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GE CREDIT CORP. v. TOUPS

August 13, 1985

GENERAL ELECTRIC CREDIT CORPORATION, Plaintiff against LEON H. TOUPS, LATERR BROADCASTING CORPORATION and BUQUET DISTRIBUTING CO., INC., Defendants


The opinion of the court was delivered by: SWEET

SWEET, D.J.

Defendants Leon H. Toups ("Toups"), Laterr Broadcasting Corporation ("LBC") and Buquet Distributing Co., Inc. ("Buquet") have moved under Rule 12(b)(2) to dismiss this diversity action on the grounds of lack of personal jurisdiction, forum non conveniens, insufficiency of service and alternatively to transfer the action to the Eastern District of Louisiana. The action has been brought by plaintiff General Electric Credit Corporation ("GECC") on personal and corporate guarantees and on certain assumption agreements. For the reasons set forth below the motions are denied in part and granted in part.

GECC is a New York corporation which on October 28, 1983 entered into a Loan Agreement (the "Loan Agreement") with Delta Transload, Inc. ("Delta"). Between November 11 and 14, 1983 a personal guarantee of the Loan Agreement in the amount of $350,000.00 was executed by Toups (the "Personal Guarantor"), a Corporate Guarantee of the Loan (the "Corporate Guarantee") in the amount of $400,000.00 by LBC and Buquet and Assumption Agreements by LBC and Buquet in the amounts of $200,000.00 and $400,000.00 respectively (the "Assumption Agreements").

 The Loan Agreement contained the following provisions in Section 5.05:

 
The Borrower hereby irrevocably agrees that GECC may bring suit against the Borrower with respect to any or all of the Fundamental Agreements for so long as any are in effect or the Note is unpaid, in any court sitting in the State of New York, United States of America and the Borrower hereby irrevocably submits to the jurisdiction of such courts. Summons or other legal process, or both, in such suit may be served on either and the borrower hereby agrees to appoint as its agent for service of process CT Corporation System, 1633 Broadway, New York, New York, (or any such other person in the City of New York as may be designated in writing by the Borrower to GECC). The Borrower agrees to maintain an agent for service of process in the City of New York at all times during the term of this Agreement. The Borrower will furnish GECC with letters of such person accepting such appointment. Final judgment in any such suit shall be conclusive and may be enforced in any jurisdiction within or without the United States of America, by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of such liability. Nothing herein precludes bringing any legal action in any other jurisdiction where the Borrower or any of its assets are located.

 The Personal Guarantee contained the following provision:

 
Any legal action or proceeding against the Guarantor with respect to this Guarantee or the obligations guaranteed hereby may be brought in the courts of the State of New York, the U. S. Federal courts in such state, or in the courts of any other jurisdiction where such action or proceeding may be properly brought, and the Guarantor hereby irrevocably accepts the jurisdiction of such courts for the purpose of any action or proceeding. The Guarantor hereby further irrevocably consents to service of process out of said courts by the mailing thereof by GECC by U. S. of registered or certified mail postage prepaid to the undersigned at the address indicated below.

 Any legal action or proceeding against the Corporate Guarantors or either of them with respect to this Guarantee or the obligations guaranteed hereby may be brought in the courts of the State of New York, the U. S. Federal Courts in such State, or in the courts of any other jurisdiction where such action or proceeding may be properly brought, and the Corporate Guarantors hereby irrevocably accept the jurisdiction of such courts for the purpose of any action or proceeding. The Corporate Guarantors hereby irrevocably consent to the service or process out of said courts by the mailing thereof by GECC by U. S. registered or certified mail postage prepaid to the undersigned at the address indicated below.

 The Corporate Guarantees state as follows:

 
The Corporate Guarantors hereby irrevocably agree that GECC may bring suit against them or either of them for so long as any of the Fundamental Agreements are in effect or the Note is unpaid, in any court sitting in the State of New York, United States of America, and each of the Corporate Guarantors hereby irrevocably submits to the jurisdiction of such courts. Summons or other legal process, or both, in such suit may be served on either, and each of the Corporate Guarantors hereby agrees to appoint as its agent for service of process CT Corporation System, 1633 Broadway, New York, New York, (or any such other person in the City of New York as may be designated in writing by the Corporate Guarantors to GECC). Each of the Corporate Guarantors agrees to maintain an agent for service of process in the City of New York at all times during the term of this Guarantee. Each of the Corporate Guarantors will furnish GECC with letters of such person accepting such appointment. Final judgment in any such suit shall be conclusive and may be enforced in any jurisdiction within or without the United States of America, by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of such liability. Nothing herein precludes bringing any legal action in any other jurisdiction where either of the Corporate Guarantors or any of their respective assets are located.

 As set forth above, Toups entered into a Personal Guarantee consenting to New York jurisdiction and similar provisions were contained in the Corporate Guarantees. However, the Assumption Agreements which assumed a portion of the debt under the Loan Agreement, contained no such consent. Further, although the Assumption Agreements referred to certain terms and conditions of the Loan Agreement, there was no reference to Section 5.05 containing the Delta consent to a New York action.

 Courts have consistently held that forum selection clauses are prima facie valid and absent a showing that they result from fraud or overreaching, that they are unreasonable or unfair, or that enforcement would contravene a strong public policy of the forum, they will be upheld. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972); Bense v. Interstate Battery System of America, 683 F.2d 718, 721-22 (2d Cir. 1982); Richardson Greenshields Securities, Inc. v. Metz, 566 F. Supp. 131, 133 (S.D.N.Y. 1983). "In short, these clauses are enforceable unless they suffer from some sort of contract invalidity or unless they are unreasonable." Richardson Greenshields Securities, Inc. v. Metz, supra, at 133; see also Leasing Service Corporation v. Gary A. Beller, 84 Civ. 1239 (S.D.N.Y. Jan. 11, 1985) (Stewart, J.); Leasing Service Corporation v. Energy Construction Co., Inc., and Stamper Collins, 80 Civ. 2653 (S.D.N.Y. Dec. 3, 1980) (Sand, J.). There has been no showing of fraud or overreaching in connection with the consent clauses.

 However, the third and fourth causes of action against LBC and Banquet are based on the Assumption Agreements which, unlike the Loan Agreement and the Corporate Guarantees, do not contain written consent to New York jurisdiction nor do they incorporate, by reference to the Loan Agreement or Guarantees, consent to New York jurisdiction. Nonetheless, GECC argues that LBC and Buquet entered into the Assumption Agreements in consideration of the terms and conditions of the Loan Agreement and, therefore, because LBC and Buquet assumed the primary obligation which is contained in the Loan Agreement, they must have contemplated being sued in New York in the event that they defaulted on the obligations. Further, GECC contends that, in any event, the consents to personal jurisdiction which are contained in the Corporate Guarantees are sufficient to establish jurisdiction over LBC and Buquet since the Guarantees state that the Guarantors will submit to this court's jurisdiction with respect to the Guarantee and the obligations which are guaranteed. Since the Assumption Agreements assume a portion of the debt created by the Loan Agreement, the Corporate Guarantees also guarantee the obligations under the Assumption Agreements. Thus, GECC argues that LBC and Buquet have in fact consented to the jurisdiction of this court.

 GECC's argument is not convincing. Both the Loan Agreement and the Corporate Guarantees contain clear, written consents to jurisdiction in New York. As GECC concedes, there are no written consents to jurisdiction in New York in the Assumption Agreements and no consents have been incorporated into the Assumption Agreements. Further, the Assumption Agreements do refer to other terms and conditions which are contained in the Loan ...


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