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SUMMERS v. GUSS

February 26, 1998

JOHN M. SUMMERS, Plaintiff, -vs- PAMELA HALL GUSS, Defendant.


The opinion of the court was delivered by: SIRAGUSA

DECISION AND ORDER

 This is an action in which the plaintiff is suing to collect on a promissory note. Before the Court is a motion by the defendant to dismiss the complaint, based upon a forum selection clause which the defendant maintains provides for exclusive jurisdiction in the Mexican Federal District Courts. The defendant has moved in the alternative for summary judgment on the ground that the plaintiff has no interest in the note in question. For the reasons stated below, both applications are denied.

 MOTION TO DISMISS

 Between December of 1987 and June of 1991, the plaintiff and the defendant were principal co-owners of three Mexican corporations known collectively as "Royco." In June of 1991, the defendant purchased the plaintiff's interest in Royco. During the course of the negotiations leading up to the purchase, the defendant contacted the plaintiff numerous times in Rochester, New York, by telephone, letter and fax, and she met with the plaintiff in Rochester for approximately one week. Pursuant to a contract dated June 18, 1991, at closing in Mexico City the defendant was to pay the plaintiff $ 600,000 in cash. *fn1" In addition, the parties agreed that the defendant would sign a series of 174 promissory notes totaling approximately $ 2,783,118. *fn2" The 174 notes were not all the same, however. Fifty-five of the notes were signed by the defendant in her individual capacity and carried interest at 3%; sixty of the notes were signed by the defendant in her individual capacity and carried no interest; four of the notes were signed by the defendant on behalf of Profesionales En Tratamiento De Metales ("Protem") corporation and carried no interest; and the last fifty-five notes were signed by the defendant on behalf of Protem and carried 11.5% interest. All of these 174 notes were guaranteed by Mexican corporations. *fn3" The 115 notes signed by the defendant individually were guaranteed by Herramientas Metalicas de Corte ("Hermecor"), Corporacion Arrendadora de Maquinas Para Produccion ("Campro"), and Profesionales En Tratamiento De Metales ("Protem"). The 59 notes signed by the defendant on behalf of Protem corporation were guaranteed by Hermecor and Campro.

 The contract and the 174 promissory notes were written in Spanish. The contract contained a forum selection clause, that translated, states:

 
"For the interpretation and performance of the present contract, the parties submit themselves to the jurisdiction and competence of the Federal District Courts, renouncing any other jurisdiction that could apply by reason of their present or future domicile."

 Noticeably absent is any reference to Mexico. In her affidavit, the defendant alleges that the term "Federal District Courts" (los tribunales del Distrito Federal) refers to the Mexican Federal District Courts, not the United States Federal District Courts. The plaintiff does not dispute this. However, as it appears in the original, the term "Federal District Courts" is ambiguous.

 The 174 promissory notes each also contained a forum selection clause, that translated, states:

 
For all that is related with the interpretation, performance or judicial requirement for payment of the presently established obligations, the subscriber and the beneficiary expressly submit themselves to the jurisdiction of the competent courts of Mexico City, Federal District, expressly renouncing, therefore, any other jurisdiction that could apply by reason of their present or future domicile.

 At closing, the parties also signed an agreement relating to certain life insurance policies. The agreement provided that in the event of either of the parties' deaths, the proceeds of the life insurance policies would be used to pay off any remaining indebtedness. This life insurance agreement was written in English and contained a New York forum selection clause.

 Prior to closing, the defendant lacked $ 125,000 of the $ 600,000 in cash that she needed to close. The defendant contacted the plaintiff, and after some negotiations, the plaintiff agreed to loan her the money. At closing, the defendant in her individual capacity signed a loan agreement and one promissory note for the amount of $ 125,000, with no interest, which enabled her to close the deal. This loan agreement and note were written in English and did not contain a forum selection clause. The plaintiff alleges that the defendant has failed to pay as required, and he is suing in this Court to collect only on the aforementioned $ 125,000 note.

 The defendant has moved to dismiss the action, arguing that any action to collect on this note is subject to the forum selection clauses found in the contract and in the other 174 promissory notes. However, the Court disagrees.

 The defendant argues that the note at issue here was an essential part of the underlying sale of the business, and therefore should be governed by the forum selection clauses in the sale contract or the other 174 promissory notes. She relies essentially upon three cases to support this argument, none of which are controlling here. Giroir v. Mbank Dallas, N.A., 676 F. Supp. 915 (E.D. Ark. 1987) is factually distinct and involved the application of a Texas venue statute. Moreover, while not all of the documents in Giroir contained a Texas forum-selection clause, they all contained a Texas choice-of-law clause. Id. at 922. Next, Interfirst Bank Clifton v. Fernandez, 853 F.2d 292 (5th Cir. 1988) involved two documents, a loan agreement containing a choice-of-law clause and a security agreement with no such clause. In the case at bar, neither the loan agreement nor the promissory note contain a forum selection clause. Finally, Friedman v. World Transportation, Inc., 636 F. Supp. 685 (N.D. Ill., 1986) involved allegations of fraud in the inducement to enter a contract which did contain a forum selection clause. That was not a case where, as here, someone was suing to enforce an agreement which did not contain a forum selection clause. Accordingly, the Court does not find the defendant's case law to be persuasive.

 The United States Supreme Court has held that forum selection clauses in contracts "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the circumstances." M/S Bremen v. Zapata Off-Shore Co., 407 U.S.1, 10, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972). However, it is undisputed that the promissory note at issue here and the underlying loan agreement do not contain a forum selection clause. The loan agreement does refer to the stock purchase agreement, and in fact is contingent upon the successful completion of the stock purchase agreement, however it does not incorporate by reference the stock purchase agreement. Since the plaintiff's action relates only to the promissory note, the forum selection clauses in the stock purchase agreement and the ...


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