                                                                                                                           Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-5-2006

Wall Street Aubrey v. Aubrey
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-5027




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Recommended Citation
"Wall Street Aubrey v. Aubrey" (2006). 2006 Decisions. Paper 956.
http://digitalcommons.law.villanova.edu/thirdcircuit_2006/956


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                                                              NOT PRECEDENTIAL

                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT


                                     No. 05-5027


                        WALL STREET AUBREY GOLF, LLC,

                                                            Appellant
                                           v.

               EVA AUBREY; GEORGE AUBREY; JOHN AUBREY;
               AUBREY FIRST FAMILY LIMITED PARTNERSHIP


                   On Appeal from the United States District Court
                        for the Western District of Pennsylvania
                              (D.C. Civil No. 05-cv-01163)
                   District Court Judge: Honorable Arthur J. Schwab


                                 Argued May 18, 2006

             Before: RENDELL, and VAN ANTWERPEN, Circuit Judges,
                      and ACKERMAN, Senior District Judge*

                                 (Filed: June 5, 2006)

Patrick L. Abromowich (Argued)
Jay D. Marinstein
Fox Rothschild, LLP
625 Liberty Ave., 29th Floor
Pittsburgh, PA 15222

Counsel for Appellant



   *
     Honorable Harold A. Ackerman, Senior District Judge, United States District Court
for the District of New Jersey.
Douglas G. Linn, II (Argued)
The Linn Law Group, LLC
228 South Main St.
P.O. Box 1554
Butler, PA 16003

Counsel for Appellees



                               OPINION OF THE COURT


VAN ANTWERPEN, Circuit Judge.

       In this diversity case, appellant Wall Street Aubrey Golf, LLC (“Wall Street”), a

Florida Corporation, seeks reversal of the Order of the United States District Court for the

Western District of Pennsylvania, Honorable Arthur J. Schwab, dismissing without

prejudice its case against appellees Eva Aubrey, George Aubrey, John Aubrey, and the

Aubrey First Family Limited Partnership (“the Aubreys”). The District Court granted the

Aubreys’ Rule 12(b)(6) motion to dismiss because the contract underlying their dispute

contained a provision selecting Butler County, Pennsylvania as the venue in which any

litigation would occur. We agree with the District Court’s conclusion that the provision

means the case must be litigated in Butler County, where there is no federal district court,

and will affirm.

                                             I.

       The facts of this case as they relate to our decision may be stated briefly. Wall

Street and the Aubreys entered into a contractual lease and option agreement dated March

4, 2005. In the agreement, the Aubreys leased a golf course located in Butler County,


                                            -2-
Pennsylvania to Wall Street, conveyed an option to purchase the course and some

adjacent real estate, and undertook several related obligations. The contract contained the

following disputed provision:

       “29. CONSTRUCTION/RECORDING: This Lease shall be construed in
       accordance with the laws of the Commonwealth of Pennsylvania, with
       venue laid in Butler County, Pennsylvania. This Lease shall not be
       recorded.”

Wall Street subsequently came to believe that the Aubreys had misrepresented certain

aspects of the deal, and had not held up their end of the bargain. Thus, on August 19,

2005, Wall Street filed a Complaint against the Aubreys in the United States District

Court for the Western District of Pennsylvania in Allegheny County alleging a number of

causes of action based in, and stemming from the agreement. The Aubreys filed a Fed. R.

Civ. P. 12(b)(6) motion to dismiss, on the basis that, inter alia, venue was improper

because the contract had specified that venue would be laid in Butler County. The

District Court granted the Aubreys’ motion on November 11, 2005, and dismissed the

case without prejudice.1 Wall Street timely appealed.

                                             II.

       The District Court had diversity jurisdiction, 28 U.S.C. § 1332, because the parties

are completely diverse, and the amount in controversy exceeds $75,000. The basis for

   1
     Dismissal under Fed. R. Civ. P. 12(b)(6) is a permissible means of disposing of a
case where venue is improper. Cf. Salovaara v. Jackson Nat. Life Ins. Co., 246 F.3d 289,
298-99 (3d Cir. 2001) (“a 12(b)(6) dismissal is a permissible means of enforcing a forum
selection clause that allows suit to be filed in another federal forum.”). Here, there is no
other federal forum, eliminating the possibility of transfer under 28 U.S.C. §§ 1404 or
1406, and making some form of dismissal all the more necessary. See id. at 299
(dismissal necessary where proper forum is state court). The parties do not dispute the
use of Rule 12(b)(6) as vehicle for dismissal in this case.

                                            -3-
our appellate jurisdiction is slightly, though not fatally, complicated by the dismissal of

proceedings below without prejudice. We requested memoranda from the parties on the

issue, and it is now ripe for decision. Dismissal without prejudice can defeat appellate

jurisdiction. E.g., Erie County Retirees Ass’n. v. County of Erie, 220 F.3d 193, 201 (3d

Cir. 2000). However, “a court of appeals has jurisdiction under 28 U.S.C. § 1291 when

the district court has divested itself of a case entirely, regardless of the fact that claims in

the case may continue to go forward in state court.” Id. at 202. In the present case, the

District Court’s dismissal served to divest it of the suit completely, with no prospect of its

return to federal court, absent an appeal. Thus, we have jurisdiction under 28 U.S.C. §

1291. Cf. Foster v. Chesapeake Ins. Co., Ltd., 933 F.2d 1207, 1211 (3d Cir. 1991)

(district court’s order remanding to state court based on forum selection clause reviewable

under collateral order doctrine).

       We use federal law when determining the effect of forum selection clauses because

“‘[q]uestions of venue and the enforcement of forum selection clauses are essentially

procedural, rather than substantive, in nature.’” Jumara v. State Farm Ins. Co., 55 F.3d

873, 877 (3d Cir. 1995) (quoting Jones v. Weibrecht, 901 F.2d 17 (2d Cir. 1990)). Our

review of the District Court’s construction of the legal effect of a contractual provision is

plenary. Id. at 880-81 (citing Vanguard Telecommunications, Inc. v. Southern New

England Tel. Co., 900 F.2d 645, 650 (3d Cir. 1990)).

                                               III.

       Despite Wall Street’s best efforts to cast doubt on the venue provision at issue

here, we find no reason to differ with the District Court’s determination. Forum selection

                                               -4-
clauses are entitled to great weight, and are presumptively valid. Coastal Steel Corp. v.

Tilghman Wheelabrator Ltd., 709 F.2d 190, 202 (3d Cir. 1983) (citing The Bremen v.

Zapata Off-Shore Co., 407 U.S. 1, 10-11 (1972)), overruled on other grounds by Lauro

Lines v. Chasser, 490 U.S. 495 (1989).

       Of course, before a contractual forum selection provision can be enforced, it must

actually effectuate a selection. To this end, “a court’s paramount consideration is the

intent of the parties.” Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001,

1009 (3d Cir. 1980) (quoting O’Farrell v. Steel City Piping Co., 403 A.2d 1319, 1324 (Pa.

Super. Ct. 1979)). The plain language of the agreement guides our construction: “[a]

court is not authorized to construe a contract in such a way as to modify the plain

meaning of its words, under the guise of interpretation.” Id. at 1010 (citing Best v. Realty

Management Corp., 101 A.2d 438, 440 (Pa. Super. Ct. 1953)). However, contract

language is ambiguous when it admits of more than one reasonable construction. Id. at

1011. Where the provision is clear and unambiguous, we determine its proper

construction as a matter of law. Polish Am. Machinery Corp. v. R.D. & D. Corp., 760

F.2d 507, 512 (3d Cir. 1985). “The court should . . . avoid ambiguities, if the plain

language of the contract permits . . . . [and] should not torture the language . . . to create

ambiguities.” First State Underwriters Agency of New England Reinsurance Corp. v.

Travelers Ins. Co., 803 F.2d 1308, 1311 (3d Cir. 1986) (referring to insurance contract

between sophisticated parties).

       The language of the provision before us compels us to conclude that the parties

intended to establish Butler County, Pennsylvania as the sole location for litigation of

                                              -5-
disputes:

       “29. CONSTRUCTION/RECORDING: This Lease shall be construed in
       accordance with the laws of the Commonwealth of Pennsylvania, with
       venue laid in Butler County, Pennsylvania.”

Wall Street argues that this language is ambiguous because the independent opening

clause, “[t]his Lease shall be construed in accordance with the laws of the

Commonwealth of Pennsylvania,” sets forth a choice of law in mandatory terms, while

the latter subordinate clause, “with venue laid in Butler County, Pennsylvania” specifies

neither a particular court, nor the circumstances of its application. Wall Street further

contends that the “shall” in the independent clause does not directly act on the

subordinate clause to render it mandatory. Finally, it asserts that without express

language indicating exclusivity, the venue provision is merely permissive, and acts only

to render venue in Butler County possible, but not necessary. We are not persuaded.

       The language of this provision admits of no other result than that the courts of

Butler County are the exclusive forum in which the parties may obtain adjudication under

their contract.2 Despite the provision’s failure to use words like “exclusive” or “sole”

with respect to venue, it would require an interpretive sleight of hand to produce the

conclusion that the provision is ambiguous. First, we cannot read the subordinate venue


   2
    We note that the gerund “laying of the venue” is defined as “[a] statement in a
complaint naming the district or county in which the plaintiff proposes that any trial of
the matter should occur.” Black’s Law Dictionary 905 (8th ed. 2004) (emphasis added).
Here, the statement, albeit in the contract, specifies that venue is to be laid in Butler
County. Butler County is obviously not a “district”; thus it must be the county in which
disputes are to be litigated. There is no federal court located in Butler County,
Pennsylvania, but it does contain a Pennsylvania Court of Common Pleas competent to
adjudicate the dispute.

                                             -6-
provision in isolation from the preceding mandatory clause: the mandatory “shall” in

“[t]his Lease shall be construed in accordance with [Pennsylvania law]” necessarily

encompasses the latter “with venue laid in Butler County.” (Emphasis added.) Second,

the subordinate clause itself admits of no ambiguity: “with venue laid in Butler County”

does not logically allow for the possibility of any other venue.3

       This is in sharp contrast to cases such as International Association of Bridge,

Structural and Ornamental Iron Workers, Local Union 348, AFL-CIO v. Koski

Construction Company, 474 F.Supp. 370 (W.D. Pa. 1979), nonetheless much relied upon

by Wall Street. In Koski, the contract stated that “the proper venue for the institution of

any action . . . shall be in Erie County, Pennsylvania.” Id. at 371. The Koski Court held

that under the express terms of the agreement, venue would be proper in the Erie Division

of United States District Court for the Western District, and not solely the Pennsylvania

Court of Common Pleas in Erie County. Id. at 372. Wall Street argues that the Koski

Court’s fundamental holding was that the clause there was not mandatory. In addition to

mischaracterizing the holding, Wall Street’s argument is beside the point. The Koski

Court held that the clause was not mandatory with respect to a specific requirement of

venue in the Erie County Court of Common Pleas; it never reached the question at issue

here: whether venue in another county altogether would have been permissible. Id.

       More illuminating is Judge Pollak’s holding in Relm Wireless Corporation v. C.P.

Allstar Corporation, 265 F.Supp.2d 523, 524 (E.D. Pa. 2003), which construed language

   3
     Wall Street argues that we must construe the provision against the Aubreys who
allegedly drafted it. Because we conclude that the language is not ambiguous, we do not
reach this issue.

                                             -7-
almost identical to that at hand: “This Agreement shall be construed and enforced in

accordance with the laws of the Commonwealth of Pennsylvania with venue in Chester

County.” There, Judge Pollak held that though “the venue selection clause does not, on

its face, mandate that suit be brought in a state court,” it would “trifle[] with language to

describe a lawsuit” filed in district court in Philadelphia as having venue in Chester

County. Id. We agree.

       Wall Street has not argued that the provision laying venue in Butler County at

issue here is unreasonable or otherwise not entitled to enforcement. Accordingly, we find

that venue is laid in Butler County, Pennsylvania and nowhere else.

                                             IV.

       We also reject Wall Street’s final argument that even if the provision is mandatory

and establishes Butler County as the sole venue, the United States District Court for the

Western District of Pennsylvania affords venue in Butler County. The Western District

of Pennsylvania embraces Butler County within its territorial jurisdiction, but does not

have a physical location there. See 28 U.S.C. § 118(c). Rather, the Court sits in Erie

(Erie County), Johnstown (Cambria County), and Pittsburgh (Allegheny County). Id. To

hold that the District Court for the Western District of Pennsylvania is a venue in Butler

County would torture logic and conflate the disparate concepts of jurisdiction and venue.

       Venue and jurisdiction are legally distinct, Neirbo Co. v. Bethlehem Shipbuilding

Corp. 308 U.S. 165, 167-68 (1939), and the two should not be confused. 15 C. Wright,

A. Miller, & E. Cooper, Federal Practice and Procedure § 3801 (1986). Venue

fundamentally “refers to locality, the place where a lawsuit should be heard.” Id.

                                              -8-
(emphasis added). Moreover, “venue ‘is primarily a matter of choosing a convenient

forum,’” and not of competence to hear a dispute. Wachovia Bank v. Schmidt, __ U.S.

__, 126 S.Ct. 941, 950 (2006) (quoting Leroy v. Great Western United Corp., 443 U.S.

173, 180 (1979)). As such, parties can agree to venue among themselves, as they have

here. Neirbo, 308 U.S. at 168. On the other hand, jurisdiction entails a court’s very

authority to adjudicate a matter in the first place, and parties may not consent or stipulate

to it where it does not exist.4 Id.

        The language and structure of Title 28 of the United States Code also separate the

concepts of jurisdiction and venue. For instance, Chapter 85 of Title 28 is devoted to the

subject matter jurisdiction of district courts, while Chapter 87 separately addresses venue.

Concomitantly, § 1391, which sets forth the general rules of venue in the federal judicial

system, presumes jurisdiction in a district court before getting to the issue of whether

venue would be proper there. It plainly contemplates that while multiple district courts

may have jurisdiction, it is possible, and even likely, that only a smaller subset will

properly have venue. A fortiori, jurisdiction alone does not confer venue.5

        The United States District Court for the Western District of Pennsylvania has



   4
       We note, of course, that personal jurisdiction is a separate consideration.
   5
     Wall Street argues that Jumara v. State Farm Insurance Company, 55 F.3d 873, 881
(3d Cir. 1995), should be taken to mean that a district court not located in a county over
which it has territorial jurisdiction has venue within that county. The holding of Jumara
is not so elastic. Rather, Jumara held that federal district courts are “courts” under the
Pennsylvania Uniform Arbitration Act, and as such, would be a “court of record” in a
county over which it had territorial jurisdiction, whether or not it was located there. Id. at
881. We see no necessary connection between the concepts of a “court of record” and
venue.

                                              -9-
jurisdiction over Butler County; but as Congress has ordained that it shall sit in Erie,

Cambria, and Allegheny Counties – and nowhere else – it is self-evident that the Court

has no location in Butler County. See 28 U.S.C. § 118(c). Therefore, where venue is laid

in Butler County, it is physically and logically impossible for a federal district court to

hear the case.

                                              V.

       For the foregoing reasons, we will affirm the Order of the District Court

dismissing the case without prejudice. Because “[t]ransfer is not available . . . when a

forum selection clause specifies a non-federal forum,” dismissal is the sole option.

Salovaara v. Jackson Nat. Life Ins. Co., 246 F.3d 289, 299 (3d Cir. 2001). Of course,

Wall Street remains free to attempt to bring suit in the Pennsylvania Court of Common

Pleas, Butler County.6




   6
     We neither reach nor express an opinion upon any statute of limitations issue. We
also note that Pennsylvania may offer a means of transferring the case to the Butler
County Court of Common Pleas, 42 Pa. Cons. Stat. Ann. § 5103(b), but decision of this
matter is not presently within our province.

                                             -10-
