Alamo Masonry & Construction Contractors, LLC v. Air Ideal, Inc. et al
Filing
26
MEMORANDUM AND ORDER denying 6 MOTION to Transfer Case to U.S. District Court for the Middle District of Florida (Signed by Judge Gregg Costa) Parties notified.(arrivera, 3)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
ALAMO MASONRY &
CONSTRUCTION CONTRACTORS,
LLC,
Plaintiff,
VS.
AIR IDEAL, INC., et al,
Defendants.
§
§
§
§
§
§
§
§
§
§
CIVIL ACTION NO. 3:13-CV-00448
MEMORANDUM AND ORDER
Plaintiff Alamo Masonry & Construction Contractors, LLC filed suit
seeking funds from a payment bond related to a construction project for the U.S.
Coast Guard Sector Field Office in Galveston. Defendants Air Ideal, Inc. and The
Gray Insurance Company filed a Motion to Transfer Case to the U.S. District Court
for the Middle District of Florida (Docket Entry No. 6) based on a forum-selection
clause in the parties’ subcontract.
That clause provides that “[a]ny legal
proceeding of any nature arising out of, in connection with, or by virtue of this
agreement, shall be submitted to trial without jury in a court of competent
jurisdiction located in Seminole County, Florida.” Docket Entry No. 6-2 at 26.
Resolution of the transfer issue turns on whether the agreement to hear this dispute
in a court “located in Seminole County, Florida”—a county where no federal
courthouse exists—provides solely for a state court forum. If that is the case, then
1/6
the clause conflicts with the exclusive jurisdiction that federal courts have over
Miller Act cases.
I.
The Miller Act’s Exclusive Federal Jurisdiction Trumps A State-Only
Forum-Selection Clause
In reversing the Fifth Circuit in a recent venue transfer case, the Supreme
Court emphasized that forum-selection clauses should prevail under a section 1404
transfer analysis unless extraordinary public interest factors counsel otherwise. See
Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Texas, --- U.S. ----,
134 S. Ct. 568, 581–82 (2013). But this case presents the following issue unrelated
to the general enforceability of forum selection clauses and thus one not controlled
by Atlantic Marine: whether a forum selection clause providing for only a state
court forum can override Congress’s intent to provide exclusive federal jurisdiction
over a claim.
On this issue, the parties agree. This dispute is governed by the Miller Act,
40 U.S.C. §§ 3131–33, the statute that governs performance and payment bonds
for construction projects involving the federal government.
The Miller Act
provides for exclusive federal jurisdiction. 40 U.S.C. § 3133; see United States ex
rel. Harvey Gulf Int’l Marine, Inc. v. Maryland Cas. Co., 573 F.2d 245, 247 (5th
Cir. 1978). And the defendants do not dispute that that the Miller Act’s exclusive
federal jurisdiction renders a state-only forum-selection clause invalid. See United
States ex rel. B & D Mech. Contractors, Inc. v. St. Paul Mercury Ins. Co., 70 F.3d
2/6
1115, 1118 (10th Cir. 1995) (“[A] forum selection clause which attempts to divest
the federal courts of their exclusive jurisdiction to hear this case is void and
unenforceable.”). But the parties disagree on whether the forum-selection clause in
this case, which refers to a county where no federal court physically sits, provides
only a state court forum. The Court now turns to that question.
II.
Does The Forum-Selection Clause Contemplate Only A State Court
Forum?
Numerous courts have addressed whether similar forum-selection clauses
provide solely for a state court forum, and they have reached different conclusions.
Compare Yakin v. Tyler Hill Corp., 566 F.3d 72, 75–76 (2d Cir. 2009) (finding that
a forum-selection clause designating venue “in Nassau County, New York”
precluded removal to the Eastern District of New York because no federal
courthouse exists within Nassau County); Excell, Inc. v. Sterling Boiler & Mech.,
Inc., 106 F.3d 318, 321 (10th Cir. 1997) (“Because the language of the clause
refers only to a specific county and not to a specific judicial district, we conclude
venue is intended to lie only in state district court.” (citing Intermountain Sys., Inc.
v. Edsall Const. Co., 575 F. Supp. 1195, 1198 (D. Col. 1983))); Rihani v. Team
Exp. Distrib., LLC, 711 F. Supp. 2d 557, 561 (D. Md. 2010) (“Grafting language—
‘a court with venue over’—onto a forum selection clause is inconsistent with basic
contract law principles.”); Infinite Tech., Inc. v. Rockwell Elec. Commerce Corp.,
2001 WL 527357, at *1–2 (N.D. Ill. May 16, 2001) (contract requiring suit to be
3/6
brought in “courts of DuPage County, State of Illinois” could not be interpreted to
include federal court located in Cook County, Illinois); and Intermountain Sys.,
575 F. Supp. at 1197–98 (interpreting a forum selection cause which mandated
venue in Adams County, Colorado to include the federal district court for Colorado
“would be a severe catachresis”); with Nahigian v. Juno-Loudoun, LLC, 661 F.
Supp. 2d 563, 568 (E.D. Va. 2009) (“This decision holds to the distinction clearly
set forth in Ferri Contracting: if a venue provision does not contain a reference to
sovereignty, then a geographic restriction permits litigation in either the state or
federal courts for that geographic region.” (citation omitted)); Xgel Tech., LLC v.
C.I. Kasei Co., Ltd., 2009 WL 1576837, at *2 (E.D. Mo. June 3, 2009) (construing
forum-selection clause requiring venue “in Phelps County, Missouri” as a
“geographical limitation” and not “waiv[ing] defendants’ right to remove the case
to th[at] Court,” which encompasses, but is not located in, Phelps County); Priority
Healthcare Corp. v. Chaudhuri, 2008 WL 2477623, at *2–3 (M.D. Fla. June 18,
2008) (rejecting argument that forum-selection clause designating venue in
Seminole County precluded removal “because no federal court sits in Seminole
County”); Epps v. 1.I.L., Inc., 2007 WL 4463588, at *3 (E.D. Pa. Dec. 19, 2007)
(“The provision’s plain language is construed to permit the action in any court of
the county, including the federal court in the federal judicial district encompassing
Wayne County, Pennsylvania, regardless of whether the federal court is physically
4/6
located in the county.”); and Oldlaw Corp. v. Allen, 2007 WL 2772697, at *6
(C.D. Ill. Sept. 24, 2007) (construing forum-clause specifying venue in Scottsdale,
Arizona to include federal district court encompassing Scottsdale, even though no
federal courthouse existed in Scottsdale).
The Fifth Circuit has taken the position of the two other courts of appeals to
consider this issue—the Second and Tenth—in holding that clauses restricting
venue to counties without federal courthouses are intended to make state court
venue mandatory. See Collin Cnty. v. Siemens Bus. Servs., Inc., 250 F. App’x 45,
52 (5th Cir. 2007). Although Collin County is not binding precedent, the Fifth
Circuit later followed its reasoning in holding that a clause “providing for venue in
a specific county, permits venue in either federal or state court, [when] a federal
courthouse is located in that county.” Alliance Health Grp., LLC v. Bridging
Health Options, LLC, 553 F.3d 397, 400 (5th Cir. 2008) (“Defendants urged on
appeal that ‘the clause’s language allows removal to a federal district court whose
jurisdiction encompasses, as well as those courts actually regularly sitting in,
Collin County.’ Our court rejected that contention, finding ‘persuasive [the]
distinction between courts encompassing an area and those sitting in or hearing
cases in an area.’” (quoting Collin Cnty., 250 F. App’x at 52)).
Collin County arose in the context of whether a case could be removed to
federal court despite the state-only forum-selection clause, but the different
5/6
procedural context does not change the outcome of what is a basic issue of contract
interpretation. “A forum selection clause that specifies venue in a county that has
no federal court cannot reasonably be interpreted to permit suit in a federal court
located in a different county.” First Nat’l of N. Am., LLC v. Peavy, 2002 WL
449582, at *2 (N.D. Tex. Mar. 21, 2002) (collecting cases). That is an even easier
call to make in this case because the clause refers to a court “located in” the county
where no federal court sits, thus reinforcing that this is a geographical restriction
on where the courthouse exists rather than a jurisdictional one involving where its
power extends.
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 all this
claim litigated in federal court. Accordingly, the Court DENIES Defendants’
Motion to Transfer (Docket Entry No. 6), and this case will be litigated in this
Court where venue is otherwise proper. See 40 U.S.C. § 3133(b)(3) (providing that
Tucker Act suits “must be brought in the United States District Court for any
district in which the contract was to be performed and executed”).
SIGNED this 8th day of April, 2014.
___________________________________
Gregg Costa
United States District Judge
6/6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?