Opinion
502128/2021
05-28-2021
BIZFUND LLC, Plaintiff, v. HOLLAND & SLIGER STEEL, LLC and Scottie Lane Sliger, Defendants.
Craig A. Convissar, Katten Muchin Rosenman LLP, 575 Madison Avenue, New York, New York 10022, (212) 490-6369, Email: craig.convissar@katten.com, Attorney for Plaintiff Bizfund LLC. Rebecca K. Lindahl, Katten Muchin Rosenman LLP, 550 S. Tryon Street, Suite 2900, Charlotte, NC 28202-4213, (704) 344-3141, Email: rebecca.lindahl@katten.com, Attorney for Plaintiff Bizfund LLC. Rachel Lee Dreher, 631 Lucerne Avenue, Suite 53, Lake Worth Beach, FL 33460, (631) 925-2373, Email: rachel@dreherlawgroup.com, Attorney for Defendants Holland & Sliger Steel, LLC and Scottie Lane Sliger.
Craig A. Convissar, Katten Muchin Rosenman LLP, 575 Madison Avenue, New York, New York 10022, (212) 490-6369, Email: craig.convissar@katten.com, Attorney for Plaintiff Bizfund LLC.
Rebecca K. Lindahl, Katten Muchin Rosenman LLP, 550 S. Tryon Street, Suite 2900, Charlotte, NC 28202-4213, (704) 344-3141, Email: rebecca.lindahl@katten.com, Attorney for Plaintiff Bizfund LLC.
Rachel Lee Dreher, 631 Lucerne Avenue, Suite 53, Lake Worth Beach, FL 33460, (631) 925-2373, Email: rachel@dreherlawgroup.com, Attorney for Defendants Holland & Sliger Steel, LLC and Scottie Lane Sliger.
Reginald A. Boddie, J.
Recitation, as required by CPLR 2219 (a), of the papers considered in the review of this motion:
PapersNumbered
MS 1Docs. No. 5-11
Upon the foregoing cited papers, defendants' motion to dismiss, pursuant to CPLR 3211 (a) (2), (a) (8), CPLR 327 and CPLR 510, is decided as follows:
Plaintiff Bizfund LLC (Bizfund), a Delaware corporation, with its principal place of business in Brooklyn, New York, purchases account receivables. Defendant Holland & Sliger Steel, LLC (Holland & Sliger), a Tennessee corporation, sells accounts receivables. Defendant Scottie Lane Sliger (Sliger) is a resident of Tennessee and a member of Holland & Sliger.
Plaintiff Bizfund alleged that on or about June 1, 2020, it entered into a Sales Agreement (Agreement) with Holland & Sliger to purchase Holland & Sliger's future receivables in exchange for $479,680.00 with a cash advance of $320,000.00. Plaintiff alleged Holland & Sliger was to make a daily payment of $3,699.00 until the balance was paid in full. Plaintiff alleged that defendant Sliger also executed a personal guaranty (Guaranty) of Holland and Sliger's performance.
Plaintiff alleged that the Agreement and the Guaranty contained a forum selection clause, which stated the Agreement "shall be governed by, construed and enforced in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely in the State of New York." Plaintiff alleged the Agreement also provided that "[a]ny controversy or claim arising out of or relating to [the Agreement] ... or any breach ... or default hereunder or thereunder, shall be submitted for resolution to a State or federal court sitting in the City, County and State of New York, which courts shall have exclusive jurisdiction with respect to any such controversy or claim." Plaintiff alleged the forum selection clause further provided that "[e]ach of the Parties agrees not to assert in any forum that such courts are not a convenient forum, or that there is a more convenient forum, for the resolution of any such controversy or claim, and waives any and all objections to jurisdiction or venue." Plaintiff alleged the Agreement further clarifies that "[f]or the avoidance of doubt, [Bizfund] or its assigns or agents may serve any summons, complaint or other process to commence or prosecute any [action] against [Defendants] ... by registered or certified mail, return receipt requested ... and any such mailing shall constitute proper service thereof for all purposes."
Plaintiff alleged that defendants made payments under the Agreement in the sum of $209,586.00 and no payment has been made since December 4, 2020, leaving a balance of $270,094.00. On January 27, 2021, plaintiff commenced this action by filing a complaint via electronic filing to recover the balance due under the Agreement. On March 2, 2021, without attaching the complaint, defendants moved to dismiss the complaint on the grounds the Court lacks both general and specific personal jurisdiction over defendants; lacks subject-matter jurisdiction over this cause of action and is an inconvenient forum and an improper venue.
As a threshold matter, plaintiff's argued defendant's motion to dismiss is procedurally deficient for failure to attach a copy of the complaint to the motion papers. CPLR 2214 (c) governs furnishing of papers to the Court. It states:
Each party shall furnish to the court all papers served by that party. The moving party shall furnish all other papers not already in the possession of the court necessary to the consideration of the questions involved. Except when the rules of the court provide otherwise, in an e-filed action, a party that files papers in connection with a motion need not include copies of papers that were filed previously electronically with the court, but may make reference to them, giving the docket numbers on the e-filing system ( CPLR 2214 [c] ).
Here, this action commenced on January 27, 2021, by electronic filing, which included a copy of the complaint. Defendants electronically filed their motion to dismiss on March 2, 2021, without attaching the complaint. However, in their motion papers, defendants cited to the corresponding docket numbers of the pleadings previously filed with the Court, including the complaint. Therefore, defendants' motion to dismiss is procedurally proper ( see CPLR 2214 [c] ).
Turning to the merits of plaintiff's motion to dismiss. On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction ( see CPLR 3026 ; Leon v Martinez , 84 NY2d 83, 87 [1994] ). The court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" ( Leon , 84 NY2d at 87-88 ).
Plaintiff moved to dismiss on the ground that the court lacks personal jurisdiction over the defendants. A court may assert general all-purpose personal jurisdiction or specific conduct-linked personal jurisdiction over a particular defendant ( see Daimler AG v Bauman , 571 US 117, 122 [2014] ; Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 US 915 [2011] ). General personal jurisdiction, provided for in CPLR 301, refers to a New York court's power to adjudicate disputes regarding a natural person or business entity in New York regardless of where the actions underlying the claim occurred ( see CPLR 301 ; Lowy v Chalkable, LLC , 186 AD3d 590, 591-592 [2d Dept 2020] ). To comport with due process, however, the defendant's contacts with New York must be "so ‘continuous and systematic,’ that it is ‘essentially at home’ in th[e] state" ( id. ).
Specific personal jurisdiction, sometimes referred to as long-arm jurisdiction, refers to jurisdiction over an individual or entity for the purpose of adjudicating a particular controversy that arises from the entity's contacts with the forum state ( see Mejia-Haffner v Killington, Ltd. , 119 AD3d 912, 913 [2d Dept 2014] ). CPLR 302 (a) (1), the section of New York's long-arm statute, grants New York courts jurisdiction over nondomiciliaries or out of state defendants when the action arises out of the nondomiciliaries' "transact[ion of] any business within the state or contract [ ] ... to supply goods or services in the state" ( CPLR 302 [a] [1] ).When a defendant objects to the court's exercise of general or specific personal jurisdiction, the ultimate burden of proof rests upon the plaintiff ( Skutnik v Messina , 178 AD3d 744 [2d Dept 2019] ). However, "[i]n opposing a motion to dismiss the complaint on the ground of lack of personal jurisdiction, a plaintiff need only make a prima facie showing that such jurisdiction exists" ( Skutnik , 178 AD3d at 744-745 [internal quotation marks omitted]; Lowy , 186 AD3d at 591 ).
A defendant can consent to personal jurisdiction ( see Creative Resources, Inc. v Rumbellow , 244 AD2d 383 [2d Dept 1997] ). This can occur when a party agrees by contract to submit to jurisdiction in a given forum ( see Oak Rock Fin., LLC v Rodriguez , 148 AD3d 1036, 1038 [2d Dept 2017] ). "... [S]uch a forum selection clause, when it is part of the contract that forms the basis of the action, will be enforced, obviating the need for a separate analysis of the propriety of exercising personal jurisdiction" ( see id. ). A guarantor of a contract is also deemed to have consented to personal jurisdiction in New York when he or she signs a guaranty that incorporates the terms of the contract, including the forum selection clause ( see Professional Merchant Advance Capital, LLC v Your Trading Room, LLC , 123 AD3d 1101, 1102 [2d Dept 2014] ).
"A contractual forum selection clause is prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court" ( see Bernstein v Wysoki , 77 AD3d 241, 248-249 [2d Dept 2010] [internal quotation marks omitted]). "Absent a strong showing that it should be set aside, a forum selection agreement will control" ( see id. ).
Here, the defendants argued that the complaint should be dismissed because the Court lacks both general and specific personal jurisdiction. Plaintiff, in opposition argued, the underlying Agreement between the plaintiff and defendants provided that "[a]ny controversy or claim arising out of or relating to [the Agreement] ... or any breach ... or default hereunder or thereunder, shall be submitted for resolution to a State or federal court sitting in the City, County and State of New York, which courts shall have exclusive jurisdiction with respect to any such controversy or claim." Therefore, plaintiff's argued, Holland and Sliger consented to the jurisdiction of New York courts. Likewise, plaintiff argued, defendant Sliger, as guarantor of the Agreement consented to personal jurisdiction of New York courts when he signed a guaranty that incorporated the terms of the Agreement, including the forum selection clause. The Court agrees.
The defendants signed the Agreement with a forum selection clause, which designated New York as the forum for disputes related to the Agreement. The defendants, as the challenging party, proffered no proof that the forum selection clause was unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court ( see Bernstein , 77 AD3d at 248-249 ). Accordingly, the contractual forum selection clause in the Agreement that pertains to personal jurisdiction is prima facie valid and enforceable. Similarly, defendant Sliger as guarantor of the Agreement is subjected to the forum selection clause ( see Professional Merchant Advance Capital, LLC , 123 AD3d at 1102 ). Therefore, this Court has personal jurisdiction over the defendants.
Defendants also argued they did not consent to service by certified mail. Plaintiff served the complaint on January 28, 2021, by mailing a copy to each defendant by certified mail. The forum selection clause contained a provision which provided for service by certified mail. In signing the Agreement, which contained the forum selection clause, defendants consented to accept service of the complaint by certified mail. Defendants have not presented any proof that the clause is not valid and enforceable ( see Bernstein , 77 AD3d at 248-249 ). Defendant Sliger also admitted in his affidavit to receiving a copy of the complaint in the mail on February 3, 2021. Therefore, defendants' have failed to establish this ground for dismissal.
Defendants also argued, pursuant to General Obligations Law § 5-1402, plaintiff's complaint should be dismissed for lack of subject matter jurisdiction because the dispute does not involve a transaction that is over $1 million. Plaintiff argued in opposition that General Obligations Law § 5-1402 is inapplicable to the instant case.
General Obligations Law § 5-1402 provides that a party may maintain an action in New York against a foreign defendant if the parties have entered into an agreement that (i) contains a New York forum selection clause, (ii) contains a New York choice of law provision, and (iii) involves a transaction that in the aggregate is over $1 million. The statute permits parties to select New York law to govern their contractual relationship and to avail themselves of New York courts despite lacking New York contacts ( see IRB-Brasil Resseguros, S.A. v Inepar Investments , S.A., 20 NY3d 310, 315 [2012] ). This section is not a limitation on the use and effectiveness of forum selection clauses. Rather, it contains a statutory mandate that a clause designating New York as the forum "shall" be enforceable, in cases involving $1 million or more, regardless of any inconvenience to the parties. Therefore, in actions involving less than $1 million, forum selection clauses are enforceable according to their terms ( see Natl. Union Fire Ins. Co. of Pittsburgh, Pa. v Worley , 257 AD2d 228, 231 [1st Dept 1999] ).
Here, although the Complaint alleges damages of $270,094.00, which is less than 1 million dollars, the Court agrees with plaintiff's contention. General Obligations Law § 5-1402 does not preclude forum selection clauses from being enforceable according to their terms in actions involving less than $1 million ( see Natl. Union Fire Ins. Co. of Pittsburgh, Pa. , 257 AD2d at 231.). Accordingly, the Court has jurisdiction of the matter.
Defendants also argued that pursuant to CPLR 327, the matter should be dismissed on the grounds of forum non conveniens. CPLR 327 articulates the common-law doctrine of forum non conveniens ( see Islamic Republic of Iran v Pahlavi , 62 NY2d 474, 478 [1984] ). It permits a court, in its discretion, to impose any conditions that may be just when dismissing an action on the ground that in the interest of substantial justice the action should be heard in another forum ( see CPLR 327 ; Lischinskaya v Carnival Corp. , 56 AD3d 116, 123 [2d Dept 2008] ).
"On a motion to dismiss the complaint on the ground of forum non conveniens, the defendant bears the burden of demonstrating relevant private or public interest factors which militate against accepting the litigation" ( see Mason-Mahon v Flint , 166 AD3d 754, 759 [2d Dept 2018] ). In making its determination, the court must weigh, among other factors, "the parties' residences, the location of the witnesses and any hardship caused by the choice of forum, the availability of an alternative forum, the situs of the action, and the burden on the New York court system ( see Mason-Mahon , 166 AD3d at 759 ). The considerations are irrelevant and dismissal is not discretionary where a valid and enforceable forum selection clause exists between parties ( see Lischinskaya , 56 AD3d at 123 ).
Here, the underlying agreement between the parties stated that "[e]ach of the Parties agrees not to assert in any forum that such courts are not a convenient forum, or that there is a more convenient forum, for the resolution of any such controversy or claim, and waives any and all objections to jurisdiction or venue." The defendants have not proffered any proof the Agreement is not valid and enforceable ( see Bernstein , 77 AD3d at 248-249 ). Accordingly, defendants' contention that this Court is an inconvenient forum was waived by their consent to the forum selection clause.
Defendants also argued that this action should be dismissed for lack of venue.
Venue, the situs of an action, may be located anywhere within the geographical jurisdiction of the court as deemed appropriate by applicable statute or rule ( see Weingarten v Bd. of Educ. of City School Dist. of City of New York , 3 Misc 3d 418, 421 [Sup Ct 2004] ). Parties can agree to venue in a contract made before an action is commenced ( see CPLR 501 ). If one party commences an action in "an inappropriate county territorial subdivision of the Supreme Court of the State of New York ... the other party can move for change of venue, i.e., transfer of the action to the appropriate county" ( see Weingarten , 3 Misc 3d at 421 ). "The court, upon [such] motion, may change the place of trial of an action where ... the county designated for that purpose is not a proper county" ( CPLR 510 [1] ; O'Brien v Vassar Bros. Hosp. , 207 AD2d 169, 171 [2d Dept 1995] ). "To prevail on a motion pursuant to CPLR 510 (1) to change venue, a defendant must show that the plaintiff's choice of venue is improper, and also that the defendant's choice of venue is proper" ( see Pinos v Clinton Cafe & Deli , Inc., 139 AD3d 1034, 1035 [2d Dept 2016] [internal quotation marks omitted]).
To meet its burden, defendant must submit proof of the names, addresses and occupations of the prospective witnesses, disclose the facts to which the proposed witnesses will testify at the trial, provide proof the witnesses for whose convenience a change of venue is sought are in fact willing to testify, and demonstrate how the witnesses in question would be inconvenienced in the event a change of venue were not granted ( see OBrien v Vassar Bros. Hosp. , 207 AD2d 169, 173 [2d Dept 1995] ). Only if a defendant meets this burden is the plaintiff required to establish, in opposition, that the venue selected was the proper venue ( see Young Sun Chung v Kwah , 122 AD3d 729, 730 [2d Dept 2014] ). However, "[i]mproper venue is not a jurisdictional defect requiring dismissal of the action" ( see Lowenbraun v McKeon , 98 AD3d 655, 656 [2d Dept 2012] ).
Here, defendants argued that the proper venue for this action is the State of Tennessee or alternatively a federal district court in New York. Defendants proffered no proof, beyond a conclusory reference to the convenience of material witnesses, that the plaintiff's choice of venue is improper. Therefore, defendants failed to meet their burden ( see Young Sun Chung , 122 AD3d at 730 ). Even assuming the plaintiff's choice of venue was improper, "[i]mproper venue is not a jurisdictional defect requiring dismissal of the action" ( Lowenbraun , 98 AD3d at 656 ). Therefore, defendants' motion to dismiss for lack of venue is denied. Accordingly, defendants' motion to dismiss is denied.
Defendants further requested, pursuant to CPLR 2004, that their time to interpose an answer be extended by thirty days from the date of the Court's Order. A motion to dismiss an action or a defense, in accordance with CPLR 3211 (a) or (b), serves to extend the time to serve and file an answer by 10 days from the date of the Court's Oder ( CPLR 3211 [f] ; see Vigo v 501 Second St. Holding Corp. , 100 AD3d 871, 872 [2d Dept 2012] ). "Except where otherwise expressly prescribed by law, the court may extend the time fixed by any statute, rule or order for doing any act, upon such terms as may be just and upon good cause shown, whether the application for extension is made before or after the expiration of the time fixed" ( CPLR 2004 ).
The granting of an extension of time pursuant to section 2004 of the CPLR is within the discretion of the court ( see Salzman & Salzman v Gardiner , 100 AD2d 846, 846 [2d Dept 1984] ). To extend the time to answer the complaint, a defendant must generally provide a reasonable excuse for the delay and demonstrate a potentially meritorious defense to the action ( see U.S. Bank N.A. v Halevy , 176 AD3d 1009, 1010 [2d Dept 2019] ). Here, defendants' motion to dismiss for lack of personal jurisdiction has been denied and defendants have not provided a reasonable excuse for their delay in answering. Therefore, defendants' request for an additional twenty days to interpose an answer is denied.
Accordingly, defendants' motion to dismiss is denied and defendants shall file an answer within 10 days of the date of entry of this order.