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Whiting-Turner Contracting Co. v. Westchester Fire Insurance Co.

United States District Court, Fourth Circuit

June 20, 2013

WHITING-TURNER CONTRACTING CO.
v.
WESTCHESTER FIRE INSURANCE CO.

MEMORANDUM

J. FREDERICK MOTZ, District Judge.

Plaintiff Whiting-Turner Contracting Co. brings this diversity action to collect monies allegedly owed under payment and performance bonds issued in connection with a construction project at a public university in Pennsylvania. Whiting-Turner, a general contractor, retained Ionadi Corp. to perform certain concrete work on that project and required Ionadi Corp. to obtain performance and payment bonds. Defendant Westchester Fire Insurance Co. ("Westchester"), acting as surety, issued those bonds in favor of Whiting-Turner.

Ionadi Corp. subsequently defaulted on its obligations, and after Whiting-Turner completed the concrete work with Westchester's authorization, it demanded reimbursement from Westchester pursuant to the performance and payment bonds. Westchester ultimately refused. Whiting-Turner then filed this suit against Westchester alleging breach of the performance bond, breach of the payment bond, breach of contract, and promissory estoppel. Pending before the court is Westchester's motion to dismiss for improper venue. At the court's instruction, the parties also submitted memoranda discussing whether the suit should be transferred to a Pennsylvania federal court pursuant to 28 U.S.C. § 1404. Those issues are fully briefed, and no hearing is necessary. See Local R. 105.6. For the reasons states below, the motion to dismiss will be denied and this court will retain jurisdiction over the case.

BACKGROUND

Whiting-Turner is a general contractor incorporated in Maryland, where it has its principal place of business. California University of Pennsylvania, a public institution in western Pennsylvania, hired Whiting-Turner in June 2009 to serve as general contractor on a project to build a new convocation center on the school's campus. In October 2009 Whiting-Turner retained Ionadi Corp. to perform the concrete work on that project. The contract between Whiting-Turner and Ionadi Corp. included a choice-of-law and forum-selection provision:

This Subcontract shall be governed by the laws of the State of Maryland, without regard to principles of conflict of laws. Any action or suit hereunder shall be brought in the jurisdiction where [Whiting-Turner's] principal office is located without regard to principles of conflict of laws or forum non conveniens.

(ECF No. 1-1 at 9.) The first page of that contract stated that Whiting-Turner's principal office was located in Baltimore, Maryland, although it also provided a return address for Whiting-Turner in Hershey, Pennsylvania.

Whiting-Turner required Ionadi Corp. to obtain performance and payment bonds, and Westchester, acting as surety, issued those bonds in November 2009. Ionadi Corp. was the principal on the bonds, and Whiting-Turner was the named obligee. The bonds, which listed a Maryland address for Whiting-Turner, expressly incorporated by reference the contract between Whiting-Turner and Ionadi Corp. The bonds provided that, in event of default by Ionadi Corp., Westchester could either remedy the default or complete the contract. If Westchester elected not to exercise either of those options, Whiting-Turner was entitled to arrange for the completion of Ionadi Corp.'s work and bill those costs to Westchester.

In October 2011 Whiting-Turner notified Ionadi Corp. and Westchester that Ionadi Corp. had defaulted on its contractual obligations by failing to staff the project with sufficient personnel to complete its concrete work in due time. Westchester authorized Whiting-Turner to complete Ionadi Corp.'s work on its behalf and to track the associated costs. During the ensuing months Whiting-Turner and counsel for Westchester corresponded about the amounts allegedly owed by Westchester under the bonds, and representatives of Westchester visited Whiting-Turner's Maryland offices in April and October 2012 to discuss the claims.

The parties were unable to resolve the dispute amicably, however, because Westchester concluded that Whiting-Turner had overstated Ionadi Corp.'s progress on the project in an effort to expedite payments from California University to the financially distressed Ionadi Corp. According to Westchester, it authorized Whiting-Turner to complete Ionadi Corp.'s concrete work because Westchester had been made to believe that Ionadi Corp. had nearly satisfied its contractual obligations. In fact, Westchester now claims, Ionadi Corp. had been paid for a significant amount of work that it never completed, including some of the concrete work for which Whiting-Turner sought reimbursement.

Whiting-Turner filed a praecipe for writ of summons in Pennsylvania state court in October 2012, but it did not file a complaint in that action. Whiting-Turner then filed this suit in February 2013 and moved to stay the Pennsylvania litigation. Westchester moved to dismiss this suit for improper venue, arguing that the court lacks specific personal jurisdiction over Westchester, a Pennsylvania company whose principal place of business is in Philadelphia. Westchester also argues that the forum-selection provision in Whiting-Turner's contract with Ionadi Corp. is unenforceable under Pennsylvania law.

After the motion to dismiss was fully briefed, the court asked the parties to file supplemental memoranda addressing whether the court should transfer the action to the appropriate federal court in Pennsylvania pursuant to 28 U.S.C. § 1404. The parties disagree about the propriety of such a transfer, but they agreed that the court should first adjudicate the pending motion to dismiss for improper venue.

ANALYSIS

I. Motion to ...


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