ATLAS GLASS & MIRROR, INC., Plaintiff, Appellant, v. TRI-NORTH BUILDERS, INC., Defendant, Appellee.
No. 20-1595
United States Court of Appeals For the First Circuit
May 12, 2021
Hon. George A. O‘Toole, Jr., U.S. District Judge
Before Lynch, Lipez, and Kayatta, Circuit Judges. Jeffrey A. Novins, with whom Howd & Ludorf, LLC was on brief, for appellant. Michael R. Stanley, with whom Michael J. Lambert and Sheehan Phinney Bass & Green, PA were on brief, for appellee.
I.
Tri-North Builders, Inc., served as general contractor on a renovation project at the Sheraton Hotel in Framingham, Massachusetts. After preliminary discussions, Atlas Glass & Mirror, Inc., a Massachusetts company, submitted a one-page proposal to supply and install Lockheed windows on the project. The proposal identified the window types, estimated prices, and specified the work, which called for the supply and installation of over 250 windows. It contained very few other terms.
Tri-North neither signed nor returned the contract proposal. Instead, it solicited and obtained Atlas‘s agreement to supply and install a sample Lockheed window so that Tri-North could ensure that the owner approved of the proposed choice. Tri-North sent Atlas an eight-page contract entitled “Subcontract 121210024667” (hereinafter “Subcontract 667“), governing the installation of the sample window. Dated August 28, 2012, Subcontract 667 identified the window to be installed, the work to be done, and the price. It also included thirty-one
After Atlas installed the sample Lockheed window, it supplied and installed a sample of another manufacturer‘s window at Tri-North‘s request. Atlas then simultaneously sent two invoices to Tri-North corresponding to the two sample-window installations. Each invoice specified “Terms” as “Per Contract” and identified Subcontract 667 as the pertinent contract.
After the owner decided to use Lockheed windows for the project, Tri-North wrote to Atlas as follows:
I will be sending a contract your way with the anticipated cost for all windows. I would imagine that we might have a few windows that we made error on during initial measure and estimate. We will correct this when you complete your field measurements to make you whole.
The parties never exchanged any new contract proposals. Instead, Atlas proceeded with the work, using the window specifications in its Lockheed proposal. As it did so, it invoiced Tri-North. Each invoice (except for one) used the pricing from the Lockheed proposal, and specified that the work was “Per Contract,” identified as Subcontract 667.1 Atlas also sent Tri-North a copy of a lien waiver for work on the project, which Atlas identified as corresponding to Subcontract 667. Atlas‘s president thereafter executed a sworn statement regarding a balance owed stating that Atlas “is a subcontractor to Tri-North . . . pursuant to a Subcontract dated 8/28/2012.”
The parties eventually fell into disagreement over the amount and pace of payments due to Atlas. After efforts to settle failed, Atlas sued in Massachusetts Superior Court for an amount just over $88,000, which Atlas claimed was due and owing for services “performed in accordance with the Subcontract,” identified by Atlas in its complaint as Subcontract 667. The complaint also sought recovery under a theory of quantum meruit and alleged a violation of
In short order, Tri-North removed the action to the United States District Court for the District of Massachusetts and sought to dismiss Atlas‘s complaint pursuant to the forum selection clause in Subcontract 667. The provision containing the clause stated that in the event of any dispute arising from Subcontract 667, Tri-North could choose whether the parties would resolve the dispute through (1) litigation, (2) the dispute resolution clause of the agreement between Tri-North and the project owner, or (3) binding arbitration in accordance with (at Tri-North‘s option) either
Atlas opposed the motion by attempting to execute a complete about-face. It argued that the forum selection clause in the Subcontract was not applicable because the Subcontract had “no relationship to the work performed by Atlas . . . for which it is seeking to be paid.” The district court
After discovery was completed without either side filing a motion to compel further discovery, Tri-North renewed its attempt to have the case dismissed based on Subcontract 667‘s forum selection clause. Rather than moving pursuant to Rule 56, Tri-North pressed a motion to dismiss pursuant to
Atlas then filed a motion to amend the judgment under
II.
A.
Atlas begins with a point of procedure. It reasons that once the district court determined (properly, says Atlas) that discovery was required to resolve the factual question of whether the claims brought here arose under Subcontract 667, Rule 12 became inapt and the matter should have been addressed under Rule 56. Compare
Even assuming that the district court should have converted Tri-North‘s motion to dismiss to a motion for summary judgment, we see no prejudicial error warranting remand. Atlas makes no challenge to the authenticity of the pertinent records (all from its files). In fact, it was Atlas -- not Tri-North -- which submitted the vast majority of the documents to the district court. Nor was Atlas deprived of the opportunity to conduct discovery. Contra Foley v. Wells Fargo Bank, N.A., 772 F.3d 63, 74 (1st Cir. 2014) (finding improper conversion to Rule 56 motion where district court considered a document the plaintiff had no opportunity to challenge). Even now Atlas points to no other facts that it would have offered that might have changed the result.
“[M]otions under Rules 12(b)(6) and 56 present a plaintiff with different hurdles, the latter of which looms larger than the former.” Martínez v. Novo Nordisk Inc., 992 F.3d 12, 19 (1st Cir. 2021). The
B.
Turning to the merits, we must first determine whether Subcontract 667 applies to the work that gave rise to this dispute. As we noted earlier, Atlas‘s complaint alleged that Tri-North had yet to pay Atlas for “all of the outstanding invoices which Atlas . . . had previously submitted for work contained in the scope of work in the Subcontract.” Such an “assertion of fact in a pleading is a judicial admission by which [the pleader] normally is bound throughout the course of the proceeding,” so long as the pleader made that assertion “clearly and unambiguously.” Schott Motorcycle Supply, Inc. v. Am. Honda Motor Co., 976 F.2d 58, 61 (1st Cir. 1992) (quoting Bellefonte Re Ins. Co. v. Argonaut Ins. Co., 757 F.2d 523, 528 (2d Cir. 1985)). “Unlike ordinary admissions, which are admissible but can be rebutted by other evidence, judicial admissions are conclusive on the party making them.” United States v. Belculfine, 527 F.2d 941, 944 (1st Cir. 1975).
That being said, district courts do retain “broad discretion to relieve parties from the consequences of judicial admission in appropriate cases.” Id. But even assuming that Atlas‘s spot-on admission left room for such relief, the remaining documents authored by Atlas itself eliminate that room with equally spot-on admissions. The very invoices for which Atlas seeks payment expressly identify Subcontract 667 as the applicable agreement, and in a sworn statement, Atlas‘s own president affirmed that the subject work was “pursuant to” Subcontract 667.3
Atlas nevertheless says that a plausible reading of its complaint (along with the appropriately considered documents) is that different contract terms governed. Atlas points out that before Tri-North and Atlas entered into the Subcontract, Atlas had sent Tri-North a proposal to install the 288 Lockheed windows for the project at a total cost of $215,400.00. Atlas further notes that after the installation of the two
Certainly the record would support a finding that the window specifications and pricing were as stated in the proposal, given that Subcontract 667 contains no such details and given that Atlas did work and charged prices matching those in its proposal without any pushback from Tri-North. But that begs the question whether the terms of the subsequently exchanged and agreed-to Subcontract 667 also applied. And as we have just described, Atlas‘s own statements and documents repeatedly made crystal clear that its work was “pursuant to” that subcontract.
C.
Having determined that the only plausible reading of the complaint and the record to which Atlas points is that Subcontract 667‘s terms apply, we now turn specifically to the forum selection clause within Subcontract 667. When a federal court sits in diversity, it faces a threshold question as to how to decide whether a forum selection clause is enforceable. Rafael Rodríguez Barril, Inc. v. Conbraco Indus., Inc., 619 F.3d 90, 92 (1st Cir. 2010). Do we treat the issue of enforceability “as ‘procedural’ and look to a federal test of validity” or do we instead “treat it as ‘substantive’ and look to pertinent state law“? Id. The Supreme Court and our court have each reserved that question. See id. (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 25–26, 32 & n.11 (1988)); Lambert v. Kysar, 983 F.2d 1110, 1116-17, 1116 n.10 (1st Cir. 1993). We see no need to answer it today, because, in determining enforceability, both Wisconsin and Massachusetts follow the federal common-law standard. See Huffington v. T.C. Grp., LLC, 637 F.3d 18, 23 (1st Cir. 2011); Cambridge Biotech Corp. v. Pasteur Sanofi Diagnostics, 740 N.E.2d 195, 201 (Mass. 2000); Beilfuss v. Huffy Corp., 685 N.W.2d 373, 378 (Wis. Ct. App. 2005).4
Under that standard, we first ask whether the forum selection clause is mandatory or permissive (i.e., whether the clause requires or merely authorizes jurisdiction and venue in a designated forum). Rivera, 575 F.3d at 17. Atlas does not contest that the clause, which provides that “[f]orum and venue for any arbitration or litigation shall be Dane County, Wisconsin” (emphasis added), is mandatory. Next, we look at the scope of the clause to see whether the claims at issue fall within it. Claudio-de León v. Sistema Universitario Ana G. Méndez, 775 F.3d 41, 47 (1st Cir. 2014). The clause here covers “[a]ny dispute arising from” Subcontract 667, and Atlas, besides arguing that Subcontract 667 is altogether inapplicable, does not otherwise contest that its claims arise from Subcontract 667. Finally, we consider whether the clause should be enforced. In so doing, we presume that the forum selection clause is “prima facie valid” and should not be set aside absent a “strong showing” of “some reason the presumption of enforceability should not apply.” Id. at 48 (first quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972); then quoting id. at 15; and then quoting Rafael Rodríguez Barril, Inc., 619 F.3d at 93). We review this issue de novo. Silva v. Encyc. Britannica Inc., 239 F.3d 385, 387 (1st Cir. 2001).
The Supreme Court has identified four possible grounds for finding a forum selection clause unenforceable:
- the clause was the product of “fraud or overreaching“;
- “enforcement would be unreasonable and unjust“;
- proceedings “in the contractual forum will be so gravely difficult and inconvenient that [the party challenging the clause] will for all practical purposes be deprived of his day in court“; or
- “enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.”
Claudio-de León, 775 F.3d at 48–49 (alteration in original) (quoting Rafael Rodríguez Barril, Inc., 619 F.3d at 93). Although Atlas does not strictly categorize its arguments under specific grounds, they can fairly be said to focus on all four.
As to the first ground, although the term “overreaching” seems quite nebulous, we understand it to refer to “one party‘s unfair exploitation of its overwhelming bargaining power or influence over the other party.” Rivera, 575 F.3d at 21. Atlas tells us that the difference in bargaining power between Tri-North and Atlas provides reason to hold the forum selection clause unenforceable here. Atlas stresses that it is a small company with only ten employees while Tri-North is a large contractor with revenues estimated by Atlas to be in the hundreds of millions. Such a difference in size could certainly create opportunities for leveraging unfair concessions once the parties become committed to a project. For example, the larger company likely could weather the cost of disputes much more easily.
But “the mere fact of th[e] inequality is not enough to render an agreement unenforceable.” Rivera, 575 F.3d at 21. Rather, “[t]here must be some evidence that the party has exploited this bargaining power in a way that the courts will not tolerate.” Id. (explaining that there must be “overweening bargaining power” (emphasis in original) (quoting Bremen, 407 U.S. 1 at 13)).
To demonstrate exploitation, Atlas points to several provisions of Subcontract 667 to suggest that Atlas was getting the raw end of the deal. For example, it notes that Subcontract 667 provides that Tri-North alone gets to choose which type of dispute resolution the parties will undergo; that Atlas was required to present all claims to Tri-North in writing within seven days of the event giving rise to them or else have the claims “deemed time barred“; and that Atlas is responsible for Tri-North‘s attorneys’ fees in Tri-North‘s “defense or settlement of any claim or demand of” Atlas.5 We certainly agree that
Subcontract 667 before signing it. See Atlas Glass & Mirror v. Tri-North Builders, Inc., No. 18-10930, 2020 WL 1323073, at *3 (D. Mass. Mar. 20, 2020). Nor is there any indication that Tri-North forced Atlas to apply Subcontract 667‘s terms to the work beyond the sample window installation. Thus, we do not see exploitation of bargaining power that would render the clause unenforceable.
Atlas next suggests that enforcement would be unreasonable and unjust because Tri-North waived its right to enforce the forum selection clause by failing to take immediate action (i.e., by initiating litigation, arbitration, or a formal dispute resolution process) in a proper forum after Atlas asked for the money it alleges Tri-North owes it. See, e.g., Claudio-de León, 775 F.3d at 49. Certainly, though, no law or reason requires a party to invoke a forum selection clause before the opposing party first seeks a forum contrary to that required by such a clause.6
Atlas next tells us that it might not be able to afford continuing the case if it were forced to litigate in Wisconsin. It points to an affidavit of its president stating that litigating this case in Wisconsin would require obtaining and educating new counsel. But that need arises only because Atlas did not follow the forum requirement in the very contract upon which it filed this lawsuit. Atlas also points out that litigation in Wisconsin would be more expensive, take up more management time, and cause additional stress. But such cost differentials are present in almost any venue dispute, and we see no “grave” difficulty so substantial here as to warrant rendering the forum selection clause unenforceable. See Furness v. Wright Med. Tech. (In re Mercurio), 402 F.3d 62, 66 (1st Cir. 2005) (explaining that “something considerably more than the mere inconvenience of traveling to litigate in a different, even faraway foreign jurisdiction, is required to overcome a contractual agreement to do so” and that the “cost of litigation alone” will not suffice). Indeed, by contesting the terms of the contract on which it sued, Atlas has likely already spent more time and money than it would have had it filed suit initially in Wisconsin. Simply put, we are loath to find the forum selection clause unenforceable merely because Atlas chose to ignore it when filing suit. See id. (seeking “specific evidence regarding the extraordinary additional costs involved in litigating in [the designated forum] that were not foreseen by the contracting parties when they entered into the [a]greement“).
To the extent Atlas suggests that a Wisconsin court may not recognize a 93A claim, that could well violate a policy declared by the Massachusetts Supreme Judicial Court. See Jacobson v. Mailboxes Etc. U.S.A., Inc., 646 N.E.2d 741, 746 (Mass. 1995) (“[I]f [another state] will not enforce violations of G.L. c. 93A and if G.L. c. 93A claims appear to have substantiality, any justification for directing the entire dispute to [that other state] is weakened.“); cf. id. at 746 n.9 (leaving open whether Massachusetts courts should decline to enforce a choice-of-law provision which “purport[s] to contract away any claims under G.L. c. 93A“); Rueli v. Baystate Health, Inc., 835 F.3d 53, 61 (1st Cir. 2016) (“A forum selection clause that, in operation, would deprive an employee of substantive rights guaranteed by the [Massachusetts] Wage Act violates public policy and is unenforceable.” (quoting Melia v. Zenhire, Inc., 967 N.E.2d 580, 590 (Mass. 2012))). But Atlas makes no attempt at showing that to be the case. See Carter‘s of New Bedford, Inc. v. Nike, Inc., 790 F.3d 289, 291 n.1, 294 n.5 (1st Cir. 2015) (dismissing, among other claims, a 93A claim pursuant to a valid forum selection clause where there was “no suggestion . . . that the claim would not be honored in [the other state]“). “It is not enough merely to mention a possible argument in the most skeletal way, leaving the court to do counsel‘s work, create the ossature for the argument, and put flesh on its bones.” United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990). As such, Atlas has failed to show that Massachusetts public policy favors setting aside the forum selection clause.
Having rejected Atlas‘s arguments to the contrary, we uphold the validity and enforceability of the clause.
D.
Finally, Atlas argues that the district court erred in dismissing the case instead of transferring it to the Western District of Wisconsin. Tri-North sought dismissal rather than transfer, which our circuit precedent allows. See Claudio-de León, 775 F.3d at 46 n.3. For its part, Atlas raised its request that the district court transfer the case for the first and only time in its motion to alter the judgment. The district court‘s order denying that motion came after Atlas filed its appeal, and Atlas did not amend its notice of appeal or file a second one. See
To the extent Atlas maintains that the district court should have considered transfer of its own accord, “[i]t is rare in a civil action to afford relief not requested in the trial court,” and we discern no error in the course the district court took. United States ex rel. Pittsburgh Tank & Tower, Inc. v. G & C Enters., Inc., 62 F.3d 35, 37 (1st Cir. 1995) (per curiam). We note that in G & C Enterprises, a case involving “the validity of a forum selection clause in a construction subcontract,” we briefly considered “whether the [district court‘s] dismissal should be affirmed or the case should be remanded for transfer to [another] district court, pursuant to
III.
For the foregoing reasons, we affirm.
