Opinion
Index No. 611493/2022
08-29-2022
Spellmans Marine Inc., Plaintiff, v. HC Composites L.L.C. D/B/A WORLD CAT, Defendant.
DIANA PATRICIA DILEONARDO, ESQ., BELLAVIA BLATT, PC Attorney for Plaintiff CHRISTOPHER SCHIERLOH, ESQ., CASEY & BARNETT, LLC, Attorney for Defendants
DIANA PATRICIA DILEONARDO, ESQ., BELLAVIA BLATT, PC Attorney for Plaintiff
CHRISTOPHER SCHIERLOH, ESQ., CASEY & BARNETT, LLC, Attorney for Defendants
James Hudson, J.
Upon due deliberation and consideration by the Court of e-filed documents numbered 2 through 12, and 15 through 25; it is
ORDERED that for the reasons set forth herein, the Plaintiff's motion (mot. seq. 001) for a preliminary injunction is denied under the circumstances presented (CPLR 6301). The temporary restraining order issued in connection with this motion is vacated and set aside. It is further
ORDERED that the Defendant's motion (mot. seq. 002) for dismissal of the Complaint is granted (CPLR 3211 [a] [1]). It is further
ORDERED that the Plaintiff's complaint is dismissed.
The Plaintiff Spellmans Marine Inc. (Hereinafter referred to as Spellmans) is a boat dealer located in Suffolk County New York. Plaintiff entered into a contract with the Defendant HC Composites LLC d/b/a World Cat (Hereinafter referred to as World Cat), manufacturer to sell the latter's watercraft (Plaintiff's exhibit "B" NYSCEF Doc. 5). This was an exclusive agreement whereby World Cat covenanted that it would set aside a specific geographic area for the Plaintiff's retail sales. The Defendant is attempting to exercise the non-renewal clause of the contract. Desiring to maintain the dealership relationship, the Plaintiff has commenced the lawsuit at hand sounding , inter alia, in breach of contract. In its complaint, Spellmans seeks a judgment against Defendant for permanent injunctive relief preventing World Cat from terminating the parties' dealer agreement relating to the marketing of the Defendant's boats. Plaintiff also seeks money damages predicated on an alleged violation of the New York General Business Law (§§ 810-816) the "Vessel Dealer Act". It is further averred that the Defendant breached the duty of good faith and fair dealing implied in the parties' dealer agreement and violated its fiduciary duty to the Plaintiff. To preserve its status as a World Cat dealer during the pendency of this case, Spellmans' has moved (mot. seq. 001) for a preliminary injunction (CPLR 6301) The Defendant has Cross-moved (mot. seq. 002) for an Order of dismissal CPLR 3211 (a) (1).
The Court would be remiss if it did not thank Counsel for their thorough and eloquent briefs. As noted by the Court at the conclusion of oral argument, their respective clients were well served by such advocates.
In the case of Merling v. Ash Dev., LLC, 198 A.D.3d 743 (2d Dept 2021), the Court held "The party seeking a preliminary injunction must demonstrate (1) a likelihood of success on the merits, (2) danger of irreparable harm in the absence of an injunction, and (3) a balance of the equities in favor of the injunction" (see 159 Smith, LLC v. Boreum Hill Prop. Holdings, LLC, 191 A.D.3d 741, 742, 141 N.Y.S.3d 486; Arcamone-Makinano v. Britton Prop., Inc., 83 A.D.3d 623, 624, 920 N.Y.S.2d 362). "The purpose of a preliminary injunction is to preserve the status quo until a decision is reached on the merits" (159 Smith, LLC v. Boreum Hill Prop. Holdings, LLC, 191 A.D.3d at 742, 141 N.Y.S.3d 486 [internal quotation marks omitted]; see Arcamone-Makinano v. Britton Prop., Inc., 83 A.D.3d at 624, 920 N.Y.S.2d 362).
Prior to discussing the question of injunctive relief, however, the Court must first consider the Defendant's cross-motion which challenges New York as the proper forum for this dispute and seeks dismissal of the Complaint.
In determining the viability of a CPLR 3211 (a) (1) motion, the court in Encore Lake Grove Homeowner's A'ssn, Inc. v. Cashin Assocs., P.C., 111 A.D.3d 881, 882, 976 N.Y.S.2d 143 [2d Dept 2013] stated:
"A motion to dismiss a complaint based upon documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law." (Id., citing Nunez v. Mohamed, 104 A.D.3d 921, 922, 962 N.Y.S.2d 338 [2d Dept 2013]; see Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994]; Cervini v. Zanoni, 95 A.D.3d 919, 920-921, 944 N.Y.S.2d 574 [2d Dept 2012]; Rubenstein v. Salomon, 46 A.D.3d 536, 539, 849 N.Y.S.2d 69 [2d Dept 2007]; Shaya B. Pac., LLC v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 A.D.3d 34, 38, 827 N.Y.S.2d 231 [2d Dept 2006]; see also Board of Managers of 100 Congress Condominium v. SDS Congress, LLC, 152 A.D.3d 478, 59 N.Y.S.3d 381 [2d Dept 2017]).
"To succeed on a motion to dismiss pursuant to CPLR 3211 (a) (1), the documentary evidence that forms the basis of the defense must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim" (B & A Realty Management, LLC v. Gloria, 192 A.D.3d 851, 144 N.Y.S.3d 443, 446 [2d Dept 2021], quoting Teitler v. Pollack & Sons, 288 A.D.2d 302, 302, 733 N.Y.S.2d 122 [2d Dept 2001]; see Held v. Kaufman, 91 N.Y.2d 425, 430-431, 671 N.Y.S.2d 429, 694 N.E.2d 430 [1988]; Leon v. Martinez, supra.; Museum Trading Co. v. Bantry, 281 A.D.2d 524, 721 N.Y.S.2d 822 [2d Dept 2001]; Jaslow v. Pep Boys - Manny, Moe & Jack, 279 A.D.2d 611, 719 N.Y.S.2d 822 [2d Dept 2001]; Brunot v. Eisenberger & Co., 266 A.D.2d 421, 698 N.Y.S.2d 882 [2d Dept 1999]).
The proffered document "must be unambiguous and of undisputed authenticity' [ Fontanetta v. Doe, 73 A.D.3d 78, 86, 898 N.Y.S.2d 569 (2d Dept 2010)]. Acceptable proof includes" mortgages, deeds, contracts and any other papers, the contents of which are essentially undeniable" [ Carr v. Wegmans Food Mkts., Inc., 182 A.D.3d 667, 668, 122 N.Y.S.3d 391 (3d Dept 2020)]. It is also beyond cavil that" As a term of the contract between the parties a contractual forum selection clause is documentary evidence [citations omitted]" (Lischinskaya v. Carnival Corp., 56 A.D.3d 116, 123, 865 N.Y.S.2d 334, 338 [2d Dept 2008]
In support of its Cross-motion, World Cat relies upon the language in Articles Ten and Eleven of the Dealership agreement.
The Court must decide if the aforementioned provisions in the contract allow for New York to hear this dispute in addition to our sister state of North Carolina.
Forum selection clauses fall into two categories, mandatory and permissive. (Boss v. American Express Financial Advisors, Inc., 6 N.Y.3d 242, 811 N.Y.S.2d 620, 844 N.E.2d 1142 [2006]). "[M]andatory forum selection clauses provide that the specified forum is the exclusive or sole forum in which the matter may be heard" (Walker, Truesdell, Roth & Assocs., Inc. v. Globeop Fin. Servs. LLC, 43 Misc.3d 1230 (A), 993 N.Y.S.2d 647 (Sup Ct, NY County 2013 Justice Marcy Friedman), aff'd sub nom. New Greenwich Litig. Tr., LLC v. Citco Fund Servs. (Eur.) B.V., 145 A.D.3d 16, 41 N.Y.S.3d 1 [1st Dept 2016]. A permissive clause allows a party the option of suing either in the designated forum or" in another forum having jurisdiction over the defendants" (Walker, Truesdell at 5 citing See e.g. Orix Credit Alliance, Inc. v. Mid-South Materials Corp., 816 F.Supp. 230 [SD NY1993]
In the case before us, the Forum clause in the World Cat Dealership agreement states:
"ARTICLE 10: GOVERNING LAW AND VENUE 10.1 This Agreement is made and entered into in Tarboro, North Carolina. This Agreement shall be construed and governed by the laws of the State of Florida without giving regards to its conflict of laws provisions. Dealer consents to the exclusive jurisdiction and venue of the state court in Edgecombe County, North Carolina for any lawsuit arising from or relating to this Agreement or the Parties' relationship, and Dealer hereby waives any objections Dealer may have to jurisdiction and venue of the lawsuit."
There is a body of caselaw which collectively opine that a forum selection clause is mandatory when the parties agree" that a specified forum "shall" hear a matter or that the forum is "exclusive."(Walker, Truesdell, Roth & Assocs., Inc. supra at 5 citing See e.g. Micro Balanced Prods. Corp. v. Hlavin Indus. Ltd., 238 A.D.2d 284, 284-285 [1st Dept 1997]; Erie Ins. Co. of New York v. AE Design, Inc., 104 A.D.3d 1319, 1320 [4th Dept 2013], lv denied 12 N.Y.3d 702 [2013]; Investools Inc. v. Waltz, 2006 WL 4682091 [Sup Ct, NY County 2006]; Hur v. Carvel Corp., 2001 WL 1568413, *2 [Sup Ct, Nassau County 2001].
The language in Article Ten of the Contract i.e." consents to the exclusive jurisdiction and venue" of North Carolina, can have only one interpretation. The forum selection clause is mandatory. The Plaintiff does not dispute that this provision is in the contract. Spellmans' position is that the Articles in the agreement relating to forum and venue are unenforceable due to NY GBL §§ 810-816 (the "Vessel Dealer Act"). This statute provides protections to a boat dealer vis-à-vis a manufacturer.
Specifically, NYGBL § 812 requires that notice of intention to exercise a non-renewal provision in a contract be given ninety days prior to terminating the agreement. NYGBL § 815 details penalties for non-compliance. It also includes the following language "4. The provisions of this article shall be in addition to any legal or equitable right that any party has pursuant to any other provision of law or pursuant to any agreement between the parties". NYGBL § 816 states, "No manufacturer or distributor shall, as a condition of entering into any agreement or contract with a dealer or in any dealer agreement, require any dealer to waive any provision or right granted pursuant to this article."
The above-mentioned statutes clearly detail protections for the Plaintiff that do not exist under the terms of the contract. The question to be resolved is whether they serve to mandate that this case remain in New York. For the reasons discussed below, the Court must decide this issue in favor of the defense.
In the oft cited case of Brooke Grp. Ltd. v. JCH Syndicate 488, 87 N.Y.2d 530, 640 N.Y.S.2d 479, 663 N.E.2d 635(1996) the Court stated
"Although once disfavored by the courts, it is now recognized that parties to a contract may freely select a forum which will resolve any disputes over the interpretation or performance of the contract. Such clauses are prima facie valid and enforceable unless shown by the resisting party to be unreasonable [citations omitted]" (Id at 534)
Defense Counsel relies on the holding in Boss v. Am. Express Fin. Advisors, Inc., supra in support of the contention that the forum selection clause in this case is enforceable notwithstanding the existence of a New York Statute which affects the substantive rights of the parties. The Court in Boss was called upon to decide the enforceability of a forum selection clause which stated that any action arising from a dispute had to be brought in a Minnesota Court (Id. at 245). The Plaintiff in Boss argued that since the defendant's actions were in violation of the NYS Labor Law, the case should be maintained in New York. The laws and regulations that were relied upon (Labor Law § 193 (1), § 198-c, and 12 NYCRR 195.1) by the Plaintiff in Boss were comprehensive, forbidding" deductions of more than 10% from an employee's wages" (Id. at 246). Additionally, the Labor Law conferred a right upon affected employees allowing them to file a complaint with the Commissioner of Labor (NY Labor Law § 196-a). On that basis, the Plaintiff contended, the forum selection clause was unenforceable. The Court disagreed stating "Objections to a choice of law clause are not a warrant for failure to enforce a choice of forum clause." (Id. at 247). The Court also noted that it did not reach the merits of whether the NYS Labor Law abrogated inconsistent provisions of the contract. Instead, the Court stated that such an argument
" should have been made to a court in Minnesota-the forum the parties chose by contract. If New York's interest in applying its own law to this transaction is as powerful as plaintiffs contend, we cannot assume that Minnesota courts would ignore it, any more than we would ignore the interests or policies of the State of Minnesota where they were implicated" (Id. at 247)
Spellmans' attempts to distinguish the holding in Boss by pointing out that the language in the Labor Law and the Vessel Dealer Act are different and thus, warrant a different holding by this Court.
This appears to be the first case interpreting the Vessel Dealer Act in connection with the viability of a forum selection clause between a boat manufacturer and dealer.
When interpreting a statute, it is incumbent on the Court to implement the intent of the legislature (People v. Badji, 36 N.Y.3d 393, 398, 2021 WL 496622 [2021]; see State of New York v. Patricia II., 6 N.Y.3d 160, 162, 811 N.Y.S.2d 289, 844 N.E.2d 743 [2006]; In re Fleet Nat. Bank, 20 Misc.3d 879, 880-81, 864 N.Y.S.2d 706, 706-07 [Sup Ct, Albany County 2008]).
The Court is mindful of its limited role in applying the law and not engaging in judicial legislation under the guise of interpretation. This is simply a recognition of the guiding principle which obliges us to look at the language of the Statute and no further, unless necessary. "Where the terms of a statute are clear and unambiguous, "the court should construe it so as to give effect to the plain meaning of the words used" (Auerbach v. Bd. of Educ. of City Sch. Dist. of City of New York, 86 N.Y.2d 198, 630 N.Y.S.2d 698, 654 N.E.2d 972, [1995] citing Patrolmen's Benevolent Assn. v. City of New York, 41 N.Y.2d 205, 208, 391 N.Y.S.2d 544, 359 N.E.2d 1338 [1976]). The Court is under a duty to give as much effect as possible to all the words in the statute and read them in harmony with each other (Loehr v. New York State Unified Ct. Sys., 150 A.D.3d 716, 720, 57 N.Y.S.3d 40, 45 [2d Dept 2017]). Only if discordant language requires the Court's discerning intervention to prevent "absurd or unreasonable consequences" will inquiry into the legislative history be permitted (Auerbach at 204 citing (Doctors Council v. New York City Employees' Retirement Sys., 71 N.Y.2d 669, 674-675, 529 N.Y.S.2d 732, 525 N.E.2d 454 [1988]). This rule is not absolute as pointed out by the Court in Riley v. County of Broome, 95 N.Y.2d 455, 463, 719 N.Y.S.2d 623, 742 N.E.2d 98 [2000]; "[T]he legislative history of an enactment may also be relevant and is not to be ignored even if words be clear [citations and internal quotation marks omitted]" (Id at 463; People v. Badji, supra at 399).
The legislative intent of the Vessel Dealer Act can be found in the notes contained within NY Bill Jacket, 2004 S.B. 6610, Ch.686, since the Act itself does not have a discussion of legislative purpose (2004 Sess. Law News of NY Ch. 686 [S. 6610-C]). A perusal of the Bill Jacket notes fails to indicate any importance to New York maintaining itself as the exclusive forum to enforce the Act.
Turning back to the language contained in the Vessel Dealer Act, there is a section which bears examination. NYGBL § 814 states
"A cause of action to enforce the provisions of this article may be commenced in any court having jurisdiction over such action or may be resolved through arbitration pursuant to arbitration standards recognized by the American Arbitration Association. Every arbitration conducted pursuant to this article shall be conducted in this state. [emphasis ours]"
The Court singled out the final sentence in this law to highlight its limitation.
To demonstrate the Legislature showing an intent to retain litigation in New York, let us compare the above statute with the provisions found in Article 35-E (The Prompt Payment Act). GBL § 757 reads
"The following provisions of construction contracts shall be void and unenforceable:
A provision, covenant, clause or understanding in, collateral to or affecting a construction contract, with the exception of a contract with a material supplier, that makes the contract subject to the laws of another state or that requires any litigation, arbitration or other dispute resolution proceeding arising from the contract to be conducted in another state."
When GBL § 814 is placed side by side with GBL § 757, the paucity of the Plaintiff's argument becomes manifest. "The failure of the Legislature to include a matter within a particular statute is an indication that its exclusion was intended" (Pajak v. Pajak, 56 N.Y.2d 394, 397, 437 N.E.2d 1138, 1139 [1982]; NY Stat. Law § 74).
When the legislature specified that an arbitration proceeding under the Vessel Dealer Act had to take place exclusively in New York, the venerable doctrine" expressio unius est exclusio alterius" creates an "irrefutable inference" that the failure to include litigation within its prohibitions was intentional (NY Stat. Law § 240).
Accordingly, the forum selection clause in the contract between Plaintiff and Defendant is enforceable and requires this dispute to be heard in North Carolina. This holding does not foreclose the Plaintiff from asserting that the Vessel Dealer Act supercedes the choice of law clause (Article 10) in the subject contract. Such a claim, however must be decided (as agreed upon) by a Judge in Edgecombe County and not before this Court (Boss at 247; see USA India Exp. Imp., Inc. v. Coca-Cola Refreshments USA, Inc., 46 Misc.3d 1215(A), 9 N.Y.S.3d 596 [Sup Ct, Westchester County 2015]. This determination brings the Court to the conclusion that the cross-motion for dismissal must be granted.
Since New York has been found to be the incorrect forum for this lawsuit, the motion for injunctive relief should be made in our Sister State. The Plaintiff's motion for a preliminary injunction will be denied as moot.
We have considered the remaining contentions of Plaintiff's counsel and although they have been advanced with great vigor, they fail to persuade the Court.