City of NY v. Pullman Inc.
Decision Date | 21 August 1979 |
Docket Number | No. 79 Civ. 3219.,79 Civ. 3219. |
Citation | 477 F. Supp. 438 |
Parties | The CITY OF NEW YORK and the New York City Transit Authority, Plaintiffs, v. PULLMAN INCORPORATED, Pullman-Standard, a Division of Pullman Incorporated, and Rockwell International Corporation, Defendants. |
Court | U.S. District Court — Southern District of New York |
Allen G. Schwartz, Corp. Counsel, New York City, for plaintiffs; Bruce S. Kaplan, Anthony Z. Scher, Jane Winer, New York City, of counsel.
Davis, Polk & Wardwell, New York City, for defendants Pullman Inc. and its Division, Pullman Standard; Philip C. Potter, Jr., Thomas J. Aquilino, Jr., New York City, Thomas A. Schweitzer, of counsel.
Chadbourne, Parke, Whiteside & Wolff, New York City, for defendant Rockwell Intern. Corp.; Charles H. Harff, Donald I. Strauber, Richard J. Ney, Jerome C. Katz, Claudia L. Taft, New York City, of counsel.
This is a motion by plaintiffs to remand this action1 to the Supreme Court of the State of New York from whence it was removed to this Court upon defendants' petition alleging diversity of citizenship.2 It is not disputed that such diversity exists.3 The motion to remand is based on a provision in the agreement out of which this action arises that provides the New York State courts shall have jurisdiction over any controversies arising thereunder, the exact terms of which are set forth hereafter.
Plaintiffs, The City of New York and The New York City Transit Authority (the "City") and the defendants, Pullman Incorporated and its subdivision Pullman-Standard, entered into an agreement whereby Pullman was to manufacture and deliver to the City 754 subway passenger cars for use in the New York City Transit System to be equipped with trucks4 designed and manufactured by defendant Rockwell International Corporation (the defendants are collectively referred to as "Pullman"). The City commenced this action against the defendants upon allegations of defects in the trucks and delays in delivery of the cars. The complaint sets forth claims of breach of contract, breach of warranty and strict liability in tort. The defendants deny plaintiffs' allegations and in addition assert counterclaims for balances due under the contract and seek mitigation of any damages as long as the City continues to use the subway cars. Pullman has cross-claimed against Rockwell for any amounts for which Pullman may be held liable on the ground that plaintiffs' claims are based on Rockwell's conduct.
The contract, referred to by the parties as Equipment Contract R-46, is composed of a series of documents including an invitation to bid issued by the City and a "Contractor's Proposal"5 executed by defendant Pullman on April 7, 1972 and submitted by it to the City.6 It contains the following:
Based upon the foregoing, the City contends that Pullman not only expressly stipulated New York State courts as the forum in which to litigate any suit arising under the contract but that it also impliedly waived its right of removal under the federal diversity statute.7
Pullman resists the City's motion upon a number of grounds—first, that Item 17 is not part of their agreement; second, that even it it is, the designation of New York courts as the forum choice does not exclude a federal court sitting in New York State when jurisdiction is based upon diverse citizenship; third, even if the language of Item 17 does not compel this interpretation, it is ambiguous and since the City drafted the agreement the ambiguity is to be resolved against the City and in favor of Pullman; and finally, if the choice of forum provision is part of the contract, its enforcement would be unreasonable, unfair and unjust.
Necessarily, we first consider the contention that Item 17 is not part of the contract, since if this position is upheld it would at once end further inquiry. It is not disputed that the Contractor's Proposal when signed and submitted by Pullman as bidder and accepted by the City was part of the contract between them. Pullman, however, contends that Item 17 is excluded from the Contractor's Proposal. In support of its position Pullman notes that it did not fill in the blank spaces in Item 17 of the printed form of the "Contractor's Proposal" that it submitted to the City as part of its bid; accordingly, it argues it did not accept or agree to Item 17 and that the entire balance of the Item, including the provision relied upon by the City to remand the action, was not consented to by it. Pullman states that the reason it did not fill in the blank spaces was because it was and is a foreign corporation authorized to transact business in the City of New York; that it intended to and in fact did submit proof of such authority thus obviating the need to fill in the blank spaces or otherwise agree to Item 17—that is the choice of forum provision and other matters referred to therein. The argument is superficial and without substance. Item 17 was directed to the following matters: (1) amenability to process and designation of an agent to receive process in instances of bidders that were foreign corporations which did not intend to submit proof of authority to do business in New York State; (2) choice of law to govern the contract; (3) choice of forum in the event of litigation; and (4) payment of taxes arising out of the contract. The clear purpose of the blank portion of Item 17 was to have it executed by a bidder that was a foreign corporation, not authorized to do business within the state, or that could not be found for process in order to assure that in the event of an action by the City against such a contractor, service of process could be effected upon an authorized agent and jurisdiction acquired over such a corporation.8 In this instance, Pullman submitted proof of its authority to do business in New York State which, of course, meant it was amenable to process within the State.9 The submission by Pullman to the City of its certificate authorizing it to do business within the State of New York necessarily obviated the need to fill in the blank spaces of Item 17. However, the submission by Pullman of a certificate which made it amenable to service of process did not thereby eliminate, as Pullman contends, the balance of Item 17 containing the provisions relating to choice of law, the choice of forum, and the agreement to pay taxes arising out of the contract. This is underscored by the fact that the forum selection clause itself twice commits the "undersigned bidder" to the terms of the choice of forum and of applicable law, and further, the "bidder also agrees it will pay all proper taxes." Furthermore, whether a bidder was or was not authorized to do business in New York State was irrelevant either to choice of law, choice of forum or the payment of taxes. It defies common sense that these provisions would be inserted in one event but not the other. Accordingly, the conclusion is compelled that the forum selection provision is part of the parties' agreement.
Thus we consider the merits of the respective and conflicting contentions. At the outset it is noted that a party's consent to process and jurisdiction in a particular forum10 does not necessarily constitute a waiver of the right of removal under the federal diversity statute.11 In the absence of a specific waiver, the question is the meaning of the language employed—was the choice of forum provision intended to exclude a federal court sitting in the State of New York; also, was it intended as a waiver of the right of removal if a basis for removal existed?
The City has submitted an affidavit of an official who played a significant role in the drafting of the language contained in Item 17 who states that the choice of forum provision was intended to make the New York State courts the exclusive forum and "was clearly written to preclude litigation from taking place in the federal forum" and further was intended to be a selection of the State Court in New York, not merely a geographical location. The Contractor's Proposal was a printed form prepared by the City with the bidder filling in pertinent blank spaces to contain its bid with respect to prices, quantities, deliveries and other substantial contractual matters. Item 17 was not the subject of negotiation or arm's-length bargaining between the parties. Whether the clause was intended to confine jurisdiction solely to a court of New York State and to exclude a federal court sitting in New York State was never discussed. Whatever the draftsman's subjective intention, undisclosed to the bidder, may have been, it does not govern.
What does govern is an objective...
To continue reading
Request your trial-
Terra Intern., Inc. v. Mississippi Chemical Corp.
...jurisdiction elsewhere unless it contains specific language of exclusion....'" Id. at 53 (quoting City of New York v. Pullman, Inc., 477 F.Supp. 438, 442 n. 11 (S.D.N.Y.1979); emphasis in the original). The court therefore held that the following forum selection clause was only permissive, ......
-
John's Insulation, Inc. v. Siska Const. Co., Inc.
...it will be construed against the party who drafted it. See Stern v. Satra, 539 F.2d 1305, 1310 (2d Cir.1976); City of New York v. Pullman Inc., 477 F.Supp. 438 (S.D.N.Y.1979); 67 Wall St. Co. v. Franklin Nat'l Bank, 37 N.Y.2d 245, 249, 371 N.Y.S.2d 915, 918, 333 N.E.2d 184, 187 In this acti......
-
Banque Worms v. Banque Commerciale Privee
...it must be susceptible of two reasonable interpretations. See Stern v. Satra, 539 F.2d 1305, 1310 (2d Cir.1976); City of New York v. Pullman Inc., 477 F.Supp. 438 (S.D.N.Y.1979). BCP interprets the clause as requiring Irving to produce a written statement that the letter of credit fund was ......
-
City of New York v. Pullman Inc.
...§§ 1332, 1441 (1976). On August 21, 1979, the district court denied appellees' motion to remand the case to the state court. 477 F.Supp. 438 (S.D.N.Y.1979).2 Despite Pullman's liability on the judgment, the district court directed a verdict in its favor on its cross-claim against Rockwell f......