ITEC, Inc. v. Centroid Systems, Inc.

Filing 23

OPINION AND ORDER. For the reasons in this Opinion and Order, Defendant's motion to dismiss the Complaint asserting claims of breach of contract, account stated, and unjust enrichment is GRANTED, without prejudice to recommencement. The Clerk of the Court is respectfully directed to terminate the motion at ECF No. 17, and to terminate this case. So ordered. re: 17 MOTION to Dismiss filed by Centroid Systems, Inc. (Signed by Judge Nelson Stephen Roman on 1/31/2018) (rjm).

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UNITED STATES DISTRICT COURT
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ITEC, INC,
No. 16-CV-05996 (NSR)

Plaintiff,
-against-

OPINION AND ORDER
CENTROID SYSTEMS, INC.,
Defendant.

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NELSONS. ROMAN, United States District Judge:
Plaintiff, ITEC, Inc. ("ITEC" or "Plaintiff'), initiated this action against Centroid Systems,
Inc. ("Centroid" or "Defendant") on July 27, 2016, asserting various claims sounding in breach of
contract, account stated and unjust emichment. Before the Comt is Defendant's motion to dismiss
Plaintiffs complaint (the "Complaint") pursuant to Fed. R Civ. P. 12(b)(6), or in the alternative,
to transfer this action to the U.S. District Court for the Eastern District of Michigan pursuant to 28
U.S.C. § 1404(a). For the reasons that follow, Defendant's motion is GRANTED. Defendant's
request for alternative relief is DENIED as moot.
BACKGROUND
The following facts are taken from the Complaint except where noted and are accepted as
true for the purposes of this motion.
Plaintiff asserts that on or about November 9, 2015, the parties entered into a consulting
agreement (the "Agreement") whereby Plaintiff agreed to furnish Defendant and its affiliate, Coty,
Inc., with remote Hyperion Technical/Functional consulting services. (Comp!. (ECF No. 1) ~ 18.)
In exchange for these services, Defendant agreed to pay Plaintiff hourly fees of $150.00. (Id.)

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Plaintiff provided the services to Defendant as requested from on or about November 9, 2015
through on or about May 15, 2016. (Id 1 19.) Defendant accepted the services provided without
objection or complaint. (Id

1 20.)

Plaintiff invoiced Defendant for the se1vices provided and

Defendant paid the first three invoices, through on or about March 8, 2016. (Id. 1 14.) Thereafter,
at Defendant's request, Plaintiff continued to provide services and invoice Defendant but
Defendant failed to make payments or object to the invoice charges. (Id 1120, 33-34.) Plaintiff's
outstanding invoices for services provided to Defendant through May 2016 (five invoices) total
$275,992.00. (Id 115.) Despite Plaintiffs repeated requests for payment, Defendant has neither
provided such payment nor provided an explanation for its failure to make payment. (Id 116.)
FORUM SELECTION CLAUSE
Defendant moves for dismissal of this action based on a f01um selection clause contained
within the Agreement.
Legal Standard
In determining whether an action should be dismissed based on a forum selection clause,
courts employ a four-part analysis, asking: "(I) whether the clause was reasonably communicated
to the party resisting enforcement; (2) whether the clause is mandatory or permissive ... ; and (3)
whether the claims and parties involved in the suit are subject to the forum selection clause."
Martinez v. Bloomberg LP, 740 F.3d 211,217 (2d Cir. 2014) (internal quotation marks and citation
omitted). "If the forum clause was communicated to the resisting party, has mandatory force, and
covers the claims and parties involved in the dispute, it is presumptively enforceable." Id (quoting

Phillips v. Audio Active Ltd, 494 F.3d 378, 383 (2d Cir. 2007)). A party can overcome the
presumption of enforceability only by "making a sufficiently strong showing that enforcement

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would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or
overreaching." Martinez, 740 F.3d at 217 (quoting Phillips, 494 F.3d at 383-84).
The "burden [is] on the plaintiff, who brought suit in a forum other than the one designated
by the forum selection clause, to make a strong showing in order to overcome the presumption of
enforceability." New Moon Shipping Co., Ltd. v. MAN B & W Diesel AG, 121 F.3d 24, 29 (2d Cir.
1997) (internal quotation marks omitted) (citing MIS Bremen v. Zapata Off-Shore Co., 407 U.S. 1
(1972)). The Supreme Court has narrowly construed the kind of showing that can overcome this
presumption: forum selection and choice of law clauses are unreasonable (1) "if their incorporation
into the agreement was the result of fraud or overreaching;" (2) "if the complaining party 'will for
all practical purposes be deprived of his day in court,' due to the grave inconvenience or unfairness
of the selected forum;" (3) "if the fundamental unfairness of the chosen law may deprive the
plaintiff of a remedy;" or (4) "if the clauses contravene a strong public policy of the forum state."
Roby v. Corporation ofLloyd's, 996 F.2d 1353, 1363 (2d Cir. 1993) (citing MIS Bremen, 407 U.S.
at 12-13, 15, 18 (1972) and Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585,595 (1991)); see
also Phillips, 494 F.3d at 392.
In evaluating a motion to dismiss based on a forum selection clause, a district court
typically relies on the pleadings and affidavits submitted by the parties. See Martinez, 740 F.3d at
216.
Analysis
Generally, when considering a motion to dismiss, pursuant to Fed. R. Civ. P. 12(b)(6), nonconclusory allegations in the complaint are deemed true. See Ruotolo v. City of NY, 514 F.3d
184, 188 (2d Cir. 2008). Under limited circumstances, the court may consider documents other
than the complaint when resolving a motion to dismiss. A court may consider "documents attached

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to ... or incorporated" by reference in a complaint where such documents are "integral" to the
claims asserted. See Chambers v. Time Warner, 282 F.3d 147, 153 (citing Int 'l Audiotext Network,
Inc. v. American Tel. and Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995)); see also Roth v. Jennings, 489

F.3d 499, 509 (2d Cir. 2007); Furman v. Cirrito, 828 F.2d 898,900 (2d. Cir. 1987); Sazerac Co.,
Inc. v. Falk, 861 F. Supp. 253,257 (S.D.N.Y. 1994).

Here, Plaintiff references the existence of a contract, the Agreement, which appears to be
the basis for two of its claims, but does not attach a copy of the Agreement to the pleadings. (See
Comp!. ,i 18.) In support of its motion, Defendant attaches a copy of the Agreement which bears
the signatures of a representative from ITEC and a representative of Centroid. (Aff. In Supp. Of
Mot. To Dismiss (ECF No. 19) ("Def.'s Aff.") Ex. 2.) The Agreement consists of five pages, each
page is initialed by Plaintiff and Defendant's respective representatives, and the signatures are both
dated "11/9/2015." (Id Ex. 2) Of relevance to Defendant's motion, the Agreement contains a
forum selection clause. Paragraph 11, entitled "Governing Law," provides: "This Agreement shall
be governed, interpreted and construed in accordance with the laws in the state of Michigan
applicable to agreements entered into and to be performed entirely therein. Any suit or proceeding
with respect to this Agreement shall be brought exclusively in the Courts of the State of Michigan."
(Id. Ex. 2, at 3.)

Plaintiff objects to the applicability or the enforceability of this forum selection provision.
Plaintiff asserts in reference to the Agreement proffered by Defendant that it "never agreed to all
the terms of the writing attached to Defendant's motion" because, allegedly, it did not receive a
fully-executed copy of the Agreement until sometime after the lawsuit was commenced. (Pl.'s
Mem. Of Law In Opp'n To Def.'s Mot. To Dismiss Or Transfer Action (ECF No. 20) ("Pl.'s
Opp'n") 2.) Plaintiff further asserts that despite the existence the Agreement, there was no meeting
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of the minds and that the parties never operated pursuant to the te1ms of the Agreement. (Id. 7.)
Plaintiff, however, does not dispute the authenticity of the Agreement, nor does it call into question
the signature of its representative affixed thereto. In fact, Plaintiff submits an affidavit from Kathy
Iervolino ("Iervolino"), ITEC's President, wherein she acknowledges executing the Agreement on
November 9, 2015. (Aff. In Opp'n To Mot. To Dismiss (ECF No. 21) ,i 3).
Analyzing each prong of the test enumerated by the Supreme Court in MIS Bremen, it is
clear that the forum selection clause applies to all of Plaintiff's claims. There is no question that
the forum selection clause was "reasonably communicated to the party resisting enforcement"
because ITEC's President, Iervolino, not only signed the Agreement but initialed each and every
page, including page 3, which contains the forum selection clause. To suggest that Plaintiff was
unaware of clause's existence defies reason.
The plain wording of the forum selection clause makes it mandatory, not permissive. The
Agreement provides "[a]ny suit or proceeding with respect to this Agreement shall be brought
exclusively in the Courts of the State of Michigan." (Def.'s Aff. Ex. 2, at 3 (emphasis added).)
This is clearly compulsory language. See S.K.1 Beer Corp. v. Baltika Brewery, 612 F.3d 705, 708
(2d Cir. 2010) ("A forum selection clause is viewed as mandatory when it confers exclusive
jurisdiction on the designated forum or incorporates obligatory venue language.") (quoting
Phillips, 494 F.3d at 386).

The forum selection clause is broad. It covers "[a]ny suit or proceeding with respect to this
Agreement." (Def.'s Aff. Ex. 2, at 3.) The language suggests that there must merely be a causal
connection between the Agreement and the claim asserted. Given the text used, it may be inferred
that any claim related to or arising out of the Agreement is subject to forum selection clause.

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Lastly, the forum selection clause applies to both parties involved in this action and applies
to the claims asserted in the Complaint. Plaintiffs first claim for breach of contract specifically
references and incorporates the Agreement. Plaintiffs second claim, for an account stated,
likewise references the existence of the Agreement and the nature of the services. Plaintiffs third
claim is for unjust enrichment, an equitable cause of action. However, "where the relationship
between the parties is contractual, the pleading of alternative non-contractual theories of liability
should not prevent enforcement of such a bargain [as to the appropriate forum for litigation]."
Cfirstclass Corp. v. Silverjet PLC, 560 F. Supp. 2d 324, 329 (S.D.N.Y. 2008) (quoting Coastal
Steel Corp. v. Tilghman Wheelabrator, Ltd., 709 F.2d 190,203 (3d Cir.1983)); see also Anselmo

v. Univision Station Group, Inc., 1993 WL 17173, at *2 (S.D.N.Y. Jan. 15, 1993) ("A forum
selection clause should not be defeated by artful pleading of claims not based on the contract
containing the clause if those claims grow out of the contractual relationship, or if 'the gist' of
those claims is a breach of that relationship.").
The burden thus shifts to the Plaintiff, as the resisting party, to "make a strong showing in
order to overcome the presumption of enforceability." New Moon Shipping, 121 F.3d at 29.
Plaintiff has not alleged that the forum selection clause was the result of fraud or ove1Teaching,
that the unfairness of the chosen law will deprive it ofa remedy, or that the clause contravenes a
strong public policy. Rather, Plaintiff argues that Defendant's breach of the Agreement, namely,
its failure to pay in accordance with the terms of the Agreement, demonstrates that there was no
meeting of the minds. Plaintiff asserts that Defendant's failure to abide by the terms of the
Agreement is indicative of the parties' lack of intention to be bound by its terms, and more
specifically, to be bound by the forum selection clause. Such contention lacks merit. A basic
principle of law is that an unambiguous contract must be construed as a whole and the intention of

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the parties is to be collected from the entire instrument and not from extrinsic evidence. See 11
Williston on Contracts§ 32:1 (4th ed.). Accordingly, Plaintiffs asse1tion is insufficient to make
the requisite showing to overcome the presumption of enforceability.
CONCLUSION
For the foregoing reasons, Defendant's motion to dismiss the Complaint asse1ting claims
of breach of contract, account stated, and unjust emichment is GRANTED, without prejudice to
recommencement. The Clerk of the Court is respectfully directed to terminate the motion at ECF
No. 17, and to terminate this case.

Dated: January 31, 2018
White Plains, New York

SO ORDERED:

United States District Judge

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