EVERBANK COMMERCIAL FINANCE, INC. v. NEIGHBORS GLOBAL HOLDINGS, LLC

Filing 23

OPINION. Signed by Judge William J. Martini on 11/21/17. (gh, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
EVERBANK COMMERCIAL FIN., INC.,
Civ. No. 2:17-3356 (WJM)

Plaintiff,
v.

OPINION

NEIGHBORS GLOB. HOLDINGS, LLC,
Defendant.

WILLIAM J. MARTINI, U.S.D.J.:
Plaintiff accused Defendant of breaking the terms of an equipment lease
agreement and now seeks the recovery of rent, damages, and return of the leased
equipment. Defendant moves to dismiss for lack of personal jurisdiction. In the
alternative, Defendant requests transfer under 28 U.S.C. § 1404(a) to another
venue. Per 28 U.S.C. § 1332(a), this Court has jurisdiction. The matter was taken
on submission without oral argument. FED. R. CIV. P. 78(b). For the reasons
below, the motion to dismiss is DENIED in its entirety.
I.

BACKGROUND

Plaintiff is a Delaware corporation with its principal place of business in New
Jersey. Compl. ¶ 1, ECF. No. 1, Ex. A. Defendant is a Delaware Limited Liability
Company with its principal place of business in Texas. Id. at ¶ 2. On July 15,
2016, Defendant and All Points Solution, Inc. d/b/a 3i International (“3i”)—a nonparty in this action—entered into a Master Equipment Lease Agreement and its
associated Equipment Schedule No. xxxx5501 (jointly, “Master Lease”) by which
3i leased equipment to Defendant at its Texas corporate office. The Master Lease
contained a forum selection clause, which allowed “the Lessor or its Assignee” to
file suit with the Lessee forever agreeing that, for any matter arising under the
Master Lease, judicial proceedings would take place in courts of either the state of
Lessor’s or Assignee’s principal place of business, or the Lessee’s state of
residence, or any court having jurisdiction over the Lessee or its assets, “all at the
sole discretion of the Lessor.” Wellford Aff., Ex. G, ¶ 25. Also, at the Lessor’s
election, the Lessee forever submitted to jurisdiction of its chosen court. Id.
Next, 3i could, without notice to Defendant, sell, assign, or otherwise transfer
the Master Lease and its rights to the associated Equipment. Id. at ¶ 21; Compl. ¶
15. Upon executing the Master Lease, 3i assigned it to Plaintiff. Cert. of Mark D.
Elliott ¶ 6, ECF No. 15; Wellford Aff. ¶ 19. Then, upon Plaintiff’s request,
1

Defendant made recurring monthly lease payments to Plaintiff’s New Jersey
office. Gruenert Aff. ¶ 16; Wellford Aff. ¶ 28. When Defendant ceased making
payments, questioning Plaintiff’s interest in the Master Lease, see Gruenert Aff. ¶
13; Wellford Aff. ¶ 29, Plaintiff filed suit in New Jersey Superior Court, seeking
to recover monies owed, damages, and return of the leased equipment. Compl. ¶¶
20-26. Defendant timely removed the action here and filed this motion to dismiss
for lack of personal jurisdiction, arguing the Master Lease’s forum selection clause
is not enforceable and that, should this Court exercise personal jurisdiction over
Defendant, the matter be transferred to the Southern District of Texas.
II.

LEGAL STANDARD

As a waivable right, a party may give “express or implied consent to the
personal jurisdiction of the court,” Burger King, 471 U.S. 462, 472 n.14 (1985)
(citation omitted), by incorporating a forum selection clause in an agreement. See,
e.g., Nat’l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 316 (1964). “Where such
forum-selection provisions have been obtained through freely negotiated
agreements and are not unreasonable and unjust . . . their enforcement does not
offend due process.” Burger King, 471 U.S. at 472 n.14 (internal quotations and
citations omitted). By agreeing to such a clause, the parties acknowledge suit may
be brought in the chosen forum as to claims relating to or arising out of an
agreement. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). It follows
that a party seeking to enforce a forum selection clause may do so through the
forum non conveniens doctrine. Atl. Marine Constr. Co. v. U.S. Dist. Court, 134 S.
Ct. 568, 579-80 (2013) (“Atl. Marine”). In applying the “balancing-of-interests
standard [like a Section 1404(a) transfer], courts should evaluate a forum-selection
clause pointing to a nonfederal forum in the same way that they evaluate a forumselection clause pointing to a federal forum.” Id. at 580.
III.

DISCUSSION

Plaintiff argues the Court has personal jurisdiction over Defendant because, for
disputes arising under the Master Lease, the forum selection clause allows it to file
suit in any court in the Lessor’s or its assignee’s principal place of business. On
the other hand, Defendant argues the Court has no personal jurisdiction because
the clause is invalid and that the Master Lease itself was procured through fraud.
Also, Defendant contends that even if the clause was deemed applicable, this
action should be transferred to the Southern District of Texas.
A. Forum Selection Clause’s Validity
In diversity cases, federal law governs enforcement of a contractual forum
selection clause. Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (1995). A forum
selection clause is presumptively valid and enforceable unless the objecting party
shows enforcing it would be ‘“unreasonable’ under the circumstances.” Foster v.
Chesapeake Ins. Co., 933 F.2d 1207, 1219 (3d Cir. 1991) (quoting M/S Bremen,
407 U.S. at 10). To find a forum selection clause “unreasonable,” the defendant
2

must make a “strong showing,” M/S Bremen, 407 U.S. at 15, “(1) that it is the
result of fraud or overreaching, (2) that enforcement would violate a strong public
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.” Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190,
202 (3d Cir. 1983), overruled on other grounds by Lauro Lines v. Chasser, 490
U.S. 495 (1989); see also M/S Bremen, 407 U.S. at 15, 18.
Defendants here have failed to make a strong showing that enforcing the forum
selection clause would be unreasonable under the circumstances. First, Defendant
has not shown how enforcing the clause would “contravene a strong public policy”
of New Jersey. See M/S Bremen, 407 U.S. at 15. Second, there lacks evidence to
indicate litigating the action in New Jersey “will be so gravely difficult and
inconvenient that he will for all practical purposes be deprived of his day in
court.” Id. at 18. And third, there lacks evidence showing Plaintiff “obtained
[Defendant’s] accession to the forum clause by fraud or overreaching.” Carnival
Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991). Instead, Defendant argues
the entire contract was procured by fraud and questions whether Plaintiff, acting as
the Lessor in the Master Lease, has the right to collect the monthly payments.
Indeed, “even if it were procured by fraud, the venue provision would be valid by
analogy to the arbitrability of disputes arising out of contracts procured by fraud
when there is no argument that the arbitration provision itself was procured by
fraud.” Stephan v. Goldinger, 325 F.3d 874, 879 (7th Cir. 2003).
Despite 3i and Plaintiff averring an assignment took place, even if Defendant
disputes such assignment, there is persuasive authority showing that, so long as it
is foreseeable for the party against whom the clause would be enforced, a “nonsignatory may enforce or be bound by a forum-selection clause.” In re:
Howmedica Osteonics Corp, 867 F.3d 390, 408 n.13 (3d Cir. 2017) (citing Magi
XXI, Inc. v. Stato della Citta del Vaticano, 714 F.3d 714, 717-20, 722-24 (2d Cir.
2013); Lipcon v. Underwriters at Lloyd’s London, 148 F.3d 1285, 1299 (11th Cir.
1998); Hugel v. Corp. of Lloyd’s, 999 F.2d 206, 209 (7th Cir. 1993)). The record
reflects Plaintiff and Defendant commenced the Master Lease when Defendant
confirmed delivery and acceptance of the leased equipment, Compl. ¶ 14;
Wellford Aff., ¶¶ 21-22. Also, the parties held subsequent post-contract
discussions and Defendant, at Plaintiff’s request, sent monthly lease payments to
its New Jersey office. Wellford Aff. ¶ 28; Gruenert Aff. ¶¶ 14-16. Thus, with a
forum selection clause being presumptively valid and enforceable and the dispute
arising out of the Master Lease, Defendant has failed to carry its burden to show
how enforcing the clause would be unreasonable. As the Court finds the forum
selection clause valid and enforceable, it will now address Defendant’s request to
transfer venue.

3

B. Transfer of Venue
“For the convenience of parties and witnesses, in the interest of justice,” a
court may transfer a case to where it could have been filed. 28 U.S.C. § 1404(a).
To transfer, venue must be proper and the court must have personal jurisdiction
over the parties. Shutte v. Armco Steel Corp., 431 F.2d 22, 24 (3d Cir. 1974). If
met, the court can address the transfer, which “is not to be liberally granted.” Id. at
25. The burden rests on the movant to show “a balancing of proper interests weigh
in favor of the transfer.” Id. Thus, a court will weigh the Jumara “private” and
“public” interest factors. 55 F.3d at 879.
When a case involves a valid forum selection clause, it alters the Section
1404(a) analysis in that the forum choice of the party resisting the clause’s
enforcement “merits no weight.” Atl. Marine, 134 S. Ct. at 581. And the private
interests factors1 are “weigh[ed] entirely in favor of the preselected forum,”
leaving the court to address the public interest factors only. Id. at 582. The public
interest factors include: (1) the ability to enforce a judgment; (2) practical
considerations that would make trial more expeditious or inexpensive; (3)
administrative concerns with court congestion; (4) deciding local controversies at
home; (5) public policies of each fora; and (6) the court’s familiarity with
applicable state law. Id. at 879-80 (citation omitted). “Because [the public interest]
factors will rarely defeat a transfer motion, the practical result is that forumselection clauses should control except in unusual cases.” Id. In applying the
Atlantic Marine framework, the Court finds the circumstances here fail to warrant
transfer to another venue.
As a threshold matter, this action could have been brought in the Southern
District of Texas because Defendant has its principal place of business in Houston,
Texas, Gruenert Aff. ¶ 2, and a substantial part of the events giving rise to the
claim occurred in Texas. Plaintiff does not dispute the alternate venue as being
proper, but argues, in light of the forum selection clause allowing Plaintiff to elect
a New Jersey forum and giving deference to Plaintiff’s choice of venue, see
Jumara, 55 F.3d at 879, the public and private interest factors weigh heavily
against transfer. Next, in entering into the Master Lease with its valid forum
selection clause, Defendant’s choice of forum—as the party resisting the clause’s
application— carries no weight because, when it signed the Master Lease, it
“waived the right to challenge the preselected forum as inconvenient or less
convenient for themselves or their witnesses, or for their pursuit of litigation.” Atl.
Marine, 134 S. Ct. at 582.
Finally, the public interest factors alone fail to support a transfer. As to
practical considerations, although Defendant and 3i’s employees reside in Texas,
The private factors include: (1) plaintiff’s choice of forum; (2) the defendant’s preference; (3) where the
claim arose; (4) convenience of the parties; (5) the convenience of expected witnesses; and (6) the location
of books and records. Jumara, 55 F.3d at 879 (citation omitted).
1

4

that serves as no bar to litigating this action in New Jersey because this Court
presents no unreasonable obstacle as a convenient forum for the parties and
witnesses. Defendant’s proposed change of venue to make trial easy, expeditious,
and less expensive in a less court-congested district merely represents a shifting of
inconveniences from Defendant to Plaintiff and from having a different court
oversee the action. Further, 3i has agreed to make its employees available for
depositions at its Texas office and has waived objections to providing in-court
testimony here. Further, the Court recognizes the parties are litigating in a Texas
state court, see ECF No. 9-4, Ex. 1, but Defendant’s filing of the Texas state court
action against 3i and Plaintiff on the same day of removing Plaintiff’s suit to this
Court does not militate against continuing this proceeding. In all, this case is of
usual circumstance and, with a valid forum selection clause, the lack of
overwhelming public factor considerations counsels against transfer.
IV. CONCLUSION
For the foregoing reasons, Defendant’s Motion to Dismiss is DENIED in its
entirety. An appropriate order follows.

/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: November 21, 2017

5