Boy invites Girl on a date for Valentine’s Day. They agree to meet at a restaurant near Boy’s home (rude, but ok). Girl wakes up on Valentine’s Day and cancels the date once she realizes she has to travel a longer distance than she expected. Boy is left wondering what happened because they had agreed on the restaurant in advance. Girl spends Valentine’s Day with her girlfriends. While breaking the location of a date leads to little (if any) repercussions for Girl in this situation, the same cannot be said for parties to a commercial contract.
Recently, Suffolk County Commercial Division Justice Emerson weighed in on the proper procedure for making a motion to dismiss based on a forum-selection clause as well as what type of harm a party needed to show in order to invalidate such a clause.
It is important to remember that a court cannot be divested of its subject matter jurisdiction by a contract and so a forum-selection clause does not affect the jurisdiction of Court. See Lischinskaya v. Carnival Corp.The proper procedure for dismissing an action based on a forum-selection clause is CPLR 3211(a)(1) using the contractual forum-selection clause as documentary evidence for a proper basis for dismissal. In this case, the Court sua sponte converted the motion from a CPLR 3211(a)(2) motion to a CPLR 3211(a)(1) motion. However, you might not be so lucky next time.
In Somerset Fine Home Building, Inc. v. Simplex Industries, Inc., Plaintiff, a home builder, contracted with Defendant for the purchase of a modular home. The sales agreement provided that any disputes arising thereunder would be determined by the law of the Commonwealth of Pennsylvania and that the exclusive forum for any action to enforce the agreement would be the Court of Common Pleas of Lackawanna County, Pennsylvania. Plaintiff commenced an action for, inter alia, breach of contract and the failure to deliver conforming merchantable goods in New York Supreme Court, Suffolk County. Defendant moved to dismiss this action based on the forum-selection clause arguing that the parties agreed to litigate their dispute in Pennsylvania.
In opposition, Plaintiff gave a laundry list of weak arguments as to why the forum-selection clause should be dismissed.
Plaintiff first argued that the agreement is unconscionable. However, a determination of unconscionability generally requires some showing of an absence of meaningful choice on the part of one of the parties, together with contract terms that are unreasonably favorable to the other party. See Gillman v. Chase Manhattan Bank. Here, the forum-selection cause was not hidden or tucked away within a complex document of inordinate length, it appeared in the same size print as the rest of the agreement, each page was initialed by the plaintiff’s principal and there was no allegations that Defendant used high-pressure tactics to get it to sign the agreement. See Brower v. Gateway 2000.
Plaintiff next argued that it was in a weaker bargaining position than the Defendant and that it had no choice other than to agree to the forum-selection clause as it was. However, the record showed that the parties acknowledged in the agreement that they had the opportunity to confer with their separate counsel in the negotiation, drafting and execution of the agreement. Id.
As a last ditch effort, Plaintiff argued that it would incur financial distress in travelling to Pennsylvania from Suffolk County, NY to pursue this action against Defendant. However, the Court noted that the Plaintiff did not support its argument with evidence showing that the cost of commencing an action in Pennsylvania would be so financially prohibitive that it would be deprived of its day in court. See Horton v. Concerns of Police Survivors, Inc. Plaintiff also did not show any evidence that Pennsylvania would treat it unfairly and deny it a chance to gain a remedy. Id.
Ultimately, these arguments were not good enough to prevent the dismissal of the action. The Court found that Plaintiff was unable to make a “strong showing” that “enforcement would be unreasonable and unjust, that enforcement would contravene public policy, or that the forum-selection clause is invalid because of fraud or overreaching such that a trial in the contractual forum would be so gravely difficult and inconvenient that the challenging party would, for all practical purposes, be deprived of his or her day in court.” See D.O.T. Tiedown & Lifting Equip. v. Wright; Koko Contr. v. Continental Envtl. Asbestos Removal Corp.; Bell Constructors v. Evergreen Caissons.