Rossi Sheet Metal Works v. AM. EMP. INS. CO.

• Decision Date: 11 May 1977
• Docket Number: Civ. A. No. 76-0483.
• Citation: 439 F. Supp. 895
• Parties: ROSSI SHEET METAL WORKS and E. L. Fielding Electric, Inc. v. AMERICAN EMPLOYERS INSURANCE CO.
• Court: U.S. District Court — District of Rhode Island

439 F. Supp. 895

ROSSI SHEET METAL WORKS and E. L. Fielding Electric, Inc. v. AMERICAN EMPLOYERS INSURANCE CO.

Civ. A. No. 76-0483.

United States District Court, D. Rhode Island.

May 11, 1977.

Thomas W. Heald, Providence, R. I., for plaintiffs.

David E. Shipley and Peter J. McGinn, Providence, R. I., for defendant.

MEMORANDUM AND ORDER

PETTINE, Chief Judge.

This action by subcontractors on a surety bond was removed here by defendant on grounds of diversity of citizenship, and defendant now moves that the case be dismissed on the grounds that a clause in the bond limits suits to the Massachusetts courts. Plaintiffs urge that the motion to dismiss be denied, or, in the alternative, that the case be remanded. The remand motion and the dismissal motion stem from differing interpretations of the legal effect of the terms of the bond. That instrument, executed by defendant and the general contractor for a construction project located in Brockton, Massachusetts, was given to protect the owner of the project from any failure on the part of the general contractor to pay its laborers and its suppliers of materials. The bond gives laborers and suppliers the right to sue defendant directly for the unpaid obligations to them incurred by the contractors, provided certain conditions are met, including a requirement that all suits be brought in the county court where the project is located or the corresponding federal district court (which in this case would mean Plymouth County, Massachusetts, Superior Court or the United States District Court for the District of Massachusetts).

Defendant contends that this provision is valid and enforceable and that plaintiffs' failure to follow it requires dismissal. Plaintiffs urge that the restriction should not be enforced, a solution that would leave the case in this Court. In the alternative, plaintiffs argue that if the restriction in the bond is valid, venue was not properly laid in Rhode Island Superior Court and, accordingly, that the case could not have been validly removed to this Court and must now be remanded to Rhode Island Superior Court. See Weeks v. Fidelity & Casualty Co., 218 F.2d 503 (5th Cir. 1955).

At the outset, the Court must narrow the options proposed by the parties to exclude remand for lack of jurisdiction. It is true that "if the state court lacked jurisdiction, so too does the federal court", Leesona Corp. v. Concordia Manufacturing Co., 312 F.Supp. 392, 396 (D.R.I.1970), and it is probably also true that if venue is improperly laid at the state level the federal court, upon removal, is without jurisdiction, see Still v. Missouri Pacific Railroad Co., 335 F.Supp. 78, 80 (N.D.Okl.1971). However, the Court cannot agree that venue was improperly laid in Rhode Island Superior Court. Venue in the Rhode Island courts is determined by statute, see R.I.G.L. §§ 9-4-2 to 9-4-6 (Supp.1976), and not by agreement between litigants. Assuming that the agreement in the present case is valid, ". . . it merely constitutes a stipulation in which the parties join in asking the court to give effect to their agreement by declining to exercise its jurisdiction", Central Contracting Co. v. Maryland Casualty Co., 367 F.2d 341, 345 (3d Cir. 1966). Since venue was properly laid in Superior Court for Providence County, see R.I.G.L. § 9-4-3 (Supp.1976), removal here was proper.

Since the case is properly here, the Court must decide whether it may stay here or, assuming the agreement to bring suit on the bond only in Massachusetts is binding on plaintiffs, whether the case must be dismissed or transferred to the United States...