U.S. Pipelining, LLC v. Bancker Construction Corp.
1:14-cv-05566
E.D.N.YSep 22, 2016Background
- U.S. Pipelining (plaintiff) contracted with Bancker (contractor) under a subcontract to install two cured-in-place pipes at an Exxon-owned storm drainage project in Brooklyn; plaintiff began work but Bancker terminated the subcontract before completion and refused further payment.
- Plaintiff recorded a mechanic's lien for the full subcontract amount; Bancker posted a lien discharge bond issued by Travelers.
- Plaintiff sued in the Eastern District of New York against Bancker (breach of contract), Exxon (unjust enrichment), and Travelers (compel payment on bond).
- The subcontract includes an Agreement with Riders; Rider A-1 contains a forum-selection clause stating disputes “shall be governed by New York State law and legal forum shall lie exclusively with the Supreme Court of New York State.”
- Defendants moved to dismiss under forum non conveniens based on the Rider A-1 clause (alternatively Rule 12(b)(6)). Plaintiff argued Rider A-1 is ambiguous, unsigned, and conflicts with ¶6.1 of the Agreement.
- The Court found Rider A-1 was incorporated and communicated, mandatory and broad enough to cover the parties and claims, and enforceable; it dismissed the case for forum non conveniens.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of Rider A-1 forum-selection clause | Rider A-1 is ambiguous, incorrectly cites NY Gen. Bus. Law §757(1), unsigned, conflicts with ¶6.1 | Rider A-1 is incorporated into the subcontract, clearly limits forum to NY State Supreme Court, and is mandatory | Clause reasonably communicated, mandatory, and covers the claims; valid and enforceable |
| Whether non-signatories (Exxon, Travelers) are subject to clause | Non-signatories cannot force clause | Non-signatories are closely related to the subcontract and enforcement was foreseeable | Non-signatories may enforce clause; claims against them fall within clause |
| Whether enforcement is unreasonable, unjust, product of fraud/overreaching | Enforcement would be unreasonable because of purported ambiguity/conflict | No evidence of fraud, overreach, or undue hardship; public interest favors NY forum | Plaintiff failed to rebut presumption of enforceability; enforcement not unreasonable or unjust |
| Whether court should decide Rule 12(b)(6) motions after compelling forum | Plaintiff seeks to litigate merits in EDNY | Defendants seek dismissal on forum non conveniens first | Court dismissed on forum non conveniens and declined to reach 12(b)(6) arguments |
Key Cases Cited
- Atlantic Marine Construction Co., Inc. v. U.S. District Court for the Western District of Texas, 134 S. Ct. 568 (Sup. Ct. 2013) (forum-selection clauses get controlling weight; enforce via forum non conveniens)
- Martinez v. Bloomberg LP, 740 F.3d 211 (2d Cir. 2014) (four-part test for forum-selection clause validity in this Circuit)
- Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007) (distinguishing mandatory vs. permissive forum clauses)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (Sup. Ct. 1972) (forum-selection clauses are prima facie valid and enforceable absent strong showing)
- Roby v. Corporation of Lloyd’s, 996 F.2d 1353 (2d Cir. 1993) (grounds for setting aside forum-selection clauses)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (Sup. Ct. 1981) (public interest factors relevant to forum non conveniens analysis)