Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ZURICH INSURANCE COMPANY v. PRIME

August 9, 2005.

ZURICH INSURANCE COMPANY (f/k/a Alpina Insurance Company Ltd.) a/s/o BOEHRINGER INGELHEIM INTERNATIONAL GmbH, Plaintiff,
v.
PRIME, INC., Defendant/Third-Party Plaintiff, v. 1050758 ONTARIO, INC., d/b/a S.M. FREIGHT, Third-Party Defendant.



The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge

MEMORANDUM OPINION and ORDER

This matter is before the Court on the Motion of third-party defendant 1050758 Ontario, Inc., d/b/a/ S.M. Freight ("S.M. Freight") to dismiss the Third-Party Complaint because of improper venue under a forum selection clause. For the reasons that follow, S.M. Freight's motion to dismiss is granted.

  Facts

  Plaintiff Zurich Insurance Company ("Zurich") is the cargo insurer for the consignment of a shipment of pharmaceuticals owned by plaintiff Boehringer Ingelheim (Canada), a subsidiary of plaintiff Boehringer Ingelheim International BmgH (collectively "Boehringer"). The pharmaceuticals were delivered to defendant Prime, Inc. ("Prime") in Oklahoma and placed in a container for shipment by road to Boehringer's premises in Burlington, Ontario, Canada. Prime was given instructions to maintain the temperature of the pharmaceuticals at ° C.

  When the shipment arrived at Burlington, the temperature graphs within the container showed that temperatures as low as -15° C and -28° C had been reached. Thus, the pharmaceuticals had to be declared a constructive total loss and were destroyed. Boehringer submitted its claim for damages to its insurer. Zurich paid the claim and sued Prime for damages in the amount of $140,000 plus interest and costs. Prime then brought a third-party action against S.M. Freight, alleging that S.M. Freight was the actual transporter of the pharmaceuticals pursuant to a "Contract Carrier Agreement" ("CCA") between Prime and S.M. Freight, and seeking indemnification.

  S.M. Freight now moves to dismiss, based on Fed.R.Civ.P. 12(b)(3) or, alternatively, 28 U.S.C. § 1406(a), for improper venue. The CCA contains a forum selection clause that states, "The Agreement shall be governed and construed under the laws of the State of Missouri, and all disputes arising hereunder shall be heard by a Court of competent jurisdiction in Greene County, Missouri." CCA ¶ 14. S.M. Freight argues that this forum selection clause makes venue in New York improper for the third-party claim.

  Prime argues that S.M. Freight should not prevail because, as a third-party defendant, S.M. Freight does not have standing to object to venue. Prime also contends that it would be a waste of judicial resources to litigate the third-party action in another court while the principal action proceeds in this court. Finally, Prime argues that, because the motion lacks merit, S.M. Freight should pay Prime's costs in defending this motion.

  Discussion

  I. Proper Procedural Framework

  The qusetion of the proper framework within which to examine a motion to dismiss a complaint based on the enforcement of a forum selection clause has not been definitively answered. See Mercury West A.G., Inc. v. R.J. Reynolds Tobacco Co., No. 03 Civ. 5262 (JFK), 2004 WL 421793 at *2, 2004 U.S. Dist. LEXIS 3508 at *4-5 (S.D.N.Y. Mar. 5, 2004) (citing New Moon Shipping Co., Ltd. v. MAN B & W Diesel AG, 121 F.3d 24, 28-29 (2d Cir. 1997); Jockey Int'l, Inc. v. M/V "Leverkusen Express", 217 F. Supp. 2d 447, 450 (S.D.N.Y. 2002) ("The Second Circuit has not decided what rule governs dismissals based on a forum selection clause.")). Nonetheless, courts of this circuit have made clear that courts do possess the ability under either Rule 12(b)(3) or § 1406(a) to dismiss a case upon a motion that a forum selection clause renders venue in a particular court improper. Jockey Int'l, 217 F. Supp. at 450; Tech. Express, Inc. v. FTF Bus. Sys. Corp., No. 99 Civ. 11692 (LAK), 2000 WL 222628 at *3, 2000 U.S. Dist. LEXIS 2006 at *9-10 (S.D.N.Y. Feb. 25, 2000).

  S.M. Freight brings the instant motion under Rule 12(b)(3) and, alternatively, 28 U.S.C. § 1406(a). Neither party has offered materials outside the pleadings.*fn1 Although Prime contends that § 1406(a) does not apply, it does not object to treating the motion as one brought pursuant to Rule 12(b)(3). The Court will therefore treat the motion as one to dismiss under Rule 12(b)(3). II. Third Party Standing to Object to Venue

  Ordinarily, a third-party defendant does not have standing, absent specific statutory authorization, to object to venue. See First Fed. Sav. & Loan Ass'n v. Oppenheim, Appel, Dixon & Co., 634 F. Supp. 1341, 1349 (S.D.N.Y. 1986) (citing cases and treatises). However, it is not clear that this doctrine applies in the face of a forum selection clause, as courts in this circuit and beyond have allowed third-party defendants to prevail on motions to dismiss pursuant to valid forum selection clauses. See generally Glyphics Media, Inc. v. M.V. "Conti Singapore", No. 02 Civ. 4398 (NRB), 2003 WL 1484145, 2003 U.S. Dist. LEXIS 4387 (S.D.N.Y. Mar. 21, 2003); Laserdynamics Inc. v. Acer America Corp., 209 F.R.D. 388 (S.D. Tex. 2002); Lafargue v. Union Pacific R.R., 154 F. Supp. 2d 1001 (S.D. Tex. 2001). Therefore, S.M. Freight has standing to bring this motion and the Court now turns to the validity of the forum selection clause.

  III. The Forum Selection Clause Is Valid and Enforceable

  Forum selection clauses at one time were disfavored, but today are presumptively valid. See M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9-10 (1972); Bense v. Interstate Battery Sys. of Am., Inc., 683 F.2d 718, 721 (2d Cir. 1982) (stating that "any such `general hostility' towards forum-selection clauses is today simply a vestigial remainder of an outmoded doctrine"); Mercury West, 2004 WL 421793 at *3, 2004 U.S. Dist. LEXIS 3508 at *6-7. In fact, the Court of Appeals for the Second Circuit has developed a policy of honoring forum selection clauses. See Strategic Mktg. & Communications, Inc. v. Kmart Corp., 41 F. Supp. 2d 268, 270 (S.D.N.Y. 1998). Underlying this policy is an understanding that forum selection clauses carry an economic benefit to at least one of the parties that is typically reflected in the overall economics of the contract. As such, these clauses are bargained-for terms of ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.