You’re Going to New York!
Superior Court for the Northern District of Hillsborough Enforces Forum Selection Clause
In a recent opinion handed down by the Superior Court for the Northern District of Hillsborough (the “Court”), Plaintiffs Grace Costa and Michael McCann (Plaintiffs) found themselves on the wrong side of a forum selection clause.
The case in controversy originated from a membership interest purchase agreement, wherein the Plaintiffs sold their interest in VennScience, LLC, to Defendant PureFacts Financial Solutions, Inc. (“Defendant”). The membership purchase agreement contained a forum selection clause which stated that each party must submit to the exclusive jurisdiction of the state of New York should any disagreement arise. As part of the acquisition, Plaintiffs were offered employment positions within the company. However, disagreements soon arose which ultimately led to the Plaintiffs challenging the membership interest purchase agreement in New Hampshire state court.
In this action, Plaintiffs moved for the forum selection clause contained in the membership purchase agreement to be found unenforceable. In reviewing the Plaintiffs’ motion, the Court first looked to RSA 508-A:3, which provides that if parties agree in writing that an action or controversy shall be brought only in another state, but it is brought in New Hampshire, then the action will be dismissed unless one or more of the five exceptions provided in RSA-A:3 exist. The Plaintiffs argued that two of the provided exceptions existed in their scenario – (1) that New York would be a substantially less convenient place for the trial to be held than New Hampshire and (2) that it would be unfair and/or unreasonable to enforce the agreement.
The Plaintiffs stated that it was substantially inconvenient and unreasonable to hold the trial in New York because none of the parties were located in New York, no acts related to the action occurred in New York, and no witnesses were in New York, among other claims. The Court concluded that RSA 508-A:3 includes no such requirement that there be a significant relationship between the parties and/or the agreement and the selected forum. As such, it is an inappropriate factor to consider when analyzing the enforceability of the clause.
Regarding the Plaintiffs’ contention that holding the trial in New York would be a substantial inconvenience to both parties, the Court cited to the United States Supreme Court opinion in Atlantic Marine Const. Co. v. U.S. Dist. Court for Western Dist. of Texas, wherein the Supreme Court held that “[w]hen parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of litigation…” as the inconvenience suffered by the parties “…was clearly foreseeable at the time of contracting.” 571 U.S. 49, 64 (2013).
The Court denied Plaintiffs’ request to find the forum selection clause unenforceable and declined to address the choice of law provision contained in the agreement, declaring that the New York court that will preside over the dispute should address such provision.
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