States District Court for the District of Maryland pursuant to
28 U.S.C. § 1404(a).
The first issue in this case is whether the instant forum
selection clause is permissive or mandatory. In Seward v.
Devine, 888 F.2d 957 (2d Cir. 1989), the Court of Appeals was
faced with a forum selection clause in a purchase agreement
which stated that "the New York State Supreme Court, Delaware
County, shall have jurisdiction over all litigation which shall
arise out of any disputes or disagreements between the parties
concerning a breach or interpretation of any of the terms of
the agreement." Id. at 962. The Second Circuit held that this
language mandated that the suit be remanded to the New York
State Supreme Court, Delaware County. The forum selection
clause in the instant case is virtually identical to the clause
that the Second Circuit discussed in Seward, and therefore the
instant clause requires that this case be remanded to the
Supreme Court of the State of New York, New York County.*fn1
Defendants contend that Seward is distinguishable from the
instant case because the Court in Seward was interpreting three
separate forum selection clauses in three related agreements,
and two of the clauses specified that venue as well as
jurisdiction was to lie in the New York State Supreme Court,
Delaware County. The defendants apparently maintain that had
the Second Circuit in Seward been faced, as this court is faced
in the instant case, with only a provision which stated that
"jurisdiction shall be in the New York State Supreme Court,"
the Second Circuit would have held that provision permissive.
However, nowhere in the Seward opinion does the Court of
Appeals indicate that the specification of venue in the other
two agreements informed the court as to the interpretation of
the forum selection clause that did not specify venue. To the
contrary, the Second Circuit indicated that, standing alone,
the forum selection provision in the purchase agreement had the
same meaning as the forum selection provisions in the two other
agreements. See Seward, 888 F.2d at 962 ("We . . . note that
these agreements plainly provided that venue was to be solely
to the state court in Delaware County. The Farm Purchase
Agreement stated that `the New York State Supreme Court,
Delaware County shall have jurisdiction. . . .' Similarly, both
the Joint Venture and Limited Partnership Agreements provided
for `venue and jurisdiction' in Delaware County. . . ."
(emphasis added) (citations omitted)); see also General
Electric Co. v. Southwest Silicone Co., 1991 WL 16022, *5
(N.D.N.Y. 1991) ("When a specific court is identified as being
the court with jurisdiction over all litigation arising out of
disputes concerning a breach or interpretation of any term of
the contract, all litigation must be brought in that court.")
(citing Seward at 962); ASM Communications, Inc. v. Allen,
656 F. Supp. 838, 839-40 (S.D.N.Y. 1987) (use of the word "shall" in
a forum selection clause makes the clause mandatory).
Defendants point to First National City Bank v. Nanz, Inc.,
437 F. Supp. 184 (S.D.N.Y. 1975) to support their position that
the forum selection clause in the instant case is permissive.
In Nanz, the court held permissive a contractual provision
which stated that "[t]he Supreme Court of the State of New
York, within any county of the city of New York, shall have
jurisdiction of any dispute between the parties." While Nanz is
directly on point, the Second Circuit's decision in Seward has
implicitly overruled Nanz's holding in this area.
Having decided that the forum selection clause in the instant
case is mandatory, we turn next to the issue of whether this
court should enforce the clause. The Second Circuit
has held that when a court in a diversity case is faced with a
mandatory forum selection clause that dictates that an action
proceed in state rather than federal court, the court "should
enforce [the] contractual forum selection clause unless it is
clearly shown that enforcement would be unreasonable and unjust
or that the clause was obtained through fraud or overreaching."
Jones v. Weibrecht, 901 F.2d 17, 18, 19 (2d Cir. 1990); accord
Karl Koch Erecting Co. v. New York Convention Center
Development Corp., 838 F.2d 656, 659 (2d Cir. 1988). In the
instant case, defendants have failed to make such a showing,
and therefore this case must be remanded to the New York State
Supreme Court, New York County.
Because we hold that the instant forum selection clause
mandates that this case be remanded to the New York State
Supreme Court, New York County, the defendant's cross-motion to
transfer this action to the United States District Court for
the District of Maryland is denied. Finally, plaintiff's motion
for Rule 11 sanctions is denied.
Plaintiff's motion to remand this case to the New York State
Supreme Court, New York County is granted, his motion for Rule
11 sanctions is denied, and defendants' cross-motion to
transfer this case to the United States District Court for the
District of Maryland is denied.