J. THOMAS MARTEN, Judge.
This is a dispute involving a biofuels construction project located in Kansas, owned or operated by two entities, Abengoa Bioenergy Biomass of Kansas, and Abener Teyma Hugoton GP. Plaintiff Bowen Engineering, an Indiana corporation, brought the original breach of contract and unjust enrichment action against defendant Walters Metal Fabrication, an Illinois corporation, seeking sums due in exchange for Bowen's work. It also sued defendants Pacific Indemnity Company and Scott Process Systems, Inc., based on lien surety bonds issued in connection with the project. (Dkt. 1-1). Pacific and Scott removed the action to this court.
Following the removal, Bowen settled its claim against Walters, which was judgment in the amount of $718,781.92. Further, in addition to a direct payment of $200,000 to Bowen, Walters assigned to Bowen its claims against Scott and Pacific.
Bowen's First Amended Complaint, filed December 9, 2014, advances claims of breach of contract and unjust enrichment against Scott for failing to pay Walters. Bowen also seeks to foreclose on the mechanics lien it filed against the project under K.S.A. 60-1101.
This matter is before the court on the Motion for Judgment on the Pleadings under FED.R.CIV.PR. 12(c), as well as a Motion to Transfer Case, both filed by
The Amended Complaint filed by Bowen on December 9, 2014, alters the relationship among the parties by removing Walters and adding contract claims against the defendants,
The defendants' Motion to Dismiss is grounded on the limitation on potential claimants to a statutory bond under Kansas law. Such claimants may proceed against the bond only if the claimant could have enforced and perfected a lien. K.S.A. 60-1103(a) provides:
(Emphasis added.) The statute does not apply to remote suppliers, such as those that supply labor or materials to sub-subcontractors. See Wichita Steet Metal Supply Inc. v. Dahlstrom and Ferrell Construction, 246 Kan. 557, 792 P.2d 1043, 1048 (1990); J.W. Thompson Co. v. Welles Products, 243 Kan. 503, 758 P.2d 738, Syl. ¶¶ 2-4 (1988); BRB Contractors v. Akkerman Equipment, 935 F.Supp. 1156, 1158-59 (D.Kan.1996) (suppliers to sub-subcontractors are not afforded statutory protection).
The defendants thus argue, and Bowen does not dispute, that under Kansas law suppliers to second-tier subcontractors or suppliers do not have lien rights.
But the parties differ as to the identity of the parties to the construction contract. Bowen characterizes Scott as the contractor, and suggests Abener Teyma Hugoton
Bowen acknowledges that Abener held itself out as the contractor, but argues this is not binding on the court. It relies in part on the decision of the Missouri Court of Appeals in Tharp v. Keeter/Schaefer Investments, 943 S.W.2d 811 (Mo.Ct.App. 1997) (finding under the facts of the case that a putative general contractor was actually an agent of the owner rather than a true contractor). Bowen further argues that Kansas law implicitly recognizes the concept of an owner's agent in K.S.A. 60-1101, which provides that
(Emphasis added). Since K.S.A. 60-1103 does not include such language, Bowen argues, it means such owner's agents are not included.
Paragraph 3 of the state court Petition asserts that "Abener is either the owner of the Biomass Project or is the owner's agent." (Dkt. 1-1, at ¶ 3). In their separate Answers, Scott and Pacific each admitted Paragraph 3. (Dkt. 8, 9 at ¶ 3). But, as defendants note, their Answers cannot be fairly read to indicate that Abener's "only role was as the owner's agent." (Dkt. 42, at 4, defendant's emphasis). The defendants proceed to state specifically in their Answers that "Bowen is not entitled to any mechanic's lien under Kansas law as it contracted with a supplier or sub-subcontractor to a subcontractor for the Project." (Dkt. 8, 9, at ¶ 41 (emphasis added)). Bowen cites no authority for the proposition that the roles of owner's agent and contractor are exclusive.
The court concludes that even if Abener was an agent of the owner, this would not exclude it from acting as a contractor. K.S.A. 60-1103 explicitly recognizes and defines the concept of an "owner contractor." Whether Abener was an agent or general contractor, § 60-1103 remains applicable, and the lien arises only in favor of the immediate "suppliers and subcontractors" of the owner contractor, Abengoa.
Alternatively, Bowen argues that it is entitled to a mechanics lien based on a special relationship between Abener and Abengoa. For this argument, Bowen relies on this court's decision in BRB Contractors v. Akkerman Equipment, 935 F.Supp. 1156, 1158-59 (D.Kan.1996), which denied summary judgment based upon evidence that a subcontractor and sub-subcontractor were involved in a joint venture.
The court finds BRB Contractors to be inapposite. The allegation advanced in the complaint in BRB, if proved, would have the result that the claimant would advance from third tier to second tier, advancing from sub-subcontractor status to subcontractor. Bowen's argument of a close relationship between Abengoa and Abener would have no such effect here. As noted earlier, even if Abener was an agent of owner Abengoa, or even if those parties were involved in a joint venture, Scott was still a subcontractor of the owner contractor entity, as defined in K.S.A. 60-1103(b), Walters is a sub-subcontractor, and Bowen is third tier claimant.
Bowen also notes that in Scott's Notice of Extension to File Contractor's Lien in Stevens County, Kansas, the defendant
Bowen itself acknowledged in its lien statement that Abengoa Bioenergy Biomass was the owner, and Abener Teyma Hugoton General was the project contractor. There is simply no reasonable basis for any conclusion other than that Scott was the first-tier subcontractor on the project. Walters was a second-tier subcontractor. And Bowen, a third-tier subcontractor, is too remote to invoke the protection of the Kansas statute.
The Assembly Services Agreement contains an express forum selection clause, under which "the Parties agree to resolve its [sic] dispute in state or federal court in Missouri." Scott and Pacific invoke this clause in support of their Motion to Transfer the action to Missouri.
In responding to the motion, Bowen argues first that the motion is untimely, since under Rule 12(b)(3), a motion to dismiss for improper venue must be made prior to the filing of a responsive pleading. In the present case, Walters filed its Answer prior to the defendants' Motion to Transfer. Second, Bowen argues that Pacific and Scott have no standing to assert the forum selection clause contained in the ASA, which is applicable only to "the Parties" to the ASA. Finally, the plaintiff contends that Kansas is the proper venue for the action, since it is seeking to pursue a mechanics lien against the real estate in Kansas under the Kansas Fairness in Private Construction Act (KFPCA), K.S.A. 16-1801 et seq.
The court finds that the defendants are not precluded from seeking a transfer of the action to Missouri. Defendants are not seeking to dismiss the action under Rule 12, or asserting improper venue as a defense to the Complaint, but are asking for transfer of the action to Missouri. Rule 12(b)(3) is inapplicable. "An action may be transferred under § 1404(a) at any time during the pendency of the case, even after judgment has been entered." Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir.1991) (citation omitted).
Further, defendants Pacific and Scott are entitled to invoke the forum selection clause as intended beneficiaries of the clause. A nonsignatory party may still invoke such a clause "if [its] relationship [to] the signatory is sufficiently close so that the nonparty's enforcement of the forum selection clause is foreseeable by virtue of the relationship between the signatory and the party sought to be bound." Magi XXI, Inc. v. Stato Della Citta Vaticano, 818 F.Supp.2d 597, 605-606 (citing In re Optimal U.S. Litigation, 813 F.Supp.2d 351, 369 (E.D.N.Y.2011)). With respect to the forum selection clause, both Pacific and Scott are intended beneficiaries of the ASA under Kansas law. See Noller v. GMC Truck & Coach Div., 244 Kan. 612, 772 P.2d 271, 275 (1989). Here, Bowen's
As noted earlier, Bowen contends that the action is properly brought only in Kansas, in light of the KFPCA. K.S.A. 16-1801(b) provides that "[t]he rights and duties prescribed by this act" cannot be altered by contract. The KFPCA otherwise provides (in K.S.A. 16-1806) that "[v]enue of such an action shall be in the county where the real property is located."
The defendants stress that the KFPCA does not explicitly define venue as one of the "rights and duties" which cannot be varied by contract. They also note that some other states with similar construction statutes explicitly provide that out-of-state forum selection clauses are void against public policy. See, e.g., 815 Ill.Comp.Stat. 665/10 ("A provision contained in or executed in connection with a building and construction contract to be performed in Illinois that makes the contract subject to the laws of another state or that requires any litigation, arbitration, or dispute resolution to take place is against public policy. Such a policy is void and unenforceable").
The court finds that it need not directly resolve the issue. The KFPCA does not directly prohibit the use of foreign forum selection clauses, in contrast to other state construction codes. On the other hand, at least one commentator has assumed that the KFPCA broadly limits such selection clauses. See C. Burger, "The Fairness in Private Construction Act: Legislative Fairness or Oxymoron?" 75 J.K.B.A. 22, 25-26 (2006) (Act "addresses such issues as attempts to undermine `substantive' and `procedural' rights, subrogation, the recovery of attorneys' fees, and venue provisions" and "requires the preservation of all procedural rights . . . includ[ing] . . . venue (including choice of forum)").
However, even if the statute were so construed, this does not end the matter. This is because "[i]n federal court, the effect to be given a contractual forum selection clause in diversity cases is determined by federal not state law. 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 irrespective of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)." Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir.1995) (internal citations and quotations omitted). See Atlantic Marine, 134 S.Ct. at 578 ("federal venue provisions . . . alone define whether venue exists in a given forum").
Forum selection clauses are presumptively valid. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). Such clauses are unenforceable only "if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision." Id. at 15, 92 S.Ct. 1907. Further, federal courts will give effect to a forum selection clause if the state policy against such clauses simply reflects the continued "provincial attitude regarding the fairness of other tribunals." Id. at 12, 92 S.Ct. 1907. See Albemarle Corp. v. AstraZeneca UK, 628 F.3d 643, 652 (4th Cir.2010) ("contrary to judicial disfavor of forum selection clauses such as that manifested in the South Carolina statute, in federal court, forum selection clauses enjoy a presumption of enforceability").
"Invalidating a forum selection clause because it conflicts with a statutory venue provision ignores the strong countervailing public policy in favor of holding parties to their agreements, which a court in similar circumstances has described as the `dominant
The KFPCA does not preclude the application of the forum selection clause in the ASA. The court is persuaded by the reasoning in cases such as Albemarle and Whiting-Turner Contracting Co. v. Westchester Fire Ins. Co., No. JFM-13-348, 2013 WL 3177881 (D.Md.2013). In the latter, the court concluded that a Pennsylvania law barring the application of forum selection clauses did not override such an agreement.
2013 WL 3177881 at *3-4.
These considerations are present in this action as well. None of the parties are Kansas citizens. The parties to the ASA freely and voluntarily agreed to litigate all matters in Missouri. As noted earlier, the defendants are entitled to assert the forum selection clause as intended beneficiaries of the agreement. And Kansas courts routinely enforce forum selection clauses in other cases, recognizing that "a mandatory forum selection clause may be enforced if it bears a reasonable relationship to the transaction." Packard v. Credit Solutions of America, 42 Kan.App.2d 382, 387, 213 P.3d 437, 441 (2009). See also Vanier v. Ponsoldt, 251 Kan. 88, 99-100, 833 P.3d 949 (1992) (quoting The Bremen (407 U.S. at 13, 92 S.Ct. 1907) as to the "compelling reason" for giving such clauses "full effect," and enforcing agreement as to Kansas venue, in case involving sale of an Arabian horse located in Kentucky).
Similarly, in Brahma Group, Inc. v. Benham Constructors, 08-970TS, 2009 WL 1065419 (D.Utah.2009) the court upheld application of a foreign selection clause in a contract which specified the use of Texas law, even though Utah law provided that such clauses were "void and unenforceable against the public policy of this state." U.C.A. 1953 § 13-8-3(2). The court observed:
Id. at *4 (footnotes omitted). Utah's statutory scheme as to construction contracts was not definitive, the court observing that under The Bremen, "the state of Utah does not get to define its own public policy as `strong.'" Id. at *4 n. 15.
Alternatively, the court found the Utah statute precluding forum selection clauses was procedural in nature, and thus not one which the court was bound to apply. In reaching this conclusion, the court stressed that under Tenth Circuit precedent such clauses are favored under federal law.
Id. at *5 (quoting Boyd Rosene & Assoc's v. Kansas Municipal Gas Agency, 174 F.3d 1115, 1121 (10th Cir.1999) (quoting RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 comment e)). The court further noted the Tenth Circuit's quotation of The Bremen (407 U.S. at 12, 92 S.Ct. 1907) in Yavuz v. 61 MM, Ltd., 465 F.3d 418, 429 (10th Cir.2006)—"The choice of forum was made in an arms-length negotiation by experienced and sophisticated businessmen, and absent some compelling and countervailing reason it should be honored by the parties and enforced by the courts."
IT IS ACCORDINGLY ORDERED this 5th day of January, 2015, that the defendants' Motions to Dismiss (Dkt. 29) and Transfer (Dkt. 27) are granted, as provided herein.