United States District Court, Southern District of New York
November 22, 1991
GENERALE BANK, NEW YORK BRANCH, PLAINTIFF,
MAHMOOD CHOUDHURY, DEFENDANT.
The opinion of the court was delivered by: Freeh, District Judge.
OPINION AND ORDER
On October 9, 1991, this Court granted defendant Mahmood
Choudhury's ("Choudhury") motion to dismiss this action for
lack of personal jurisdiction. 776 F. Supp. 123. Pursuant to
Local Rule 3(j), plaintiff Generale Bank ("Generale") moved to
reargue the matter, which motion was granted on October 28,
1991. The Court having reviewed the parties' supplemental
briefs and the recent cases of the United States Supreme
Court, defendant's motion to dismiss for lack of personal
jurisdiction is now denied.
The facts of this case were set out in the Court's October
9th opinion, and will not be repeated here. Suffice it to say
that defendant Choudhury, a Pennsylvania resident, signed two
promissory notes which obligate him to pay some $90,000 to the
lender or its assignee, Generale. When Choudhury defaulted on
those notes, Generale brought this action. Choudhury moved to
dismiss for lack of personal jurisdiction on the grounds that
his contacts with New York State were insufficient to warrant
an exercise of personal jurisdiction.
In its original opinion, the Court found that payments of
installments due under a promissory note, without more, were
insufficient contacts with the state to establish personal
jurisdiction in the New York courts. (October 9, 1991 Order
and Opinion at 4). The Court further found that, because the
forum selection clauses contained in the numerous documents
signed by Choudhury did not appear to be "freely negotiated,"
those clauses were not binding. See Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 n. 14, 105 S.Ct. 2174, 2182, 85
L.Ed.2d 528 (1985) ("Where . . . forum-selection clauses have
been obtained through `freely negotiated' agreements and are
not `unreasonable or unjust,' their enforcement does not offend
due process.") (quoting The Bremen v. Zapata Off-Shore Co.,
407 U.S. 1, 15, 92 S.Ct. 1907, 1916, 32 L.Ed.2d 513 (1972)).
Accordingly, Choudhury's motion to dismiss was granted.
In its motion to reargue, Generale relies on Carnival Cruise
Lines, Inc. v. Shute, ___ U.S. ___, 111 S.Ct. 1522, 113 L.Ed.2d
622 (1991), a recent Supreme Court case which was omitted from
its prior pleadings. Because Carnival impacts the cases upon
which the Court relied in its earlier decision, that decision
must be reconsidered and now reversed.
In Carnival the Supreme Court addressed the forum-selection
clause contained in passenger tickets issued by the defendant
cruise line. Plaintiff Eulala Shute had been injured while a
on one of the defendant's ships, and filed an action against
the cruise line in the United States District Court for the
Western District of Washington. 111 S.Ct. at 1524. However, on
the lower left hand corner of the ticket, the following
It is agreed by and between the passenger and
the Carrier that all disputes and matters
whatsoever arising under, in connection with or
incident to this Contract shall be litigated, if
at all, in and before a Court located in the
State of Florida, U.S.A., to the exclusion of the
Courts of any other state or country.
Based on this language, the defendant moved for summary
judgment in the Washington action. Id.
The District Court granted the defendant's motion on the
grounds that the defendant had insufficient contacts with the
State of Washington to support an exercise of personal
jurisdiction. Id. The Ninth Circuit Court of Appeals reversed,
finding sufficient contacts to justify continuing the case in
Washington. Id. at 1525. The Court of Appeals also found that
the forum selection clause was not binding because that clause
had not been freely negotiated and because the plaintiffs were
incapable of pursuing the litigation in Florida. Id.
The Supreme Court reversed on the forum selection issue. The
Court specifically rejected the Ninth Circuit's finding that
"a nonnegotiated forum-selection clause in a form ticket
contract is never enforceable simply because it is not the
subject of bargaining." 111 S.Ct. at 1527. Rather, the Court
found that such clauses must be reviewed for "fundamental
fairness." Id. at 1528. Factors to be considered in determining
whether a particular forum-selection clause is unfair include a
"bad-faith motive" on the part of the party seeking to enforce
that clause, or evidence that one party "obtained [the other
party's] accession to the forum clause by fraud or
Applying these factors to this case, it is clear that
Choudhury is obligated by the forum-selection clause contained
in the promissory note. That clause states as follows:
This Note shall be construed in accordance with
and governed by the laws of the State of New York
. . . For any dispute arising under this Note or
in connection herewith, the Payor hereby
irrevocably submits to, consents to, and waives
any objection to, the jurisdiction of the courts
of the State of New York or the United States
Courts for the Southern District of New York.
[Reilly Aff., Ex. A at 3].
Choudhury claims that he should not be forced to litigate
this action in New York because he had no notice of the
forum-selection clause and because he was "fraudulently
induced" to enter into the transaction. In this respect, this
case is arguably distinguishable from Carnival, where the
plaintiffs conceded that they had notice of the clause at
issue. 111 S.Ct. at 1525, 1528. The notice "concession" upon
which the Supreme Court relied, however, was merely a statement
by the plaintiffs that "the forum selection clause was
reasonably communicated to [them]" in the form passenger ticket
that they had purchased. Id. at 1525.
Choudhury does not dispute that he signed the promissory
notes, nor that he could have been made aware of the
forum-selection clause had he read those documents. Choudhury
merely states that he was advised by a broker that he was
purchasing a limited partnership interest for cash, with no
further obligations, and that he did not review the
forum-selection provision of the notes. (Choudhury Aff. ¶¶ 3,
6). Given that the forum-selection clause was "reasonably
communicated" to Choudhury through delivery of the promissory
notes, which he signed,*fn1 Choudhury had constructive notice
of that clause.*fn2
Choudhury also argues that proceeding with this case in New
York would be fundamentally unfair because the broker who
allegedly induced Choudhury into this transaction is a key
defense witness who is "not amenable to the Subpoena process"
of this Court. Whether or not the broker can be subpoenaed to
appear at a trial in New York, Choudhury has presented no
evidence suggesting that the broker cannot be deposed as a
third-party witness, or that such a deposition could not be
introduced at trial.*fn3 Under these circumstances, Choudhury
would not be denied "his day in Court" if forced to proceed
here. See Carnival, 111 S.Ct. at 1528 (rejecting Court of
Appeals' finding that the plaintiffs were incapable of trying
case in Florida). In the absence of any showing that the
forum-selection clause was inserted into the promissory notes
in bad faith,*fn4 that clause will be deemed binding.
For the foregoing reasons, Choudhury's motion to dismiss for
lack of personal jurisdiction is denied. Generale's
cross-motion for summary judgment will be considered
separately. The parties are ordered to appear for oral
argument on the latter motion on December 16, 1991 at 9:00 a.m.