Daniel Lund III | Phelps Dunbar
Can’t cut the cord.
A subcontractor on a Louisiana VA hospital project filed a claim in federal court in Shreveport against the general contractor and its Miller Act surety. The general contractor sought to have the matter moved to the Middle District of Florida pursuant to a venue clause in the subcontract which the GC asserted governed the relationship between the general and the sub.
However, the subcontractor pushed back on the transfer request, preferring to stay in Shreveport and urging that the contract in question had never been executed between the parties and, therefore, the venue provision therein did not apply.
The court noted that, notwithstanding the Miller Act’s mandatory-looking venue clause, stating that an action under the Act “must be brought… in the United States District Court for any district in which the contract was to be performed and executed, regardless of the amount in controversy” – courts have held that “the venue provision in the statute ‘exists for the convenience of the parties’ and ‘is subject to variation by their agreement.’”
In determining whether the written contract applied to the parties, the court examined the chain of events leading to the performance of work by the subcontractor:
- the sub’s providing of a proposal which was not intended for signature
- the signing of a credit application by the general contractor, and otherwise establishing credit and payment terms with the subcontractor
- emailing by the GC of the proposed subcontract with the venue provision
- initial lack of response by the subcontractor concerning the proposed subcontract
- utilization during the course of the job by the subcontractor of the pay application form appended to the unsigned subcontract
- very late in the project, after some prodding by the GC, the sub returned a signed subcontract to the GC – a version which contained many amendments (the court 2 indicates this version was never accepted by the GC), including omission of the Florida venue provision.
Applying Louisiana law, and characterizing the sub’s return of the amended subcontract as a counteroffer, the court rejected the GC’s argument that the subcontractor – by moving ahead with the work – had tacitly accepted the terms of the subcontract, including the venue provision:
“[The GC] does not point to any language in its proposed Subcontract Agreement that invited the subcontractor to accept by performance. The evidence of record is to the contrary… . [The GC] repeatedly demanded that the subcontractor produce the signed agreement even after performance had begun. …”
Additionally, the court noted: “There is no evidence that it is customary in the construction industry for a subcontract worth more than $300,000 to be accepted by commencement of performance rather than execution of a written agreement.”
Avallone Architectural Specialties, LLC v. Blue Cord Design, 2023 U.S. Dist. LEXIS 68884 (W.D. La. Apr. 3, 2023) (the magistrate’s recommendation was confirmed by the district judge on April 18).
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