Court Opinion

ID: 4584524
Source: CourtListenerOpinion
Date Created: 2020-11-06 19:00:24.604207+00
Date Added: 2024-06-11T13:47:39.821225
License: Public Domain

Case: 20-30187     Document: 00515629401         Page: 1    Date Filed: 11/06/2020

           United States Court of Appeals
                for the Fifth Circuit
                                                             United States Court of Appeals
                                                                      Fifth Circuit
                                 No. 20-30187
                               Summary Calendar
                                                                    FILED
                                                             November 6, 2020
                                                               Lyle W. Cayce
   PCL Civil Constructors, Incorporated,                            Clerk

                                                           Plaintiff—Appellant,

                                      versus

   Arch Insurance Company,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                     for the Western District of Louisiana
                            USDC No. 5:19-CV-491

   Before CLEMENT, HIGGINSON, and ENGELHARDT, Circuit
   Judges.
   STEPHEN A. HIGGINSON, Circuit Judge:
          PCL Civil Constructors, Inc. (“PCL”) appeals a judgment of
   dismissal without prejudice based on forum non conveniens. The district court
   enforced a disputed forum selection clause requiring litigation in the 19th
   Judicial District Court in and for the Parish of East Baton Rouge, Louisiana.
   Because the forum selection clause is mandatory and enforceable, and
   because the appellant has waived any argument that public interest requires
   retention of this lawsuit in the federal court system, we AFFIRM.
Case: 20-30187      Document: 00515629401           Page: 2    Date Filed: 11/06/2020

                                     No. 20-30187

                                          I.
          The disputed forum selection clause applies to the parties before the
   court by way of three contracts that incorporate each other’s terms: (1) the
   “Prime Contract”—a contract between PCL, a general contractor, and its
   client, the Louisiana Department of Transportation and Development
   (“DOTD”); (2) the “Subcontract”—a contract between PCL and a
   subcontractor, Command Construction Industries, LLC (“Command”);
   and (3) the “Bond”—a contract detailing the terms of a performance bond
   between Command and a surety company, Arch Insurance Company
   (“Arch”).
          First, PCL entered into a contract with the Louisiana DOTD to
   perform work on a public works project (the “Prime Contract”). The Prime
   Contract enumerates a list of “Contract Documents” that are incorporated
   into the Prime Contract, including the Louisiana Standard Specifications for
   Roads and Bridges, 2006 Edition (the “2006 Standard Specifications”).
   Section 107.01 of the 2006 Standard Specifications provides the disputed
   forum selection clause: that “any litigation arising under or related to the
   contract or the bidding or award thereof shall be instituted in the 19th Judicial
   District Court in and for the Parish of East Baton Rouge, State of Louisiana.”
          In turn, PCL, as general contractor, entered into a contract with
   subcontractor Command to perform certain work on the DOTD project (the
   “Subcontract”).      The Subcontract incorporates the Uniform Special
   Conditions to Subcontract, and Article 1.1 of Uniform Special Conditions to
   Subcontract provides that all provisions of the Prime Contract are
   incorporated into the Subcontract: “The Prime Contract is incorporated
   herein by reference and made an integral part of the Subcontract.”

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                                     No. 20-30187

          Finally, in connection with its work on the DOTD project, Command
   provided a performance bond (the “Bond”) for $2,223,144.00 issued by
   Arch. The Bond names PCL as obligee and incorporates the Subcontract,
   providing that the “Subcontract is by reference made a part hereof.”
          In short, the Bond incorporates the Subcontract in its entirety, which
   incorporates the Prime Contract in its entirety.
          The instant dispute arose when, resting on diversity jurisdiction, PCL
   sued Arch in the United States District Court for the Western District of
   Louisiana, alleging that Command had defaulted under the Subcontract and
   seeking payment under the Bond from Arch. Arch filed a motion to dismiss
   on the ground of forum non conveniens, arguing that any dispute must be
   brought in the 19th Judicial District Court in and for the Parish of East Baton
   Rouge, as provided in the Prime Contract. The district court granted Arch’s
   motion, and PCL appealed.

                                          II.
          Forum non conveniens is a doctrine under which a court may decline to
   exercise its jurisdiction and dismiss a case that is otherwise properly before it
   so that the case can be adjudicated in another forum. Forum non conveniens is
   “the appropriate way to enforce a forum-selection clause pointing to a state
   or foreign forum.” Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of
   Texas, 571 U.S. 49, 60 (2013).
          When reviewing forum non conveniens rulings involving forum
   selection clauses, “[w]e review de novo the district court’s conclusions that
   the [forum selection clause] was mandatory and enforceable.” Weber v.
   PACT XPP Techs., AG, 811 F.3d 758, 766 (5th Cir. 2016). Then, “[w]e

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                                          No. 20-30187

   review for abuse of discretion the district court’s use of Atlantic Marine’s
   balancing test” of public-interest factors. Id.
                                               A.
           We first consider, de novo, whether the forum selection clause is
   mandatory or permissive. Id. at 768. A forum selection clause is mandatory
   if it “affirmatively requires that litigation arising from the contract be carried
   out in a given forum.” Id.
           Here, the forum selection clause provides that “any litigation arising
   under or related to the contract or the bidding or award thereof shall be
   instituted in the 19th Judicial District Court in and for the Parish of East
   Baton Rouge, State of Louisiana” (emphasis added). Under Louisiana law, 1
   the word “shall” is routinely construed as mandatory. See, e.g., Bateman v.
   Louisiana Pub. Emps. Council No. 17 of Am. Fed’n of State, Cty. & Mun. Emps.,
   AFL-CIO, 94-1951 (La. App. 4 Cir. 7/26/95); 660 So. 2d 80, 82 (affirming a
   trial court’s interpretation of the word “shall” as “mandatory” in a contract
   provision); cf. LA. STAT. ANN. § 1:3 (“The word ‘shall’ is mandatory and the
   word ‘may’ is permissive.”); LA. CODE CIV. PROC. ANN. art. 5053 (same);
   LA. CODE CRIM. PROC. ANN. art. 5 (same). Accordingly, we find that the
   district court correctly held that the forum selection clause is mandatory.

           1
             When interpreting the words in a forum selection clause, “[a] federal court sitting
   in diversity applies the forum state’s choice-of-law rules to determine which substantive
   law will apply.” Weber, 811 F.3d at 770. Here, we do not undertake a choice-of-law analysis
   because the parties do not appear to dispute that Louisiana law governs the interpretation
   of the contracts in this case.

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                                    No. 20-30187

                                         B.
          We next consider, de novo, whether the forum selection clause is
   enforceable. Weber, 811 F.3d at 766. Federal law applies to determine the
   enforceability of forum selection clauses in diversity cases. All. Health Grp.,
   LLC v. Bridging Health Options, LLC, 553 F.3d 397, 399 (5th Cir. 2008).
   Under federal law, the party resisting enforcement of a forum selection clause
   bears a “heavy burden of proof,” Ginter ex rel. Ballard v. Belcher, Prendergast
   & Laporte, 536 F.3d 439, 441 (5th Cir. 2008) (quoting Haynsworth v.
   Corporation, 121 F.3d 956, 963 (5th Cir. 1997)), and this court “applies a
   strong presumption in favor of the enforcement of mandatory [forum
   selection clauses],” Weber, 811 F.3d at 773. When “a litigant in federal court
   attempts to have a case dismissed based on a contractual provision requiring
   suit to be filed in state court, the forum-selection clause should be upheld
   unless the party opposing its enforcement can show that the clause is
   unreasonable.” Ginter, 536 F.3d at 441. A party may show the disputed
   clause is unreasonable if
          (1) the incorporation of the forum selection clause into the
          agreement was the product of fraud or overreaching; (2) the
          party seeking to escape enforcement “will for all practical
          purposes be deprived of his day in court” because of the grave
          inconvenience or unfairness of the selected forum; (3) the
          fundamental unfairness of the chosen law will deprive the
          plaintiff of a remedy; or (4) enforcement of the forum selection
          clause would contravene a strong public policy of the forum
          state.
   Haynsworth, 121 F.3d at 963 (citing Carnival Cruise Lines, Inc. v. Shute, 499
   U.S. 585, 595 (1991); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12–13,
   15, 18 (1972)). Here, PCL has not presented any argument that supports a

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                                    No. 20-30187

   finding that the forum selection clause is unreasonable. The district court
   correctly held that the forum selection clause is enforceable.
                                         C.
           Finally, in a typical case involving a mandatory, enforceable forum
   selection clause, we would “review for abuse of discretion the district court’s
   use of Atlantic Marine’s balancing test” of public-interest factors. Weber, 811
   F.3d at 766. However, PCL does not challenge the district court’s balancing
   of the public-interest factors and thus waives this argument on appeal. United
   States v. Young, 872 F.3d 742, 747 (5th Cir. 2017).

                                        III.
           PCL’s primary argument in the district court and on appeal is that the
   forum selection clause in Section 107.01 of the 2006 Standard Specifications
   simply does not govern the instant suit. Specifically, PCL argues that the
   Bond does not incorporate the portion of the Prime Contract that contains
   the forum selection clause (Section 107.01 of the 2006 Standard
   Specifications), so the clause cannot govern the dispute between PCL and
   Arch.    In response to this argument, the district court held that it is
   “unambiguously clear from the governing documents at issue that the Bond
   incorporates Section 107.01 through Plaintiff’s underlying Subcontract with
   Command, which thereby incorporates the Prime Contract itself.” Whether
   a contract is ambiguous, as well as the interpretation of an unambiguous
   contract, are questions of law that are reviewed de novo. Texas v. Am. Tobacco
   Co., 463 F.3d 399, 406 (5th Cir. 2006) (citing Stinnett v. Colorado Interstate
   Gas. Co., 227 F.3d 247, 254 (5th Cir.2000)).
           It is a well established rule of contract law that “separate documents
   may be incorporated into a contract by attachment or reference thereto.”

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                                     No. 20-30187

   Russellville Steel Co. v. A & R Excavating, Inc., 624 So. 2d 11, 13 (La. Ct. App.
   1993) (citing Action Fin. Corp. v. Nichols, 180 So. 2d 81, 83 (La. Ct. App.
   1965)).    Here, the Bond specifically incorporates the Subcontract
   (“Subcontract is by reference made a part hereof”), which in turn
   specifically incorporates the Prime Contract (“The Prime Contract is
   incorporated herein by reference and made an integral part of the
   Subcontract.”). Indeed, as this court has previously recognized, “where a
   contract expressly refers to and incorporates another instrument in specific
   terms which show a clear intent to incorporate that instrument into the
   contract, both instruments are to be construed together.” One Beacon Ins.
   Co. v. Crowley Marine Servs., Inc., 648 F.3d 258, 267 (5th Cir. 2011). We find
   that the district court correctly held that the Bond incorporates the forum
   selection clause in Section 107.01 of the 2006 Standard Specifications.
          Nevertheless, PCL argues that a forum selection clause in a different
   provision, Article 12.9.5 of the Uniform Special Conditions to Subcontract
   (incorporated in the Subcontract), should govern this dispute rather than
   Section 107.01. Article 12.9.5 provides that “[a]ny mediation, arbitration or
   legal proceeding permitted hereunder shall be commenced and proceed in
   the county in which the Project is located, unless the parties agree in writing
   to a different location.” The district court rejected this argument, explaining
   that Article 12.9.5 “expressly states that it will not apply if the parties agree
   in writing to a different location, which the parties have plainly done as pro-
   vided in Section 107.01.”
          Under Louisiana contract law, “[e]ach provision in a contract must be
   interpreted in light of the other provisions so that each is given the meaning
   suggested by the contract as a whole.” LA. CIV. CODE ANN. art. 2050. As we
   determined above, the Bond fully incorporates the Subcontract, which fully
   incorporates the Prime Contract. Thus, we must read Section 107.01 to-
   gether with Article 12.9.5. In doing so we agree with the district court’s

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   interpretation that, as contemplated by Article 12.9.5, the parties before the
   court, and as incorporated in the relevant governing documents, have
   “agreed in writing to a different location” for litigation: the 19th Judicial
   District Court in and for the Parish of East Baton Rouge, as provided in Sec-
   tion 107.01.

                                        IV.
          The forum selection clause contained in Section 107.01 of the 2006
   Standard Specifications governs the dispute at issue, is mandatory, and is en-
   forceable. Appellant has waived any argument that public-interest factors re-
   quire retention of this suit in the federal court system. The district court’s
   dismissal without prejudice on the ground of forum non conveniens is AF-
   FIRMED.

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