The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM OF DECISION AND ORDER
This contract case involves a simple question of whether the
forum selection clause agreed to by the parties, providing for
jurisdiction over any dispute to be in New York State Supreme
Court, Suffolk County, prevents the Defendants from removing the
case to this Court based on
diversity of citizenship under the provisions of
28 U.S.C. § 1332.
In December 1998, the Plaintiff, a New York corporation with
its principal place of business in Nassau County, New York,
entered into an agreement with the Defendants, a Pennsylvania
corporation and its principals, both residents of Pennsylvania,
concerning the licensing of a machine created by the Plaintiffs
and purchased by the Defendants. The agreement included a forum
selection clause reading as follows:
It is mutually agreed by all parties to this
Agreement, that the law of the State of New York
shall govern any and all issues of rights, remedies,
and construction of all terms, conditions,
definitions, both express and implied herein. The
Parties agree that jurisdiction of all legal disputes
shall be decided in the Supreme Court of the State of
New York, County of Suffolk and the parties hereby
agree to submit to the jurisdiction of that court,
agree to accept service of process by mail, and waive
any jurisdictional or venue defenses otherwise
According to the Plaintiff, the Defendants failed to pay the
sums required by the agreement, and on March 7, 2000, the
Plaintiff commenced an action for breach of contract, fraud, and
theft of trade secrets in New York State Supreme Court.
Curiously, however, the Plaintiff filed this action in Nassau
County Supreme Court, not Suffolk as set forth in the forum
selection clause of the contract set forth above.
On April 14, 2000, the Defendants removed the action to this
Court, citing diversity of the parties under 28 U.S.C. § 1332. On
May 15, 2000, the Plaintiff moved to remand the case, citing the
forum selection clause. The Defendants argue that the forum
selection clause does not prevent removal to federal court, and
further contend that the Plaintiff has waived the operation of
the clause by filing its action in the wrong county.
The issue of whether a forum selection clause prevents removal
of a case to federal court has attracted significant judicial
consideration. It has well-recognized that waiver of a party's
statutory right to remove a case to federal court must be clear
and unequivocal. Cronin v. Family Education Co., 105 F. Supp.2d 136,
137-38 (E.D.N.Y. 2000), citing John's Insulation v. Siska
Construction Co., Inc., 671 F. Supp. 289, 294 (S.D.N.Y. 1987).
Such a waiver has usually been found where the forum selection
clause identifies a particular court in which disputes will be
heard, see e.g. Karl Koch Erecting Co. v. New York Convention
Ctr. Dev. Corp., 838 F.2d 656, 659 (2d Cir. 1988) (clause
providing that no action shall be commenced "except in the
Supreme Court of the State of New York" operated as waiver),
John's Insulation, 671 F. Supp. at 294 (finding of waiver
supported by "specific designation of `the Supreme Court of the
State of New York' as the forum for commencement of actions"),
and not in clauses where courts are simply identified
geographically. Cronin, 105 F. Supp.2d at 138 (removal permitted
where clause invoked "jurisdiction of the courts located in the
City and State of New York"); City of New York v. Pullman Inc.,
477 F. Supp. 438, 442 (S.D.N.Y. 1979) (provision stating "only the
New York courts shall have jurisdiction over this contract" did
not preclude removal). See also Rogen v. Memry Corp.,
886 F. Supp. 393, 396 (S.D.N.Y. 1995) (explaining the difference).
The difference is significant since the Second Circuit has held
that "`[w]hen only jurisdiction is specified, the clause will
generally not be enforced without some further language
indicating the parties' intent to make jurisdiction exclusive,'
while `if mandatory venue language is employed, the clause will
be enforced.'" John Boutari & Son, Wines and Spirits, S.A. v.
Attiki, 22 F.3d 51, 52-53 (2d Cir. 1994). In other words, if the
parties' agreement stipulates that a state court shall be the
venue for a dispute, the defendant's right to remove the case
to federal court would be deemed waived; removal would
necessarily move the case to a venue other than the one in the
agreement. However, if the agreement only establishes that a
state court shall have jurisdiction over a dispute, the right
to remove the case would not be affected; personal jurisdiction
over a defendant is an issue distinct from the question of where
a trial will be held.
Because there is an ambiguity in the clause, the Court must
interpret it against the drafter. Albany Savings Bank v.
Halpin, 117 F.3d 669, 674 (2d Cir. 1997); Pullman, 477 F. Supp.
at 443. In this case, it is undisputed that the agreement was
drafted by the Plaintiff. Accordingly, the Court interprets the
ambiguous forum selection clause to only establishes that New
York State Supreme Court shall have jurisdiction over this
dispute, not to require that it be the venue of the action. Such
a conclusion is justified by the facts of this case: the
Defendants are residents of the state of Pennsylvania, and there
is no evidence to suggest that they would otherwise be subject to
the personal jurisdiction of courts in New York. Nevertheless,
nothing in the clause suggests that this jurisdiction is intended
to be exclusive. Accord Boutari, 22 F.3d at 52 (clause
declaring that Greek courts will have jurisdiction over "any
dispute" did not provide for exclusive jurisdiction in Greece).
In any event, even if the forum selection clause could be read
as the Plaintiff suggests, the Court would nevertheless deny the
Plaintiff's motion to remand on the grounds that the Plaintiff
has waived its right to insist on the designated forum. In New
York, when a party disregards a forum selection clause and sues
on a contract in an unauthorized forum, it waives the forum
selection clause on the claims it pursues. Pirolo Brothers, Inc.
v. Angelo Maffei and Figli, SAS, 1989 WL 20945 (S.D.N.Y. 1989);
see also In Re Rationis Enterprises, Inc., 1999 WL 6364
(S.D.N.Y. 1999) ("a forum selection clause will be deemed waived
if the party invoking it has taken actions inconsistent with
A court will enforce a forum selection clause unless doing so
would be unreasonable or unjust. Jones v. Weibrecht,
901 F.2d 17, 18 (2d Cir. 1990), citing Bremen v. Zapata OffShore Co.,
407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). Here,
enforcing the term of the contract by remanding the case to
Nassau County would be unjust to the Defendants who bargained for
the right to be sued only in Supreme Court, Suffolk County.
Because the remedy of remand sought by the Plaintiff would not
have the effect of bringing about the situation the parties
apparently bargained for, the Plaintiff's motion to remand is
DENIED. The parties are directed to ...