773 F.Supp.3d 248
M.D. La.2025Background
- United Resource, LLC contracted with Compliance Envirosystems, LLC for post-hurricane cleanup services; United later assigned its accounts receivable to Sterling Commercial Credit, LLC.
- United filed for bankruptcy and entered a factoring agreement with Sterling, which included assignment of United’s accounts receivable, a transaction later approved by a bankruptcy court.
- Compliance was notified (twice) by Sterling of the assignment and was instructed to pay Sterling, but instead paid United directly for the services.
- Sterling sued Compliance for nonpayment in federal court in Michigan, which dismissed for lack of personal jurisdiction; Sterling then refiled in the Middle District of Louisiana.
- Compliance moved to dismiss the action based on forum non conveniens, citing a forum selection clause in the original subcontract requiring disputes be resolved in Louisiana state court (19th Judicial District Court).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of forum selection clause against non-signatory assignee | Sterling is not bound because it’s only assigned receivables, not the contract | Sterling is bound as assignee/subrogee and by direct-benefits estoppel | Clause enforceable against Sterling |
| Applicability of assignment/subrogation | Factoring is purchase of receivables, not assignment of contract rights | Under LA law, assignment of receivable includes assignment of contract rights | Assignment/subrogation binds Sterling |
| Applicability of direct-benefits estoppel | Sterling lacked knowledge; did not seek direct contractual benefits | Sterling seeks payment under subcontract—requires reference to contract terms | Direct-benefits estoppel applies |
| Forum non conveniens balancing | Public interest factors don’t favor state court; venue in federal court ok | Forum selection clause overrides private interest factors, only public factors matter | Public factors don’t outweigh forum selection |
Key Cases Cited
- Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49 (2013) (forum-selection clauses pointing to non-federal forums are enforced via forum non conveniens)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) (articulates private and public interest factors in forum non conveniens analysis)
- Haynsworth v. The Corporation, 121 F.3d 956 (5th Cir. 1997) (forum selection clauses are generally enforceable unless unreasonable)