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November 22, 1991


The opinion of the court was delivered by: Freeh, District Judge.


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 passenger 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 statement appeared:

    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 overreaching." Id.

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 ...

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