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STONEHENGE, LTD. v. GARCIA

January 13, 1998

STONEHENGE, LTD., Plaintiff, against DEBORAH KOONS GARCIA and DAVID HELLMAN, CO-EXECUTORS OF THE ESTATE OF JEROME J. GARCIA, GRATEFUL DEAD MERCHANDISING, INC., and PETER McQUAID, Defendants.


The opinion of the court was delivered by: SCHEINDLIN

 SHIRA A. SCHEINDLIN, U.S.D.J.:

 Plaintiff Stonehenge Ltd. filed a Complaint on September 5, 1997, seeking a declaratory judgment that it is not in breach of its Licensing Agreement with Nora Sage, allegedly the agent of the defendant Estate of Jerome J. Garcia ("the Estate"). The Complaint also seeks damages for tortious interference with contractual relations, intentional tortious interference with prospective economic advantage, breach of implied covenant of good faith, and injury to business reputation. The Estate, now joined by the other defendants, moved to transfer the action pursuant to 28 U.S.C. § 1404, or, in the alternative, to dismiss the Complaint or stay the action pending a petition to compel arbitration. For the reasons stated below, the defendants' motion to transfer is granted. Because the action will be transferred to the Northern District of California, I will not address the defendants' motions to dismiss or stay.

 I. Facts

 Plaintiff is a New York corporation engaged in the design and sale of clothing accessories, including neckwear. Defendant Grateful Dead Merchandising, Inc. ("GDM") is a California corporation also engaged in the sale of neckwear. Defendant Peter McQuaid, the Chief Executive Officer of GDM, is a resident of California, as are Deborah Koons Garcia and David Hellman, co-executors of the Estate. See Complaint for Declaratory Relief, Tortious Interference with Contractual Relations and Prospective Economic Advantage; Injury to Business Reputation ("Cmplt.") at PP 1-4.

 In 1992, plaintiff entered into a Licensing Agreement ("the Agreement") with Nora Sage, a resident of Oregon who does business as "The Art Peddler" ("The Art Peddler"). See Cmplt. at P 14; Plaintiff Stonehenge Ltd.'s Memorandum of Law ("Plaintiff's Brief") at 4-5. The Agreement authorized plaintiff to use artwork created by Jerome Garcia and supplied by The Art Peddler for use in the plaintiff's neckwear designs. See Estate of Jerome J. Garcia's Notice of Motion ("Notice of Motion") at Ex. A, P C. According to plaintiff, The Art Peddler acted as Garcia's agent -- and after Garcia's death in 1995, as the Estate's agent -- with respect to the Agreement. See Cmplt. at P 17. The Agreement was renewed in 1993 and 1996, and will expire by its terms on October 31, 1998. See id. at PP 15, 17. It contains a clause indicating that any controversy or claim arising out of it is to be settled by arbitration in San Raphael, California. See Notice of Motion at Ex. A, P 9.

 According to plaintiff, it discovered in November, 1996 that the Estate had appointed McQuaid as its "licensing coordinator." It further learned that McQuaid had used this position to distribute, through GDM and a company called Mulberry Neckwear, a line of neckwear similar to the Garcia line sold by plaintiff. When plaintiff complained of this conduct, the Estate allegedly threatened to terminate the Agreement. See id. at PP 18, 24.

 In this action, plaintiff seeks a declaratory judgment that the Agreement remains binding on the Estate as well as tort and contract damages based on the GDM's distribution of the Mulberry Neckwear line and the Estate's approval thereof. See id. at 35, 37, 41, 46, 50.

 II. Discussion

 Section 1404(a) 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." Plaintiff concedes that this action could have been brought in the Northern District of California; therefore, the only issue is whether suit there would be more convenient and fair than suit here. Determination of this question lies within my discretion and is decided with reference to a variety of factors. See In re Cuyahoga Equipment Corp., 980 F.2d 110, 117 (2d Cir. 1992) (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 101 L. Ed. 2d 22, 108 S. Ct. 2239 (1988)). The factors I consider relevant in this case are the forum-selection clause contained in the Agreement, the residence of likely witnesses, the site of the operative facts, and plaintiff's choice of forum.

 A. Forum Selection Clause

 The Supreme Court has held that "the presence of a forum-selection clause . . . [is] a significant factor that figures centrally" in a court's decision to grant or deny a § 1404 transfer motion. Stewart, 487 U.S. 22, 29, 101 L. Ed. 2d 22, 108 S. Ct. 2239 (1988). The general rule is that forum-selection clauses are regularly enforced. See National Sch. Reporting Servs., Inc. v. National Sch. Ltd., 924 F. Supp. 21, 23 (S.D.N.Y. 1996); Elite Parfums, Ltd. v. Rivera, 872 F. Supp. 1269, 1271 (S.D.N.Y. 1995). A party resisting transfer to a forum designated in its contract must demonstrate "exceptional facts" indicating that transfer would be inappropriate. Weiss v. Columbia Pictures Television, 801 F. Supp. 1276, 1279 (S.D.N.Y. 1992).

 Here, Counts I, II, and IV of the Complaint are premised on rights allegedly arising from the Agreement. As noted above, the Agreement contains a clause indicating that any controversy or claim arising out of it is to be settled by arbitration in San Raphael, a city located in the Northern District of California. At oral argument, plaintiff asserted that the Estate could not enforce this clause, as it was not directly a party to the contract. It is certainly true that, on its face, the Agreement appears to be between plaintiff and The Art Peddler. However, plaintiff repeatedly alleges in its Complaint that The Art Peddler is merely the Estate's agent with respect to the Agreement. See Cmplt. at PP 17, 32, 37, 45. This allegation, of course, is crucial to plaintiff's declaratory judgment claim: If the Estate were not bound to the terms of the Agreement, there would be little sense to the plaintiff's allegation that the Estate has wrongfully threatened to terminate it. See Cmplt. at PP 31-32. In short, therefore, plaintiff's position is that while the ...


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