The opinion of the court was delivered by: Sweet, District Judge.
Plaintiff Gibbs & Hill, Inc. ("Gibbs") has moved by order to
show cause for a stay of defendant Harbert International, Inc.
("Harbert") from prosecuting an action commenced in the United
States District Court for the Northern District of Alabama (the
"Alabama Action"). The motion to stay is denied. The opposition
to this motion has been considered a motion to transfer to
Alabama and has been granted for the reasons set forth below.
By order to show cause dated September 12, the Gibbs motion
was set for a hearing on September 18, 1990, the day before
depositions were to take place. Between the filing of the order
and the hearing on the stay, the Honorable Robert B. Propst in
the Alabama Action stayed the depositions pending a resolution
in open court in New York on the 18th. After hearing argument
the opposition to this motion was treated as a motion to
transfer, granted orally on September 19 and as set forth
Gibbs is a construction engineering and consulting firm with
its principal place of business in New York, and is responsible
for providing the joint venture in dispute with design and
engineering work which it performs from its Manhattan offices.
Harbert is a Delaware corporation with its principal place of
business in Birmingham, Alabama. In addition to its
responsibility for directing the efforts of the joint venture,
Harbert is responsible for the procurement and construction
work on behalf of the joint venture.
In August 1988 the joint venture entered into an agreement
with the owner to engineer and construct the Project for the
lump sum price of $50,963,907. As of July 1990, change orders
amounting to $1,859,024 were approved by the owner. As a result
the current value of the contract is $52,822,931. Gibbs has
alleged that it had performed 97.0% of its work as of July
As of the end of July 1990, Harbert forecasted that there
would be a loss on the Project of $6,263,852. The Project is
currently almost two months behind schedule. Under the contract
with the owner the joint venture may be liable for substantial
consequential damages to the extent that the Project is delayed
beyond its schedule March 31, 1991 completion date. Gibbs has
overdue unpaid invoices to the joint venture, some as old as
During the course of the Project Gibbs was concerned that
Harbert failed to meet its responsibility to manage the joint
venture and filed a complaint in the Southern District for
authorization of payment that Harbert has withheld for the
invoices and alleging Harbert's mismanagement of the joint
Harbert and Gibbs disagree about whether Gibbs is obligated
to make additional contributions to the capital of the joint
venture. On or about April 24, 1990 the Executive Committee of
the joint venture met and at that time Harbert informed Gibbs
that additional capital would be required. Harbert furnished an
invoice and payment schedule to Gibbs thereafter and Gibbs has
made no additional capital contributions nor has Gibbs referred
the matter of the dispute over the capital call to arbitration.
Gibbs has demanded that it be paid out of the joint venture's
operating capital, and Harbert has refused to do so and ceased
to make distributions to itself and to Gibbs.
After failing to extract additional payments and after
refusing to make further capital contributions, Gibbs withheld
from Harbert and the joint venture certain electrical,
instrumentation, and control drawings, revised cable and
raceway schedules, revised flow diagrams, and the line, valve
and instrument lists prepared by Gibbs for the Project. These
documents are needed to permit construction on the project to
proceed. Among other things, Gibbs has refused to allow Harbert
to review the documents or to obtain or copy them for their use
on the project unless Harbert meets Gibbs' demand for payment.
These documents were to be the subject of the deposition
scheduled for September 18 and then stayed by Judge Propst
pending the outcome of this motion at the hearing held on the
On the morning of August 28, 1990 Harbert telecopied a formal
notice to Gibbs complaining of Gibbs' default under the
Agreement and demanding that the default be cured by August 31,
1990. Within hours after receiving Harbert's notice, Gibbs
filed this action in the Southern District of New York.
Notwithstanding its dispute over its contractual obligation to
arbitrate disputes with Harbert under Alabama law, Gibbs sought
a declaratory judgment from this court that Gibbs is not in
default of its joint venture obligations and damages for ...