N. Am. Elite Ins. Co. v. Stewart & Stevenson FDDA LLC
| Docket Number | 22-CV-21705-RAR |
| Decision Date | 07 June 2023 |
| Parties | NORTH AMERICAN ELITE INSURANCE COMPANY, as subrogee of EdgeConneX, Inc., Plaintiff, v. STEWART & STEVENSON FDDA LLC, d/b/a Florida Detroit Diesel-Allison, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
ORDER GRANTING MOTION TO TRANSFER VENUE
THIS CAUSE comes before the Court upon Defendant Stewart & Stevenson FDDA LLC's (Stewart & Stevenson) Renewed Motion to Transfer to the Southern District of Texas Pursuant to Mandatory Forum-Selection Clause (“Motion”), filed on February 21, 2023. [ECF No 26]. Plaintiff North American Elite Insurance Company (“North American”) filed a Response in Opposition on March 7, 2023, [ECF No. 27], and Defendant filed a Reply on March 21, 2023, [ECF No. 31]. The Court having carefully considered the relevant submissions and applicable law, it is hereby
ORDERED AND ADJUDGED that the Motion [ECF No. 26] is GRANTED for the reasons set forth herein.
North American brings this action as the subrogee of EdgeConneX Inc. (“EdgeConneX”) against Stewart & Stevenson for its allegedly faulty maintenance work performed on two of EdgeConneX's generators: GENSET AA and GENSET AB.[1] Mot. at 2. EdgeConneX had hired an entity called Facility Gateway Corp “to provide maintenance to the generators.” See Resp. at 11, 12 (citing Gerena Decl. [ECF No. 26-1] ¶ 6).[2] Facility Gateway then hired Defendant Stewart & Stevenson to service the generators. See Mot. at 3.
On or about November 29, 2018, Stewart & Stevenson performed annual maintenance on the two generators. Compl. ¶ 8. On or about December 4, 2018, GENSET AA allegedly failed while Stewart & Stevenson was performing maintenance. Id. ¶ 9. On or about January 2, 2019, GENSET AB failed as well, with both generator's failures allegedly attributable to Stewart & Stevenson's faulty maintenance work. Id. ¶¶ 10-12. As a result, EdgeConneX submitted insurance claims for the two generators, and North American paid insurance proceeds to EdgeConneX pursuant to the terms of their insurance policy. Id. ¶¶ 13-14.
As subrogee of EdgeConneX, North American now sues Stewart & Stevenson to recoup the insurance proceeds it paid to EdgeConneX for the repairs to the two generators, valued at $526,260.08 and $483,025.07, respectively. Id. ¶¶ 15, 24, 33. North American first brought suit in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida. See [ECF No. 1-2] Ex. 1. Defendant removed this action to the Southern District of Florida on June 3, 2022. [ECF No. 1].
Defendant filed its Motion to Transfer Venue on February 21, 2023. [ECF No. 26].
Defendant contends that the services it provided to Facility Gateway were governed by the Additional Terms of Sale attached to the Invoices, which Facility Gateway had repeatedly paid over the course of their “longstanding business relationship”. See Mot. at 3; Reply at 4; Gerena Decl. ¶¶ 11-13. Defendant argues that Plaintiff's negligence-based Complaint should actually be pled as a breach of contract action because North American's rights are derived from the Additional Terms of Sale. See Reply at 6. Moreover, the Additional Terms of Sale in the Invoices all contained a mandatory forum selection clause, stating in relevant part that:
The laws of the State of Texas (without giving effect to its conflict of laws principles) govern all matters arising out of or relating to this Agreement, including without limitation, its validity, interpretation, construction, performance and enforcement. Venue for any action arising out of or relating to this Agreement shall be in Harris County, Texas; and the parties waive any claim of an inconvenient forum.
Gerena Decl. at 9, 13, 17. Thus, Defendant requests the Court transfer this action to the Houston Division of the Southern District of Texas pursuant to 28 U.S.C. § 124(b)(2).
Plaintiff counters that no contractual privity exists between its subrogor, EdgeConneX, and Defendant Stewart & Stevenson. Resp. at 3. Plaintiff argues that EdgeConneX is not “closely related” to Facility Gateway sufficient to bind them as non-parties to the Additional Terms of Sale contained in the invoices exchanged between Facility Gateway and Stewart & Stevenson. Id. at 5.
With no valid contract, there cannot be an enforceable forum selection clause, Plaintiff argues, and therefore Defendant cannot meet the factors required for a motion to transfer venue. Resp. at 4.
The Motion is ripe for review.
Federal law, specifically 28 U.S.C. § 1404(a), governs venue disputes. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 28 (1988). In the absence of a mandatory forum selection clause governing the parties, “a district court considering a § 1404(a) motion [to transfer venue] must evaluate both the convenience of the parties and various public interest considerations.” Atl. Marine Const. Co., Inc. v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49, 63 (2013). A movant has to first establish that the cause could be transferred to another “district where the action might have been brought,” 28 U.S.C. § 1404(a); Tingley Sys., Inc. v. Bay State HMO Mgmt., Inc., 833 F.Supp. 882, 885 (M.D. Fla. 1993), and then show that transfer is warranted on grounds of convenience and interests of justice, Van Dusen v. Barrack, 376 U.S. 612, 616 (1964); Windmere Corp. v. Remington Products, Inc., 617 F.Supp. 8, 10 (S.D. Fla. 1985).
When a mandatory forum selection clause governs the parties' dispute, however, “this analysis changes dramatically.” See Trump v. Twitter, Inc., No. 21-22441, 2021 WL 8202673, at *2 (S.D. Fla. Oct. 26, 2021) (citing Atl. Marine, 571 U.S. at 60). The presence of a valid forumselection clause requires district courts to adjust their usual § 1404(a) analysis. Atl. Marine, 571 U.S. at 63. That adjustment, in relevant part, requires courts to disregard plaintiff's choice of forum and shift the burden to plaintiff to establish that transfer to the forum for which the parties bargained is unwarranted. See id. It also requires courts to ignore arguments about the parties' private interests and consider only arguments about the public interest factors. Id. The result is that “a valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases.” Id. (citing Stewart, 487 U.S. at 33 (Kennedy, J., concurring)). This is because “enforcement of valid forum-selection clauses, bargained for by the parties, protects their legitimate expectations and furthers vital interests of the justice system.” Id.
To bind a non-party to a forum selection clause agreed to between two parties, the nonparty must be closely related to the dispute such that it becomes foreseeable that it will be bound. Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285, 1299 (11th Cir. 1998) (citing Hugel v. Corp. of Lloyd's, 999 F.2d 206, 209 (7th Cir. 1993)) (internal quotation marks omitted). Although third-party beneficiaries to a contract would, by definition, satisfy the closely related and foreseeability requirements, a third-party beneficiary status is not required. Id. (citing Hugel, 999 F.2d at 209-210 n.7) (internal quotation marks omitted). If the non-party's interests are “completely derivative” of those of a party to an agreement, and thus “directly related to, if not predicated upon” the interests of the parties, then the non-party can be bound by a forum selection clause in an agreement. Id. ().
The questions presented before the Court are: 1) Do the Additional Terms of Sale in Stewart & Stevenson's Invoices constitute a valid contract rendering the forum selection clause enforceable? And if so, 2) Can EdgeConneX as a non-party to those contracts nonetheless be bound by the forum selection clause? The Court answers both questions in the affirmative. The longstanding business relationship between Stewart & Stevenson and Facility Gateway militates in favor of finding that the Additional Terms of Sale constitute a valid contract governing the two parties' business relationship. Moreover, EdgeConneX hired Facility Gateway to perform service on its generators which Facility Gateway then subcontracted out to Stewart & Stevenson. Resp. at 11-12. Any claims North American (via its subrogor EdgeConneX) has against Stewart & Stevenson are “directly related to, if not predicated upon” the generator servicing work performed pursuant to the Additional Terms of Sale. See Lipcon, 148 F.3d at 1299. Accordingly, North American (via its subrogee EdgeConneX) must be bound by the forum selection clause and this matter must be transferred to the Houston Division of the Southern District of Texas.[3]
Under both Florida and Texas law, a contract may be binding even if the parties did not sign the contract, where both parties have performed under the contract. ConSeal Int'l Inc v. Neogen Corp., 488 F.Supp.3d 1257, 1269 (S.D. Fla. 2020) (quoting Consol. Res. Healthcare Fund I, Ltd. v. Fenelus, 853 So.2d 500, 503 (Fla. 4th DCA 2003); Integrated Health Servs. of Green Briar, Inc. v. Lopez-Silvero, 827 So.2d 388, 339 (Fla. 3d DCA 2002)) (internal quotation marks omitted); see also Stout v. Oliveira, 153 S.W.2d 590, 596 (Tex. Civ. App. 1941); W. Techs., Inc. v. Omnivations II, L.L.C., 583 S.W.3d 786, 793 (Tex. App. 2019). A party may assent to...
To continue reading
Request your trial