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Roberts & Schaefer Co. v. Merit Contracting

October 30, 1996

ROBERTS & SCHAEFER COMPANY,

A DELAWARE CORPORATION,

PLAINTIFF-APPELLANT,

v.

MERIT CONTRACTING, INCORPORATED, A PENNSYLVANIA CORPORATION,

DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division.

No. 95 C 217 Elaine E. Bucklo, Judge.

Before POSNER, Chief Judge, and CUMMINGS and COFFEY, Circuit Judges.

COFFEY, Circuit Judge.

ARGUED APRIL 17, 1996

DECIDED OCTOBER 30, 1996

Plaintiff-appellant Roberts & Schaefer Company ("R&S") sued defendant-appellee Merit Contracting, Inc. ("Merit") in the Circuit Court of Cook County, Illinois, claiming that Merit had breached its construction subcontract with R&S. Merit removed the case to federal district court on the basis of diversity of citizenship. 28 U.S.C. secs. 1332, 1441. Merit then filed a motion to dismiss or, in the alternative, to transfer the case to the United States District Court for the Western District of Pennsylvania or stay the proceedings pending resolution of a case between the parties in Pennsylvania state court. R&S responded with a motion to remand to state court, arguing that its contract with Merit contained a forum selection clause according to which the parties agreed that (1) Illinois law would govern any contractual dispute between them, and (2) the Illinois Circuit Courts would have exclusive jurisdiction to adjudicate any such dispute. The district court rejected Merit's contention that the parties' agreement contained the forum selection clause and entered an order dismissing R&S's suit for lack of personal jurisdiction. R&S appeals. We reverse and remand.

I. BACKGROUND

R&S, a Delaware corporation with its principal place of business in Chicago, Illinois, is a design/build contractor. Merit, a Pennsylvania corporation with its principal place of business in Monongahela, Pennsylvania, engages in general construction work. R&S bid on and was awarded the contract to design and build a raw coal storage and handling facility in Washington County, Pennsylvania, for the 84 Mining Company. R&S subcontracted with Merit to perform demolition, excavation, and construction work in connection with this project, described as the "84 Mining Project".

The subcontract between R&S and Merit came about as follows. On May 25, 1993, R&S asked Merit to submit a bid to perform the previously mentioned construction services on the 84 Mining Project. To assist Merit in making its bid, R&S passed along to Merit a "bid package" prepared by 84 Mining Company. Although the bid package was never submitted to the district court, we understand from Merit's attorney's representations at oral argument that this bid package contained details of the demolition and construction work that Merit proposed to perform. Based on the bid package, Merit submitted a bid of $1.775 million, and, on August 27, 1993, R&S accepted the bid verbally. R&S told Merit to proceed with the work, and Merit commenced work on September 1, 1993.

On September 7, 1993, R&S sent a letter to Merit confirming their Purchase Order No. 9331-711 for the demolition and construction work to be performed by Merit on the 84 Mining Project. The letter briefly described the nature of the work (demolition, excavation etc.) and listed a price of $1.775 million. The letter further stated that the confirming purchase order documents would be forwarded to Merit as soon as they were complete. At the end of September, Merit invoiced R&S for work done during that month in the amount of $154,620.00, and, in late October, R&S paid the invoice by check.

On November 1, 1993, R&S sent Merit Purchase Order No. 9331-711 and several accompanying documents (collectively, the "Purchase Order Documents"). The purchase order consisted of seven pages. The first page provided a brief description of the work, while the remaining pages provided a more detailed breakdown of the work to be performed, the work completion schedule, the contract price and payment terms. *fn1 Accompanying Purchase Order No. 9331-711 was a document titled "Roberts and Schaefer Company Construction General Notes and Conditions" ("General Notes and Conditions"). The General Notes and Conditions contained terms relating to a wide variety of issues, including scheduling, payments, risk of loss, inspections, changes, warranties, force majeure (e.g., Acts of God), indemnification and insurance, and liens. The General Notes and Conditions also included Paragraph 6.14 titled "Law Governing." This provision stated:

This purchase order and all disputes between the parties hereto shall be governed by and construed according to the laws of Illinois whose Circuit Courts shall have exclusive jurisdiction to determine all such issues.

In addition to the General Notes and Conditions, the purchase order was accompanied by a document entitled "Sub-Contract Agreement." The Sub-Contract Agreement identified the work to be done by Merit on the 84 Mining Project as that "specified" by Purchase Order No. 9331-711; it also identified the price as $1.775 million. A representative of R&S signed the Sub-Contract Agreement, but no representative of Merit ever signed the document.

On November 11, 1993, R&S sent Merit revised pages 2, 5, and 6 of the purchase order. According to the cover letter, these pages were revised to reflect certain points regarding concrete volume ...


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