Opinion
Civil Action No. 1:21-cv-1078
2021-12-13
UNITED STATES FOR the USE AND BENEFIT OF ALLAN MYERS VA, INC., and Allan Myers VA, Inc., Plaintiffs, v. WESTFIELD INSURANCE COMPANY, Defendant, and Ocean Construction Services, Inc., Defendant / Counterclaim Plaintiff, v. United States for the Use and Benefit of Allan Myers VA, Inc., et al., Counterclaim Defendants.
Douglas L. Patin, Bradley Arant Boult Cummings LLP, Washington, DC, for Plaintiff United States for the Use and Benefit of Allan Myers VA, Inc. Douglas L. Patin, Amy Elizabeth Garber, Eric Arthur Frechtel, Pro Hac Vice, Bradley Arant Boult Cummings LLP, Washington, DC, for Plaintiff Allan Myers VA, Inc. David Allen Hearne, Reaves Coley PLLC, Chesapeake, VA, for Defendant / Counterclaim Plaintiff Ocean Construction Services, Inc. David Downing Gilliss, Pro Hac Vice, Pike & Gilliss, LLC, Timonium, MD, Schyler A. Bailey, Bowie & Jensen LLC, Anthony Jude Magnetti Kikendall, Pro Hac Vice, Pike & Gilliss, LLC, Towson, MD, for Defendant Westfield Insurance Company. Douglas L. Patin, Amy Elizabeth Garber, Bradley Arant Boult Cummings LLP, Washington, DC, for Counterclaim Defendant Allan Myers VA, Inc. Douglas L. Patin, Bradley Arant Boult Cummings LLP, Washington, DC, for Counterclaim Defendant United States for the Use and Benefit of Allan Myers VA, Inc.
Douglas L. Patin, Bradley Arant Boult Cummings LLP, Washington, DC, for Plaintiff United States for the Use and Benefit of Allan Myers VA, Inc.
Douglas L. Patin, Amy Elizabeth Garber, Eric Arthur Frechtel, Pro Hac Vice, Bradley Arant Boult Cummings LLP, Washington, DC, for Plaintiff Allan Myers VA, Inc.
David Allen Hearne, Reaves Coley PLLC, Chesapeake, VA, for Defendant / Counterclaim Plaintiff Ocean Construction Services, Inc.
David Downing Gilliss, Pro Hac Vice, Pike & Gilliss, LLC, Timonium, MD, Schyler A. Bailey, Bowie & Jensen LLC, Anthony Jude Magnetti Kikendall, Pro Hac Vice, Pike & Gilliss, LLC, Towson, MD, for Defendant Westfield Insurance Company.
Douglas L. Patin, Amy Elizabeth Garber, Bradley Arant Boult Cummings LLP, Washington, DC, for Counterclaim Defendant Allan Myers VA, Inc.
Douglas L. Patin, Bradley Arant Boult Cummings LLP, Washington, DC, for Counterclaim Defendant United States for the Use and Benefit of Allan Myers VA, Inc.
ORDER
T. S. Ellis, III, United States District Judge At issue in this Miller Act case is whether the Court should grant Defendant Ocean Construction's Motion to Transfer pursuant to 28 U.S.C. § 1404 (Dkt. 7), joined by Defendant Westfield Insurance (Dkt. 13). Specifically, Defendants seek transfer to the Norfolk Division of the United States District Court for the Eastern District of Virginia, citing a forum selection clause in the subcontract between Defendant Ocean Construction and Plaintiff Allan Myers. The Allan Myers Plaintiffs, as well as Counterclaim Defendants Fidelity and Berkshire Hathaway, oppose transfer. The Motions to Transfer have been fully briefed by the parties and orally argued on December 10, 2021 and are therefore ripe for disposition. For reasons stated in this Order, the request to transfer this case to the Norfolk Division must be granted.
40 U.S.C. §§ 3131 –3134.
A brief note on the designations of the parties is warranted. The dispute in this matter stems from a construction contract between general contractor Ocean Construction Services, Inc., and subcontractor Allan Myers VA, Inc. In the original complaint in this matter (Dkt. 1), the Allan Myers Plaintiffs filed suit against Defendant Ocean Construction as well as Ocean Construction's surety, Defendant Westfield Insurance Company. Subsequently, Ocean Construction filed a counterclaim against the Allan Myers Plaintiffs (Dkt. 10). Ocean Construction then filed a third-party complaint (Dkt. 18) against Allan Myers's sureties, Fidelity & Deposit Company of Maryland and Berkshire Hathaway Specialty Insurance Company, styling the sureties as Third-Party Defendants. However, Fidelity and Berkshire Hathaway, as Allan Myers's sureties, are potentially subject to direct liability on the counterclaim, not derivative third-party liability to Ocean Construction on the original claim. Accordingly, Fidelity and Berkshire Hathaway are correctly designated as Counterclaim Defendants, not Third-Party Defendants. The parties confirmed this designation at oral argument.
Also pending before the Court is Defendant Ocean Construction's Motion to Stay (Dkt. 5), which seeks to stay this matter pending Plaintiffs' exhaustion of administrative remedies. Because this matter will be transferred to the Norfolk Division, it is neither appropriate nor necessary to address Defendant's Motion to Stay.
At the outset, as a threshold requirement, 28 U.S.C. § 1404(a) permits transfer only to a venue where an action "might have been brought" in the first place. The analysis therefore begins with the question of whether Allan Myers could have filed this action in the Norfolk Division of the Eastern District of Virginia. The parties do not dispute that the contract between Ocean Construction and Allan Myers is valid and contains a forum selection clause which mandates that all disputes arising out of the contract must be brought in "the Circuit Court of the City of Virginia Beach, Virginia or the United States District Court for the Eastern District of Virginia, Norfolk Division." Nonetheless, the parties opposed to transfer assert that the Norfolk Division would not have been a proper venue under the terms of the Miller Act.
The parties' argument pursuant to the Miller Act is unpersuasive for two reasons. First, the venue provision of the Miller Act mandates that any action brought thereunder must be filed "in the United States District Court for any district in which the contract was to be performed and executed." 40 U.S.C. § 3133(b)(3)(B) (emphasis added). The parties represent that the contract between Ocean Construction and Allan Myers covered work to be performed at a location in the Eastern District of Virginia, namely Arlington National Cemetery. Because the contract selects a venue within the Eastern District of Virginia—the Norfolk Division—the plain text of the Miller Act would have permitted Allan Myers to file suit in that division.
The Allan Myers Plaintiffs further observe that Local Civil Rule 3(C) states that "civil actions for which venue is proper in this district shall be brought in the proper division, as well," and Arlington National Cemetery falls within the Alexandria Division. But the contention that this rule barred plaintiff from instituting this action in the Norfolk Division is not persuasive. For one, while Local Civil Rule 3(C) instructs that 28 U.S.C. § 1391 "shall be construed as if the terms ‘judicial district’ and ‘district’ were replaced with the term ‘division,’ " Rule 3(C) does not include the same command with respect to the Miller Act. Moreover, Local Civil Rule 3(C) does not instruct courts in this district to ignore contractual forum selection provisions or state that a particular division specified by contract is not a "proper division."
Second, even assuming (without deciding) that the venue provision of the Miller Act would have been an impediment to instituting this action in the Norfolk Division, the clear weight of judicial authority indicates that parties may waive that provision by contract. Several federal circuit courts have so held, and the parties cite no circuit authority to the contrary. See B & D Mechanical Contractors, Inc. v. St. Paul Mercury Ins. Co. , 70 F.3d 1115, 1117 (10th Cir. 1995) ; Pittsburgh Tank & Tower, Inc. v. G & C Enterprises, Inc. , 62 F.3d 35, 36 (1st Cir. 1995) ; FGS Constructors, Inc. v. Carlow , 64 F.3d 1230, 1233 (8th Cir. 1995) ; In re Fireman's Fund Ins. Cos. , 588 F.2d 93, 95 (5th Cir. 1979). The Allan Myers Plaintiffs cite just one unpublished and unpersuasive district court decision to the contrary: U.S.A. ex rel. Advance Concrete, LLC v. T.H.R. Enterprises, Inc. , No. 2:1-cv-477, 2016 WL 3002408 (E.D. Va. May 19, 2016). In summary, the parties agreed by contract to litigate any disputes in either the Virginia Beach state circuit court or the Norfolk Division, and the Miller Act does not present any obstacle to giving full effect to that contractual provision. Accordingly, Allan Myers could have instituted this action in the Norfolk Division.
The Advance Concrete decision, which transferred a Miller Act case to the Eastern District of North Carolina despite a forum selection clause designating the Eastern District of Virginia, is unpersuasive for three reasons. First, Advance Concrete is not analogous: whereas Advance Concrete involved an inter -district transfer to the district of contractual performance, this case involves an intra -district transfer within the proper Miller Act district. Second, Advance Concrete gives little reason to reject the conclusion that the Miller Act venue provision may be waived by contract. The court in Advance Concrete observes that "it is not clear that the United States Court of Appeals for the Fourth Circuit" has so held, but fails to grapple with persuasive decisions from several other circuit courts. See 2016 WL 3002408, at *4. Finally, Advance Concrete 's statement that a forum selection clause is merely a "significant factor" in the transfer analysis (id. ) fails to give full effect to the Supreme Court's instruction that forum selection clauses must be given determinative weight in the transfer analysis in all but the most "exceptional cases." Atlantic Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas , 571 U.S. 49, 59, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013).
Because the threshold requirement is met, i.e. that this case could have been brought in the Norfolk Division, the analysis under § 1404(a) now proceeds to other relevant factors. Specifically, "a court considers and balances a variety of factors, including (i) the weight accorded to plaintiff's choice of venue; (ii) witness convenience and access; (iii) convenience of the parties; and (iv) the interest of justice." Noetic Specialty Ins. Co. v. N.C. Mut. Wholesale Drug Co. , 453 F. Supp. 3d 842, 845 (E.D. Va. 2020). Importantly, a district court's analysis is tightly constrained when a motion to transfer under § 1404(a) is premised on a valid forum selection clause. In this regard, the Supreme Court has instructed that a motion to transfer to a venue designated by contract should be granted in all but the most "exceptional cases." Atlantic Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas , 571 U.S. 49, 59, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013). Stated otherwise, "[o]nly under extraordinary circumstances unrelated to the convenience of the parties should a § 1404(a) motion be denied." Id. at 62, 134 S.Ct. 568.
Put simply, the Plaintiffs and Counterclaim Defendants have identified no "extraordinary circumstances" sufficient to justify ignoring a valid forum selection provision. With respect to the first factor—Plaintiff's choice of forum—the Supreme Courts has made clear that this factor "merits no weight" in the face of a forum selection provision. Id. at 63, 134 S.Ct. 568. Long before this dispute, Plaintiff Allan Myers agreed to litigate any disputes arising out of its contract with Ocean Construction in the Norfolk Division, and "[o]nly that initial [contractual] choice deserves deference." Id. Similarly, with respect to the convenience factors, when the parties have agreed to particular venue, a court "must not consider arguments about the parties' private interests." Id. at 64, 134 S.Ct. 568. This is so because the parties have already agreed that their interests are adequately addressed by the contractual choice of forum. To reweigh these interests when a party to the contract objects to transfer to the selected forum amounts to a request not to be bound by the contract. As Atlantic Marine makes clear: "When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation." Id.
The Allan Myers Plaintiffs' principal argument under the § 1404(a) factors is that litigating this dispute in the Norfolk Division will likely prove more onerous than litigating it in the Alexandria Division. This contention is unpersuasive, especially in light of Atlantic Marine. To offer one example, Plaintiffs contend that some relevant witnesses may fall outside the subpoena reach of a federal court in the Norfolk Division, and it may therefore prove difficult to ensure the appearance of some of those witnesses (in particular, individuals employed by the United States Army Corps of Engineers). However, Allan Myers could readily have foreseen this difficulty when it agreed, by contract, to litigate any disputes arising out of a construction project at Arlington National Cemetery in the Norfolk Division. Furthermore, Plaintiffs' arguments in this regard are not persuasive in any case. Defendant Ocean Construction has represented that it will take appropriate steps to ensure the appearance of necessary witnesses, including through its ongoing contractual relationship with the Army Corps of Engineers, and possesses an incentive to do so given that it seeks to litigate a counterclaim. Other courses of action are also available to the parties, such as conducting depositions, videotaped or otherwise, outside the geographic bounds of the Norfolk Division of the Eastern District of Virginia.
Finally, the interest of justice also weighs firmly in favor of transfer to the Norfolk Division. Indeed, as stated by the Supreme Court in Atlantic Marine , the "enforcement of valid forum-selection clauses, bargained for by the parties, protects their legitimate expectations and furthers vital interests of the justice system." Atlantic Marine Const. Co. , 571 U.S. 49, 63, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013) (citation omitted). To be sure, a court may consider "public-interest factors" notwithstanding a forum selection clause ( id. at 64, 134 S.Ct. 568 ), but no extraordinary public-interest considerations exist in this case. For example, there exists a general "fairness interest in having local controversies decided at home." Noetic , 453 F. Supp. 3d at 847. But that interest is hardly abridged by litigating this matter in a different division of the same judicial district. Moreover, this case is not purely local to the Alexandria Division: as the parties represent, several potential witnesses reside in Washington, D.C., and Defendant Ocean Construction is headquartered in Virginia Beach, Virginia.
In summary, given the valid forum selection clause in the contract between Allan Myers and Ocean Construction, the § 1404(a) factors clearly support transfer to the Norfolk Division. However, one additional argument warrants discussion: Counterclaim Defendants Fidelity and Berkshire Hathaway also object to transfer, noting that they are not parties to the subcontract's forum selection clause. Although true, this argument does not overcome the foregoing analysis, or alter the result reached here. This is so for two reasons. First, although Fidelity and Berkshire Hathaway are technically not contractual parties or strictly bound by the forum selection clause, they surely had notice of the forum selection clause when they each agreed to post a performance bond in relation to the subcontract. Second, even assuming that the convenience of Fidelity and Berkshire Hathaway may be factored into the analysis because they are not contractual parties, any inconvenience wrought by litigating in Norfolk instead of Alexandria does not warrant ignoring a valid contractual forum selection clause of which the Counterclaim Defendants had notice when they agreed to become sureties. Put simply, the Counterclaim Defendants' objection to transfer is not an "extraordinary circumstance" sufficient to warrant denial of this motion to transfer to the contractual choice of forum. Atlantic Marine Const. Co. , 571 U.S. 49, 62, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013).
Accordingly, for reasons stated in this Order,
It is ORDERED that Defendants' Motions to Transfer (Dkt. 7) and to Change Venue (Dkt. 13) are GRANTED . This case is hereby TRANSFERRED to the Norfolk Division of the United States District Court for the Eastern District of Virginia.