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United States District Court, S.D. New York

September 16, 2004.

STARAD, INC., Plaintiff,

The opinion of the court was delivered by: GERARD E. LYNCH, District Judge


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 (1972).*fn2 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 selection clause.

  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 clause.

  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.


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