United States of America v. Gulf Building

CourtDistrict Court, S.D. Florida
DecidedOctober 4, 2021
Docket0:21-cv-62075
StatusUnknown

This text of United States of America v. Gulf Building (United States of America v. Gulf Building) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States of America v. Gulf Building, (S.D. Fla. 2021).

Opinion

IIn the United States District Court for the Southern District of Georgia Brunswick Division

UNITED STATES OF AMERICA ) for the use and benefit of ) CENTRAL SOUTHERN CONSTRUCTION ) CORP., ) ) Plaintiffs, ) ) v. ) 2:21-CV-024 ) GULF BUILDING, ) HERNANDEZ CONSULTING A JOINT ) VENTURE, LLC, ) WESTERN SURETY CO., ) and BERKLEY INSURANCE CO., ) ) Defendants. ) ORDER Before the Court is a motion to dismiss or transfer filed by Defendants Gulf Building, Hernandez Consulting A Joint Venture LLC, Western Surety Company, and Berkley Insurance Company. Dkt. No. 14. For the reasons below, the motion to transfer is GRANTED. The Court therefore does not make any ruling on the motion to dismiss but defers consideration of those issues to the transferee court. BACKGROUND This is a contract case under the Miller Act. See 40 U.S.C. §§ 3131, et seq. The Miller Act requires companies that provide materials or labor for government projects (“prime contractors”) to obtain a third party’s guarantee that, if the prime contractor cannot meet its obligations under the contract, the third party will assume responsibility for the failed obligations (a “surety bond”). See generally id. That bond must guarantee (1) performance of the prime contractor’s duties and (2) payment of people they contract with to perform the contract (“subcontractors”). Id. § 3131. If the prime contractor fails to

pay a subcontractor, the Miller Act allows them to sue in the name of the United States. Id. § 3133(b). Plaintiff Central Southern Construction Corp. (“CSC”) sued Defendants, prime contractors1 on a construction project at King’s Bay Naval Base, alleging that they underpaid CSC after wrongfully accusing CSC of defaulting on promised road repair and paving. Dkt. No. 1 ¶¶ 12, 23-68. Defendants responded by filing this motion. Dkt. No. 14. Their primary request is for this Court to dismiss the lawsuit, arguing

that (1) CSC may not sue until it has completed the dispute resolution procedures required by the contract, id. at 11-14; and

1 The docket reflects that one of the defendants is a surety, another an insurance company, and the third a “joint venture” of some kind. See generally 2:21-cv-024. The parties give little explanatory context about their roles and relationships other than CSC’s occasional references to “prime contractors,” so this order will do the same. (2) three of CSC’s claims (counts II, III, and IV) do not state a claim for relief, id. at 14-20. Their alternative request is for this Court to transfer this case to the United States District Court for the Southern District of Florida under a forum selection clause in the parties’ contract. Id. at 4-11. Because the parties agreed at the motion hearing that the Court should address the transfer issue first, the Court deals with only that question here. The disagreement on that score is

how best to understand the forum selection clause. Compare dkt. nos. 14, 23, and 26, with dkt. nos. 18, 30. In particular, the parties disagree about whether the forum selection clause dictates the venue for all disputes under the subcontract, or merely those “to challenge [a] final arbitration decision.” Dkt. No. 1-3 at 18. The clause reads, in its entirety: Dispute Resolution. This Subcontract shall be governed, construed and interpreted in accordance with the laws of the [State of Florida] without regard to its conflict of law principles, except as to any provisions governed by the laws and regulations of the United States, as to which provisions the applicable laws and regulations of the United States shall govern. Each party hereby expressly and irrevocably consents that any suit, action, or proceeding to challenge the final arbitration decision shall be brought in the appropriate state or federal court within the [State of Florida, Broward County]. Id. (brackets in original) (emphasis added). Defendants contend that the modifier, “to challenge the final arbitration decision,” applies to the term “proceeding.” See Dkt. No. 14, 23. CSC reads that same language as applying to all three terms in the list: “suit, action, or proceeding[.]” See Dkt. No. 18. Thus, if Defendants are correct, then the contract says this action should have been brought in the Southern District of Florida. But if CSC has the better of the argument, then the contract specifies venue only for arbitration-related disputes, making this Court an appropriate venue for non-arbitration related dispute.

This Court held a hearing on the motion and invited the parties to submit supplemental briefing on the issue. Dkt. No. 28; see also dkt. nos. 26 (Defendants’ supplemental brief), dkt. no. 27-1 (Plaintiff’s supplemental brief), and dkt. no. 30 (same). LEGAL STANDARD The Miller Act provides that lawsuits “must be brought . . . 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). But it is well-settled that parties may agree to alter

that venue via a forum-selection clause in their subcontracts. See In re Fireman's Fund Ins. Cos., 588 F.2d 93, 95 (5th Cir.1979);2

2 The Eleventh Circuit recognizes as binding precedent all decisions of the former Fifth Circuit handed down prior to October 1,1981. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc). see also Artistic Stone Crafters, Inc. v. Safeco Ins. Co. of Am., No. CV 108-153, 2010 WL 317472, at *7 (S.D. Ga. Jan. 25, 2010). The mechanism for enforcing a forum selection clause is 28 U.S.C. § 1404(a), which provides that “a district court may transfer any civil action to any other district or division . . . to which all parties have consented.” See Atlantic Marine Constr. Co. v. U.S. Dist. Court, 134 S. Ct. 568, 579 (2013). Since, by definition, a forum selection clause demonstrates that all parties

have consented to a particular district, § 1404(a) requires enforcement of a valid forum selection clause in all but the most exceptional cases. Id. at 574 (citations and quotations omitted). To that end, federal law governs disputes about the enforceability of a forum selection clause. Stewart Org., Inc. v. Ricoh Corp., 478 U.S. 22, 28-32 (1988). And under federal common law, “[f]orum selection clauses are presumptively valid and enforceable unless the plaintiff makes a ‘strong showing’ that enforcement would be unfair or unreasonable under the

circumstances.” Krenkel v. Kerzner Int'l Hotels Ltd., 579 F.3d 1279, 1281 (11th Cir. 2009) (quotations omitted). CSC does not dispute that the forum selection clause is valid and enforceable, dkt. No. 18 at 2, so, as they correctly state, “[t]he issue before the Court turns on interpretation—not enforceability—of the forum selection clause.” Dkt. No. 18 at 2. DISCUSSION Defendants argue that the Court should transfer this case to Florida, contending that the modifying phrase (“a final arbitration decision”) is best understood as applying only to the last term in the list (“proceedings”), invoking what is called the

“rule of the last antecedent.” Dkt. Nos. 23, 26. CSC disagrees, insisting that the case should remain here.

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United States of America v. Gulf Building, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-of-america-v-gulf-building-flsd-2021.