United States District Court, D. Hawaii
ORDER DENYING DEFENDANT'S MOTION TO TRANSFER
VENUE PURSUANT TO SECTION 1404(a), OR IN THE ALTERNATIVE, TO
DISMISS THE COMPLAINT
A. OTAKE, UNITED STATES DISTRICT JUDGE
action involves a dispute between a contractor and
subcontractor for a public works project in American Samoa.
The subcontractor, Plaintiff Continental Transport
Corporation, asserts breach of contract, fraudulent
misrepresentation, negligent misrepresentation, and
quantum meruit claims against Defendant Engineering
Remediation Resources Group, Inc. Defendant moves to transfer
the case to the Northern District of California, or in the
alternative, to dismiss the misrepresentation counts (Counts
II and III) of the Complaint.
reasons stated below, the Motion is DENIED.
Facts as Alleged in the Complaint
American Samoa Power Authority (the “Power
Authority”) hired Defendant to construct the New Wells
Nos. 1, 2, and 3 Water System Connection Project (the
“Project”) in Malaeimi Valley, American Samoa.
Compl. ¶ 1. Defendant entered into a Construction
Services Agreement (the “Prime Contract”) with
the Power Authority on July 13, 2016. Id. ¶ 1.
Defendant hired Plaintiff to “execute all phases of
field work” for the Project, and the parties executed a
Subcontract on July 8, 2016. Id. ¶¶ 1-2.
Plaintiff bid on the Project without seeing final design
plans, basing its bid on Defendant's representations
regarding the Project. Id. ¶ 3. Defendant
provided final design plans after bid closing, and Plaintiff
realized that the work required for the Subcontract exceeded
its bid. Id. Plaintiff began construction anyway,
allegedly because Defendant assured Plaintiff that the Power
Authority would approve a change order to fund the additional
passed without a change order and Plaintiff stopped work in
November 2017. Id. ¶ 4. On February 23, 2018,
Defendant and the Power Authority reached an agreement, and
Plaintiff, Defendant, and the Power Authority executed
agreements on March 13, 2018 (the “Letter
Agreement”) and on May 8, 2018 (the “Payment
Agreement”). Id. ¶ 6. Plaintiff alleges
that it completed all work under the Subcontract and Payment
Agreement, but that it is still due money because Defendant
failed to pay or authorize the Power Authority to pay.
Id. ¶¶ 43-51. Plaintiff also claims that
Defendant made misrepresentations that induced Plaintiff to
enter into the Subcontract, begin work, and later enter into
the Payment Agreement. Id. ¶¶ 52-67.
Prime Contract, Subcontract, and Payment Agreement contain
governing law provisions. The Prime Contract states:
15. Governing Law. The validity of this Contract and
any of its terms or provisions, as well as the rights and
duties of the parties to this Contract, shall be governed by
the laws of the Territory of American Samoa. The Venue for
any action at law or in equity to enforce or interpret the
provisions of this Contract shall be the U.S. Federal Court
in Honolulu, Hawaii.
49. Applicable Law: Jurisdiction. This Agreement
shall be construed according to the laws of the State of
Hawaii. The Venue for any action at law or in equity to
enforce or interpret the provisions of this Contract shall be
the U.S. Federal Court in Honolulu, Hawaii. Should either
Party to this Agreement bring legal action against the other,
the case shall be handled by the U.S. Federal Court in
Honolulu, Hawaii, and the Party prevailing in such action
shall be entitled to reasonable attorney's fees which
shall be fixed by the judge hearing the case, and such fees
shall be included in the judgment, together with all costs.
ECF No. 26-5 ¶¶ 15, 49.
4.12 Governing Law
Except for disputes related to this AGREEMENT that are
subject to dispute resolution under the PRIME CONTRACT, which
shall be governed by the governing laws of the PRIME
CONTRACT, this AGREEMENT shall be governed by the laws of the
state of California without giving effect to the principles
thereof relating to conflicts of law.
5.1 Dispute Resolution
5.1.1 [Plaintiff] and [Defendant] shall attempt to resolve
any disputes by good faith negotiation. In the event they
cannot reach a negotiated agreement, the dispute resolution
process shall be litigation in any court of appropriate
jurisdiction. [Plaintiff] agrees that in the event [the Power
Authority] and [Defendant] become engaged in a dispute
resolution process under procedures required by the PRIME
CONTRACT, [Defendant] may, in its sole discretion, join the
[Plaintiff] in the PRIME CONTRACT dispute resolution
proceeding, if [Defendant] alleges that the matter being
addressed in said proceeding involves work that is the
subject of this Subcontract. In the event it is joined in a
dispute resolution process under the PRIME CONTRACT,
[Plaintiff] agrees to be bound by all terms of the PRIME
CONTRACT dispute resolution process and any resulting ruling,
order, award, or judgment.
ECF No. 16-3 ¶¶ 4.12, 5.1.1.
the Payment Agreement states:
WHEREAS [Defendant] wishes for [the Power
Authority] to pay [Plaintiff] directly from the Construction
Proceeds in order to satisfy [Defendant's] payment
obligation to [Plaintiff] under the Subcontract Agreement.
WHEREAS the Parties executed a letter
agreement, dated March 13, 2018 (the “Letter
Agreement”), that included, among other things, the
Parties' express agreement that [the Power Authority]
would pay [Plaintiff] directly for future services on the
[Power Authority] Project.
4.7 Venue. This agreement shall be governed
by the laws of American Samoa, and any disputes arising out
of this agreement shall be heard in the U.S. Federal Court in
ECF No. 26-6 at 1, ¶ 4.7.
initiated this action on March 5, 2019, asserting breach of
contract (Count I), fraudulent misrepresentation (Count II),
negligent misrepresentation (Count III), and quantum
meruit (Count IV) claims. ECF No. 1. Plaintiff
prays for liquated, compensatory, consequential, and punitive
damages; attorneys' fees; and any other relief deemed
appropriate. Id. at 24.
April 24, 2019, Defendant filed the instant Motion to
Transfer Venue Pursuant to Section 1404(a), or in the
alternative, to Dismiss the Complaint. ECF No. 16. Plaintiff
filed an opposition, ECF No. 26, and Defendant responded with
a reply, ECF No. 27. The Court asked for supplemental
briefing to address questions regarding choice of law. ECF
No. 28. Defendant responded to the Court's inquiry, ECF
No. 30, and Plaintiff replied, ECF No. 31.