United States Fire Insurance Company v. Brown

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

UNITED STATES FIRE INSURANCE COMPANY CIVIL ACTION

VERSUS No. 23-1723

J. TERRELL BROWN, SR. ET AL. SECTION I

ORDER & REASONS

Before the Court is a motion1 to dismiss for forum non conveniens filed by

defendants J. Terrell Brown, Jr., J. Terrell Brown, Sr., Horseshoe Investments, LLC,

and John T. Brown Development, LLC (collectively, the “Brown Group”). Defendants

Brad L. Dutruch and Sewer Hawk, LLC (collectively, the “Dutruch Group”),2 Lauren

D. Field, Robert D. Field, Jr., and Hawk RDF, LLC,3 and Rodney K. James4 (“James”)

join in the Brown Group’s motion to dismiss.

Also before the Court is a motion5 to dismiss for forum non conveniens and lack

of subject matter jurisdiction or, alternatively, a motion6 to strike certain allegations

from the plaintiff’s pleadings, filed by the Dutruch Group. James joins in that

motion.7

1 R. Doc. No. 16.

2 R. Doc. No. 13, at 1.

3 R. Doc. No. 20 (order granting motion for joinder).

4 R. Doc. No. 36 (order granting motion for joinder).

5 R. Doc. No. 13.

6 Id.

7 R. Doc. No. 36 (order granting motion for joinder).

The plaintiff, United States Fire Insurance Company, operating under the

registered trademark “Crum & Forster” (“C&F”), opposes8 both motions. For the

reasons below, the Court denies the motions.

I. BACKGROUND

This case arises from the alleged default of two Louisiana Department of

Transportation and Development (“LADOTD”) projects known as “LA 10” and “LA

12.”9 TL Hawk, LLC (“TL Hawk”), a defendant in this matter, served as the general

contractor for these projects, and the plaintiff, C&F, served as TL Hawk’s bonding

company.10

On December 19, 2019, the defendants—TL Hawk, J. Terrell Brown, Sr., J.

Terrell Brown, Jr., John T. Brown Development, LLC, Brad Dutruch, Sewer Hawk,

LLC, Hawk Industries Holding Company, LLC, Hawk Industries Holding Company,

LLC, TL Hawk, LLC, TL Hawk Industrial, LLC, Hawk RDF, LLC, Hawk RKJ, LLC,

Lauren D. Field, Rodney K. James, and Robert D. Field, Jr. (collectively, the

“Indemnitors”)—executed a General Collateral & Indemnity Agreement11

(“Indemnity Agreement”) in favor of C&F. The Indemnity Agreement provided that

C&F would issue payment and performance bonds on behalf of TL Hawk in exchange

8 R. Doc. Nos. 21 (response to Brown Group’s motion, R. Doc. No. 16) and 22 (response

to Dutruch Group’s motion, R. Doc. No. 13).

9 This section provides background information drawn from undisputed statements

in the plaintiff’s complaint, the parties’ memoranda, and the exhibits.

10 “In order to bid on LADOTD contracts, TL Hawk was required to have bonds in

place.” R. Doc. No. 16, at 2.

11 R. Doc. No. 1-3.

for promises that the Indemnitors would collateralize C&F if a claim should be made

on any bond.12

Pursuant to the Indemnity Agreement, the Indemnitors agreed to “exonerate,

defend, indemnify, keep indemnified and hold harmless [C&F] from and against any

and all Loss.”13 Section 2 of the Agreement defines “Loss” as “all demands, liabilities,

losses, costs, damages and expenses of any kind or nature . . . which [C&F] incurs, or

to which it may be exposed, in connection with any Bond or this Agreement, including

but not limited to all loss and expense incurred by reason of: (i) [C&F]’s having

executed any Bond[.]”14 Section 2 defines “Bond” as “any and all bonds, undertakings,

guarantees, contractual obligations, and writings or statements of prequalification or

commitment, including Modifications thereof, which [C&F] has executed or procured

. . . , issued for or on behalf of any one or more of Indemnitors[.]”15 Section 2 also

defines “Contract” as “any agreement of, or undertaking by, any Indemnitor, the

performance of which is bonded by [C&F] and all Modifications thereof,” including

“any contract or obligation, the performance of which is guaranteed or covered either

in whole or in part under a Bond.”16

The Indemnitors must, “upon written request of [C&F], promptly procure the

full and complete discharge of [C&F] from any and all Bonds specified in such request

and all potential liability by reason of such Bonds. If such full and complete discharge

12 See generally id.

13 Id. § 5.

14 Id. § 2.

15 Id.

16 Id.

is unattainable, the Indemnitors shall, if requested by [C&F], within five (5) business

days, deposit with [C&F] a sum of money, as collateral security, in an amount [C&F],

in its sole and absolute discretion, deems necessary at the time of said demand to

protect [C&F] from actual or anticipated Loss.”17 The Indemnity Agreement further

provides:

The Indemnitors acknowledge and agree that their failure to

immediately deposit with [C&F] any sums demanded under this section

shall cause irreparable harm to [C&F] for which it has no adequate

remedy at law. Indemnitors agree and shall stipulate in any legal

proceeding that [C&F] is entitled to injunctive relief for specific

performance of said collateral deposit obligation and do hereby expressly

waive and relinquish any claims or defenses to the contrary.18

Additionally, the Indemnity Agreement states that “[t]he Indemnitors submit

to the jurisdiction of the state and federal courts situated in New York, waiving any

defenses of lack of personal jurisdiction and waiving venue arguments, including

forum non conveniens, in any action brought by [C&F] in the State of New York.”19

Moreover, “[C&F] reserves the right to bring an action in any state . . . where a project

covered by a Bond subject to this Agreement is located . . . and Indemnitors agree to

submit to the jurisdiction of the courts in such state.”20 Finally, the Indemnity

Agreement “shall be governed by the laws of the State of New York, without regard

to conflicts of laws principles.”21

17 Id. § 6.

18 Id.

19 Id. § 17.

20 Id.

21 Id.

After the execution of the Indemnity Agreement, TL Hawk entered into seven

contracts with the LADOTD for projects involving the construction and improvement

of certain bridges in Louisiana.22 The projects included LA 10, LA 20, LA 16 Amite

River Bridge, US 84 UP Railroad Overpass, LA 75 Bayou Breaux Bridge, LA 106

Bayou Boeuf Bridge, and Hwy 41 Spur Bridge over Gum Creek.23 C&F then issued

payment and performance bonds in connection with each of these seven projects.24

The LADOTD was named the obligee on each of the Bonds and TL Hawk was named

the principal.25

On March 2, 2023, the LADOTD notified TL Hawk and C&F that TL Hawk

had defaulted on its obligations to perform work in accordance with the requirements

of the contract documents for two of the seven projects: the LA 10 and LA 20 Project.26

The LADOTD instructed C&F to complete the work for both projects and cure the

conditions of TL Hawk’s default.27 C&F also alleges that, on March 30, 2023, the

LADOTD informed certain Indemnitors and C&F that several of TL Hawk’s

subcontractors had made payment claims for all seven projects.28

C&F subsequently sent the Indemnitors a letter29 on March 28, 2023,

demanding that they provide C&F with updated financial statements by April 4,

22 R. Doc. Nos. 3-3–3-9.

23 R. Doc. No. 1, ¶ 27.

24 Id. ¶ 28.

25 R. Doc. No. 16-1, at 2.

26 R. Doc. Nos. 3-10 and 3-11.

27 R. Doc. No. 3-1, at 6.

28 Id.

29 R. Doc. No. 3-13.

2023. According to C&F, the Indemnitors “either ignored [C&F’s] April 4th deadline

or . . . requested a time extension until April 14th, 2023.” The Indemnitors allegedly

failed to provide C&F with updated financial statements by this extended deadline.

After speaking with counsel for the Brown Group and the Dutruch Group, C&F

“allowed these Indemnitors to provide partial updated financial statements with no

representations of accuracy by April 28, 2023, so long as they would provide full,

complete, and sworn financial statements with representations of accuracy by May 5,

2023.”30

On May 1, 2023, following a request from the Brown Group, C&F agreed to

draft a confidentiality agreement to facilitate the Brown Group’s production of

financial statements. On May 4, 2023, the Brown Group allegedly sent C&F a letter

enclosing updated financial reports and advising C&F that J. Terrell Brown, Sr. and

his wife allegedly had a longstanding separate property agreement in place.31

Also on May 4, 2023, the Dutruch Group asked C&F to draft a confidentiality

agreement, and C&F did so.32 On May 5, 2023, the Dutruch Group provided C&F

with Brad Dutruch’s updated personal financial statement, as well as copies of a Joint

Petition for Approval to Terminate Community of Acquets and Gains and to Enter

into Separate Property Regime and Partition Agreement (“Joint Petition”)33 filed by

30 R. Doc. No. 3-1, at 8, see also R. Doc. No. 3-13.

31 R. Doc. No. 3-1 at 8–9.

32 Id. at 9.

33 R. Doc. No. 3-14.

Brad Dutruch and his wife, Amy Dutruch, in family court for the East Baton Rouge

Parish on May 4, 2023.

On May 12, 2023, C&F filed a petition to intervene in the family court case and

oppose the Joint Petition.34 On June 28, 2023, the family court issued a judgment

terminating Brad and Amy Dutruch’s community property regime and approving

their Contract for Separate Property Regime.35 To this Court’s knowledge, C&F’s

revocatory action, which seeks to annul the separation agreement and raises

questions of bad faith and fraud, is still pending in the family court.36

On May 17, 2023, the Brown Group informed37 C&F that they intended to

contest their obligations under the Indemnity Agreement. As of May 24, 2023, C&F

alleged that “the other Indemnitors . . . remained silent.”38 C&F then brought this

action seeking a preliminary injunction.

II. STANDARDS OF LAW

a. Motion to Dismiss for Lack of Subject Matter Jurisdiction and

Alternative Motion to Strike

i. Motion to Dismiss for Lack of Subject Matter Jurisdiction

“Federal courts are courts of limited jurisdiction; without jurisdiction conferred

by statute, they lack the power to adjudicate claims.” In re FEMA Trailer

34 R. Doc. No. 13-8.

35 R. Doc. No. 33-2, at 1.

36 At a hearing held on June 27, 2023, the family court denied Brad and Amy

Dutruch’s dilatory exceptions of prematurity, meaning the revocatory action could

proceed despite C&F not yet having obtained a judgment against Brad Dutruch. See

R. Doc. No. 22-1, 3:19–9:11.

37 R. Doc. No. 3-18.

38 R. Doc. No. 3-1, at 11.

Formaldehyde Prod. Liab. Litig., 668 F.3d 281, 286 (5th Cir. 2012). Pursuant to

Federal Rule of Civil Procedure 12(b)(1), “a claim is ‘properly dismissed for lack of

subject-matter jurisdiction when the court lacks the statutory or constitutional power

to adjudicate’ the claim.” Id. (citation omitted). Courts are to consider a Rule 12(b)(1)

jurisdictional argument before addressing any other arguments on the merits. Id.

(citing Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001)).

When ruling on a Rule 12(b)(1) motion, a court may dismiss an action for lack

of subject matter jurisdiction “on any one of three separate bases: (1) the complaint

alone; (2) the complaint supplemented by undisputed facts evidenced in the record;

or (3) the complaint supplemented by undisputed facts plus the court’s resolution of

disputed facts.” Spotts v. United States, 613 F.3d 559, 565–66 (5th Cir. 2010) (quoting

St. Tammany Par., ex rel. Davis v. Fed. Emergency Mgmt. Agency, 556 F.3d 307, 315

(5th Cir. 2009)). “The burden of proof for a Rule 12(b)(1) motion to dismiss is on the

party asserting jurisdiction.” Ramming, 281 F.3d at 161. If a court determines that it

does not have subject matter jurisdiction over an action, the action is dismissed

without prejudice. See, e.g., Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977).

ii. Motion to Strike

Rule 12(f) allows courts to “strike from a pleading . . . any redundant,

immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). However, “the

action of striking a pleading should be sparingly used by the courts . . . It is a drastic

remedy to be resorted to only when required for the purposes of justice . . . [A] motion

to strike should be granted only when the pleading has no possible relation to the

controversy.” Augustus v. Bd. of Pub. Instruction of Escambia Cnty., 306 F.2d 862,

868 (5th Cir. 1962) (quoting Brown & Williamson Tobacco Corp. v. United States, 201

F.2d 819, 822 (6th Cir. 1953) (internal quotation marks omitted)).

b. Motion to Dismiss for Forum Non Conveniens

The Supreme Court has made clear that “the appropriate way to enforce a

forum-selection clause pointing to a state or foreign forum is through the doctrine of

forum non conveniens.” Atl. Marine Constr. Co., Inc. v. U.S. Dist. Ct. for W. Dist. of

Tex., 571 U.S. 49, 60 (2013). Typically, a court conducting a forum non conveniens

analysis must decide whether there is an available and adequate alternative forum

and, if so, decide which forum is best suited for the litigation by considering a variety

of private and public interest factors, while also giving deference to the plaintiff’s

choice of forum. Hotel Mgmt. of New Orleans, LLC v. Gen. Star Indem. Co., 603 F.

Supp. 3d 356 (E.D. La. 2022) (Milazzo, J.) (citing Barnett v. DynCorp Int’l, L.L.C., 831

F.3d 296, 300 (5th Cir. 2016)).

However, when confronted with a valid and enforceable forum-selection clause,

courts perform a modified forum non conveniens analysis. Matthews v. Tidewater

Crewing, Ltd., No. 21-1530, 2023 WL 2263838, at *6 (E.D. La. Feb. 28, 2023) (Vitter,

J.) (citations omitted). In this modified analysis, courts give no weight to a plaintiff’s

choice of forum. Id. (citation omitted). “Because the parties have already

contractually agreed upon a given forum, a court need not determine the availability

and adequacy of that chosen forum; presumably the parties themselves have already

determined that the chosen forum is both adequate and available.” Id. Courts also do

not consider any of the private interest factors and “must deem the private-interest

factors to weigh entirely in favor of the preselected forum.” Id. (citation and quotation

omitted). Although courts may consider arguments about public interest factors, “a

valid forum-selection clause [should be] given controlling weight in all but the most

exceptional cases.” Id. (citation and quotation omitted). “The plaintiff bears a ‘high

burden of persuasion’ in demonstrating why a court should not transfer a case to the

contractually selected forum.” Id. (citation omitted).

III. ANALYSIS

a. The Dutruch Group’s Motion to Dismiss for lack of Subject Matter

Jurisdiction and Alternative Motion to Strike

i. Subject Matter Jurisdiction

The Court first considers the threshold jurisdictional question raised in

Dutruch Group’s motion to dismiss for lack of subject matter jurisdiction.39 The

Dutruch Group’s argument centers around a Joint Petition40 to terminate their

community property regime filed by defendant Brad Dutruch and his wife, Amy

Dutruch, in family court. As discussed, C&F intervened in the family court

proceedings, objecting to the separation of property as being “in fraud of [C&F’s]

rights under the Indemnity Agreement” and “in bad faith.”41

39 Neither the Dutruch Group nor any other defendant challenges the Court’s

diversity jurisdiction over C&F’s claims pursuant to 28 U.S.C. § 1332. The nearly

$18.5 million amount in controversy clearly exceeds $75,000. The plaintiff is a

Delaware corporation with its principal place of business in New Jersey, and all

defendants are residents of either Louisiana, Florida, or Texas. R. Doc. No. 22, at 12.

40 R. Doc. No. 13-4.

41 R. Doc. No. 13-8, ¶ 32. Again, although the family court has now issued a judgment

terminating the Dutruches’ community property regime, R. Doc. No. 33-2, at 1, C&F’s

The Dutruch Group clarified in its reply that its “separate motion [to dismiss

for lack of subject matter jurisdiction] is limited to the issues of bad faith and creditor

fraud.”42 C&F mentioned “bad faith” and “fraud” once in its complaint and once in its

motion for a preliminary injunction, where it suggested that “the Dutruches have

acted in bad faith in order to deprive [C&F] of amounts that are due” and that “certain

Indemnitors” have taken “legal steps . . . to commit fraud on [C&F’s] rights.”43

According to the Dutruch Group, this Court lacks subject matter jurisdiction over

those claims because Amy Dutruch never signed the Indemnity Agreement, because

the Family Court has “exclusive jurisdiction” over the matter pursuant to Louisiana

state law, and because Brad and Amy Dutruch filed dilatory exceptions of

prematurity in the family court.

What the Dutruch Group overlooks, however, is that C&F has not asked this

Court to determine whether Brad and Amy Dutruch acted in bad faith or committed

fraud. Rather, C&F seeks a judgment for collateral pursuant to the Indemnity

Agreement signed by Brad Dutruch. That has nothing to do with whether the

partition of assets that took place in family court constituted bad faith or fraud. While

C&F’s few mentions of bad faith and fraud may have been somewhat gratuitous, the

Court is not persuaded that it lacks subject matter jurisdiction over the question

revocatory action, which seeks to annul the separation agreement and raises

questions of bad faith and fraud, remains pending in that court. See R. Doc. No. 22-

1, 22:19–28:11.

42 R. Doc. No. 33, at 5.

43 R. Doc. No. 1, ¶¶ 88, 52. See also R. Doc. No. 3-1, at 9 (“The Indemnitors are now

attempting to commit fraud on [C&F’s] rights.”), 11 (“[T]he Dutruches have acted in

bad faith in order to deprive [C&F] of amounts that are due . . .”).

actually at issue in this case: whether the Indemnitors, including Brad Dutruch, must

collateralize C&F pursuant to the Indemnity Agreement.

The Dutruch Group’s emphasis on the uncontested fact that Amy Dutruch did

not sign the Indemnity Agreement and therefore owes no obligations to C&F is

entirely irrelevant to this Court’s subject matter jurisdiction. The question of whether

C&F may seek collateral from Amy Dutruch’s now-separate property in the event

that this Court issues a judgment against Brad Dutruch is simply not before this

Court.44 Amy Dutruch is not even a party to this lawsuit. As C&F points out, the

basic problem with the Dutruch Group’s motion is that it “confuse[s] [C&F’s] current

request for a judgment for collateral—which is derived from the Indemnity

Agreement—with [C&F’s] subsequent ability to enforce that judgment against Mr.

Dutruch’s [former] community property [if] it is issued—a right that [C&F]

intervened in the Family Court Litigation to protect, but which is not at issue in this

action.”45

Likewise, the Dutruch Group’s argument that the family court has exclusive

jurisdiction over this matter is misplaced. The Dutruch Group is correct that,

pursuant to Louisiana law, the family court has “exclusive jurisdiction” over “the

issuance of conservatory writs for the protection of community property” and “[a]ll

actions for the settlement and enforcement of claims arising from matrimonial

regimes or the establishment thereof.” La. Stat. Ann. § 13:1401(A) (2011). However,

44 See R. Doc. No. 22, at 16 (“To be clear, Crum & Forster do not dispute that Mrs.

Dutruch is not an obligor under the Indemnity Agreement.”).

45 Id. at 12.

this lawsuit does not concern claims arising from the Dutruches’ matrimonial regime.

Rather, this case is about claims arising from the Indemnity Agreement that Brad

Dutruch signed. C&F’s sparse references to Brad and Amy Dutruch’s partition of

assets in family court allegedly having been “in bad faith” or “fraud” do not change

that.

Similarly, the Dutruch Group is incorrect that dilatory exceptions of

prematurity filed by Brad and Amy Dutruch in family court somehow affect this

Court’s jurisdiction. As explained, the issue before this Court is not—as the Dutruch

Group suggests in its motion—whether C&F “can maintain the status quo as it

relates to Amy’s interest in the community.”46 Rather, the question is whether C&F

is entitled to recover collateral from the named defendants—including Brad

Dutruch—pursuant to the Indemnity Agreement. In any event, the family court has

now denied these exceptions.47 The Dutruch Group’s motion to dismiss for lack of

subject matter jurisdiction will therefore be denied.48

46 R. Doc. No. 13-1, at 14.

47 R. Doc. No. 22-1.

48 In its reply, the Dutruch Group argues for the first time that, pursuant to Burford

v. Sun Oil Co., 319 U.S. 315 (1943), this Court should abstain from deciding the issues

of bad faith and fraud because “identical issues are framed for resolution in state and

federal court.” R. Doc. No. 33, at 6. As discussed, the question of whether Brad and

Amy Dutruch acted in bad faith or committed fraud in partitioning their community

property is not before this Court. Therefore, “identical issues” are not being framed

for resolution in this Court and in family court, rendering abstention inapposite.

ii. Motion to Strike

The Dutruch Group also contends that, pursuant to Federal Rule of Civil

Procedure 12 (f), the Court should strike from the record C&F’s allegations that Brad

and Amy Dutruch acted in bad faith.49

Rule 12(f) allows courts to “strike from a pleading . . . any redundant,

immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). As C&F points

out, “the action of striking a pleading should be sparingly used by the courts . . . It is

a drastic remedy to be resorted to only when required for the purposes of justice . . .

[A] motion to strike should be granted only when the pleading has no possible relation

to the controversy.” Augustus, 306 F.2d at 868 (quotation and citation omitted).

Although C&F’s suggestions that Brad and Amy Dutruch acted in “bad faith”

and committed “fraud” may not have been strictly necessary, the Court finds that

they bear a possible relation to the controversy. C&F mentions bad faith and fraud

only in connection with the Dutruches’ decision to terminate their community

property regime after more than twenty years of marriage.50 According to C&F, the

termination of this property regime could affect C&F’s recovery pursuant to the

Indemnity Agreement.51 C&F argues that this constitutes “irreparable harm”

supporting its request in this case for a preliminary injunction.52 The Dutruch Group

49 R. Doc. No. 13-1, at 15.

50 R. Doc. No. 3-1, at 30.

51 R. Doc. No. 22, at 19.

52 Id. A preliminary injunction is only appropriate where, inter alia, there is “a

substantial threat of irreparable injury if the injunction is not issued.” Texans for

Free Enter. v. Tex. Ethics Comm’n, 732 F.3d 535 (5th Cir. 2013) (quoting Speaks v.

Kruse, 445 F.3d 396, 399–400 (5th Cir. 2006) (internal quotation marks omitted).

has not satisfied the stringent requirements of Rule 12(f) and its motion to strike will

therefore be denied.

b. Motion to Dismiss for Forum Non Conveniens Based on Forum-Selection

Clause

i. Incorporation of the Forum-Selection Clause

The Brown Group argues that the Court should dismiss C&F’s claims for forum

non conveniens based on the forum-selection clause indisputably incorporated by

reference into the contracts between the LADOTD and TL Hawk.53 The Brown Group

contends that the Indemnity Agreement “incorporates the LADOTD Contracts and

the C&F Bonds”54 because C&F’s collateral demand pursuant to the Indemnity

Agreement “is conditioned upon a Loss resulting from the issuance of a Bond.”55

The Indemnity Agreement is governed by New York law.56 Consequently, the

question of whether the Indemnity Agreement incorporates the LADOTD contracts’

forum-selection clause is governed by New York law. C&F correctly notes that the

Indemnity Agreement does not expressly incorporate the provisions of those

53 R. Doc. No. 16-1, at 6–14. Those forum-selection clause provides for litigation in the

19th Judicial District in and for the Parish of East Baton Rouge, and it has expressly

incorporated by reference into the LADOTD contracts.

54 Id. at 10.

55 R. Doc. No. 32, at 1. C&F does not appear to challenge the validity of the LADOTD

contracts’ forum-selection clause, but asserts that this clause does not apply to claims

arising from the Indemnity Agreement.

56 R. Doc. No. 1-3, § 17. The Brown Group argues that Louisiana law “provides

guidance on whether the state forum-selection clause[s] in the LADOTD Contracts

apply to the Indemnity Agreement and therefore is relevant.” R. Doc. No. 16-1, at 8.

However, pursuant to the plain language of the Indemnity Agreement, issues related

to the Indemnity Agreement—the contract at issue in this lawsuit—are governed by

New York law. R. Doc. No. 1-3, § 17.

contracts,57 and the Brown Group does not dispute that.58 The question, then, is

whether, pursuant to New York law, an Indemnity Agreement that requires

collateral to protect a party from “actual or anticipated Loss” arising from certain

bonded contracts impliedly incorporates the provisions of those bonded contracts.

As C&F points out, the first problem with the Brown Group’s argument is that

the Indemnity Agreement is itself a contract containing a forum-selection clause.59

In Section 17 of the Indemnity Agreement, the Indemnitors agreed to “submit to the

jurisdiction of the state and federal courts situated in New York, waiving any

defenses of lack of personal jurisdiction and waiving venue arguments, including

forum non conveniens, in any action brought by [C&F] in the State of New York.”60

Additionally, C&F “reserves the right to bring an action in any state where an

Indemnitor has substantial contacts or where a project covered by a Bond subject to

this Agreement is located or where a claimant brings suit against [C&F] on a bond

covered by this Agreement and Indemnitors agree to submit to the jurisdiction of the

courts in such state.”61

The Brown Group does not even acknowledge Section 17, but functionally asks

this Court to read it out of the Indemnity Agreement. According to the Brown Group,

C&F is bound by the LADOTD contracts through the bonds to litigate any issues

57 R. Doc. No. 21, at 11.

58 R. Doc. No. 16-1, at 18 (recognizing that “the terms of the Indemnity Agreement do

not expressly incorporate by reference the terms of the LADOTD Contracts, the

Standard Specifications, or the terms of the Bonds”).

59 R. Doc. No. 21, at 10.

60 R. Doc. No. 1-3, § 17.

61 Id.

related to the LADOTD contracts—including collateralization, an issue arising from

the Indemnity Agreement—in Louisiana state court.62 But contract law, both in

Louisiana and in New York, generally provides that the language of the contract is

the law between the parties. Trafficware Grp., Inc. v. Sun Indus., L.L.C., 749 F. App’x

247, 252 (5th Cir. 2018); Abiele Contracting, Inc. v. New York City School Const.

Auth., 689 N.E. 2d 864, 867 (N.Y. 1997). The Court therefore will not ignore the

Indemnity Agreement’s forum-selection provision.

Further, the Brown Group fails to cite any cases applying New York law

suggesting that a forum-selection clause from one contract can be impliedly

incorporated by reference into another under these circumstances, and this Court has

found none. To the contrary, New York courts have made clear that indemnity

agreements are separate contracts, and that a forum-selection clause in an indemnity

agreement should be enforced even where a related agreement contains a different

forum-selection clause. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Williams, 637

N.Y.S. 2d 36 (App. Div. 1996) is particularly instructive. There, the court found that,

“[w]hile the respective [notes and indemnification] agreements [were] unquestionably

part of the same overall transaction, each involve[d] different parties and serve[d] a

distinct purpose.” Id. at 37. The court specifically noted that “[t]he choice of different

law to be applied to each contract and the designation of a different forum for the

62 See R. Doc. No. 16-1, at 14 (arguing that, “because the Indemnity Agreement and

the Bonds at the heart of these proceedings clearly relate to TL Hawk’s work under

the LA 10 and LA 20 Contracts, which contain a mandatory forum-selection clause,

C&F’s claims should be dismissed on the grounds of forum non conveniens”).

litigation of disputes arising out of its performance indicate[d] that the respective

agreements [were] intended to be separate.” Id. at 38.

The National Union court also explained that “if the choice of law and selection

of forum provisions of the notes were to be adopted [into the indemnification

agreement], as defendants suggest[ed], the contradictory provisions of the

indemnification agreement would be rendered mere surplusage, a result that offends

a fundamental principle of contract interpretation.” Id. (citing Ruttenberg v. Davidge

Data Syss. Corp., 626 N.Y.S. 2d 174, 177–78 (App. Div. 1995). “According the

respective contracts their appropriate place in the overall transaction,” the court

found that, “in exacting the indemnification agreements from defendants, plaintiff

bargained for the right to proceed directly against the purchasers of the limited

partnership interests as a condition of providing the bond to secure repayment of

their obligations under the notes.” Id. The court therefore enforced the forum-

selection clause in the indemnification agreement with respect to the claims arising

from the indemnification agreement. Id. at 39.

Here too, C&F’s claims are brought pursuant to the Indemnity Agreement, not

the bonds or LADOTD contracts. Although the Brown Group appears to be correct

that C&F is bound by the LADOTD contracts through the language of the bonds,63

the issue here is simply whether C&F can bring a claim for collateralization arising

from the Indemnity Agreement pursuant to the Indemnity Agreement’s forum-

selection clause. It can.

63 R. Doc. No. 32, at 2; R. Doc. No. 21, at 12.

The Brown Group cites three cases in support of its argument that the

LADOTD contracts’ forum-selection clauses “apply to” the Indemnity Agreement. As

C&F points out, these cases are inapposite as they do not apply New York law and do

not interpret forum-selection clauses in indemnity agreements comparable to the one

at issue here.

The Brown Group first points to PCL Civ. Constructors, Inc. v. Arch Ins. Co., a

case where a court applying Louisiana law granted a motion to dismiss based on

forum non conveniens where an obligee sued a surety claiming that the surety failed

to perform under a performance bond. No. 19-0491, 2020 WL 1068160 (W.D. La. Mar.

5, 2023). The bond in question in that case expressly stated that it incorporated by

reference the parties’ subcontract which in turn expressly incorporated by reference

the prime contract containing the mandatory forum-selection clause pursuant to

Section 107.01 of the 2006 Standard Specifications. Id. at *3. There is no such express

incorporation of the bonds or the LADOTD contracts in the Indemnity Agreement at

issue here.

The Brown Group next cites Town of Melville v. Safeco Ins. Co. of Am. for the

proposition that a contract and a performance bond must be read together. 651 So.2d

404 (La. Ct. App. 1995). In that case, the Louisiana Third Circuit Court of Appeal

noted that the contract at issue “provide[d] in part that the (performance) bond shall

provide for the payment of reasonable attorney’s fees for the enforcement of contract

proceedings.” Id. at 408. Based on the contract’s language, the court determined that

the contract and bond had to be “read together,” so the surety was contractually

obligated to pay attorney’s fees. Id.

Importantly, the determination of whether contracts should be construed

together turns on what those contracts actually say. Unlike the contracts at issue in

Town of Melville, the Indemnity Agreement in this case includes no language that

warrants applying another contract’s forum-selection clause to it. In fact, as

discussed, the Indemnity Agreement includes its own forum-selection clause.

Similarly, the Brown Group’s reliance on Matthews v. Tidewater Crewing, Ltd.

is misplaced. No. 21-1530, 2023 WL 2263838 (E.D. La. Feb. 28, 2023) (Vitter, J.). In

that case, the court determined that a forum-selection clause in an employment

contract required an employee to bring claims related to alleged exposure to

chemicals in the High Court of Justice in London. Although the Brown Group is

correct that the word “shall” in a forum-selection clause typically renders that clause

mandatory, that has no bearing on whether the LADOTD contracts’ forum-selection

clause is incorporated in the Indemnity Agreement.

Because the LADOTD contracts’ forum-selection clause is not incorporated into

the Indemnity Agreement and the Indemnity Agreement itself contains a forum-

selection clause permitting C&F to bring its claims in this forum, the Court will not

dismiss C&F’s claims for forum non conveniens on this ground.

ii. Direct Benefits Estoppel

Alternatively, the Brown Group argues that the Court should grant its motion

to dismiss for forum non conveniens because C&F is bound to the forum-selection

clause in the LADOTD contracts through the doctrine of “direct-benefits estoppel.”64

Although this doctrine is often associated with arbitration clauses, courts have also

applied it to bind parties to forum-selection clauses in contracts they have not signed.

See, e.g., Hellenic Investment Fund, Inc. v. Det Norske Veritas, 464 F.3d 514, 518–20

(5th Cir. 2006); see also Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974) (noting

that an arbitration clause is “a specialized kind of forum-selection clause”).

The direct-benefits estoppel doctrine “holds a non-signatory to a clause in a

contract if it ‘knowingly exploits the agreement’ containing the clause.” In re Lloyd’s

Reg. N. Am., Inc., 780 F.3d 283, 291 (5th Cir. 2015) (quoting Bridas S.A.P.I.C. v. Gov’t

of Turkmenistan, 345 F.3d 347, 361–62 (5th Cir. 2003)). A non-signatory may be

bound either “by knowingly seeking and obtaining ‘direct benefits’ from the contract”

or “by seeking to enforce the terms of that contract or asserting claims that must be

determined by reference to that contract.” Id. (quoting Noble Drilling Servs., Inc. v.

Certex USA Inc., 620 F.3d 469, 473 (5th Cir. 2010)). The Brown Group argues that

C&F should be bound by the forum-selection clause in the LADOTD contracts because

its claims “must be determined by reference to the LADOTD contracts.”65

C&F counters that the direct-benefits estoppel doctrine does not apply for two

reasons. First, the Indemnity Agreement is governed by New York law and “there is

no indication that, under New York law, [the direct-benefits estoppel doctrine] should

apply as to the . . . indemnitors.”66 Second, C&F’s claims in this lawsuit are “expressly

64 R. Doc. No. 16-1, at 15–18.

65 R. Doc. No. 16-1, at 17.

66 R. Doc. No. 21, at 15.

authorized and derived from the unambiguous language of the Indemnity

Agreement,” which “entitles [C&F] to collateral and indemnity to protect it from Loss

without any requirement that the claims giving rise to that Loss be fully determined

or adjudicated.”67

A. Choice of Law

The relevant choice-of-law analysis is complex. At issue is whether, as a non-

signatory to the LADOTD contracts, C&F is bound by the forum-selection clause in

those contracts pursuant to the direct-benefits estoppel doctrine. The Brown Group

initially appeared to suggest that this question was governed by federal law,68 but

argued in its reply that the question was in fact governed by Louisiana law because

“any interpretation of the LADOTD Contracts or the Bonds must be interpreted

under Louisiana law.”69 C&F argues that New York law governs the question because

the parties’ Indemnity Agreement is governed by New York law.70

The Fifth Circuit has previously recognized in the context of arbitration

agreements that “it is often an uncertain question” whether state or federal law

governs the determination of whether a party should be compelled to arbitrate its

claims. Wash. Mut. Fin. Grp., L.L.C. v. Bailey, 364 F.3d 260, 267 n.6 (5th Cir. 2004).

Because the question of whether an arbitration clause (and by extension a forum-

selection clause) binds a non-signatory “presents no state law question of contract

67 Id. at 16.

68 See R. Doc. No. 16-1, at 15-17 (repeatedly citing In re Lloyd’s Reg. N. Am., Inc., 780

F.3d 283 (5th Cir. 2015)).

69 R. Doc. No. 32, at 4 n.7.

70 R. Doc. No. 21, at 15.

formation or validity,” the Fifth Circuit found it “appropriate to apply the doctrine of

equitable estoppel as outlined by federal courts without reference to [state] law.” Id.

(citing Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411,

417 n.4 (4th Cir. 2000) (internal quotation marks omitted).71

In Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009), “the Supreme Court

clarified that while the [Federal Arbitration Act] creates substantive federal law

regarding the enforceability of arbitration agreements, ‘background principles of

state contract law’ control the interpretation of the scope of such agreements,

‘including the question of who is bound by them.’” Harland Clarke Holdings Corp. v.

Milken, 997 F. Supp. 561, 579–81 (W.D. Tex. 2014) (quoting Carlisle, 556 U.S. at 630).

Since Carlisle, some district courts have applied state law to resolve this question.

Id. (collecting cases). The Fifth Circuit has sometimes applied federal law, id. (citing

Griffin v. ABN Amro Mortg. Grp., Inc., 378 F. App’x 437, 439–40 (5th Cir. 2010)), and

other times appeared to find the question unsettled. Id. (citing Graves v. BP America,

Inc., 568 F.3d 221, 223 (5th Cir. 2009)).

“Generally whether state or federal law applies will have no effect on the

outcome, since state and federal law both utilize background principles of contract

and agency law, and those principles are typically similar across jurisdictions.”

Harland Clarke Holdings Corp., 997 F. Supp. at 580. Finding no significant difference

71 But see Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1074–75 (5th Cir. 2002)

(applying Texas law to determine whether a non-signatory was bound by an

arbitration agreement).

among New York, Louisiana, and federal law with respect to this question,72 the

Court concludes it “need not decide which law controls.” Id. at 581.

B. Application of Direct-Benefits Estoppel Doctrine

Whether C&F is bound by the LADOTD contracts’ forum-selection clause

through the doctrine of direct-benefits estoppel turns on whether C&F “assert[s]

claims that must be determined by reference to” the LADOTD contracts.73 Bridas,

345 F.3d at 361–62 (citation omitted). The Brown Group argues that C&F’s claims of

collateral “must be determined by reference to the LADOTD Contracts.”74 C&F

instead argues that its claims for collateral and indemnity to protect it from “Loss”

can be adjudicated “without any requirement that the claims giving rise to that Loss

be fully determined or adjudicated” and that C&F’s “rights under the Indemnity

Agreement are not premised on the terms or conditions of the contracts it bonded.”75

72 Confronted with the question of whether it should compel a non-signatory to

arbitrate, the New York Court of Appeals noted that “some New York courts have

relied on the direct benefits estoppel theory, derived from federal case law, to

abrogate the general rule against binding nonsignatories.” Belzberg v. Verus

Investments Holdings Inc., 999 N.Y.S.2d 685, 688 (N.Y. 2013) (citations omitted). The

New York Court of Appeals relied heavily on federal cases in its analysis and

ultimately concluded that the non-signatory in the case at bar had not derived a direct

benefit from the agreement at issue. Id. at 691. Likewise, the Louisiana Supreme

Court has acknowledged the direct-benefits estoppel doctrine, calling it a

“jurisprudentially created type of estoppel” and “an equitable remedy.” Donelon v.

Shilling, 340 So.3d 786 (La. 2020); see also Trader’s Mart, Inc. v. AOS, Inc., 268 So.3d

420, 428 (La. App. 2019) (relying on federal case law to explain direct-benefits

estoppel).

73 The Brown Group mentions in a single footnote that “C&F also arguably obtained

direct benefits from the Contracts as the C&F bond premiums were determined by

the value of the Contracts.” R. Doc. No. 16-1, at 17 n.104. The Brown Group provides

no further support for this position, and no other party mentions this point.

74 R. Doc. No. 16-1, at 17.

75 R. Doc. No. 21, at 16.

The Brown Group’s argument is based on the text of the Indemnity Agreement.

Section 6 of that Agreement provides for collateral “to protect [C&F] from “actual or

anticipated Loss” and Section 2 defines “Loss” as “all demands, liabilities, losses,

costs, damages, and expenses of any kind or nature . . . which [C&F] incurs, or to

which it may be exposed in connection with any Bond or this Agreement.”76 According

to the Brown Group, since C&F’s collateral demand is “conditioned upon Loss

resulting from the issuance of a Bond, C&F’s claims must be determined by reference

to the underlying [LADOTD] Contracts.”77

The direct-benefits estoppel doctrine typically applies in cases where a non-

signatory sues a signatory and the non-signatory’s claims are premised in part on the

agreement. Bridas, 345 F.3d at 361-62. C&F’s claims in the instant action are

premised on the parties’ separate Indemnity Agreement—which contains its own

forum-selection clause—not the bonds or the LADOTD contracts. C&F has therefore

not “exploited” the LADOTD contracts “to the degree that the cases that consider

applying [direct-benefits] estoppel require.” Id. at 362. Indeed, “[a]s plaintiff, [C&F]

is not required to base its claims on [the bonds or LADOTD contracts] and can . . .

disclaim any reliance thereupon.” Noble Drilling Servs., Inc. v. Certex USA, Inc., 620

F.3d 469, 474 (5th Cir. 2010). Although the Indemnity Agreement references the

bonds, C&F has framed its claims as claims arising from the Indemnity Agreement

76 R. Doc. No. 1-3, §§ 6, 2 (emphasis added).

77 R. Doc. No. 16-1, at 18.

and not from the bonds or LADOTD contracts. It has also expressly disclaimed

reliance on the terms or conditions of the contracts it bonded.7®

The Court therefore concludes that C&F is not bound by the forum-selection

clause in the LADOTD contracts to litigate its claims in the Judicial District

Court in and for the Parish of East Baton Rouge. However, if any claims C&F asserts

later reveal themselves to be premised on the terms of the bonds or LADOTD

contracts, the Court reserves the right to dismiss those claims pursuant to the

doctrine of direct-benefits estoppel.

IV. CONCLUSION

For the foregoing reasons,

IT IS ORDERED that the motion to dismiss for lack of subject matter

jurisdiction, the motion to strike,®° and the motions to dismiss based on forum non

conveniens®! are DENIED.

It is FURTHER ORDERED that any responses to C&F’s motion for a

preliminary injunction must be filed no later than AUGUST 23, 2023. Any replies

must be filed no later than AUGUST 30, 2023.

New Orleans, Louisiana, August 9, 2023.

n__

UNITED STATES DISTRICT JUDGE

78 R. Doc. No. 21, at 17.

79 R. Doc. No. 13.

80 Td.

81 Td. and R. Doc. No. 16.

26