US District Court for District of Massachusetts allows motion to transfer insurance coverage case to New York because of forum selection clauses in underlying contracts

Wegmans Food Markets entered into two contracts relevant to an accident at a supermarket under construction in Burlington, Massachusetts.  The first contract was a staffing agreement with Aerotek, under which Aerotek provided Thomas Story to Wegmans as a construction supervisor at the site. The second contract was a construction subcontract with MP Masonry.

Both contracts had forum selection clauses.  The Aerotek contract provided that New York courts would have exclusive jurisdiction over the parties and subject matter of proceedings with respect to any matter arising under the contract. The MP Masonry contract provided that any litigation brought by MP Masonry based on or arising out of the contract shall be brought only in New York. 


Joseph Holgun, an employee of MP Masonry, was injured when a scaffold collapsed at the construction site.  He sued Wegmans and Story.  Wegmans demanded that MP Masonry defend and indemnify it under an indemnification clause in the construction contract. 

Firemen's Insurance Company of Washington insured MP Masonry.  It agreed to defend Wegmans. ACE American Insurance Company insured Aerotek.

Firemen's sued ACE, Story, and Aerotek in the United States District Court for the District of Massachusetts.  It sought a declaratory judgment that they must contribute to the costs of defending Wegmans.  Specifically, Firemen's asked the court to rule that:

·       Story is not an insured under the Firemen's policy and Firemen's has no duty to defend or indemnify him; 

·       Story is not an intended beneficiary of contractual defense and indemnity obligations owed by MP Masonry to Wegmans under the terms of the construction contract; 

·       Wegmans is an additional insured under the ACE policy; and 

·       ACE is required to defend and indemnity Wegmans under the indemnity clause of the Aerotek contract.  

Aerotek and Story moved to transfer the case to New York under the contractual forum selection clauses. In Firemen's Insurance Co. of Washington, D.C. v. ACE American Insurance Co., __ F.Supp. 3d __, 2019 WL 2914159, the court granted the motion. 


Firemen's argued that it was not a party to either the the construction contract or the staffing contract, so most of its claims were not subject to the forum selection clauses.  It conceded that its claim that the ACE policy had to cover Wegmans because of the contractual indemnity clause of the staffing agreement was subject to the forum selection clause in that contract, but argued that transferring only one claim to New York courts would be unreasonable. 

The United States District Court  provided an overview of federal law on motions to transfer on the basis of contractual forum selection clauses.  The analysis boils down to:  when a contract has a mandatory forum selection clause, it can be defeated only rarely and only based on public interest factors such as the administrative difficulties flowing from court congestion, the importance of having local controversies decided at home, and the interests in having the trial of a case that will be decided on the basis of state law in the federal jurisdiction that most understands the law of that state. A non-party to a contract may be bound by a forum selection clause if the party is so closely related to the dispute that is foreseeable that it will be bound. 

The court held that it was foreseeable that Firemen's and ACE would have to indemnify Wegmans under the construction and staffing contracts.  All the declarations Firemen's sought required interpretation of the underlying contracts.  The insurers were therefore closely enough related to the dispute that the forum selection clauses applied.