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Amati Environmental Enterprises, Inc. v. Westchester Fire Insurance Co.

January 8, 2009


The opinion of the court was delivered by: Hay, Magistrate Judge

Judge Donetta W. Ambrose/Magistrate Judge Amy Reynolds Hay


In the second phase*fn1 of this diversity matter, the Court Considers a Motion (Doc. 8) made by the Defendant, Westchester Fire Insurance Co., to transfer this action to the District Court for the Eastern District of New York, pursuant to the provisions of 28 U.S.C. § 1404(a)*fn2. Having engaged in the weighing process mandated by the Court of Appeals for the Third Circuit in cases where transfer pursuant to Section 1441(a) is requested, the Court finds that this case should be transferred to the United States District Court for the Eastern District of New York.


This factual summary is identical to that recounted in the Report and Recommendation. In its Complaint (Doc.1), the Plaintiff, Amati Environmental Enterprises, Inc. ("Amati"), a Pennsylvania company engaged in the business of construction and waste management, (see Doc. 12 at 3), claims that it is owed money pursuant to the terms of a bond issued by Westchester Fire Insurance Co. ("Westchester"), a large New York corporation which issues surety bonds and regularly conducts business in many states, including Pennsylvania. (Id.).

Amati's claim grows out of a September 2005 contract made between North American Demolition Corp. ("North American") and Tri-State Ship Repair & Dry Dock Co. ("Tri-State") for removal and disposal of a sunken dry dock, ("the job"), located in Staten Island, New York. (Doc.1 at ¶ 6). Westchester, as surety for North American, issued a bond ("the bond") in connection with the job, which obligated Westchester to pay claimants "for labor, materials and equipment furnished for use on or performance of the Job" in the event that North American failed to make payment. (Id. Ex. A).

In March 2006, North American entered into an oral contract with Amati, whereby Amati agreed to serve as the job's construction manager in return for $100,000, plus out-of-pocket costs for labor, material, and equipment. Amati contends that although it performed the required work, North American failed to pay $234,101.09 of the total amount owed. Relying on the bond, Amati filed this action seeking payment from Westchester. (Id. at ¶¶ 10 -14). Westchester filed Motions to Dismiss which were denied when the District Court adopted the Report and Recommendation of the Magistrate Judge. (Doc. 13, Doc.15 ). In the alternative, Westchester asked that this case be transferred to the District Court for the Eastern District of New York in accordance with the terms of a forum selection clause made part of the bond, and the applicable provisions of 28 U.S.C. § 1404(a). The Court now addresses the propriety of the requested transfer.


In order for Section 1404(a) to apply at all, venue must be proper in the both the original and requested venues. Jumara v. State Farm Insurance Co., 55 F.3d 873, 878 (3d Cir. 1995). In its Report and Recommendation, this Court determined that venue is proper in the Western District of Pennsylvania under 28 U.S.C. §1331(a)(1). The propriety of venue in the Eastern District of New York is uncontested.*fn3

In Jumara, which also involved a forum selection clause, the Court of Appeals set clear guidelines for courts faced with transfer requests made in diversity matters made pursuant to 28 U.S.C. §1404(a). As a preliminary matter, the Court observed that "the effect to be given a contractual forum selection clause in diversity cases is determined by federal not state law." Id. at 877. The Court explained: "Because "[q]uestions of venue and the enforcement of forum selection clauses are essentially procedural, rather than substantive in nature," federal law applies in diversity cases. Jumara, 55 F.3d at 877 (citations omitted). The Court then referenced the Supreme Court's decision in Stewart Org., Inc. v. Ricoh, 487 U.S. 22 (1988), mandating that district courts considering transfer under Section 1404(a) "engage in a case-specific balancing process . . . to determine whether to give the clause effect by transferring the case to another district court embracing the contractually specified forum." Jumara, 55 F.3d at 878.

The Court in Jumara then delineated the public and private considerations to be balanced by a court evaluating a request for transfer of venue. Id. at 879. The relevant private interests include: 1) the plaintiff's choice of forum; 2) the defendant's choice of forum; 3) where the claim arose; 4) the convenience of the parties as indicated by their relative physical and financial conditions; 5) the convenience of the witnesses, but only to the extent that they may actually be unavailable for trial; and 6) the location of books and records, but again only insofar as they cannot be produced in the alternative forum. Id. In general, a plaintiff's choice of forum is the paramount consideration in deciding whether transfer of venue is warranted. The decision to grant a motion for transfer lies within the broad discretion of the court, but is not to be liberally granted. Shutte v. ARMCO Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970).

In cases where a forum selection clause is involved, the analysis of private interests is altered. "Within [the Jumara] framework, a forum selection clause is treated as a manifestation of the parties' preferences as to a convenient forum." Jumara, 55 F.3d at 880. The parties' preference as expressed in such a clause is not dispositive, but is "entitled to substantial consideration." Id. (internal citations omitted). The degree of deference normally accorded to a plaintiff's choice is inappropriate where the plaintiff has already freely contractually chosen an appropriate venue.*fn4 Where the forum selection clause is valid - meaning that there has been no fraud, influence, or overweening bargaining power - the plaintiffs bear the burden of demonstrating why they should not be bound by their contractual choice of forum." See id. (internal citations omitted).

The decision in Jumara also requires that a transfer request be evaluated against important public interests which include: 1) the enforceability of the judgment; 2) practical considerations that could make the trial easy, expeditious, or inexpensive; 3) a locale's interest in deciding local controversies; 4) the public policies of the fora; and 5) the Court's familiarity with applicable state law. Id. at 879-80.

Before the Court can begin the balancing process described in Jumara, it must assess the validity of ...

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