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United States v. Travelers Casualty and Surety Co. of America

United States District Court, N.D. New York

August 25, 2017

UNITED STATES OF AMERICA, for the use and benefit of CHARLES T. DRISCOLL MASONRY RESTORATION, CO., INC., Plaintiff,
v.
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, et al., Defendants.

          MEMORANDUM-DECISION AND ORDER

          LAWRENCE E. KAHN U.S. DISTRICT JUDGE.

         I. INTRODUCTION

         Plaintiff Charles T. Driscoll Masonry Restoration, Co., Inc. (“Driscoll”) commenced this action against defendants Travelers Casualty and Surety Company of America (“Travelers”) and Serviam Construction, LLC, pursuant to the Miller Act, 40 U.S.C. § 3131 et seq., and various state law causes of action. Dkt. No. 1 (“Complaint”). Presently before the Court is Defendants' motion to dismiss or transfer and motion to strike. Dkt. No. 10 (“Motions”); see also Dkt. No. 10-3 (“Memorandum”); Dkt. No. 10-2 (“Orr Affidavit”). Driscoll opposes the Motions, Dkt. No. 17 (“Response”), and Defendants filed a reply, Dkt. No. 23 (“Reply”). For the reasons that follow, the Court grants in part and denies in part Defendants' Motions.

         II. BACKGROUND

         A. Factual History

         Driscoll is a New York corporation whose principal place of business is Skaneateles, New York. Compl. ¶ 3. Travelers, which “is in the business of writing performance and payment bonds, ” is a Connecticut corporation with a principal place of business in Hartford, Connecticut. Id. ¶ 4. Serviam is a Pennsylvania limited liability company whose principal place of business is Altoona, Pennsylvania. Id. ¶ 5.

         This case stems from a construction project overseen by the Department of Veterans Affairs (“VA”) in Syracuse, New York. Id. ¶ 6. Serviam contracted with the VA to perform work related to “the federal project commonly known as ‘Building Facade and Parapet Repairs.” Id. ¶ 7. On October 2, 2015, Travelers issued Serviam a payment bond[1] in the amount of $2, 444, 652. Id. ¶ 8; see also Orr Aff. Ex. 2. Then, on November 16, 2015, Serviam entered a subcontract with Driscoll in which Driscoll agreed “to furnish labor, materials and equipment to complete . . . masonry and abatement work . . . for the agreed sum of $1, 080, 106.” Compl. ¶ 9; see also Orr Aff. Ex. 1.[2] The subcontract contains the following clause: “The construction, interpretation, enforcement and all other matters relating to this Subcontract and any amendments or modifications hereto shall be governed by the laws of the Commonwealth of Pennsylvania, and jurisdiction and venue for any litigation arising under this Subcontract shall lie within the appropriate court in Blair County, Pennsylvania.” Orr Aff. Ex. 1, § 11. The subcontract also states that Driscoll “waives the right to trial by jury on any issues relating to this Subcontract.” Id.

         Driscoll began working on the project around July 2016. Id. ¶ 11. At some point, Serviam accused Driscoll of causing “damage to existing roofs at . . . several project work sites.” Id. ¶¶ 14-15. Driscoll claims it had nothing to do with the damage. Id. ¶ 19. Nevertheless, Serviam has told Driscoll it will back charge the cost of repairing the roofs against Driscoll's subcontract balance, and Driscoll alleges that the repairs will cost over $300, 000. Id. ¶¶ 16-17. Serviam has also informed Driscoll that “it will make no further payments under the Subcontract until the roof repairs are completed, and the total amount of cost of the repairs has been deducted from Driscoll's Subcontract.” Id. ¶ 18. Driscoll has sought payment from Serviam for work valued at $932, 258.53, but Serviam has paid only $487, 579.34. Id. ¶ 20. According to Driscoll, it “has duly performed the Subcontract, ” and “Serviam has breached the Subcontract by failing to pay Driscoll the amount due under the Subcontract.” Id. ¶¶ 24-25.

         B. Procedural Background

         Driscoll began this action on April 25, 2017. Compl. It brings five causes of action: breach of contract and quantum meruit against Serviam, id. ¶¶ 27-35, a Miller Act claim against Travelers, id. ¶¶ 36-41, a request for attorney's fees, id. ¶¶ 42-44, and a claim under 48 C.F.R. § 52.232-27, which is titled “Prompt Payment for Construction Contracts, ” id. ¶¶ 45-47. Driscoll seeks $451, 614.49 plus prejudgment interest in damages. Id. ¶ 48.

         Defendants, pointing to the forum selection clause quoted above, ask the Court to transfer this case to the Western District of Pennsylvania. Mem. at 3-6.[3] They concede that there is no federal courthouse in Blair County, Pennsylvania, but they note that there is such a courthouse in Johnstown, a city in Cambria County, which is “adjacent to Blair County.” Id. at 6. Thus, Defendants argue, transferring this case to the Western District of Pennsylvania would best effectuate the parties' intent. Id. Defendants also seek to strike Driscoll's jury demand on the ground that Driscoll agreed to waive its right to a jury trial in the subcontract. Id. at 6-7.

         According to Driscoll, the Court cannot enforce the forum selection clause because the Miller Act provides for exclusive federal jurisdiction, and the clause mandates venue in a county in which no federal courthouse is located. Resp. at 2-4. Since the clause thus requires this case to be heard in state court, the argument goes, it is unenforceable. Id. at 4. Driscoll also claims that Travelers, as a nonsignatory to the subcontract, cannot enforce either the forum selection clause or the jury waiver. Id. at 7-10.

         III.DISCUSSION

         A. The Forum Selection Clause

         “When assessing a motion to transfer on the basis of a forum-selection clause, a court must first determine whether the forum-selection clause is valid and enforceable.” Vulcan Capital Corp. v. Miller Energy Res., Inc., No. 13-CV-8751, 2014 WL 4384159, at *2 (S.D.N.Y. Sept. 4, 2014). “The enforceability of forum-selection clauses is determined by federal law, while interpretive questions going to their ‘meaning and scope' ‘are resolved under the substantive law designated in ...


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