The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.
Defendants NEC Information Systems, Inc. (NEC Information) and NEC
Technologies, Inc. (NEC Technologies) move (a) to dismiss the complaint
pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure, and,
(b) alternatively, to transfer the action to the District of
Massachusetts, pursuant to 28 U.S.C. § 1406(a) or for the convenience
of the parties and witnesses, and in the interest of justice pursuant to
28 U.S.C. § 1404(a).
Plaintiff Mibar Enterprises, Ltd. (Mibar) brings this action based on
breach of the terms of an October 28, 1988 agreement to extend for one
year the terms of the Value Added Reseller Agreement dated September 27,
1987 (1987 VAR Agreement) between plaintiff and NEC Information. Pursuant
to a merger agreement with another company, NEC Information dissolved and
NEC Technologies, a Delaware corporation, was formed and has been its
successor corporation since November 1989. No issue is raised at this
time with respect to NEC Technologies' liability for any breach of NEC
Information's contracts with plaintiff.
The 1987 VAR Agreement, under which plaintiff was appointed a
non-exclusive authorized value added reseller of NEC Information's
computer hardware and software products, provided that any action brought
against defendant NEC Information would be brought in the appropriate
federal or state court in Massachusetts. The extension agreement of
October 28, 1988 extended retroactively the terms of the 1987 VAR
Agreement (1988 VAR Extension Agreement) for an additional year, and, in
addition to terms pertaining principally to delinquent payment
obligations of plaintiff, contained the following provision relating to
This Agreement and all questions of interpretation,
construction and enforcement hereof shall be governed
by the laws of the Commonwealth of Massachusetts. It
is expressly agreed by MIBAR that this Agreement has
been negotiated and accepted by NECIS in Massachusetts
and MIBAR consents to jurisdiction of any dispute
arising under this Agreement by any state or federal
district court located within Massachusetts. MIBAR
further waives any objection that it may have with
respect to venue or forum non conveniens for any
action that may be filed in said jurisdiction to
enforce the terms of this Agreement. (1988 VAR
Extension Agreement, ¶ IX.(B))
Notwithstanding this provision, plaintiff brought this action in the
New York State Supreme Court, New York County. It was removed to this
Court on December 8, 1989.
Defendants promptly filed this motion. Thereafter, settlement
discussions were initiated but failed.
The original 1987 VAR Agreement contained a different forum selection
clause. Under that agreement, NEC Information was required to bring suit
in a state or federal court with jurisdiction in plaintiff's place of
business, and plaintiff was required to bring suit against NEC
Information in a state or federal court in Massachusetts. Thus,
plaintiff's initiation of this action in New York would violate the forum
selection clause in the 1987 VAR Agreement. It would not, however, be an
express violation of the consent to a Massachusetts forum provision
contained in the 1988 VAR Extension Agreement. No express provision in
the 1988 VAR Extension Agreement requires plaintiff to sue in
Plaintiff, in opposition to the motion to transfer, relies on its
rejection of the October 27, 1988 draft extension agreement submitted by
plaintiff to defendants' counsel and on correspondence relating thereto.
That draft agreement conferred on NEC Information an express right to
remove any suit filed by plaintiff to a state or
federal court in Massachusetts. Counsel for plaintiff, by letter dated
October 28, 1988 rejected this provision, along with certain other
language pertaining to choice of forum. There were subsequent
negotiations between counsel over the language of this provision. The
final agreement was dated October 28, 1988, apparently drawn by
defendants' counsel. The agreement was executed by defendant NEC
Information on October 28, 1988 and by plaintiff on October 31, 1988.
In view of this negotiating history, the Court finds that the forum
selection clause in the 1987 VAR Agreement was intended to be modified by
the 1988 VAR Extension Agreement, and that plaintiff was entitled to
bring suit in New York.
Such entitlement does not, however, dispose of the motion to transfer
under 28 U.S.C. § 1404(a).
It is the general rule that plaintiff's choice of forum should not be
disturbed. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839,
843, 91 L.Ed. 1055(1947). In weighing the convenience of the parties and
witnesses in this case, the Court notes that plaintiff claims numerous
witnesses it intends to call for trial, all of whom are residents in the
New York metropolitan area. Although plaintiff's proof of liability
principally involves acts in Massachusetts as to which defendants'
witnesses and records will be heavily involved, plaintiff also seeks to
corroborate its claims of damages through testimony of customer
witnesses. These witnesses are non-party witnesses and would not be
subject to subpoena for trial in Massachusetts. Defendants' witnesses, in
contrast, are all company witnesses living in Massachusetts.
The Court is not unmindful of the likelihood that this action was
initiated to forestall an action to collect sums due and owing for goods
sold and delivered or to collect an unrepaid line of credit. Nor is the
Court unmindful of the fact that Massachusetts law required to be applied
by the provisions of the contract is more easily applied by judges
sitting in Massachusetts. Nevertheless, the laws of Massachusetts and New
York have a similarity that makes this factor not of great weight.
On balance, the lack of compulsory process to compel the attendance at
trial of non-party witnesses causes the Court to find the requirements of
28 U.S.C. § 1404(a) are best met by denying defendants' motions and
holding the matter for trial in this District. ...