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S-FER INT'L, INC. v. PALADION

December 4, 1995

S-FER INTERNATIONAL, INC. and MODA IMPORTS, INC., Plaintiffs, against PALADION PARTNERS, LTD., Defendant.


The opinion of the court was delivered by: KOELTL

 JOHN G. KOELTL, District Judge:

 The Complaint in this action seeks rescission of a commercial shopping center lease and guaranty and related damages based on fraud in the inducement. Plaintiffs S-Fer International, Inc. ("S-Fer") and its guarantor Moda Imports, Inc. ("Moda") filed this action on January 13, 1995 in New York State Supreme Court, New York County, and defendant Paladion Partners, Ltd. ("Paladion") removed the case to this Court. Paladion, the lessor, filed an action against S-Fer and Moda for past due rent and default of the lease on February 24, 1995 in the United States District Court for the Southern District of California (the "California action").

 Before the Court are two related motions. Paladion moves to transfer this action to the Southern District of California pursuant to 28 U.S.C. § 1404(a) . S-Fer *fn1" opposes the transfer and moves instead to enjoin the pending California action pending the completion of this case. For the reasons that follow, the motion to transfer is denied and the motion to enjoin the California action is granted.

 I.

 Paladion moves to transfer this case pursuant to 28 U.S.C. § 1404 (a) which provides:

 
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

 In ruling on a motion to transfer, the court should consider both the interest of the litigants and the public interest. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 91 L. Ed. 1055, 67 S. Ct. 839 (1947). The interest of the litigants includes plaintiff's initial choice of forum, the convenience of the parties and the witnesses, the relative ease of access to sources of proof, the availability of compulsory process for the attendance of witnesses, the location of relevant documents and other tangible evidence, questions as to the enforceability of a judgment if one is obtained, and "all other practical problems that make trial of a case easy, expeditious and inexpensive." Id., 330 U.S. at 508; see Red Bull Assocs. v. Best Western Int'l, Inc., 862 F.2d 963, 966-67 (2d Cir. 1988); Calavo Growers of California v. Generali Belgium, 632 F.2d 963, 966-67 (2d Cir. 1980) cert. denied, 449 U.S. 1084, 66 L. Ed. 2d 809, 101 S. Ct. 871 (1981); Elite Parfums, Ltd. v. Rivera, 872 F. Supp. 1269, 1271 (S.D.N.Y. 1995); Orix Credit Alliance, Inc. v. Brown, No. 93 Civ. 1019, 1994 U.S. Dist. LEXIS 10206, 1994 WL 392240, at *6 (S.D.N.Y. July 22, 1994); Arrow Elecs., Inc. v. Ducommun Inc., 724 F. Supp. 264, 265 (S.D.N.Y. 1989). The public interest includes administrative difficulties that follow from court congestion, a local interest in having localized controversies decided at home, and the appropriateness of having the trial of a diversity case in a forum that is at home with the state law that must govern the action. See Gulf Oil, 330 U.S. at 508-09. The party seeking the transfer bears the burden of demonstrating that the factors weigh in favor of a change in venue. See Factors Etc., Inc. v. Pro Arts Inc., 579 F.2d 215, 218 (2d Cir. 1978), cert. denied, 440 U.S. 908, 59 L. Ed. 2d 455, 99 S. Ct. 1215 (1979); Elite Parfums, 872 F. Supp. at 1271. The plaintiff's forum choice should not be disturbed unless the balance of the factors tips heavily in favor of a transfer. See Dwyer v. General Motors Corp., 853 F. Supp. 690 (S.D.N.Y. 1994); Nat'l Util. Serv., Inc. v. Queens Group, Inc., 857 F. Supp. 237 (S.D.N.Y. 1994).

 The parties agree that this action could have been brought properly in the Southern District of California originally. Jurisdiction over this action, as well as the California action, is proper based solely on diversity of citizenship of the parties. S-Fer and Moda are both New York corporations, Paladion is a California limited partnership with no New York partners, and the amount in controversy exceeds $ 50,000. See 28 U.S.C. § 1332(a)(1). Venue would be proper in the Southern District of California based on the location of the property at issue. See 28 U.S.C. § 1391(a)(2). Venue would also be proper in the Southern District of New York because a substantial part of the events giving rise to the claims occurred in New York. See 28 U.S.C. 1391(a)(2); see also Constitution Reinsurance Corp. v. Stonewall Ins. Co., 872 F. Supp. 1247, 1249 (S.D.N.Y. 1995) (venue may be proper in more than one district under 28 U.S.C. § 1391(a)(2)). The issue on this motion is the convenience of the parties and witnesses, and the interests of justice, rather than a claim that either California or New York would be an improper venue.

 Paladion argues that the lease that is the subject of the controversy contains a forum selection clause designating California as the appropriate venue for this action. S-Fer contends that the clause only covers actions for enforcement of the lease and that an action for fraudulent inducement directed at the validity of the lease does not fall within the meaning of the term "enforcement". The parties also present opposing views on the balance of the factors enumerated above, particularly the convenience of the parties and potential witnesses.

 Forum selection clauses in contracts are regularly enforced. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 113 L. Ed. 2d 622, 111 S. Ct. 1522 (1991); Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 101 L. Ed. 2d 22, 108 S. Ct. 2239 (1988); The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 7, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972); see also Effron v. Sun Line Cruises, Inc., 67 F.3d 7, 9-10 (2d Cir. 1995); Bense v. Interstate Battery System of America, 683 F.2d 718, 721-22 (2d Cir. 1982); Weiss v. Columbia Pictures Television, Inc., 801 F. Supp. 1276, 1282 (S.D.N.Y. 1992). A forum selection clause is not itself dispositive on a motion to transfer, and the district court should still examine the "public policy ramifications of transfer decisions." Red Bull, 862 F.2d at 967. Nevertheless, "the presence of a forum selection clause . . . will be a significant factor that figures centrally in the district court's [§ 1404 (a)] calculus." Stewart, 487 U.S. at 29.

 In this case, however, the dispute at issue is not covered by the terms of the contractual forum selection clause. The forum selection clause in the lease provides:

 
32.12 Governing Law; Forum; Construction. The laws of the State of California shall govern the validity, performance and enforcement of this Lease. Should either party institute legal suit or action for enforcement of any obligation contained herein, it is agreed that the venue of such suit or action shall be in San Diego County, California. Although the printed provisions of this Lease were drawn by Lessor, this Lease shall not be construed either for or against Lessor or Lessee, but this Lease shall be interpreted in accordance with the general tenor of the language in an effort to reach the result intended by the language.

 (Perrone Affirm., Ex. B (emphasis added).) The phrase "enforcement of any obligation contained herein" is a limited forum selection clause. It is narrower than the choice of law provision that immediately precedes it, which provides that California law shall govern the validity, performance and enforcement of the lease. It is also narrower than other forum selection clauses considered by courts in the context of § 1404 (a) transfer motions. See, e.g., Bense, 683 F.2d at 720 ("any suits or causes of action arising directly or indirectly from this Agreement"); Orix Credit Alliance, 1994 U.S. Dist. LEXIS 10206, *4, 1994 WL 392240, at *2 ("any matter arising hereunder"); First Interstate Leasing Serv. v. Sagge, 697 F. Supp. 744, 746-47 (S.D.N.Y. 1988) ("any suits or causes of action arising directly or indirectly from this Agreement"); see also Caton v. Leach Corp., 896 F.2d 939, 943 n.3 (5th Cir. 1990) ("In contrast to broad clauses which choose a particular state's law to 'govern, construe and enforce all of the rights and duties of the parties arising from or relating in any way to the subject matter of this contract,' the instant ...


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