause that provides only for a state-court
forum. See, e.g., Alamo Masonry & Constr. Contractors, LLC v. Air Ideal, Inc., No. 13-CV-448,
2014 WL 1391024, at *1 (S.D. Tex. Apr. 8, 2014) (“[T]he Miller Act’s exclusive federal
jurisdiction renders a state-only forum-selection clause invalid.”).
The forum selection clause in this case provides that “jurisdiction and venue for any
litigation arising under this Subcontract shall lie within the appropriate court in Blair County,
Pennsylvania.” Orr Aff. Ex. 1, § 11. The parties disagree over the proper interpretation of this
clause. Driscoll argues that it precludes venue in federal court because there is no brick-andmortar federal courthouse in Blair County, Pennsylvania. Resp. at 4. Defendants, for their part,
focus on the phrase “appropriate court,” which they take to refer to “whichever court . . . has the
power to hear the case.” Reply at 3. Because the Western District of Pennsylvania is a “federal
court with jurisdiction over Blair County,” Defendants argue that the clause does not prevent a
federal court from hearing the case. Id. at 4.
As Defendants correctly point out, id. at 3, since this dispute turns on the interpretation of
a forum selection clause, the Court must apply the law selected in the contract’s otherwise valid
choice-of-law clause, see Martinez, 740 F.3d at 217–18 (“In answering the interpretive questions
posed by [forum selection clauses] . . . we normally apply the body of law selected in an
otherwise valid choice-of-law clause.”). Here, the subcontract provides that Pennsylvania law
governs interpretation of its provisions, Orr Aff. Ex. 1, § 11, and there is no reason to doubt the
enforceability of this choice-of-law clause.4 Thus, the Court applies Pennsylvania contract law in
interpreting the forum selection clause.
“[F]ederal courts must give the ‘fullest weight’ to decisions of the state’s highest court
when deciding questions of state law . . . .” Allocco Recycling, Ltd. v. Doherty, 378 F. Supp. 2d
348, 368 (S.D.N.Y. 2005) (quoting Santalucia v. Sebright Transp., Inc., 232 F.3d 293, 297 (2d
Cir. 2000)). If the state’s highest court has not provided relevant guidance, the court is “bound to
apply the law as interpreted by a state’s intermediate appellate courts unless there is persuasive
evidence that the state’s highest court would reach a different conclusion.” V.S. v. Muhammad,
595 F.3d 426, 432 (2d Cir. 2010). But “[w]here . . . a question of state law has not been
conclusively resolved by those [state] courts, our general practice is to look next to the law of the
circuit in which the state is located.” Casey v. Merck & Co., Inc., 653 F.3d 95, 100 (2d Cir. 2011)
(citing Factors Etc., Inc. v. Pro Arts, Inc., 652 F.2d 278, 283 (2d Cir. 1981)). A court may
disregard a pronouncement on an unclear area of state law offered by the relevant federal court of
Under New York choice-of-law principles, which apply here, Weber v. PACT XPP
Techs., AG, 811 F.3d 758, 770 (5th Cir. 2016), courts typically “enforce a choice-of-law clause
so long as the chosen law bears a reasonable relationship to the parties or the transaction,”
Welsbach Elec. Corp. v. MasTec N. Am., Inc., 859 N.E.2d 498, 500 (N.Y. 2006). Serviam is a
Pennsylvania limited liability company with a principal place of business in Altoona,
Pennsylvania. Compl. ¶ 5. That alone suffices to establish a reasonable relationship between
Pennsylvania and the parties. See, e.g., Bleecker v. Zetian Sys., Inc., No. 12-CV-2151, 2013 WL
5951162, at *5 (S.D.N.Y. Nov. 1, 2013) (“A principal place of business is sufficient to establish
a reasonable relationship between the parties and the state.”). Further, there is no indication that
application of Pennsylvania law here would “violate some fundamental principle of justice, some
prevalent conception of good morals, some deep-rooted tradition of the common weal.” Cooney
v. Osgoode Mach., Inc., 612 N.E.2d 277, 284 (N.Y. 1993) (quoting Loucks v. Standard Oil Co.,
120 N.E. 198, 202 (N.Y. 1918)).
appeals only if it believes that “the holding ha[s] been superseded by a later pronouncement from
state legislative or judicial sources, or that prior state court decisions ha[ve] been inadvertently
overlooked by the . . . court of appeals.” Factors, 652 F.2d at 283.
Under Pennsylvania law, “[t]he fundamental rule in contract interpretation is to ascertain
the intent of the contracting parties. In cases of a written contract, the intent of the parties is the
writing itself.” Lesko v. Frankford Hospital-Bucks Cty., 15 A.3d 337, 342 (Pa. 2011) (quoting
Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co., 905 A.2d 462, 468 (Pa. 2006)). Thus, “[w]hen a
written contract is clear and unequivocal, its meaning must be determined by its contents alone.”
Robert F. Felte, Inc. v. White, 302 A.2d 347, 351 (Pa. 1973) (quoting E. Crossroads Ctr., Inc. v.
Mellon-Stuart Co., 205 A.2d 865, 866 (Pa. 1965)). Courts discern “contractual intent” by looking
to “the whole instrument,” and they “do not assume that a contract’s language was chosen
carelessly . . . [or] that the parties were ignorant of the meaning of the language they employed.”
Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418, 429 (Pa. 2001). Pennsylvania law
recognizes that “it is not the function of a court to rewrite [a contract] or to give it a construction
in conflict with the accepted and plain meaning of the language used.” Meeting House Lane, Ltd.
v. Melso, 628 A.2d 854, 857 (Pa. Super. Ct. 1993) (collecting cases).
The parties have not pointed to—and the Court is unable to locate—any Pennsylvania
state court decisions interpreting a forum selection clause with language similar to that at issue
here. But in Wall Street Aubrey Golf, LLC v. Aubrey, 189 F. App’x 82 (3d Cir. 2006), the Third
Circuit, applying Pennsylvania law, interpreted a forum selection clause that read: “This Lease
shall be construed in accordance with the laws of the Commonwealth of Pennsylvania, with
venue laid in Butler County, Pennsylvania.” Id. at 85. The plaintiff argued that the Western
District of Pennsylvania, which does not have a courthouse in Butler County, nevertheless
afforded venue there. Id. at 86. The court disagreed: “To hold that the District Court for the
Western District of Pennsylvania is a venue in Butler County would torture logic and conflate the
disparate concepts of jurisdiction and venue.” Id. True, “the Western District of Pennsylvania has
jurisdiction over Butler County; but as Congress has ordained that it shall sit in Erie, Cambria,
and Allegheny Counties—and nowhere else—it is self-evident that the Court has no location in
Butler County.” Id. at 87. Accordingly, “where venue is laid in Butler County, it is physically and
logically impossible for a federal district court to hear the case.” Id. The court therefore affirmed
the district court’s dismissal of the case without prejudice, noting that the plaintiff “remain[ed]
free to attempt to bring suit in the Pennsylvania Court of Common Pleas, Butler County.” Id.
Aubrey’s application of Pennsylvania contract law applies with equal force here. The
forum selection clause in this case provides that “jurisdiction and venue for any litigation arising
under this Subcontract shall lie within the appropriate court in Blair County, Pennsylvania.” Orr
Aff. Ex. 1, § 11. There is no federal courthouse in Blair County, so “it is physically and logically
impossible for . . . [the Western District of Pennsylvania] to hear th[is] case.” Aubrey, 189 F.
App’x at 87. Thus, under Aubrey’s reasoning, the clause requires this case to be heard in a state
court in Blair County. And since the Third Circuit encompasses Pennsylvania, its interpretation
of Pennsylvania law demands our deference unless “the holding ha[s] been superseded by a later
pronouncement from state legislative or judicial sources, or . . . prior state court decisions
[were] . . . inadvertently overlooked by the . . . court of appeals.” Factors, 652 F.2d at 283.5 There
The Court recognizes that Aubrey is an unpublished opinion and thus not binding
authority. See Golden v. Beers, No. 14-CV-1468, 2015 WL 273649, at *5 n.4 (D.N.J. Jan. 21,
2015) (“[A]n unpublished opinion by the Third Circuit is not precedential . . . .”). It is unclear
is no indication that either of these exceptions applies here. Thus, the Court adopts Aubrey’s
reading of a materially similar forum selection clause and holds that the parties intended to select
a state court forum to hear disputes arising from the subcontract.6
It is true that, unlike the forum selection clause here, the one in Aubrey does not provide
for venue in an “appropriate court” in Butler County. Instead, it simply states that “venue [is] laid
in Butler County, Pennsylvania.” 189 F. App’x at 85. But the phrase “appropriate court” cannot
bear the interpretive weight Defendants assign it. Defendants in effect read that phrase to mean
“a court with jurisdiction over the case.” See Reply at 3 (“‘[A]ppropriate court’ must be a
reference to whichever court . . . has the power to hear the case.”). Since the Western District of
Pennsylvania has jurisdiction over Blair County, Defendants argue, the forum selection clause
allows suit to be filed in federal court. The trouble is that Aubrey rejected a similar attempt to
“conflate the disparate concepts of jurisdiction and venue.” 189 F. App’x at 86. The forum
selection clause here states that “jurisdiction and venue for any litigation arising under this
Subcontract shall lie within the appropriate court in Blair County, Pennsylvania.” Orr Aff. Ex. 1,
whether Factors requires less deference to a sister circuit’s unpublished opinion predicting the
course of state law. Even if it does, the Court finds Aubrey to be the most persuasive prediction
of how the Pennsylvania Supreme Court would interpret the forum selection clause in this case.
See Caronia v. Phillip Morris USA, Inc., 715 F.3d 417, 449 (2d Cir. 2013) (“In cases . . . in
which state law controls and the governing principles are uncertain or ambiguous, we attempt to
predict how the highest court of the state would resolve the uncertainty or ambiguity.” (citing
Travelers Ins. Co. v. 633 Third Assocs., 14 F.3d 114, 119 (2d Cir. 1994))). Moreover, the Third
Circuit “look[s] to [an unpublished] decision as a paradigm of the legal analysis [it]
should . . . follow” where, as here, that decision is “factual[ly] similar” to the case at hand.
Drinker by Drinker v. Colonial Sch. Dist., 78 F.3d 859, 864 n.12 (3d Cir. 1996).
Aubrey was not a Miller Act case, and so it did not present the precise question before
this Court. “[B]ut the different procedural context does not change the outcome of what is a basic
issue of contract interpretation.” Air Ideal, Inc., 2014 WL 1391024, at *3.
§ 11 (emphasis added). The Western District of Pennsylvania has jurisdiction over Blair County,
but it is simply not a venue in Blair County. See Relm Wireless Corp. v. C.P. Allstar Corp., 265
F. Supp. 2d 523, 524 (E.D. Pa. 2003) (“There is no question that this court has jurisdiction over
certain defendants and events situated within the Eastern District of Pennsylvania—a nine-county
area which includes Chester County. However, it trifles with language to describe a lawsuit filed
in this court as one that has ‘venue in Chester County.’”).
Moreover, courts have regularly held that forum selection clauses using the similar phrase
“a court of competent jurisdiction” preclude filing in federal court where the clauses pointed to a
county or city with no federal courthouse. See, e.g., Renaissance Nutrition, Inc. v. Burkard,
No. 12-CV-691, 2013 WL 1855767, at *2, 5–6 (W.D.N.Y. Apr. 11, 2013) (holding that a forum
selection clause pointing to “a court of competent jurisdiction in Blair County, Pennsylvania”
required venue in a state court in that county), adopted by 2013 WL 1855785 (W.D.N.Y. Apr.
30, 2013); Aqua Operations, Inc. v. City of Kyle, No. 11-CV-952, 2012 WL 12883066, at *2
(W.D. Tex. Jan. 27, 2012) (“Although this Court is apparently of ‘competent jurisdiction’ to hear
this case, it is not located within Hays County. Therefore, this Court must enforce the forum
selection clause by dismissing this suit. Were there a federal district court in Hays County, the
Court would of course entertain a motion to transfer venue there, in lieu of dismissal, but there is
no such court.”), aff’d, 515 F. App’x 260 (5th Cir. 2013); Gold Canyon Mining & Constr., LLC
v. Robinson Nev. Mining Co., No. 11-CV-95, 2011 WL 6400295, at *1 (D. Nev. Dec. 20, 2011)
(concluding that a forum selection clause “providing that any dispute arising under the contract
‘shall be decided by a court of competent jurisdiction in Ely, Nevada’” required “a state court
forum” because “there is no federal courthouse located in Ely, Nevada”). Thus, Defendants’
reliance on the phrase “appropriate court” is unavailing.
The Court’s reading of the forum selection clause here is confirmed by the Second
Circuit’s decision in Yakin v. Tyler Hill Corp., 566 F.3d 72 (2d Cir. 2009). There, the court was
tasked with interpreting the following forum selection clause: “the venue and place of trial of any
dispute that may arise out of this Agreement or otherwise, to which Tyler Hill Camp, or its
agents, is a party shall be in Nassau County, New York.” Id. at 74. In 1999, when the events
giving rise to the litigation occurred, there was a federal courthouse in Nassau County, but by the
time the plaintiff commenced litigation, “the federal courthouse in [Nassau County] had closed
and the court was re-located . . . to Central Islip in Suffolk County.” Id. The court found the
clause unambiguous and concluded that “the parties intended that litigation take place in an
appropriate venue in Nassau County and that this commitment was not conditioned on the
existence of a federal courthouse in that county.” Id. at 76. Since there was no federal courthouse
in Nassau County when litigation began, the Second Circuit affirmed the district court’s decision
to remand the case to Nassau County State Supreme Court. Id. Other courts have reached the
same conclusion about similar forum selection clauses. See, e.g., Argyll Equities LLC v. Paolino,
211 F. App’x 317, 319 (5th Cir. 2006) (“Because the forum selection clause unambiguously
establishes that the underlying claims are subject to the exclusive jurisdiction of ‘courts sitting in
Kendall County,’ and the district court does not meet that description, the court properly
dismissed Paolino’s suit . . . .”); Rihani v. Team Exp. Distrib., LLC, 711 F. Supp. 2d 557, 551
(D. Md. 2010) (“[A] venue limitation means what it says: when its language prohibits venue
outside a geographic boundary, it must be interpreted to prohibit venue in any court that sits
outside that geographic boundary.”). But see, e.g., Merrill v. Renier, No. 06-CV-404, 2006 WL
1587414, at *2 (W.D. Wash. June 6, 2006) (“Does a forum selection clause that mandates venue
‘in the county of residence of the non-breaching party,’ prohibit filing or removing an action in a
federal district court that encompasses the county, but has no courthouse within the county?
Under Ninth Circuit law, the answer is ‘No.’”).
Since the forum selection clause in the subcontract unambiguously shows the parties’
intent to litigate this dispute in Pennsylvania state court, it violates the federal courts’ exclusive
jurisdiction over Miller Act claims and is therefore unenforceable. See Air Ideal, Inc., 2014 WL
1391024, at *3 (“Because there is no federal court located in Seminole County and the Miller Act
establishes exclusive federal jurisdiction over the claims in this case, the forum selection clause
is an invalid attempt to override Congress’s intent to have . . . this claim litigated in federal
Defendants argue in their Reply that, even if the Court deems the forum selection clause
unenforceable, it should nevertheless transfer the case to the Western District of Pennsylvania
under § 1404(a). Reply at 7. The Court rejects this argument for two reasons. First, Defendants
did not raise it in their moving papers, and it is well established that courts need not consider
arguments raised for the first time in a reply brief. See, e.g., Bravia Capital Partners, Inc. v. Fike,
296 F.R.D. 136, 144 (S.D.N.Y. 2013) (“[A]rguments may not be made for the first time in a
reply brief.” (quoting Knipe v. Skinner, 999 F.2d 708, 711 (2d Cir. 1993))). Second, even though
§ 1404(a) motions typically require courts to balance nine factors, Royal & Sun All. Ins., PLC v.
Nippon Express USA, Inc., 202 F. Supp. 3d 399, 405 (S.D.N.Y. 2016), Defendants do not
discuss any of them in detail in their Reply, Reply at 7–8. It would be inappropriate for the Court
to consider such an incompletely developed argument. See Herbert v. Architect of Capitol, 839 F.
Supp. 2d 284, 298 (D.D.C. 2012) (“[T]he [defendant] has simply failed to support its argument
with any meaningful measure of factual or legal argument. Courts need not consider cursory
arguments of this kind, and the Court declines to do so here.”).
B. Driscoll’s Jury Waiver
It is well established that “[a] contractual waiver of the right to a jury trial is enforceable
‘if it is made knowingly, intentionally, and voluntarily.’” Westminster Sec. Corp. v. Uranium
Energy Corp., No. 15-CV-4181, 2017 WL 2629475, at *2 (S.D.N.Y. June 19, 2017) (quoting
Merrill Lynch & Co. v. Allegheny Energy, Inc., 500 F.3d 171, 188 (2d Cir. 2007)). But because
the right to a jury “is a fundamental one,” “[c]ourts will indulge every reasonable presumption
against such a waiver.” Idearc Media LLC v. Siegel, Kelleher & Kahn LLP, No. 09-CV-1090,
2012 WL 162563, at *7 (W.D.N.Y. Jan. 18, 2012). Thus, “[c]ontract provisions waiving the right
are narrowly construed, and the requirement of knowing, voluntary, intentional waiver is strictly
applied.” Morgan Guar. Tr. Co. of N.Y. v. Crane, 36 F. Supp. 2d 602, 603 (S.D.N.Y. 1999). “In
addressing jury waiver clauses, courts have consistently examined the following factors:
negotiability of the contract terms, disparity in bargaining power between the parties, the
business acumen of the party opposing the waiver, and the conspicuousness of the jury waiver
provision.” Sullivan v. Ajax Navigation Corp., 881 F. Supp. 906, 911 (S.D.N.Y. 1995)
Defendants seek to strike Driscoll’s jury demand on the ground that Driscoll waived its
right to a jury trial in the subcontract. Mem. at 6–7. The subcontract states that Driscoll “waives
the right to trial by jury on any issues relating to this Subcontract.” Orr Aff. Ex. 1, § 11. Driscoll
does not dispute the enforceability of the waiver with respect to Serviam, but it argues that
Travelers, as the surety, cannot enforce the waiver. Resp. at 9–10. The Court agrees with Driscoll
and thus strikes the jury demand only to the extent that it seeks a jury trial against Serviam.
There is a dearth of authority on the question whether a surety such as Travelers may
enforce a jury waiver contained in a contract between the surety’s principal and the claimant. See
Attard Indus., Inc. v. U.S. Fire Ins. Co., No. 10-CV-121, 2010 WL 3069799, at *2 (E.D. Va.
Aug. 5, 2010) (“[T]he Court has found only two reported cases explicitly dealing with the issue,
each reaching a different conclusion.”). Nonetheless, the Court is persuaded by the reasoning of
the Attard court, which declined to enforce such a waiver.
In Attard, the defendant-insurer sought to enforce a jury waiver contained in a subcontract
between the plaintiff, a sub-subcontractor, and the contractor. Id. at *1. The subcontract stated
that both the plaintiff and the contractor “expressly waive their right to a jury trial for any and all
disputes arising out of or related to performance of this Subcontract.” Id. The subcontract did not
refer to the insurer “or the possibility that a surety will be obtained, or that payment bonds have
been or will be issued in connection with [the contractor’s] performance.” Id. After the
subcontract was executed, the insurer issued payment bonds “with respect to [the contractor’s]
performance in connection with the Project,” and these bonds did “not contain a similar jury
waiver provision, incorporate the Subcontract by reference, or refer to the Subcontract.” Id.
The court was faced with the question whether the insurer, which was not a party to the
subcontract, could enforce the jury waiver. Id. at *2. The court acknowledged that, because “a
surety’s liability to a claimant on a bond is measured by the liability of the surety’s principal to
that claimant,” “a surety, defending a suit on the principal’s bonded obligation, stands in the
principal’s shoes and may assert those defenses to liability available to the principal.” Id. at *3.
And it recognized that “courts have allowed a surety to enforce an arbitration provision in its
principal’s contract with a claimant,” and that “an arbitration clause necessarily gives up not only
a jury but a court trial as well.” Id. But the court refused to allow the insurer to enforce the jury
waiver for three reasons. “First, the justification for a surety to ‘stand in the shoes’ of its principal
diminishes when the principal’s right to be enforced is not related to the principal’s liability to
the claimant, but to the process or procedure relating to the adjudication of that liability.” Id.
at *4. Second, “[t]hose cases that have enforced arbitration provisions, and their concomitant
waiver of a trial and a jury, are driven by the strong federal policy in favor of arbitration.” Id.
There is no similarly strong policy favoring waiver of jury trial rights; indeed, as this Court has
already noted, there is “a strong federal policy against jury waivers.” Id. Third, the Attard court
stressed that “in assessing whether there has been a jury waiver with respect to a given dispute,”
courts entertain every reasonable presumption against waiver. Id.
Here, the subcontract states only that Driscoll “waives the right to trial by jury on any
issues relating to this Subcontract.” Orr Aff. Ex. 1, § 11. It “does not explicitly waive the right to
a jury trial in a suit on a bond, or to any dispute with a non-party to the Subcontract.” Attard,
2010 WL 3069799, at *4. While the subcontract appears to contemplate the possibility of a
payment bond, Orr Aff. Ex. 1, § 7, the payment bond itself contains no mention of a jury waiver,
id. Ex. 2. Given that the right to a jury trial “is fundamental and a presumption exists against its
waiver,” Allegheny Energy, 500 F.3d at 188, and in light of the other arguments advanced in
Attard, the Court declines to permit Travelers to enforce the waiver in these circumstances, see
United States ex rel. Collins Plumbing, Inc. v. Turner-Penick Joint Venture, No. 11-CV-2834,
2013 WL 5462278, at *9 (S.D. Cal. Sept. 30, 2013) (“In short, Turner-Penick and the Surety
Defendants have not made a sufficient showing to overcome the presumption against waiver.
Accordingly, the Surety Defendants may not enforce the jury waiver provision against CCS.”).
But because Driscoll does not dispute that Serviam has standing to enforce the waiver or that it is
enforceable with respect to Serviam, the Court strikes Driscoll’s jury demand to the extent that it
seeks a jury trial against Serviam.
Accordingly, it is hereby:
ORDERED, that Defendants’ Motions (Dkt. No. 10) are GRANTED in part as to the
request to strike Driscoll’s jury demand against Serviam, and DENIED in all other respects;
and it is further
ORDERED, that the Clerk of the Court serve a copy of this Memorandum-Decision and
Order on all parties in accordance with the Local Rules.
IT IS SO ORDERED.
August 25, 2017
Albany, New York
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