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Harold E Nutter and Son Inc. v. Tetra Tech Tesoro Inc.

United States District Court, N.D. California

July 28, 2014

TETRA TECH TESORO INC., et al., Defendants.


JOOSEPH C. SPERO, Magistrate Judge.


Plaintiff Harold E. Nutter & Son, Inc., (hereafter, "HEN"), filed this action against Tetra Tech Tesoro, Inc. ("Tesoro") and its surety, Safeco Insurance Company of America ("Safeco"), (collectively, "Defendants"), asserting a claim under the Miller Act, 40 U.S.C. § 3131 et seq ., as well as state law claims for breach of contract, open book account and quantum meruit. Defendant has filed a Motion to Dismiss or Alternatively Transfer Venue ("Motion"), in which they contend that HEN fails to state a plausible claim for relief, and that the governing subcontract has a forum-selection clause selecting the Eastern District of Virginia as the proper forum for this dispute. The Court finds the Motion suitable for determination without oral argument, and vacates the hearing and case management conference scheduled for August 1, 2014. See Civil L.R. 7-1(b). For the reasons stated below, the Court GRANTS the motion to transfer venue to the Eastern District of Virginia, and DENIES WITHOUT PREJUDICE the motion to dismiss so that Defendants may re-file the motion in the Eastern District of Virginia.[1]


The Complaint alleges that Tesoro was awarded a prime contract by the United States Department of Homeland Security, United States Coast Guard ("Owner") for the construction of the D/B New Off Cycle Crew Support Building, located on Coast Guard Island, Alameda, California (hereafter, "Project"). Compl. ¶¶ 2, 7. Tesoro obtained a payment bond with Safeco in compliance with the Miller Act's mandate that contractors in federal projects obtain a payment bond "for the protection of all persons supplying labor and material in carrying out the work provided for in the contract for the use of each person." 40 U.S.C. § 3131(b)(2); Compl. ¶ 8. The payment bond makes Tesoro and Safeco jointly liable to persons supplying material and labor for the Project. See id.

On July 1, 2011, Tesoro and HEN entered into a subcontract in which HEN agreed to supply the labor, equipment and materials to complete the electrical work on the Project for the agreed upon price of $1, 108, 431.00 (hereafter, "Subcontract"). Compl. ¶ 11, Exh. A. HEN alleges that it has complied with the Subcontract, and that it also performed extra work for the Project that was directed by Tesoro. Id . ¶¶ 13-14. HEN alleges that Tesoro has breached the contract and that Tesoro is indebted to HEN in the amount of $139, 236.32. Id . ¶ 14.

In their Motion, Defendants note that Article 15.3 of the Subcontract contains an express forum-selection clause:

Subcontractor agrees that all other claims against TESORO by the SUBCONTRACTOR related in any way or manner to the Subcontract Work or this Subcontract not included in subparagraph 15.1 or 15.2 above shall be litigated in the Circuit Court of the City of Virginia Beach, Virginia or the United States District Court for the Eastern District of Virginia, Norfolk Division.

Subcontract at 6, § 15.3. Defendants contend that this forum-selection clause is binding and constitutes grounds to either dismiss this case or transfer the case to the Eastern District of Virginia.

In the opposition brief to the Motion, HEN argues that venue is proper in this court under the Miller Act's venue provision, which provides that "[a] civil action brought under this subsection must be brought... in the United States District Court for any district in which the contract was to be performed and executed, regardless of the amount in controversy." 40 U.S.C. § 3133(b)(3). Defendants contend the forum-selection clause overrides the Miller Act's venue provision.


Defendants move to transfer without citing any specific rule or statute. The Court construes Defendants' Motion as a motion to transfer venue under 28 U.S.C. § 1404(a). See Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court for the Western District of Texas , 134 S.Ct. 568, 187 L.Ed.2d 487 (2013).

Section 1404(a) authorizes district courts to transfer a case "to any district or division to which all parties have consented, " and instructs courts to consider "the convenience of the parties and witnesses" and the "interest of justice." 28 U.S.C. § 1404 (a). "The calculus changes, however, when the parties' contract contains a valid forum-selection clause...." Atlantic Marine , 134 S.Ct. at *581. Because a forum-selection clause protects the parties' "legitimate expectations, " and because "the overarching consideration under § 1404(a) is whether a transfer would promote the interest of justice, ' a valid forum-selection clause should be given controlling weight in all but the most exceptional cases." Id . (citations and alterations omitted).

When there is a valid forum-selection clause, courts need not consider the plaintiff's choice of forum, as "the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted." Id . at *581. Nor should courts consider "arguments about the parties' private interests" because by agreeing to a forum-selection clause, parties "waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses...." Id . at *582. Nevertheless, a ...

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