LEISTRITZ ADVANCED TECHNOLOGIES CORPORATION v. IPCG LLC et al

Filing 11

OPINION. Signed by Judge Jose L. Linares on 9/21/2015. (ld, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Civil Action No.: 15-4753 (JLL)

LEISTRITZ ADVANCED
TECHNOLOGIES CORPORATION,

OPINION
Plaintiff,
v.
IPCG LLC, a/k/a INTERNATIONAL
PROCUREMENT & CONTRACTING
GROUP, LLC and SHAKIR ALKHAFAJI,
Defendants.

LINARES, District Judge.
This matter comes before the Court by way of Plaintiff Leistritz Advanced Technologies
Corporation's Motion to Remand and for Just Costs and Expenses Pursuant to 28 U.S.C. § 1447.
(ECF No. 6.) The Court decides this matter without oral argument pursuant to Rule 78 of the
Federal Rules of Civil Procedure. For the reasons set forth below, the Court grants Plaintiffs
motion to remand, but denies Plaintiffs motion for just costs and expenses.

BACKGROUND
On June 1, 2015, Plaintiff filed an action against Defendants in the Superior Court of New
Jersey, Bergen County, Law Division arising from Defendants' alleged breach of contract in
connection with the sale of goods, and resulting breach of a related settlement agreement. (See
ECF No. 1-1 ("Compl.").) According to Plaintiffs Complaint, in May 2013, Defendants agreed
to be bound by certain terms and conditions as part of the contract, which state in relevant part:
"The laws of the State of New Jersey shall apply. Any court action taken in connection with the

foregoing shall be brought in the Superior Court of the State of New Jersey, except that
confirmation of an Award in Arbitration may be sought in any court of competent jurisdiction."
(Compl. Ex. C ("Terms and Conditions") at 2;

id.~~

5, 8.) Plaintiff further alleges that on August

19, 2014, the parties entered into a Settlement Agreement, which included a Consent to Judgment.
(Compl. ,-i,-r 19, 21; id. Ex. D ("Settlement Agreement"); id. Ex. E ("Consent to Judgment").) The
Settlement Agreement states that Defendants "continue[] to be bound by the [Terms and
Conditions.]" (Settlement Agreement at 2.) Furthermore, the Consent to Judgment states in
pertinent part:
6.

[Defendant] consents to venue and personal jurisdiction in the Superior
Court of New Jersey, Bergen County, New Jersey for the purposes of
authorizing a Judgment and waives any and all objections to venue and
jurisdiction of any such court, and agrees that the laws of the state of New
Jersey shall apply as to this matter.

7.

Upon [Defendant's] failure to timely make all payments pursuant to the
agreement executed concurrent herewith, [Defendant] hereby authorizes
any attorney-at-law to appear in any court of record in the State of New
Jersey; to waive the issuing and service of process and all other
constitutional rights to due process oflaw ....

(Consent to

Judgment~~

6, 7.)

On June 30, 2015, Defendants removed the action to this Court pursuant to 28 U.S.C. §
1441and28 U.S.C. § 1332. (ECF No. 1.) On July 30, 2015, Plaintiff filed a motion to remand
the action to the Superior Court of New Jersey, Bergen County, Law Division pursuant to the
above terms, and for just costs and expenses associated with the motion to remand under 28 U .S.C.
§ 1447. (ECF No. 6; see also ECF No. 6-1, Brief of Plaintiff in Support of Motion for Remand
and for Just Costs and Expenses Pursuant to 28 U.S.C. § 1447 ("Pl. Mov. Br.").) Defendants filed
opposition (ECF No. 9, Memorandum of Law of Defendants Responding to Motion for Remand

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and for Just Costs and Expenses Pursuant to 28 U.S.C. § 1447 ("Def. Opp. Br.")) and Plaintiff
replied (ECF No. 10, Reply Letter Memorandum ("Pl. Reply Br.")). The motion is now ripe for
resolution.

LEGAL STANDARD
"The federal removal statute, 28 U .S.C. § 1441, is strictly construed, requiring remand if
any doubt exists over whether removal was proper. The party seeking removal carries the burden
of proving that removal is proper. That burden is particularly heavy when the party seeks to avoid
a forum selection clause through use of removal." Carlyle Inv. Mgmt. LLCv. Moonmouth Co. SA,
779 F.3d 214, 218 (3d Cir. 2015) (internal citations omitted).
"In federal court, the effect to be given a contractual forum selection clause in diversity
cases is determined by federal not state law." Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d
Cir. 1995); see also Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 27-32 (1988). Under federal
law, in order for a forum selection clause to be enforceable, "the choice of forum must be
mandatory rather than permissive. To assess whether a forum selection clause is mandatory, the
court looks to the wording of the agreement and applies ordinary principles of contract
interpretation." Union Steel Am. Co. v. MIV Sanko Spruce, 14 F. Supp. 2d 682, 687 (D.N.J. 1998)
(internal citations and punctuation omitted). In short, the Court must determine whether the plain
language of the contract "unambiguously states the parties' intentions" to make jurisdiction
exclusive. John Wyeth & Bro. Ltd. v. CIGNA Int'! Corp., 119 F.3d 1070, 1074 (3d Cir. 1997)
(citation omitted). The forum selection clause, however, does not have to contain language such
as "exclusive" or "sole" to be mandatory. Wall Street Aubrey Golf, LLC v. Aubrey, 189 Fed. App'x

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82, 85-86 (3d Cir. 2006) (upholding a forum selection clause, which stated "[t]his Lease shall be
construed in accordance with the laws of the Commonwealth of Pennsylvania, with venue laid in
Butler County, Pennsylvania," and finding it unambiguous "[ d]espite the provision's failure to use
words like 'exclusive' or 'sole' with respect to venue"). Overall, the "clause must be reasonably
capable of only one construction." Wyeth, 119 F.3d at 1074 (citation omitted).
As this Court has previously noted, "[ w]hen a contract that is the subject of a dispute
contains a forum selection clause, said clause is 'entitled to great weight' and is 'presumptively
valid."' Am. Fin. Res., Inc. v. Money Source, Inc., No. 14-1651, 2014 WL 1705617, at *6 (D.N.J.
Apr. 29, 2014) (citing Wall St. Aubrey Golf, LLC v. Aubrey, 189 Fed. App'x 82, 84 (3d Cir. 2006)).
The United States Court of Appeals for the Third Circuit established a general rule to test the
validity of a forum selection clause. See Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709
F.2d 190, 202 (3d Cir. 1983). Under this general rule, a forum selection clause is presumptively
valid and enforceable by the forum unless the objecting party establishes (1) that it is the result of
fraud or overreaching, (2) that enforcement would violate a strong policy of the forum, or (3) that
enforcement would, in the particular circumstances of the case, result in litigation in a jurisdiction
so seriously inconvenient as to be unreasonable. See id.; see also Days Inns Worldwide, Inc. v.
Royal Hospitality Grp., LLC, No. 12-5028, 2013 WL 538343, at *3 (D.N.J. Feb. 13, 2013) (citing

standard).

ANALYSIS

Plaintiff argues that remand is warranted because the agreements contain valid and
enforceable forum selection clauses which show that Defendants unambiguously consented to

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resolving disputes in New Jersey Superior Court, and that they are further entitled to just costs and
expenses in accord with 28 U.S.C. §1447. (Pl. Mov. Br. at 2-3; Pl. Reply Br. at 2-5.) Defendants
contend that the agreements contain merely a permissive consent to jurisdiction clause, rather than
a mandatory forum selection clause, and alternatively argue that the clauses should be invalidated
on grounds of illegality. (Def. Opp. Br. at 4-8.) Defendants further contend that Plaintiff is not
entitled to recover just costs and expenses pursuant to 28 U.S.C. § 1447 because the basis for
removal was not objectively unreasonable. (Id. at 9.) The Court finds that remand is warranted
but that Plaintiff is not entitled to just costs and expenses.
A. The Language of the Forum Selection Clause is Mandatory

The Court agrees with Plaintiff that the language of the forum selection clause is
mandatory. First, the Terms and Conditions state that "[a]ny court action taken in connection with
the [purchase orders] shall be brought in the Superior Court of the State of New Jersey ...."
(Terms and Conditions at 2.) Second, the Settlement Agreement between the parties explicitly
states that Defendants "continue[] to be bound by the [Terms and Conditions]," including the
forum selection clause therein. (Settlement Agreement at 2.) Finally, the Consent to Judgment
focuses the forum selection clause even further when it states that "[Defendant] consents to venue
and personal jurisdiction in the Superior Court of New Jersey, Bergen County, New Jersey for the
purposes of authorizing a Judgment and waives any and all objections to venue and jurisdiction of
any such court ...." (Consent to Judgment if 6.) The Court is satisfied that a plain reading of
these clauses as a whole shows that the parties unambiguously agreed to bring any action relating
to the purchase orders in the Superior Court of New Jersey.

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B. The Forum Selection Clause is Valid and Reasonable

The Court further finds that the forum selection clause is valid and reasonable because
there is no evidence of fraud or overreaching by Plaintiff, enforcement of the clause would not
violate a strong public policy of this forum, and enforcement will not deprive Defendants of their
day in court. See Coastal Steel, 709 F.2d at 202.
First, there is no evidence of bad faith, fraud, or overreaching by Plaintiff. There is no
indication that Plaintiff set New Jersey as the forum in order to discourage Defendants from
pursuing legitimate claims, and furthermore, Defendants had notice of the forum selection clause
and retained the option of rejecting its terms. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S.
585, 595 (1991) (noting that "bad faith" argument with respect to enforceability of forum selection
clause is "belied" for same reasons).
Second, enforcement of the forum selection clause would not violate a strong policy of this
forum. Although Defendants may be right that ex parte entries of judgment by confession-like
the Consent to Judgment in this case--have been in disrepute in New Jersey for almost 150 years,
New Jersey Court Rules do not wholly eliminate the practice, and instead merely require notice to
the other party, which Defendants clearly have in this instance. See Pressler & Verniero, Current
N.J. Court Rules, Comment 1onR.4:45-2 (2015). To the contrary, it would be wholly consistent
with the public policy of this forum to enforce the forum selection clause in order to give force to
the parties' agreement, and to then have the Superior Court of New Jersey address any issues with
the Consent to Judgment. See Jumara, 55 F.3d at 880 (holding that valid forum selection clauses
are entitled to substantial consideration).
Finally, enforcement will not deprive Defendants of their day in court. There is no

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indication that the Superior Court of New Jersey is so seriously inconvenient as to be unreasonable,
and Defendants do not make arguments to that effect. The Court notes that "[m ]ere inconvenience
or additional expense is not the test of unreasonableness since it may be assumed that the plaintiff
received under the contract consideration for these things. If the agreed upon forum is available
to plaintiff and said forum can do substantial justice to the cause of action then plaintiff should be
bound by his agreement." Cent. Contracting Co. v. Maryland Casualty Co., 367 F.2d 341, 344
(3d Cir.1966) (quoting Cent. Contracting Co. v. C.E. Youngdahl & Co., 418 Pa. 122, 133-34
(1965)). Accordingly, the Court finds that the forum selection clause is valid and shall be given
effect.

C. Plaintiff is Not Entitled to Just Costs and Expenses Under 28 U.S.C. § 1447
Plaintiff argues that it is entitled to just costs and expenses under 28 U.S.C. § 1447 because
Defendants had "no objective basis" to remove the action. (Pl. Mov. Br. at 3.) Defendants contend
that costs and expenses should not be awarded because the clause is ambiguous and therefore it
was not objectively unreasonable for Defendants to remove the action to this Court. (Def. Opp.
Br. at 9.)
The Court agrees with Defendants. Section 1447 states in pertinent part: "An order
remanding the case may require payment of just costs and any actual expenses, including attorney
fees, incurred as a result of the removal." 28 U.S.C. §1447.

The statutory language is clearly

permissive in that an Order remanding a case "may" require payment of just costs and actual
expenses. Id. The Court is not persuaded that Plaintiff is entitled to just costs and expenses merely
because it agrees with Plaintiff that that remand is warranted. In fact, the Court finds that it was
not objectively unreasonable for Defendants to argue that the forum selection clause was

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penmss1ve rather than mandatory or that it should be overruled on grounds of illegality.
Accordingly, the Court will not require Defendants to pay Plaintiffs just costs and expenses
associated with the motion to remand.

CONCLUSION
For the reasons above, the Court grants Plaintiffs motion to remand this case to New Jersey
Superior Court, Law Division, Bergen County, but denies Plaintiffs motion for just costs and
expenses pursuant to 28 U.S.C. § 1447. An appropriate Order accompanies this Opinion.

DATED:

September~, 2015
. LINARES
ITED STATES DISTRICT JUDGE

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