United States ex rel. Brown Minneapolis Tank Co. v. Kinley Constr. Co.

• Decision Date: 02 September 2011
• Docket Number: No. CIV 11–0291 JB/LFG.,CIV 11–0291 JB/LFG.
• Citation: 816 F.Supp.2d 1139
• Parties: UNITED STATES of America for the use of BROWN MINNEAPOLIS TANK CO., A New Mexico Corporation, Plaintiff, v. KINLEY CONSTRUCTION COMPANY, A Texas Corporation, and Travelers Casualty and Surety Company of America, Defendants.
• Court: U.S. District Court — District of New Mexico

816 F.Supp.2d 1139

UNITED STATES of America for the use of BROWN MINNEAPOLIS TANK CO., A New Mexico Corporation, Plaintiff,

v.KINLEY CONSTRUCTION COMPANY, A Texas Corporation, and Travelers Casualty and Surety Company of America, Defendants.

No. CIV 11–0291 JB/LFG.

United States District Court, D. New Mexico.

Sept. 2, 2011.

Patrick J. Hart, David P. Gorman, Sheehan Sheehan & Stelzner, P.A., Albuquerque, NM, for Plaintiff.

David H. Thomas, III, Dave Thomas & Associates, P.C., Albuquerque, NM, Paul D. Gibson, Donald H. Knecht, Jr., Gibson, Gruenert & Zaunbrecher, PLLC, Lafayette, LA, Thomas G. Gruenert, Gibson, Gruenert & Zaunbrecher, PLLC, Pearland, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on the Defendants' Motion to Dismiss or, in the Alternative, to Transfer Venue, filed May 18, 2011 (Doc. 16) (“Motion”). The Court held a hearing on July 27, 2011. The primary issue is whether, pursuant to the Miller Act, 40 U.S.C. §§ 3131–3134, the United States District Court for the District of New Mexico is the proper venue for Plaintiff Brown Minneapolis Tank Co. (“BMT Co.”) to bring this action. The Court finds that venue is appropriate, because the Miller Act's venue provision requires that claims must be brought in the location where the contract was performed, and the construction was done in New Mexico. The Court therefore denies the Motion.

FACTUAL BACKGROUND

“The basic facts and procedural history are not in dispute.” Motion at 2. See Use Plaintiff Brown Minneapolis Tank Co.'s Response to Defendants' Motion to Dismiss Or, in the Alternative, to Transfer Venue at 1, filed May 31, 2011 (Doc. 20)(“Response”)(“For the most part, the background facts which are relevant to this issue are not disputed, and the parties have stipulated to the following facts....”). In April 2009, Kinley Construction entered into contract number W912PP–09–C–0025 (“Prime Contract”) with the Department of the Army, U.S. Army Corps of Engineers, for the construction of, among other things, two fuel storage tanks and related facilities at Kirtland Air Force Base, located within Bernalillo County, State of New Mexico (the “Project”). Response ¶ 1, at 2. See Motion ¶ a, at 2. In connection with execution of the Prime Contract, Kinley Construction, as principal, and Defendant Travelers Casualty and Surety Company of America, as surety, executed payment bond number 105246436. See Response ¶ 2, at 2.

In September, 2009, Kinley Construction and BMT Co. entered into the Agreement between Contractor and Subcontractor, Contract No. 10–001–01, filed May 18, 2011 (Doc. 16–1)(“the Subcontract”), under which BMT Co. agreed to build the fuel storage tanks required for the Project under the Prime Contract. Motion ¶ b, at 2; Response ¶ 3, at 2. According to Kinley Construction, under the terms of the Subcontract, BMT Co. was to complete fabricating the tanks no later than April 13, 2010. See Motion ¶ b, at 2; Subcontract ¶ 7, at 4; id. Ex. B. Pursuant to the Subcontract, BMT Co. performed labor and supplied materials which were incorporated into the work required by the Prime Contract. See Response ¶ 4, at 2.

Because of high wind conditions at the job site, one of the tanks collapsed in April, 2009. Kinley Construction alleges that BMT Co. negligently failed to adequately protect its work from weather damage; BMT Co. denies that it was negligent and alleges that it went far beyond industry standards in its efforts to secure the tank. See Motion ¶ c, at 2–3. BMT Co. rebuilt the tank. BMT Co. also designed and installed a wind protection system intended to protect the tank from further damage. In June, 2010, however, a second high wind event caused the tank to collapse a second time. See Motion ¶ d, at 3. The final completion of the Project was delayed due to the two tank collapses. A dispute has arisen between BMT Co. and Kinley Construction regarding whether BMT Co.'s performance was timely under the Subcontract. See Response ¶ 6, at 2. Kinley Construction has taken the position that BMT Co. is responsible for the costs Kelly incurred from the delays, which BMT Co. denies. See Motion ¶ e, at 3. BMT Co. has issued, and Kinley Construction has refused to pay, invoices for labor and materials furnished to and incorporated into the work required by the Prime Contract. See Response ¶ 5, at 2.

PROCEDURAL BACKGROUND

Kinley Construction filed suit against BMT Co. in the 67th Judicial District Court, Tarrant County, Texas on March 8, 2011. See Kinley Constr. Co. v. Brown Minneapolis Tank Co., No. 67–251478–11, Plaintiff's Original Petition (Tex.D.Ct. March 8, 2011)(Doc. 16–2)(the “Texas Action”). Kinley Construction brought breach of the contract, negligence, indemnity, and unjust enrichment claims based on BMT Co.'s performance under the Subcontract, alleging that BMT Co. was at fault for the collapse of the fuel tanks and liable to the ensuing delays and the $336,138.75 in costs Kinley Construction incurred as a result of the delays. On April 8, 2011, BMT Co. removed the Texas Action to the United States District Court for the Northern District of Texas. See Kinley Constr. Co. v. Brown Minneapolis Tank Co., No. CIV 11–0231–01, Notice of Removal (N.D.Tex. Apr. 8, 2011).

On April 6, 2011, BMT Co. filed its Complaint for Violation of the Miller Act, Claim on Payment Bond and Breach of Contract in this action. See Doc. 1 (“Complaint”). BMT Co. commenced this action within one year of the date on which it last performed labor or supplied materials for the work required by the Prime Contract. See Response ¶ 8, at 2. BMT Co. brings Miller Act claim against the Defendants, a breach of contract claim against Kinley Construction, and a claim for payment on the bond against Travelers. See Complaint Counts I–III, at 3–4. BMT Co. alleges that, “[w]hile Brown was prosecuting its work under the Subcontract, the construction site experienced weather events which—through no fault of Brown's—resulted in collapses of the partially erected tanks.” Complaint ¶ 10, at 1. BMT Co. alleges that it completed all work it was obligated to do under the contract, and that Kinley Construction refuses to pay the $74,402.00 balance that remains due under the contract.

On April 27, 2011, BMT Co. filed a motion to transfer the Texas Action to this Court, to be consolidated with this action. See Kinley Constr. Co. v. Brown Minneapolis Tank Co., No. CIV 11–0231–08, Defendant's Motion to Transfer Venue (N.D.Tex. April 27, 2011)(“Motion to Transfer Venue”). Kinley Construction opposes the motion. See Kinley Constr. Co. v. Brown Minneapolis Tank Co., No. CIV 11–0231–19, Plaintiff's Response and Opposition to Defendant's Motion to Transfer Venue (N.D.Tex. May 18, 2011).

The Defendants now move to dismiss or, in the alternative, to transfer venue to the Northern District of Texas. The Defendants assert that, when related cases are pending before two federal courts, the court in which the case was last filed may refuse to hear it if the cases raise substantially overlapping issues. They argue that this case involves duplicative or substantially similar issues as the Texas Action, and that the two cases should be resolved together. They further argue that, because the Texas Action was filed first, the Northern District of Texas is the appropriate venue for adjudication. The Defendants also contend that BMT Co.'s claims arise from the same transaction or occurrence, and therefore must be brought, if at all, as compulsory counterclaims in the Texas action under rule 13 of the Federal Rules of Civil Procedure.

On May 31, 2011, BMT Co. filed its Response. BMT Co. does not dispute that the facts in this case involve identical or substantially overlapping issues as the Texas Action. Indeed, BMT Co. asserts in its Motion to Transfer Venue that it filed in the Texas Action that the Texas Action should be consolidated with this action, because the actions “involv[e] the same parties, the same contract and the same incident.” Motion to Transfer Venue at 1. BMT Co. argues instead that, notwithstanding the first-to-file doctrine, under the Miller Act's venue requirements, the District Court of New Mexico has “exclusive venue” for its Miller Act claim. Response at 1. They contend that the Miller Act's venue provision is a special circumstance that makes it unnecessary for the Court to weigh the inconveniences to the parties, because “[w]here Congress has established an exclusive venue for actions, inconvenience is not an appropriate consideration for the courts.” Response at 5. BMT Co. further argues that the “Miller Act constitutes a special circumstance that outweighs prudential venue considerations of the first-filed suit.” Response at 6.

On June 3, 2011, the Defendants filed their Memorandum in Reply to Plaintiff's Response to Motion to Dismiss or, in the Alterantive [sic], to Transfer Venue. See Doc. 21 (“Reply”). The Defendants assert that they filed the Texas Action almost a month before BMT Co. filed this action. The Defendants assert that BMT Co. contends that the Court has exclusive jurisdiction, and argues that the Miller Act venue provision “ ‘is merely a venue requirement’ and not a jurisdictional absolute.” Reply at 2 (quoting F.D. Rich Co., Inc. v. United States ex rel. of Indus. Lumber Co., 417 U.S. 116, 94 S.Ct. 2157, 40 L.Ed.2d 703 (1974)). The Defendants further contend that the Miller Act's venue provision benefits only defendants, and defendants may elect to assert or waive the venue requirement. Accordingly, the Defendants argue, because they do not seek the Miller Act's venue provision's benefits, BMT Co. has no ground upon which to invoke them. The Defendants also assert that “the inconvenience that might be suffered by one party or the other, based on where the cases ultimately are consolidated and tried, is equally balanced.” Reply at 4.

At the July 27, 2011 hearing, Thomas G. Gruenert, counsel f...