598 F.Supp.3d 1129
D. Kan.2022Background
- KRW (Nebraska) subcontracted with Stronghold (California) to perform work on a Union Pacific project in Seward County, Kansas; the subcontract specified California law and a forum‑selection clause requiring venue in Riverside County, California.
- KRW filed a mechanic’s lien in Seward County for ≈$400,850 after alleged nonpayment; Stronghold and Hartford (surety, Connecticut) posted a surety bond and Stronghold later sued KRW in Riverside County Superior Court.
- KRW then sued Stronghold and Hartford in Seward County asserting: breach of subcontract, violation of the Kansas Fairness in Private Construction Contract Act (KFPCCA), action on bond (K.S.A. §60‑1110), and breach of the surety bond; defendants removed to federal court and moved to transfer to the Central District of California (or dismiss under forum non conveniens).
- KRW moved to remand to Seward County, arguing the KFPCCA prohibits contractual venue waivers and mandates venue in the county where the real property is located.
- The district court applied federal procedural law to the forum‑selection clause, held the clause valid and mandatory, concluded it covers all asserted claims (including bond and KFPCCA claims), and allowed Hartford (a nonsignatory) to invoke it based on its close relationship to the subcontract.
- Because the clause specified a county (Riverside County) and California law, the court held it covers California state court only (not federal court) and dismissed the Kansas action without prejudice under forum non conveniens; remand was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which law governs interpretation of the forum‑selection clause? | Kansas substantive law governs under Erie. | Federal procedural law governs enforcement/interpretation. | Federal procedural law applies to interpret and enforce the clause. |
| Is the forum‑selection clause enforceable despite the KFPCCA? | KFPCCA makes venue mandatory in county of the property and bars waiver; clause is unenforceable as against public policy. | Clause is presumptively valid; federal law favors enforcement absent strong public policy against it. | Clause enforceable; KFPCCA does not show the strong public policy required to override federal preference for enforcement. |
| Does the clause cover all claims (breach, KFPCCA, bond claims) and may nonsignatory Hartford invoke it? | KRW: clause invalid; thus all claims not barred. | Defendants: all claims arise from subcontract; Hartford can invoke clause as intended beneficiary/closely related party. | Clause covers all claims; Hartford, as issuer of the surety bond directly tied to the subcontract, may invoke it. |
| Does the clause include federal court or only California state court; remedy? | KRW: clause intended for county (state) forum in Kansas; if clause irrelevant, remand to Kansas. | Defendants: venue in Riverside County encompasses federal or state courts in that county; transfer to Central District of California or dismissal. | Clause specifies Riverside County (county‑level language) and California law; it designates California state court only. Court cannot transfer under §1404; it dismissed without prejudice under forum non conveniens and denied remand. |
Key Cases Cited
- Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49 (2013) (forum‑selection clauses are to be given controlling weight; when clause exists, court should assess only public‑interest factors and dismiss under forum non conveniens in most cases)
- M/S Bremen v. Zapata Off‑Shore Co., 407 U.S. 1 (1972) (forum‑selection clauses are presumptively valid; heavy burden on party resisting enforcement)
- Excell, Inc. v. Sterling Boiler & Mechanical, Inc., 106 F.3d 318 (10th Cir. 1997) (clause specifying a county points to state court and does not reasonably include federal forum)
- Am. Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d 921 (10th Cir. 2005) (distinguishes sovereign vs. geographic forum language; federal courts are not "courts of the State")
- Milk ‘N’ More, Inc. v. Beavert, 963 F.2d 1342 (10th Cir. 1992) (wording that venue be in a county strongly points to state court forum)
- Bowen Eng’g Corp. v. Pac. Indem. Co., 83 F. Supp. 3d 1185 (D. Kan. 2015) (enforced out‑of‑state forum clause against KFPCCA argument where parties were nonresidents)
- Herr Indus., Inc. v. CTI Sys., SA, 112 F. Supp. 3d 1174 (D. Kan. 2015) (declined to find KFPCCA a strong public policy barring enforcement of an out‑of‑state forum clause)
- Wheatland Contracting, LLC v. Jaco Gen. Contractor, Inc., 57 Kan. App. 2d 236, 450 P.3d 374 (Kan. Ct. App. 2019) (Kansas Court of Appeals held KFPCCA venue provision preempted a contractual venue clause in different factual posture)