Zimmerman Metals, Inc. v. United Engineers & Constructors, Inc.

720 F. Supp. 859, 1989 U.S. Dist. LEXIS 11489, 1989 WL 113059
District Court, D. Colorado·Decided September 28, 1989·No. Civ. A. 89-B-1002·Published·Cited by 7 cases

Opinion

MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

This matter is before me on plaintiff Zimmerman Metals, Inc.’s (ZMI) motion to remand this case to the Adams County District Court pursuant to 28 U.S.C. § 1447(c). ZMI filed its complaint in Adams County District Court on May 8, 1989. After ZMI served defendants with process, defendants removed the case to this court pursuant to 28 U.S.C. § 1441(a), contending that diversity jurisdiction exists under 28 U.S.C. § 1332. ZMI argues that the agreement between ZMI and defendant United Engineers Constructors, Inc. (United Engineers) contains an enforceable forum selection clause in which United Engineers consented to the jurisdiction of the Colorado state court. ZMI also contends that there is no diversity of citizenship between ZMI and United Engineers. I deny ZMI’s motion.

A contractual forum selection clause is “prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.” M/S Bremen v. Zapata Offshore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 1913, 32 L.Ed.2d 513 (1972). Here, ZMI makes no allegations of fraud or undue influence underlying the forum selection clause that would render its enforcement unreasonable. See Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 280 (9th Cir.1984).

ZMI asserts, however, that the forum selection clause is ambiguous. It contends that the phrase “courts of Colorado” can be interpreted to mean the Colorado state court system, but not the United States District Court for the District of Colorado. I disagree.

Whether the terms of a contract are ambiguous is a matter of law for the court to decide. Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310 (Colo.1984), Buckley Bros. Motors v. Grand Prix Imports, Inc., 633 P.2d 1081 (Colo.1981). To ascertain whether contract provisions are ambiguous, language must be construed according to the plain and generally accepted meaning of the words used, and reference must be made to all provisions of the agreement. Radiology Professional Corp. v. Trinidad Area Health Ass’n., Inc., 195 Colo. 253, 577 P.2d 748 (1978). A difference of opinion regarding the interpretation of an instrument does not, by itself, create an ambiguity. Radiology Professional Corp., supra.

The forum selection clause here states:

18. APPLICABLE LAWS.
The contract shall be governed by, subject to, and construed according to the laws of the State of Colorado, except that when Federal common law of government contracts exists on substantive matters requiring construction under this Contract, such federal common law shall apply in lieu of state law. The Contractor shall comply with all applicable federal, state and local laws. The Contractor consents to the jurisdiction of the courts of Colorado with respect to any legal action commenced therein. (Emphasis added).

*861 Another clause in the contract concerning forum selection states:

40. DISPUTES.
In the event that any dispute arising under or relating to this contract cannot be resolved by settlement between the parties, either party may litigate any such dispute in any court of competent jurisdiction. (Emphasis added).

The prevailing rule is that where venue is specified with mandatory language the clause will be enforced. See Sterling Forest Associates v. Barnett-Range Corp., 840 F.2d 249, 251-252 (4th Cir.1988). When only jurisdiction is specified, the clause will generally not be enforced without some further language indicating the parties’ intent to make jurisdiction exclusive. See e.g., Keaty v. Freeport Indonesia, Inc., 503 F.2d 955, 956 (5th Cir.1974); Docksider, Ltd. v. Sea Technology, Ltd., 875 F.2d 762, 764 (9th Cir.1989).

Read together, the two clauses are consistent and unambiguous. The plain meaning of the last sentence of paragraph 18 is that ZMI and United Engineers agree not to contest that the “courts of Colorado” have personal jurisdiction over them concerning actions commenced in this state. Paragraph 40 is the forum selection clause. It selects all courts that have jurisdiction as appropriate forums. However, the forum selection clause is permissive. It is not mandatory or exclusive. Therefore, this action can be maintained in the United States District Court for the District of Colorado if this court is a court of “competent jurisdiction.”

ZMI argues that this court is not one of “competent jurisdiction” because United Engineers’ principal place of business is in Colorado, and thus, complete diversity of citizenship between the parties does not exist. I disagree.

For purposes of diversity, a corporation has dual citizenship in both the state of incorporation and the state where it has its principal place of business. 28 U.S.C. § 1332(c). In paragraph 2 of its complaint, ZMI asserts that United Engineers is a Delaware corporation with its principal place of business located at 700 South Ash in Glendale, Colorado. United Engineers, both in its notice of removal and answer and counterclaim, admits that it is a Delaware corporation, but asserts that its principal place of business is located in Philadelphia, Pennsylvania.

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Zimmerman Metals, Inc. v. United Engineers & Constructors, Inc., 720 F. Supp. 859, 1989 U.S. Dist. LEXIS 11489, 1989 WL 113059 (D. Colo. 1989).

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