United States District Court, S.D. New York
September 16, 2004.
STARAD, INC., Plaintiff,
LAWSON SOFTWARE, INC., LAWSON SOFTWARE USA, INC., WINTHROP RESOURCES CORPORATION, GENERAL ELECTRIC CAPITAL CORPORATION and WELLS FARGO EQUIPMENT FINANCE, INC., Defendants.
The opinion of the court was delivered by: GERARD E. LYNCH, District Judge
OPINION AND ORDER
Plaintiff Starad, Inc., acquired software from defendants
Lawson Software, Inc., and Lawson Software USA, Inc.
(collectively, "Lawson"), under a lease financing arrangement
with defendant Winthrop Resources Corporation ("Winthrop"), which
was later assigned to another financial institution, General Electric Capital
Corporation.*fn1 The software evidently did not perform to
Starad's expectations, and Starad accordingly brought this suit,
alleging breach of contract, fraud, and similar causes of action.
Defendants move to dismiss for improper venue, citing forum
selection clauses in the respective agreements made by Starad
with Lawson and Winthrop. The motion will be granted.
The agreement between Lawson and Starad contains a provision
designating Minnesota as the exclusive forum for disputes between
the parties. According to paragraph 19 of the agreement:
Any action, to confirm an arbitration award or any
other legal action related to this Agreement, the
Products, or any other dispute between [Starad] and
Lawson, shall be instituted only in a federal or
state court in the State of Minnesota, USA, and
[Starad] shall submit to personal jurisdiction of
these courts in any such legal action.
(Houlihan Decl. Ex. B, ¶ 19; emphasis added.) Similarly, if
slightly less tightly drafted, the agreement between Starad and
Winthrop provided that
[Starad] and [Winthrop] consent to jurisdiction of
any local, state, or federal court located within
Minnesota. Venue shall be in Minnesota and [Starad]
hereby waives local venue and any objection relating
to Minnesota being an improper venue to conduct any
proceeding relating to this Lease Agreement. At
[Winthrop's] sole election and determination,
[Winthrop] may select an alternative forum, including
arbitration or mediation, to adjudicate any dispute
arising out of this Lease Agreement.
(Belmonte Aff. Ex. A, ¶ 25.) Such forum selection clauses are enforceable under both federal
and New York law. Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22
(1988); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1
To avoid enforcement of such a contractual
provision, the opposing party has a "heavy burden" of showing
that adjudication in the contractually-dictated forum "will be so
manifestly and gravely inconvenient . . . that it will be
effectively deprived of a meaningful day in court," The Bremen,
407 U.S. at 19, "or that the clause [is] invalid for such reasons
as fraud or overreaching," id. at 15.
Starad does not attempt to argue that either standard is met.
Nor does it dispute defendants' assertion that both
forum-selection clauses are mandatory. Instead, it argues that
the clauses do not apply to this dispute. Starad maintains that
it is suing not based on the provisions of either contract, but
on an alleged partnership agreement with Winthrop, and that its
claim for breach of contract and fraud arise out of this alleged
agreement, not out of either the licensing agreement with Lawson
or the lease agreement with Winthrop. Citing promotional
literature allegedly used by Winthrop to lure Starad into the
software deal, Starad notes that Winthrop's proposal to them
asked "Why Winthrop Should Be Starad's Partner," and offered not
simply a lease, but a "Value-Added Lease." (P. Mem. 2, citing
Compl. ¶ 34.) The essence of Starad's strenuous verbal
legerdemain is summed up in the creative argument that "[w]hile
`commercial software and equipment leasing' providers may have
court `protection' as to issues of venue, no case cited by Winthrop remotely suggest[s] that `added-value
commercial software and equipment leasing' providers are accorded
the same protection." (P. Mem. 2-3.)
But creative characterizations such as these cannot defeat a
valid and binding forum selection clause. First, Starad's
citations of Winthrop's promotional literature are unavailing.
Putting aside that Winthrop's offer of "partnership" and
distinction of its services from mere leases transparently
constitute commercial puffery rather than legal characterization,
the Winthrop-Starad lease agreement contains an integration
clause expressly stating that it "constitute[s] the entire
understanding and agreement between [Winthrop] and [Starad] with
respect to the lease of the Equipment, superseding all prior
agreements, understandings, negotiations, discussions, proposals,
representations, promises, commitments and offers between the
parties, whether oral or written." (Belmonte Aff. Ex. A, ¶ 25.)
Such clauses are routinely given effect both in New York and in
Minnesota. See, e.g., Jarecki v. Shung Moo Louie,
95 N.Y.2d 665, 669 (2001); Lehman v. Stout, 112 N.W.2d 640 (Minn. 1961).
Thus, even if Winthrop's literature proposed a literal
partnership, the only agreement actually entered between the
parties is the lease agreement itself, which contains the forum
Second, Starad cannot characterize its way out of its agreement
by characterizing its claims as something other than claims
arising out of the agreements with Lawson and Winthrop. Neither
forum selection clause is limited to causes of action for breach
of the agreements themselves. The Lawson agreement establishes
Minnesota as the exclusive forum for "any other legal action
related to this Agreement, [or to] the Products," or indeed to
"any other dispute between [Starad] and Lawson." (Houlihan Decl.
Ex. B, ¶ 19.) The Winthrop agreement similarly applies to "any
proceeding relating to this Lease Agreement." (Belmonte Aff.
Ex. A, ¶ 25.) This language is clearly broad enough to encompass not
merely claims for breach of the agreements, or even claims
arising from the agreements, but any claims that so much as
relate to the agreement.
Unquestionably, Starad's claims relate to the agreements it had
with the various defendants. The suit is about the alleged
failure of the products and services for which Starad contracted,
and the alleged breach of promises and representations about
those services made by the defendants in inducing Starad to enter
the agreements. The very first count in the complaint, indeed, is
explicitly a claim against Lawson for breach of the very contract
that contains the choice of forum clause. The other counts allege
breach of the alleged "partnership" with Winthrop; breach of
warranties contained in the contracts with Winthrop and Lawson;
fraud, deceptive practices and negligent misrepresentation in
connection with the solicitation and negotiation of the
contracts; and unjust enrichment in connection with the payments
made under the contracts. So far as can be discerned from the
complaint, there is no relationship between Starad and the
defendants other than the one that is not merely related to,
but centered on, the agreements containing the forum selection
Authority as well as logic supports these conclusions. Courts
interpreting such clauses have routinely held that contractual
forum selection clauses worded as broadly as the ones in this
case apply to tort claims as well as contract claims that relate
to the subject matter of the contract. See, e.g., Roby v.
Corporation of Lloyd's, 996 F.2d 1353, 1361 (2d Cir. 1993);
Bense v. Interstate Battery System of America, 683 F.2d 718,
720 (2d Cir. 1982).
However Starad strains to characterize its lawsuit otherwise,
its claims are related to the agreements it entered with Lawson
and Winthrop. Starad, a substantial and sophisticated commercial enterprise (Compl. ¶¶ 8-9), knowingly and voluntarily
promised, as part of those agreements, to bring any litigation
that relates to those contractual relationships in Minnesota. It
is bound by that promise, and its effort to bring suit in New
York must therefore be rejected.
Defendants' motions are granted; the complaint is dismissed
without prejudice for lack of venue.