Forum Selection Clauses In New York: What Out-of-State Borrowers Must Know

Forum selection clauses in loan agreements force out-of-state borrowers to litigate in New York. As a collection defense attorney, I've observed how these provisions can tilt the playing field in favor of lenders. This analysis explores tactical approaches to contesting forum selection clauses, focusing on jurisdictional challenges, unconscionability arguments, and public policy considerations. We'll examine recent New York case law and statutory interpretations that offer potential avenues for keeping cases in borrowers' home states, despite seemingly ironclad forum selection provisions.

Case 1: Court Upholds Forum Selection Clause in Promissory Note Despite Ambiguous Language

An assignee of a promissory note sought to enforce an acceleration clause against the obligor. The obligor challenged personal jurisdiction based on a forum selection clause in the note. The court upheld the validity of the forum selection clause, despite its use of the term "venue" rather than "jurisdiction."

Key Legal Principles:

1. Parties to an agreement may consent to submit to the jurisdiction of a court that would otherwise not have personal jurisdiction over them.
2. Forum selection clauses are generally valid unless enforcement would be unreasonable, unjust, or there has been fraud or overreaching.
3. Courts will interpret forum selection clauses to give effect to the parties' intentions, even if the precise legal terminology is not used.

Conclusion: The main takeaway is that courts will enforce forum selection clauses in contracts, interpreting them to confer both venue and personal jurisdiction, unless there are compelling reasons not to do so. The use of the term "venue" instead of "jurisdiction" does not invalidate the clause if the overall intent is clear.

Citation: CV Holdings, LLC v Bernard Tech., Inc., 14 AD3d 854 (3d Dept 2005).

Case 2: Enforceability of Forum Selection Clauses and Preservation of Jurisdictional Defenses in Litigation Funding Disputes

A litigation funding company sued a law firm and its client for breach of contract related to a funding agreement. The law firm challenged personal jurisdiction, arguing it was not bound by the forum selection clause in the agreement it did not sign. The court held that the law firm was bound by the forum selection clause due to its close relationship with the transaction and the client, but also ruled that the law firm had not waived its jurisdictional defense by participating in the action.

Key Legal Principles:

1. Non-signatories may be bound by a forum selection clause if they are closely related to the transaction and it is foreseeable they would be bound.
2. A defendant does not waive the defense of lack of personal jurisdiction by participating in the defense of an action if they consistently raise and maintain the jurisdictional objection.
3. Related agreements executed as part of the same transaction should be interpreted together, even if not explicitly incorporated by reference.

Conclusion: The main takeaway is that courts may enforce forum selection clauses against non-signatories who are closely involved in the transaction, while still allowing them to preserve jurisdictional defenses if properly raised and maintained. This approach balances contractual principles with due process considerations in complex business relationships.

Citation: P.S. Finance, LLC v Eureka Woodworks, Inc., 214 AD3d 1 (2d Dept 2023).

Case 3: New York Court Upholds Jurisdiction Based on Forum Selection Clause but Applies Connecticut Law in Vehicle Lease Dispute Between Connecticut Parties

A Connecticut leasing company sued a Connecticut lessee in New York based on a forum selection clause in their vehicle lease agreement. The court upheld jurisdiction based on the forum selection clause but applied Connecticut law to the substantive issues, including pre-judgment interest, due to the lack of connection between the transaction and New York.

Key Legal Principles:

1. Forum selection clauses are generally enforceable and can establish personal jurisdiction, absent fraud or unfairness.
2. Choice of law provisions may not be honored if the chosen jurisdiction has no reasonable relationship to the agreement or parties.
3. Pre-judgment interest is considered a substantive issue governed by the law of the state with the most significant relationship to the transaction.

Conclusion: The court upheld jurisdiction based on the forum selection clause but applied Connecticut law to substantive issues due to the lack of connection to New York. This case demonstrates that courts may separate jurisdictional issues from choice of law considerations in contracts lacking a nexus to the chosen forum.

Types of Forum Selection Clauses

1. Exclusive forum selection clauses: These specify a single forum where all disputes must be resolved, excluding all other possible venues. For example: "Any and all disputes arising from or related to this contract shall be resolved exclusively in the United States District Court for the Southern District of New York." This clause restricts all dispute resolution to a specific court, eliminating the possibility of litigation elsewhere.
2. Non-exclusive forum selection clauses: These allow disputes to be resolved in the specified forum but don't rule out other venues. An example would be: "The parties agree that the courts of California shall have jurisdiction to hear any disputes arising from this agreement, but this shall not prevent either party from bringing proceedings in any other court of competent jurisdiction." This clause establishes California courts as a proper venue while explicitly allowing for litigation in other jurisdictions.
3. Mandatory forum selection clauses: Similar to exclusive clauses, these require disputes to be resolved in the specified forum. For instance: "All disputes arising under this agreement must be litigated in the courts of Delaware, and the parties hereby consent to the personal jurisdiction of such courts." While this clause requires disputes to be resolved in Delaware courts, it doesn't explicitly rule out other venues, though in practice it often has the same effect as an exclusive clause.
4. Permissive forum selection clauses: These suggest a preferred forum but allow flexibility for disputes to be resolved elsewhere. An example is: "The parties may bring any action arising from this contract in the courts of Toronto, Ontario, but are not required to do so." This clause suggests Toronto as a potential forum but clearly states that the parties are not obligated to use this venue.
5. Floating forum selection clauses: These allow the forum to be determined based on certain conditions or future events. For example: "Any disputes shall be resolved in the courts of the country where the defendant has its principal place of business at the time the lawsuit is filed." This clause doesn't specify a particular forum, instead allowing it to "float" based on the defendant's location when a dispute arises, which can be useful in contracts where the parties' locations might change over time.

Citation: Putnam Leasing Co., Inc. v Pappas, 46 Misc 3d 195 (NY Dist Ct 2014).

Case 4: U.S. Supreme Court Upholds International Forum Selection Clause in Maritime Contract Dispute, Setting Precedent for Enforcement of Such Clauses

A dispute arose between an American company and a German company over damage to a drilling rig during an ocean tow. The contract contained a forum selection clause designating London as the venue for disputes. The U.S. Supreme Court considered whether to enforce this clause despite lower courts' refusal to do so.

Key Legal Principles:

1. Forum selection clauses are prima facie valid and should be enforced unless shown to be unreasonable under the circumstances.
2. The party seeking to avoid the forum selection clause bears a heavy burden of proof to show it should not be enforced.
3. A forum selection clause may be found unenforceable if enforcement would contravene a strong public policy of the forum where the suit is brought. For example, if enforcing the clause would effectively validate a contract provision that is illegal under local law, such as an exculpatory clause prohibited in the forum state.

Conclusion: The Court held that forum selection clauses in international contracts should be enforced unless the resisting party can clearly show enforcement would be unreasonable or unjust. This decision marked a shift toward greater respect for party autonomy in international commercial agreements.

Citation: M/S Bremen v Zapata Off-Shore Co., 407 US 1 (1972).

Case 5: Contracts Choosing New York Law Don't Automatically Include New York's Rules for Choosing Other States' Laws

This case involves a dispute over the distribution of death and retirement benefits. The central issue was whether a contract's choice-of-law provision, specifying New York law, requires the application of a New York statute that might, in turn, require applying another state's law. The Court of Appeals held that such a provision does not require application of the New York statute.

Key Legal Principles:

1. A contractual choice-of-law provision generally eliminates the need for conflict-of-laws analysis, including statutory choice-of-law directives, unless expressly stated otherwise.
2. Parties' intent in including a choice-of-law provision is to apply only the chosen state's substantive law, not its conflict-of-laws principles or statutory choice-of-law directives.
3. Courts should interpret contract language to effectuate the parties' intended and expressed choice of law, avoiding interpretations that would lead to unpredictable results.

Conclusion: The main takeaway is that when parties include a choice-of-law provision in a contract, they intend for only the substantive law of the chosen state to apply, excluding both common-law conflict-of-laws principles and statutory choice-of-law directives, unless explicitly stated otherwise. This decision promotes certainty and predictability in contractual relationships.

Citation: Ministers & Missionaries Benefit Bd. v Snow, 26 NY3d 466, 25 NYS3d 21, 45 NE3d 917 (2015).

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Case 6: New York Court Dismisses Healthcare Financing Case Despite Forum Selection Clause: Absence of New York Choice of Law Provision Proves Decisive

This case centers on a financing dispute between an out-of-state medical practice and a healthcare financing firm. The court grappled with personal jurisdiction and forum selection issues when the defendants lacked New York ties, despite the agreement's clause permitting New York venue.

Key Legal Principles:

1. Personal jurisdiction over non-domiciliaries hinges on the defendant conducting business in New York or contracting to provide goods or services in the state (CPLR § 302(a)(1)).
2. For a forum selection clause naming New York courts to be enforceable against non-residents, New York law must also govern (General Obligations Law §§ 5-1401 and 5-1402).
3. Enforcing a New York forum selection clause under General Obligations Law § 5-1402 requires a contract value of at least $1 million and explicit choice of New York law.

Conclusion: The court dismissed the action, citing lack of personal and subject matter jurisdiction. This ruling emphasizes the crucial nature of meticulously crafting choice of law and forum selection clauses in interstate agreements. The key lesson is that merely listing New York as a potential forum is insufficient; New York law must also be selected, and other statutory requirements must be met.

Citation: Bankers Healthcare Group, LLC v Pediatric Assoc., Inc., 79 Misc 3d 1218(A), 190 NYS3d 920 (Sup Ct, Onondaga County 2023).

Case 7: New York Court Dismisses Case Between Foreign Corporations Due to Lack of Subject Matter Jurisdiction, Despite Forum Selection Clause

A foreign corporation sued another foreign corporation in New York based on a contract with a forum selection clause designating New York courts. The contract specified Maryland law would govern. The court dismissed the case for lack of subject matter jurisdiction, finding the forum selection clause alone was insufficient without also choosing New York law to govern.

Key Legal Principles:

1. Under NY Business Corporation Law § 1314(b), foreign corporations can only sue other foreign corporations in New York in limited circumstances.
2. NY General Obligations Law § 5-1402 allows parties to maintain an action in New York courts if their contract chooses New York law and forum, even without other NY connections.
3. Choosing New York as a forum does not implicitly mean New York procedural law is chosen; an explicit choice of New York law is required to satisfy § 5-1402.

Conclusion: The main takeaway is that a forum selection clause designating New York courts is not enough on its own to establish subject matter jurisdiction in New York for a dispute between foreign corporations. There must also be an explicit choice of New York law governing the contract for NY courts to have jurisdiction under § 5-1402.

Citation: DDR Real Estate Servs., Inc. v Burnham Pac. Props., Inc., 1 Misc 3d 802 (Sup Ct, Monroe County 2003), affd, 12 AD3d 1182 (4th Dept 2004).

Case 8: New York Court Dismisses Foreign Corporation's Lawsuit for Lack of Subject Matter Jurisdiction

A Wyoming corporation sued an Ohio resident and two Ohio companies in New York over a contract dispute involving labor supplied in California. The court dismissed the case for lack of subject matter jurisdiction, finding that the requirements of Business Corporation Law § 1314 were not met and that long-arm jurisdiction under CPLR 302 did not apply.

Key Legal Principles:

1. Business Corporation Law § 1314 limits New York courts' jurisdiction over actions between foreign corporations or non-residents.
2. General Obligations Law § 5-1402 provides an exception to BCL § 1314 limitations for certain contracts, but requires the contract to involve at least $1 million.
3. New York does not recognize consent as a basis for long-arm jurisdiction under CPLR 302.

Conclusion: The main takeaway is that New York courts have limited subject matter jurisdiction over disputes between foreign entities, even when there is a contractual forum selection clause, if the case does not meet specific statutory requirements or establish a basis for long-arm jurisdiction. Forum selection clauses alone are insufficient to confer jurisdiction in such cases.

Citation: Mobile Programming LLC v Tallapureddy, 71 Misc 3d 1219(A), 144 NYS3d 558 (Sup Ct, NY County 2021) (holding that New York courts lack subject matter jurisdiction over a dispute between foreign entities where BCL § 1314 requirements are not met and long-arm jurisdiction under CPLR 302 is not established, despite a contractual forum selection clause).

Case 9: Court Enforces Forum Selection Clause in Partnership Dispute Despite Fraud Allegations

A limited partner brought a derivative action seeking to invalidate an option agreement between the partnership and a defendant. The defendants moved to change venue based on a forum selection clause in the agreement. The court reversed the lower court's denial of the motion, holding that the forum selection clause was enforceable despite general allegations of fraud.

Key Legal Principles:

1. Forum selection clauses are prima facie valid and will only be set aside if enforcement would be unreasonable, unjust, or if the clause itself resulted from fraud or overreaching.
2. General allegations of fraud in the underlying agreement are insufficient to invalidate a forum selection clause; the fraud must specifically relate to the clause itself.
3. In a derivative action, a limited partner is bound by a forum selection clause signed by the partnership, as the partner's rights are derivative of the partnership's rights.

Conclusion: The main takeaway is that courts will enforce forum selection clauses in business agreements unless there are specific, compelling reasons not to do so. General allegations of fraud in the overall agreement are not enough to invalidate such clauses, and non-signatories may be bound if their interests are derivative of a signatory party.

Citation: Harry Casper, Inc. v Pines Assoc., L.P., 53 AD3d 764 (3d Dept 2008).

Legal Implications of Forum Selection Clauses

1. Jurisdiction and venue determination: These clauses can dictate which court has the authority to hear the case and where the case will be tried. For example, a clause stating "All disputes arising from this contract shall be litigated in the Supreme Court of New York, County of New York" clearly establishes both jurisdiction (California) and venue (Los Angeles County). This means that if a dispute arises, the parties must bring their case to this specific court, regardless of where they are located or where the contract was performed.
2. Applicable law considerations: The chosen forum can influence which laws will be applied to the dispute. Consider a clause that reads: "Any disputes shall be resolved in the courts of England and Wales under English law." This not only sets the forum but also explicitly states the governing law. Even without the latter part, choosing English courts often implies the application of English law, which could significantly affect the interpretation of the contract and the outcome of the dispute.
3. Enforceability challenges: Parties may contest the validity or fairness of the clause itself. For instance, in a consumer contract between a large corporation and an individual, a clause stating "All disputes must be litigated in the state of Delaware" might be challenged by the consumer as unfair if they reside far from Delaware and the contract was for a small purchase. Courts might find such a clause unenforceable if it effectively denies the consumer their day in court due to the burdensome travel and expense involved.
4. Impact on litigation costs and timelines: The chosen forum can affect the expense and duration of legal proceedings. For example, a clause specifying "All disputes shall be resolved through arbitration in Singapore under the rules of the Singapore International Arbitration Centre" could significantly impact costs and timelines. Arbitration in Singapore might be faster than court proceedings, but it could also be more expensive for parties located elsewhere due to travel costs and potentially higher arbitrator fees.
5. Potential for forum non conveniens arguments: This refers to the possibility of a party arguing that the chosen forum is inconvenient or inappropriate. Consider a situation where a forum selection clause in a contract between a U.S. and a Japanese company specifies New York as the forum. If a dispute arises and most of the evidence and witnesses are in Japan, the Japanese company might argue forum non conveniens, claiming that despite the clause, Japan would be a more appropriate forum for the case. While courts often enforce valid forum selection clauses, they might consider such arguments in exceptional circumstances.

Case 10: Court Upholds Forum Selection Clause in Franchise Agreement Despite Fraud Allegations

A New York franchisee sued a Texas franchisor for breach of contract and fraud. The court dismissed the complaint, enforcing a forum selection clause in the franchise agreement that designated Dallas County, Texas as the exclusive jurisdiction and venue for disputes.

Key Legal Principles:

1. Forum selection clauses are prima facie valid and enforceable unless shown to be unreasonable, unjust, against public policy, or invalid due to fraud or overreaching.
2. The challenging party must demonstrate that a trial in the selected forum would be so gravely difficult that they would effectively be deprived of their day in court.
3. General allegations of fraud in the complaint are insufficient to invalidate a forum selection clause.

Conclusion: The main takeaway is that courts will enforce forum selection clauses in business agreements unless there are specific, compelling reasons not to do so. Merely alleging fraud in the underlying agreement is not enough to invalidate such clauses.

Citation: LSPA Enter., Inc. v Jani-King of New York, Inc., 31 AD3d 394 (2d Dept 2006).

Case 11: New York Court Enforces Forum Selection Clause in Contract Under $1 Million

A guarantor of a promissory note sued a non-resident debtor in New York to recover payments made upon default. The lower court dismissed the case, but the appellate court reversed, enforcing the forum selection clause in the indemnity agreement despite the contract being for less than $1 million.

Key Legal Principles:

1. General Obligations Law § 5-1402 mandates enforcement of forum selection clauses for contracts over $1 million but does not preclude enforcement for smaller contracts.
2. Agreeing to a forum selection clause constitutes consent to personal jurisdiction in the selected forum.
3. A party agreeing to a forum selection clause is generally precluded from later challenging jurisdiction on forum non conveniens grounds.

Conclusion: The main takeaway is that New York courts may enforce forum selection clauses in contracts under $1 million, and such clauses are generally viewed as consent to jurisdiction in the selected forum. This decision emphasizes the importance and enforceability of contractual forum selection clauses, even in smaller contracts.

Citation: Natl. Union Fire Ins. Co. of Pittsburgh, Pa. v Worley, 257 AD2d 228 (1st Dept 1999).

Case 12: New York Court Upholds Contractual Consent to Jurisdiction and Forum Selection Clause

In a breach of contract action, the defendant appealed the denial of his motion to dismiss based on lack of personal jurisdiction and forum non conveniens. The court affirmed the lower court's decision, enforcing the contractual provisions consenting to New York jurisdiction and forum selection.

Key Legal Principles:

1. Parties can validly consent to jurisdiction in a specific state through contractual agreements.
2. Choice of law, forum selection, and consent to jurisdiction provisions in contracts are generally enforceable.
3. When an agreement satisfies the criteria of General Obligations Law § 5-1402(1), which includes choice of New York law and consent to New York jurisdiction in contracts involving at least $1 million, the complaint should not be dismissed based on forum non conveniens as per CPLR 327(b).

Conclusion: The main takeaway is that New York courts will generally enforce contractual provisions consenting to jurisdiction and selecting New York as the forum, even when one party later challenges these provisions. This decision emphasizes the importance of carefully considering jurisdictional clauses when entering into contracts.

Citation: Creative Resources, Inc. v Rumbellow, 244 AD2d 383 (2d Dept 1997).

Case 13: New York Court Enforces Contractual Consent to Jurisdiction and Grants Summary Judgment on Guaranty Agreement

A bank sued a guarantor based on an individual guaranty agreement. The court denied the defendant's motion to dismiss for inconvenient forum and granted the plaintiff's motion for summary judgment, enforcing the contractual consent to jurisdiction and the unconditional guaranty.

Key Legal Principles:

1. Contractual consent to submit to personal jurisdiction in a specific state is enforceable.
2. General Obligations Law § 5-1402 precludes dismissal on the ground of inconvenient forum when there is a valid jurisdictional consent clause.
3. An unconditional guaranty is an instrument for the payment of money only under CPLR 3213, allowing for summary judgment when supported by proper documentation.

Conclusion: The main takeaway is that New York courts will enforce contractual provisions consenting to jurisdiction and will grant summary judgment on unconditional guaranties when supported by appropriate evidence. This decision emphasizes the importance of carefully drafting and considering jurisdictional clauses and guaranty agreements in contracts.

Citation: Rochester Community Sav. Bank v Smith, 172 AD2d 1018 (4th Dept 1991).

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Case 14: Court Grants Venue Change Despite Forum Selection Clause in Contract

A New York corporation sued a foreign business for breach of contract in Nassau County. The defendant moved to change venue to New York County. The court granted the motion, finding that the forum selection clause in the contract did not specifically designate Nassau County as the venue, and the plaintiff failed to establish a nexus between the action and Nassau County.

Key Legal Principles:

1. A contractual forum selection clause is prima facie valid unless shown to be unreasonable, unjust, against public policy, or invalid due to fraud or overreaching.
2. Commencing an action against a corporation in the wrong county forfeits the plaintiff's right to select venue.
3. A general forum selection clause designating New York courts does not override the requirement to establish a proper venue under CPLR § 503.

Conclusion: The main takeaway is that a forum selection clause designating a state for jurisdiction does not automatically establish proper venue in any county within that state. Plaintiffs must still demonstrate a nexus between the action and the chosen county to maintain venue there.

Citation: Merchant Cash & Capital, LLC v Laulainen, 55 Misc 3d 349 (Sup Ct, Nassau County 2017).

Case 15: Court Enforces Forum Selection Clause in Nursing Home Admission Agreement

An estate sued a nursing home for medical malpractice. The defendant moved to change venue based on a forum selection clause in the admission agreement. The court granted the motion, enforcing the clause that designated Suffolk County as the exclusive jurisdiction for disputes.

Key Legal Principles:

1. A contractual forum selection clause is prima facie valid and enforceable unless shown to be unreasonable, unjust, against public policy, or the result of fraud or overreaching.
2. The challenging party must demonstrate that a trial in the selected forum would be so gravely difficult that they would effectively be deprived of their day in court.
3. An admission agreement, including its forum selection clause, can be binding on the parties to the litigation, including the estate of the deceased resident.

Conclusion: The main takeaway is that courts will generally enforce forum selection clauses in admission agreements for healthcare facilities unless the challenging party can demonstrate specific reasons why enforcement would be unreasonable or unjust. This decision emphasizes the importance of carefully reviewing such clauses in admission agreements.

Citation: Puleo v Shore View Ctr. for Rehabilitation & Health Care, 132 AD3d 651 (2d Dept 2015).

Strategic Purposes of Forum Selection Agreements

1. Predictability in dispute resolution: By specifying the forum in advance, parties can better anticipate how potential disputes might unfold.
2. Mitigation of legal risks: Choosing a favorable forum can help parties manage their legal exposure.
3. Cost and time management: Selecting an efficient or nearby forum can help control litigation expenses and duration.
4. Leverage in negotiations: The ability to specify a forum can be a bargaining chip in contract negotiations.
5. Protection of intellectual property rights: Choosing a forum with strong IP protections can help safeguard a company's intellectual assets.

Case 16: Court Dismisses Case on Forum Non Conveniens Despite Valid Forum Selection Clause

An equipment lessor sued a lessee in New York to recover $1,839.77 for a lease transaction. The court found that while the forum selection clause in the lease agreement was valid, the case should be dismissed on forum non conveniens grounds due to lack of substantial nexus with New York and the unreasonableness of enforcing the clause.

Key Legal Principles:

1. A contractual forum selection clause is prima facie valid and enforceable unless shown to be unreasonable, unjust, or invalid due to fraud or overreaching.
2. General allegations of fraud are insufficient to invalidate consent to jurisdiction and forum selection provisions in a contract.
3. A court may dismiss a case on forum non conveniens grounds despite a valid forum selection clause if enforcement would be unreasonable or unjust.

The court used several factors to justify dismissing the case on forum non conveniens grounds, despite the valid forum selection clause:

• Lack of substantial nexus with New York:
  • The entire equipment lease transaction was executed in California.
  • The defendant's business and the leased equipment were located in California.
  • The defendant was a resident of California with no ties to New York.
• Age of the defendant:
  • The defendant was 86 years old, which could make travel to New York difficult.
• Amount in dispute:
  • The principal amount in dispute was only $1,839.77, which the court considered minor.
• Burden on New York courts:
  • The court cited the principle that New York courts should not be compelled to accept jurisdiction of a case having no substantial nexus with New York.
  • Availability of an alternative forum:
  • The court conditioned the dismissal on the defendant waiving jurisdictional and statute of limitations defenses in California, ensuring the availability of an alternative forum.

Conclusion: The main takeaway is that while forum selection clauses are generally enforceable, courts may still consider the overall fairness and practicality of enforcing such clauses, especially in cases with minimal connection to the chosen forum and where enforcement would be unduly burdensome on the defendant.

Citation: N. Leasing Sys., Inc. v French, 48 Misc 3d 43 (App Term, 1st Dept 2015).

Case 16: Forum Selection Clause with Permissive Language Held Mandatory

A seller of a business sued the buyer for breach of contract. The lower court ordered a change of venue based on a forum selection clause in the agreement. The seller appealed, arguing that the clause's use of "may" made it permissive rather than mandatory. The appellate court affirmed the lower court's decision.

Key Legal Principles:

1. Forum selection clauses are generally considered prima facie valid and enforceable.
2. The use of permissive language like "may" in a forum selection clause does not necessarily negate its mandatory nature.
3. Courts will look at the entire clause and agreement to determine the parties' intent regarding exclusivity of jurisdiction.

Conclusion: The main takeaway is that even if a forum selection clause uses permissive language like "may," it can still be considered mandatory if other language in the agreement indicates the parties' intent to make jurisdiction exclusive. This case establishes precedent for interpreting similar clauses in New York.

Citation: Fear & Fear, Inc. v N.I.I. Brokerage, L.L.C., 50 A.D.3d 185, 851 N.Y.S.2d 311 (4th Dep't 2008).

Case 17: Enforceability of Forum Selection Clause in Nursing Home Admission Agreement

The estate of a nursing home resident sued a healthcare facility for medical malpractice. The facility moved to change the venue based on a forum selection clause in the admission agreement. The lower court denied the motion, but the appellate court reversed, holding that the forum selection clause was binding and enforceable.

Key Legal Principles:

1. Contractual forum selection clauses are prima facie valid and enforceable unless shown to be unreasonable, unjust, against public policy, or the result of fraud or overreaching.
2. The challenging party must demonstrate that a trial in the selected forum would be so difficult as to deprive them of their day in court.
3. Forum selection clauses in admission agreements can be binding on the estate of a deceased resident.

Conclusion: The main takeaway is that forum selection clauses in nursing home admission agreements are generally enforceable unless the challenging party can demonstrate specific reasons for invalidity or undue hardship. Courts are likely to uphold such clauses absent compelling evidence to the contrary.

Citation: Puleo v Shore View Ctr. for Rehabilitation & Health Care, 132 AD3d 651 (2d Dept 2015).

Case 18: Hotel's Forum Selection Clause Upheld Despite Guest's Claim of Adhesion Contract

A hotel guest sued a resort for negligence after sustaining injuries on the property. The resort sought to change venue based on a forum selection clause in the rental agreement signed at check-in. The lower court denied the motion, but the appellate court reversed, rejecting the guest's argument that the agreement was an unenforceable contract of adhesion.

Key Legal Principles:

1. A contract of adhesion contains terms that are unfair and nonnegotiable and arises from a disparity of bargaining power or oppressive tactics.
2. Forum selection clauses are prima facie valid unless shown to be unreasonable, unjust, against public policy, or the result of fraud or overreaching.
3. The mere presentation of a standard form agreement at registration, without negotiation, does not automatically render it an unenforceable contract of adhesion.

Conclusion: The main takeaway is that courts will likely enforce forum selection clauses in standard hotel rental agreements unless the challenging party can demonstrate specific unfair tactics, oppression, or undue hardship. Simply labeling an agreement as a "contract of adhesion" is insufficient to invalidate a forum selection clause.

Citation: Molino v Sagamore, 105 AD3d 922 (2d Dept 2013).

Case 19: Court Upholds Dismissal of Engineering Malpractice Suit Based on Out-of-State Forum Selection Clause

An insurance company, as subrogee of a warehouse owner, sued an engineering firm for malpractice and breach of contract after a warehouse roof collapsed. The court upheld the dismissal of the lawsuit based on a forum selection clause in the contract that required litigation to be brought in Pennsylvania courts.

Key Legal Principles:

1. Forum selection clauses are prima facie valid and enforceable unless shown to be unreasonable, unjust, or in contravention of public policy.
2. Objections to a choice of law clause are not grounds for failing to enforce a choice of forum clause.
3. Broad forum selection clauses apply to both contractual and related non-contractual claims arising from the agreement.

Conclusion: The main takeaway is that courts will generally enforce forum selection clauses in commercial contracts, even when they require litigation in another state, unless there is a strong showing that enforcement would be unreasonable or against public policy. Parties cannot circumvent such clauses by pleading non-contractual claims or arguing about choice of law issues.

Citation: Erie Ins. Co. of N.Y. v AE Design, Inc., 104 AD3d 1319 (4th Dept 2013).

Case 20: Court Grants Venue Change Despite Forum Selection Clause in Contract

A New York-licensed foreign corporation sued a foreign business for breach of contract in Nassau County. The defendant moved to change venue to New York County. Despite a forum selection clause in the contract allowing litigation in New York state courts, the court granted the motion to change venue because the plaintiff failed to establish a nexus between the action, parties, and Nassau County.

Key Legal Principles:

1. Forum selection clauses are prima facie valid unless shown to be unreasonable, unjust, or against public policy.
2. A plaintiff forfeits the right to select venue by commencing an action against a corporation in the wrong county.
3. Even with a forum selection clause, plaintiffs must establish a nexus between the action, parties, and chosen venue under CPLR § 503.

Conclusion: The main takeaway is that a general forum selection clause allowing litigation in New York state courts does not override the statutory requirements for proper venue. Plaintiffs must still demonstrate a connection to the specific county where they file suit, even when suing out-of-state defendants.

Citation: Merchant Cash & Capital, LLC v Laulainen, 55 Misc 3d 349 (Sup Ct, Nassau County 2017).

Case 21: New York Court Requires Foreign Corporation to Register Despite Forum Selection Clause and $1 Million Contract Threshold

A foreign financial services corporation sued a real property developer over a credit default swap agreement. The developer moved to dismiss, arguing the plaintiff lacked capacity to sue as an unauthorized foreign corporation doing business in New York. The court held that despite a forum selection clause allowing suit in New York, the plaintiff still needed to comply with New York's business registration requirements.

Key Legal Principles:

1. General Obligations Law § 5-1402 allows parties to maintain actions in New York courts pursuant to contractual agreements choosing New York law and forum in cases involving $1 million or more.
2. The effect of GOL § 5-1402 is to preclude New York courts from declining jurisdiction when the only nexus is the contractual agreement.
3. Business Corporation Law § 1312 prohibits unauthorized foreign corporations doing business in New York from maintaining actions in the state until they obtain proper authorization.

Conclusion: The main takeaway is that a forum selection clause choosing New York courts does not override the requirement for foreign corporations to register to do business in New York before maintaining an action. The court allowed the plaintiff time to comply with the registration requirement rather than dismissing the case outright.

Citation: Credit Suisse Intl. v URBI, Desarrollos Urbanos, S.A.B. de C.V., 41 Misc 3d 601 (Sup Ct, NY County 2013).

Case 22: New York Court Upholds Stay Despite Forum Selection Clause, Clarifying Limits of General Obligations Law § 5-1402

An appellate court affirmed a lower court's decision to stay a New York action in favor of a more comprehensive Pennsylvania lawsuit, despite a non-exclusive New York forum selection clause. The court distinguished between declining jurisdiction based on inconvenience and staying an action due to parallel proceedings, emphasizing that General Obligations Law § 5-1402 does not preclude stays in all circumstances.

Key Legal Principles:

1. General Obligations Law § 5-1402 mandates New York courts to exercise jurisdiction in cases involving $1 million or more with New York choice of law and forum clauses, even if the only connection to New York is the contractual agreement.
2. While GOL § 5-1402 and CPLR 327(b) prevent parties from challenging New York jurisdiction or asserting forum non conveniens after agreeing to a New York forum, they do not prohibit stays based on parallel proceedings in other jurisdictions.
3. Courts retain discretion to stay actions in favor of more comprehensive parallel proceedings, even with a forum selection clause, particularly when the clause is non-exclusive and the stay is not based on jurisdictional or convenience grounds.

Conclusion: The main takeaway is that GOL § 5-1402, while designed to ensure New York courts honor forum selection clauses in high-value contracts, does not strip courts of their discretion to manage litigation efficiently through stays. This interpretation balances the statute's purpose of making New York an attractive forum for commercial disputes with the courts' need to prevent piecemeal or preemptive litigation. The decision highlights the distinction between declining jurisdiction and staying proceedings, providing guidance on the limits of GOL § 5-1402's application.

Citation: AIG Fin. Prods. Corp. v Penncara Energy, LLC, 83 AD3d 495 (1st Dept 2011).

Case 23: New York Court Dismisses Case Between Foreign Corporations for Lack of Subject Matter Jurisdiction

Two foreign corporations, neither authorized to do business in New York, were involved in a legal dispute. The lower court initially allowed the case to proceed, but the appellate court reversed this decision, ruling that New York courts lacked subject matter jurisdiction over the matter.

Key Legal Principles:

1. New York courts generally lack subject matter jurisdiction over cases between foreign corporations not authorized to do business in the state, unless specific exceptions apply.
2. Consent can establish personal jurisdiction in New York, but it does not establish long-arm jurisdiction under CPLR 302.
3. The exceptions allowing a foreign corporation to sue another foreign corporation in New York (as outlined in Business Corporation Law § 1314(b)) were not applicable in this case.

Conclusion: This case reinforces the limitations on New York courts' jurisdiction over disputes between foreign entities. The main takeaway is that foreign corporations not authorized to do business in New York generally cannot litigate against each other in New York courts unless they meet specific statutory exceptions.

Case Citation: Techo-TM, LLC v Fireaway, Inc., 123 AD3d 610 (1st Dept 2014).

Case 24: Enforcement of Forum Selection Clause in High-Value Commercial Loan Agreement

A lender sued a borrower and guarantor to recover under a secured promissory note and guaranty. The defendants moved to dismiss or stay the action, arguing for a Louisiana forum. The New York court denied the motion, and the appellate court affirmed, upholding the contractual choice of New York as the forum.

Key Legal Principles:

1. Forum selection clauses in high-value commercial agreements are generally enforceable unless shown to be unreasonable, unjust, or the result of fraud.
2. Under New York General Obligations Law § 5-1402, New York is deemed an appropriate forum for disputes arising from agreements worth over $1 million that choose New York law and jurisdiction.
3. In cases of competing jurisdictions, courts consider factors such as the order of filing, service of process, and the scope of the actions in determining whether to dismiss or stay proceedings.

Conclusion: The case reinforces New York's strong policy of enforcing forum selection clauses in substantial commercial transactions, particularly when coupled with a New York choice of law provision. This approach aims to provide certainty and predictability in business dealings, solidifying New York's status as a preferred forum for commercial dispute resolution.

Citation: GE Oil & Gas, Inc. v Turbine Generation Servs., L.L.C., 140 AD3d 582, 35 NYS3d 311 (1st Dept 2016)

Case 25: Unreasonable Forum Selection Clause in Nondisclosure Agreement Invalidated

A national buyer service sued a food distributor for tortious interference with contract, claiming breach of a nondisclosure agreement. The lower court dismissed the case based on a forum selection clause designating Delaware courts. On appeal, the court reversed, finding the forum selection clause unreasonable because neither the parties nor the agreement had any connection to Delaware.

Key Legal Principles:

1. A forum selection clause is prima facie valid unless shown to be unreasonable, unjust, against public policy, or invalid due to fraud or overreaching.
2. To overturn a forum selection clause, the challenging party must make a strong showing that it should be set aside.
3. A forum selection clause may be deemed unreasonable if the chosen forum has no connection to the parties or the agreement.

Conclusion: The main takeaway is that courts may invalidate forum selection clauses that designate a jurisdiction with no meaningful connection to the parties or the agreement. This decision emphasizes the importance of choosing a reasonable forum when drafting contracts, especially when the chosen forum lacks any relationship to the transaction or parties involved.

Citation: U.S. Mdse., Inc. v L & R Distributors, Inc. (122 AD3d 613 [2d Dept 2014]).

Case 26: New York Court Limits Jurisdiction Over Foreign Corporations in Contract Dispute

A Massachusetts corporation sued a Delaware corporation in New York for breach of contract. The contract was negotiated in New York but executed in New Jersey. The court held that New York lacked jurisdiction over the defendant, as the contract was not made in New York and the defendant was not "doing business" in the state.

Key Legal Principles:

1. A contract is made where the last act necessary for its formation occurs.
2. The "grouping of contacts" doctrine applies to choice of substantive law, not to determining jurisdiction.
3. The "substantial contact" doctrine for due process purposes does not expand New York's statutory limits on jurisdiction over foreign corporations.

Conclusion: The main takeaway is that New York courts strictly interpret jurisdictional statutes for foreign corporations, adhering to traditional "presence" tests for "doing business" rather than expanding jurisdiction based on modern conflict of laws or due process doctrines. This decision emphasizes the need for legislative action to broaden jurisdiction over foreign entities in New York.

Citation: Fremay, Inc. v Modern Plastic Mach. Corp., 15 AD2d 235 (1st Dept 1961).