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AMERICAN HOME ASSURANCE COMPANY v. MARSEILLES

June 1, 2004.

AMERICAN HOME ASSURANCE COMPANY a/s/o STANEEY DOOR SYSTEMS, Plaintiff, -against- M/V HANJIN MARSEILLES, her engines, boilers, tackles, etc., VANAVANA SHIPPING, SENATOR EINES & EXPEDITORS INTERNATIONAL OF WASHINGTON, INC., Defendants


The opinion of the court was delivered by: ANDREW PECK, Magistrate Judge

REPORT AND RECOMMENDATION

Presently before the Court is defendant Senator Lines' motion to dismiss on the basis of a forum selection clause in the Bill of Lading between Senator Lines and Expediters International. (Dkt. Nos. 12 & 13.)

For the reasons discussed below, Senator Lines' motion to dismiss should be GRANTED as against co-defendant Expediters and as against plaintiff American Home Assurance ("AHA"), the subrogated cargo underwriter of Stanley Door Systems.

  FACTS

  The facts are not in dispute. On or before November 21, 2002, Stanley delivered to defendant Expeditors a shipment of 260 boxes of goods. (Dkt. No. 15: McDermott Decl. ¶ 4.) Expeditors and Stanley were parties to bill of lading number 6430071357, which does not contain a forum selection clause. (McDermott Decl. ¶ 5 & Ex. 1: Bill of Eading 6430071357.) Expeditors subcontracted with defendant Senator Eines to carry the shipment; Expeditors and Senator Eines were parties to bill of lading number SENUPUSD05802105, which contains a forum selection clause stating: "Any disputes arising under and in connection with this Sea Waybill shall be governed by German Law and determined by the courts of Bremen." (McDermott Decl. ¶ 5 & Ex. 2: Bill of Eading number SENUPUSD05802105.) AHA alleges that during shipment some of Stanley's goods were lost at sea through the fault of defendants, causing damages of $58,768.60. (Dkt. No. 1: Compl. ¶ 9 & Sched. A.) AHA brought suit in this Court against, inter alia. Senator Eines and Expeditors. (Compl.) Expeditors' answer asserted a cross-claim against Senator Eines for indemnity and/or contribution. (Dkt. No. 8: Expeditors Answer ¶¶ 23-24.)

 Senator Lines' Motion to Dismiss

  On January 22, 2004, Senator Eines filed a motion to dismiss AHA's complaint and defendant Expeditors' cross-claim on the basis of a Bremen, Germany forum selection clause contained in the bill of lading between Expeditors and Senator Eines. (Dkt. Nos. 12 & 13.) Senator Eines argues that: (1) foreign forum selection clauses are presumptively enforceable (Dkt. No. 13: Senator Eines Br. at 2); (2) courts routinely enforce German forum clauses in bills of lading (Id. at 4); and (3) Expeditors' cross-claim is subject to the forum selection clause, even for a tort claim, because they are a party to the waybill (Id. at 5). AHA opposed the motion (Dkt. Nos. 15 & 16), and Expeditors joined in AHA's opposition to the motion to dismiss via a letter to Judge Daniels. (Dkt. No. 17: Senator Lines Reply Br., Att. Expeditors 2/13/04 Eetter.)

  ANALYSIS

  I. PRINCIPLES GOVERNING THE VALIDITY OF FORUM SELECTION CLAUSES UNDER FEDERAL LAW

  A. Forum Selection Clauses Generally Are Upheld, Including in Contracts Governed by COGSA

  The Supreme Court has repeatedly upheld the validity of forum selection clauses between contracting parties. E.g., Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 589-95, 111 S.Ct. 1522, 1525-28 (1991); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n.14, 105S. Ct. 2174, 2182 n.14 (1985); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 8-18, 92 S.Ct. 1907, 1912-17 (1972).*fn1 In Bremen, the Supreme Court held that forum selection clauses "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. at 10, 92 S.Ct. at 1913. "[A]bsent some compelling and countervailing reason it should be honored by the parties and enforced by the courts." Id. at 12, 92 S.Ct. at 1914.

  In Carnival Cruise Lines, the Supreme Court "refine[d]" its Bremen analysis and extended the validity of forum selection clauses to include those not the subject of negotiation and included in a form contract between a business and a consumer, so long as the parties had notice of the clause. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 593, 111 S.Ct. at 1527. The Supreme Court explained that there are valid business reasons for including a reasonable forum selection clause in a form contract that is not the subject of negotiation. Id. at 593-94, 111 S.Ct. at 1527. The Supreme Court emphasized that "forum-selection clauses contained in form . . . contracts are subject to judicial scrutiny for fundamental fairness. . . ." Id. at 595, 111 S.Ct. at 1528. The Supreme Court noted, however, that the forum state chosen was not a "`remote alien forum'" but one where one of the parties was located. Id. at 594, 111 S.Ct. at 1528. Therefore, "because respondents do not claim lack of notice of the forum clause, . . . they have not satisfied the `heavy burden of proof,' . . . required to set aside the clause on the grounds of inconvenience." Id. at 595, 111 S.Ct. at 1528; see also, e.g., New Moon Shipping Co. v. Man B & W Diesel AG, 121 F.3d 24, 32 (2d Cir. 1997) (In order to escape a forum selection clause, a party must show "`that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court.'"); Ainsley Skin Care of New York. Inc. v. Elizabeth Grady Face First. Inc., 1997 WL 742526 at *2; National School Reporting Servs., Inc. v. National Schools of Cal., Ltd., 924 F. Supp. 21, 24 (S.D.N.Y. 1996) ("Forum selection clauses are regularly enforced. . . . The Second Circuit has consistently held that, in cases brought under diversity jurisdiction, a forum selection clause shall be upheld, unless it can be shown that `enforcement would be unreasonable and unjust or that the clause was obtained through fraud or over reaching.'"); Bison Pulp & Paper Ltd. v. M/V Pergamos, 89 Civ. 1392, 1995 WL 880775 at *7-14 & n.12 (S.D.N.Y. Nov. 29, 1995); Elite Parfums, Ltd. v. Rivera, 872 F. Supp. 1269, 1271-72 (S.D.N.Y. 1995) ("The Second Circuit has a `strong policy' of enforcing forum selection agreements."): Orix Credit Alliance. Inc. v. Bell Realty. Inc., 93 Civ. 4949, 1994 WL 86394 at *2 (S.D.N.Y. Mar. 16, 1994) ("In diversity cases, [forum selection clauses] must be enforced unless it is clear `that enforcement would be unreasonable and unjust, or that the clause was obtained through fraud or overreaching.'"): Falconwood Fin. Corp. v. Griffin. 838 F. Supp. 836, 838-41 (S.D.N.Y. 1993) ("Settled law permits parties to a contract to select in advance the forum for litigation of disputes that arise under the contract.").

  The Carriage of Goods by Sea Act("COGSA"), 46 U.S.C. § 1300-15, applies to bills of lading for shipments to or from a U.S. port in foreign trade. Like other contracts, mandatory forum selection clauses in maritime contracts governed by COGSA are upheld between the parties by federal courts. In Vimar Seguros Y Reaseguros. S.A. v. M/V Sky Reefer. 515 U.S. 528, 115 S.Ct. 2322 (1995), the Supreme Court held that foreign arbitration clauses in bills of lading were not invalid under COGSA. Since Sky Reefer, courts have consistently held that forum selection clauses (including foreign arbitration clauses) in bills of lading are valid under COGSA. See, e.g., Kukje Hwaiae Ins. Co. v. M/V Hyundai Liberty. 294 F.3d 1171, 1175 (9th Cir. 2002), pet. for cert. filed. No. 02-81, 71 USLW 3400 (Nov. 22, 2002); Fireman's Fund Ins. Co. v. M.V. DSR Atlantic. 131 F.3d 1336, 1339 (9th Cir. 1997), cert. denied. 525 U.S. 921, 119 S.Ct. 275 (1998); Mitsui & Co. (U.S.A.). Inc. v. Mira M/V. 111 F.3d 33, 36 (5th Cir. 1997); Glyphics Media. Inc. v. M.V. Conti Singapore. 02 Civ. 4398, 2003 WL 1484145 at *4-6 (S.D.N.Y. Mar. 21, 2003); Far Eastern Antique Arts v. M/V Cho Yang Success. 01 Civ. 8375, 2002 WL 1313308 at *2 (S.D.N.Y. June 14, 2002); Central National-Gottesman. Inc. v. M.V. Gertrude Oldendorff. 204 F. Supp.2d 675, 679 (S.D.N.Y. 2002); Commercial Union Ins. Co. v. M.V. ...


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