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SERVICECORP, INC. v. CASCADES

June 9, 2005.

SERVICECORP, INC., Plaintiff,
v.
CASCADES, INC., Defendant.



The opinion of the court was delivered by: LESLIE FOSCHIO, Magistrate Judge

DECISION and ORDER

JURISDICTION

This action was referred to the undersigned by Honorable Richard J. Arcara on December 8, 2004, for all pretrial matters. The matter is presently before the court on Plaintiff's motion to remand the action to New York Supreme Court, filed November 10, 2004 (Doc. No. 4).*fn1 BACKGROUND and FACTS*fn2

  Plaintiff ServiceCorp, Inc. ("Plaintiff"), a New York corporation with its principal place of business in Niagara County, New York, commenced this contract action against Defendant Cascades, Inc. ("Defendant"), a Canadian corporation with its principal place of business in Quebec, Canada, in New York Supreme Court, Niagara County, on October 4, 2004. On October 23, 2004, Defendant removed the action to this court, asserting complete diversity of the parties as the basis for federal jurisdiction. Notice of Removal (Doc. No. 1) ("Removal Notice"), ¶ 2.

  On November 10, 2004, Plaintiff filed the instant motion to remand the matter to New York Supreme Court, Niagara County (Doc. No. 4) ("Remand Motion"), and requested an award of the costs and expenses, including attorney's fees, incurred as a result of the removal. Attached in support of the Remand Motion are the Affidavit of Michael R. Law, Esq., ("Law Affidavit"), the Affidavit of ServiceCorp, Inc. President Raymond R. O'Keefe ("O'Keefe Affidavit") with exhibits, and a Memorandum of Law in Support of Plaintiff's Motion to Remand Pursuant to 28 U.S.C. § 1447 ("Plaintiff's Memorandum").

  Defendant, on January 7, 2005, filed Defendant's Memorandum of Law in Opposition to Plaintiff's Motion to Remand (Doc. No. 11) ("Defendant's Memorandum"). On January 18, 2005, Plaintiff filed in further support of remand the Reply Affidavit of ServiceCorp, Inc. President Raymond T. O'Keefe (Doc. No. 13) ("O'Keefe Reply Affidavit"), and Plaintiff's Memorandum of Law in Further Support of Plaintiff's Motion to Remand Pursuant to 28 U.S.C. § 1447 (Doc. No. 14) ("Plaintiff's Reply Memorandum"). Oral argument was deemed unnecessary.

  Based on the following, the motion to remand is DENIED.

  DISCUSSION

  Removal of a state court proceeding to federal court is provided for under 28 U.S.C. § 1441(a) which states in pertinent part:
any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.
Because federal courts are courts of limited jurisdiction, and as removal of a case raises issues of federalism, removal statutes are narrowly construed and doubts are resolved against removal. Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043, 1045-46 (2d Cir. 1991). The removal statute is construed according to federal law. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 104 (1941); Somlyo, supra, at 1047.

  Whether an action is removable based on diversity jurisdiction is determined based on the pleadings as originally filed. Crucible Materials Corporation v. Coltec Industries, Inc., 986 F.Supp. 130 131-32 (N.D.N.Y. 1997). Accordingly, 28 U.S.C. § 1441(a) permits removal of only those actions which originally could have been filed in federal district court. Further, it is the removing party's burden to demonstrate the existence of federal jurisdiction. United Food & Commercial Workers Union, Local 919, AFL-CIO v. Centermark Properties Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994) ("Where, as here, jurisdiction is asserted by a defendant in a removal petition, it follows that the defendant has the burden of establishing that removal is proper. . . .").

  In the instant case, Defendant removed the matter to this court on the basis of complete diversity under 28 U.S.C. § 1332(a)(2), given that Plaintiff is a New York citizen, whereas Defendant is a Canadian citizen, and the amount in controversy exceeds $75,000, the statutory minimum for diversity jurisdiction. Removal Notice ¶¶ 2-7. See 28 U.S.C. § 1332(a)(2). Plaintiff does not dispute that the citizenship of Plaintiff and Defendant is completely diverse, nor that the amount in controversy exceeds $75,000; rather, Plaintiff maintains that the contract's forum selection clause requires the instant action be litigated in New York Supreme Court, Niagara County and Defendant, by executing the contract, waived its right to remove the action to federal district court.*fn3 Plaintiff's Memorandum, passim; Law Affidavit ¶ 4; O'Keefe Affidavit ¶¶ 7-9.

  As relevant, the forum selection clause at issue states:
[t]his Agreement has been delivered to [Plaintiff] in Youngstown, New York and shall be governed by the laws of the State of New York in all respects, including all matters of construction, validity, and performance of this Agreement. Any disputes relating to or arising from this Agreement shall be filed in the court of competent jurisdiction in Niagara County, New York. The prevailing party shall be entitled to recover all reasonable costs and attorney's fees arising from any such dispute.
Contract, Article 8.A (emphasis added). According to Plaintiff, the forum selection clause language requiring disputes arising from the contract "be filed in the court of competent jurisdiction in Niagara County, New York," Plaintiff's Memorandum at 1 (bolding in original), establishes that the instant action may only be filed in New York Supreme Court, Niagara County, as that is the only court for which the courthouse is physically located in Niagara County and which would also have jurisdiction over both the parties and the amount in dispute. Plaintiff's Memorandum at 1-2 and 4. Plaintiff further contends that two letters exchanged between the parties while negotiating the contract establish that "[t]he clear intention of the parties with respect to [the forum selection clause] was that any dispute would be litigated in Niagara County." Plaintiff's Memorandum at 4. See O'Keefe Affidavit ¶¶ 8-10 (explaining that because the forum selection clause "clearly indicates the agreement and intent of the parties ? to have any dispute litigated in the New York Supreme Court in Niagara County," and referencing letters exchanged between the parties on March 1, 1999 (O'Keefe Affidavit Exhibit 2) and March 5, 1999 (O'Keefe Affidavit Exhibit 3) to demonstrate the importance of the forum selection clause to Plaintiff, which is a much smaller company than Defendant).

  Defendant does not dispute the forum selection clause's validity but, rather, maintains the clause "does not specify an exclusive venue in which all disputes must be resolved, not does it preclude [Defendant] from removing the action to this court." Defendant's Memorandum at 1. Defendant further argues that although no federal courthouse is physically located within Niagara County, the district court for the Western District of New York is a court of competent jurisdiction within the meaning of the forum selection clause because the Western District of New York encompasses Niagara County. Defendant's Memorandum at 2. Alternatively, Defendant maintains that the forum selection clause is ambiguous and, as such, must be construed against Plaintiff, the party responsible for its inclusion, and consistent with the parties' intent, which was to exclude a Canadian court as the forum for resolving any contract dispute. Defendant's Memorandum at 4-5.

  Plaintiff, in further support of remand, characterizes Defendant's interpretation of the forum selection clause as "strained" and contrary to the parties' intent. Plaintiff's Reply Memorandum at 2. Alternatively, Plaintiff maintains even if the forum selection clause is ambiguous, the clause was negotiated at arms-length by both parties and, as such, need not be construed against Plaintiff. Plaintiff's Reply at 3-4. Plaintiff further maintains that although venue, for purposes of federal court, is stated in terms of a "judicial district," 28 U.S.C. § ...


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