Cable-La, Inc. v. Williams Communications, Inc.

• Decision Date: 23 March 1999
• Docket Number: No. 1:98CV00266.,1:98CV00266.
• Court: U.S. District Court — Middle District of North Carolina
• Parties: CABLE-LA, INC., Plaintiff, v. WILLIAMS COMMUNICATIONS, INC., fka VYVX, Inc., Defendant, and Williams Communications, Inc., fka VYVX, Inc., Counter-Claimant, v. Cable-La, Inc., and Nobel Insurance Company, Counter-Defendants, and Cable-La, Inc., Third-Party Plaintiff, v. Whiting Construction Co., Inc., and Great American Insurance Company, Third-Party Defendants, and Whiting Construction Co., Inc., Counter-Claimant, v. Cable-La, Inc., and Nobel Insurance Company, Counter-Defendants.

104 F.Supp.2d 569

CABLE-LA, INC., Plaintiff, v. WILLIAMS COMMUNICATIONS, INC., fka VYVX, Inc., Defendant, and Williams Communications, Inc., fka VYVX, Inc., Counter-Claimant, v. Cable-La, Inc., and Nobel Insurance Company, Counter-Defendants, and Cable-La, Inc., Third-Party Plaintiff, v. Whiting Construction Co., Inc., and Great American Insurance Company, Third-Party Defendants, and Whiting Construction Co., Inc., Counter-Claimant, v. Cable-La, Inc., and Nobel Insurance Company, Counter-Defendants.

No. 1:98CV00266.

United States District Court, M.D. North Carolina.

March 23, 1999.

COPYRIGHT MATERIAL OMITTED

David A. Senter, Adams Kleemeier Hagan Hannah & Fouts, Greensboro, NC, Daniel W. Fouts, Adams Kleemeier Hagan Hannah & Fouts, Greensboro, NC, for Cable-La, Inc.

Hada V. Haulsee, Womble Carlyle Sandridge & Rice, Winston-Salem, NC, for Williams Communications, Inc., fka VYVX, Inc.

Thomas Lynn Ogburn, III, Poyner & Spruill, L.L.P., Charlotte, NC, for Whiting

Construction Co., Inc., Great American Insurance Company.

David A. Senter, Adams Kleemeier Hagan Hannah & Fouts, Greensboro, NC, Daniel W. Fouts, Adams Kleemeier Hagan Hannah & Fouts, Greensboro, NC, Brian G. Corgan, Kilpatrick & Stockton, Atlanta, GA, for Nobel Insurance Company.

MEMORANDUM OPINION

BULLOCK, Chief Judge.

This matter is before the court on a motion filed by Defendant Williams Communications, Inc., to transfer Plaintiff Cable-La, Inc.'s suit against it to the Northern District of Oklahoma, based on the presence of a forum-selection clause in the contract giving rise to their dispute. Plaintiff opposes Defendant's motion. Third-party defendants Whiting Construction Co., Inc., and Great American Insurance Company argue that the court should sever the third-party complaint and transfer it to the Western District of North Carolina, where a prior action between Third-Party Defendants and Plaintiff is pending. Plaintiff also has filed a motion to strike portions of the answers received to its third-party complaint. For the reasons set forth below, the court will grant Third-Party Defendants' motion to sever and transfer, grant Defendant's motion to transfer, and deny Plaintiff's motion to strike.

FACTS

This matter arises out of a contract between Plaintiff Cable-La, Inc. ("Cable-La") and Williams Communications, Inc. ("Williams"). Cable-La is a South Carolina construction company with its principal place of business in Aiken, South Carolina. Williams is a Delaware corporation with its principal place of business in Tulsa, Oklahoma, and it owns a large system of fiber optic cable lines which course from Washington, D.C., to Houston, Texas. Cable-La and Williams entered into a contract on October 3, 1997, pursuant to which Cable-La agreed to perform certain construction services upon a portion of Williams' cable system extending through Davidson, Davie, Rowan, and Iredell Counties in North Carolina (thus spanning the boundary between the Western and Middle Districts of North Carolina).

Cable-La entered into the contract following a competitive bidding process. During bid selection, representatives of Cable-La traveled to Tulsa, Oklahoma, to attend a pre-bid meeting at Williams' home office. In addition, Cable-La representatives communicated both by mail and telephone with Williams' representatives in Tulsa while preparing and submitting their bid. Williams ultimately awarded the contract to Cable-La, and on October 3, 1997, John Tourcotte of Williams executed Contract No. 97P0223.04 at Williams' offices in Tulsa. Although the contract is dated October 3, 1997, according to Cable-La it did not execute the contract until October 17, 1997, when Larry Coker signed the contract at Cable-La's offices in Aiken, South Carolina. Williams has submitted a copy of the October 3, 1997, contract indicating Coker signed on September 24, 1997. The contract provides that Oklahoma law governs all contractual disputes and that any lawsuit to enforce the contract shall be brought in Tulsa County, Oklahoma, or in the United States District Court for the Northern District of Oklahoma.

Work on the fiber optic cable lines began after Cable-La executed a subcontract with Whiting Construction Co., Inc., ("Whiting") on October 23, 1997. In this subcontract, Whiting obligated itself to provide Cable-La with labor and materials needed by Cable-La to provide for Williams boring, piping, and fiber optic cable installation in Iredell and Rowan Counties. According to Whiting, the sub-contract contains no forum-selection clause. Cable-La has not argued otherwise.

Williams contends that a number of safety violations occurred during the course of Cable-La's performance under the contract; Cable-La ascribes blame for these violations, if they in fact occurred, on Whiting. On November 25, 1997, a fatality occurred which Williams contends stemmed from Cable-La's disregard for the safety regulations contained in the parties' contract. Williams maintains that after this accident it warned Cable-La of the consequences of failure to observe applicable safety regulations, but that Cable-La nevertheless permitted two subsequent violations to occur. By letter dated December 5, 1997, Williams purported to terminate its contract with Cable-La based on these and other alleged defects in Cable-La's performance. It has withheld payment to Cable-La. On December 22, 1997, Cable-La purported to terminate its subcontract with Whiting and has refused to pay Whiting any amount under the subcontract.

This series of events has spawned two separate lawsuits. Cable-La filed suit in the Middle District of North Carolina on March 31, 1998, against Williams, seeking damages for an alleged wrongful termination of the parties' contract and lien foreclosures against certain property owned by Williams in the Middle District. After Williams answered Cable-La's complaint and asserted counterclaims against Cable-La and its bonding company, Nobel Insurance Company ("Nobel"), for damages arising out of the alleged defects in Cable-La's performance, Cable-La filed a third-party complaint against Whiting and its bonding company, Great American Insurance Company ("GAI"). Cable-La alleges in its third-party complaint that Cable-La is entitled to recover from Whiting any amount owed by Cable-La to Williams on the latter's counterclaims. Whiting thus became a party to the Middle District action on August 13, 1998. It has since counterclaimed against Cable-La and Nobel for payment of amounts owed for Whiting's performance under the subcontract.

Prior to Whiting's first appearance in the Middle District, however, a lawsuit had already begun in the Western District of North Carolina involving the same parties to the Middle District third-party complaint and counterclaim. Whiting filed suit on July 18, 1998, in North Carolina state court in Iredell County against Cable-La, seeking sums allegedly owed by-Cable-La under the subcontract, and Cable-La subsequently removed the case to the Western District on July 20, 1998. Whiting represents to the court that in the Western District matter Cable-La has asserted a counterclaim against Whiting which in large part tracks its third-party complaint here. A motion filed by Cable-La to transfer the Western District matter to the Middle District is pending.

In the action here, Williams has sought to enforce the Oklahoma forum-selection clause contained in its contract with Cable-La by moving to transfer this matter to the Northern District of Oklahoma under 28 U.S.C. § 1404(a). Cable-La counters that the forum-selection clause is invalid under North Carolina law and that the balance of factors to be weighed under Section 1404(a) favors suit in the Middle District so strongly that the court should not give effect to the clause. Whiting and GAI argue that they cannot be forced to litigate in Oklahoma, because they did not agree to Oklahoma as a forum for their disputes with Cable-La. They argue that if the court is inclined to enforce the forum-selection clause contained in the Cable-La-Williams contract it should sever Cable-La's third-party complaint and transfer it to the Western District for consolidation with the pending Whiting-Cable-La suit. Williams does not object to Whiting's proposal. Cable-La has moved to strike those portions of Whiting's and GAI's answers that argue for dismissal, stay, or transfer of the third-party complaint, for failure to submit an accompanying brief.

DISCUSSION

A. Williams' Motion to Transfer

A defendant's motion to transfer a case out of a district where venue is proper¹ is governed by 28 U.S.C. § 1404(a), which provides that, "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." Williams argues that transfer is warranted because Cable-La has not sufficiently demonstrated that enforcing the parties' forum-selection clause would be unreasonable. The court agrees.

The first step in addressing a motion to transfer under Section 1404(a) is a determination of whether the proposed transferee court is one in which the action originally "might have been brought." See Knight Med., Inc. v. Nihon Kohden Am., Inc., 765 F.Supp. 291, 292 (M.D.N.C.1991). This requirement is met if the transferee court "has jurisdiction over the subject matter of the action, if venue is proper there, and if the defendant is amenable to process issuing out of transferee court." Miot v. Kechijian, 830 F.Supp. 1460, 1465 (S.D.Fla.1993); see also 17 James Wm. Moore et al., Moore's Federal Practice ("Moore's") § 111.12[1][a] (3d ed.1997). Williams' principal place of business is located in Tulsa, Oklahoma. For this reason, and Cable-La does not argue otherwise, Williams would be subject to process in the Northern District of Oklahoma if it were a separate state. Moreover, this fact indicates that venue is proper in the Northern District...