Opinion
No. 217-2019-CV-00757
01-10-2020
Triple C Real Estate Investments, LLC v. Shelter Senior Living VI, LLC and Shelter Senior Living, VII, LLC
ORDER
Plaintiff Triple C Real Estate Investments, LLC ("Triple C") is a member of Defendants Shelter Senior Living VI, LLC ("SSL VI") and Bright View Senior Living VII, LLC ("BVSL VII"). Triple C brought an action in this court seeking declaratory relief, injunctive relief and a preliminary injunction, seeking to inspect business records of the Defendants based upon its rights under the Maryland LLC Act and the Operating Agreements of the LLCs. A preliminary injunction hearing was scheduled for November 14, 2019. On November 13, 2019 the Defendants filed a pleading captioned "Motion to Cancel the November 14, 2019 Hearing and to Dismiss the Complaint or, in the Alternative, to Compel Arbitration and Stay Plaintiff's Claims" (the "Merits Motion to Dismiss"). The Merits Motion to Dismiss alleged that a forum selection clause in the agreements between the parties required any litigation to be brought in Maryland or, in the alternative, that the agreements between the parties require that any dispute be arbitrated. The hearing went forward, but the Court ordered that it would not consider the Merits Motion to Dismiss until full briefing was completed. On November 27, 2019, Defendants moved to dismiss for lack of personal jurisdiction (the "Jurisdiction Motion to Dismiss").
Apparently Plaintiff misnamed Defendant Bright View Senior Living VII, LLC, referring to it in the Complaint as Shelter Senior Living VII, LLC. The Court will treat this as a misnomer rather than a case of mistaken identity. Perez v. Pike Industries, Inc., 153 N.H. 158, 162 (2005).
For the reasons stated in this Order, the Jurisdiction Motion to Dismiss is DENIED. The Merits Motion to Dismiss is GRANTED IN PART and this case is DISMISSED WITHOUT PREJUDICE in light of the forum selection clause in the agreements between the parties. In light of this disposition, the Court need not consider whether or not it must compel arbitration.
II
Both Defendants allege that the case should be dismissed because there is no jurisdiction in New Hampshire. Defendants recognize that jurisdiction may be satisfied by either general or specific jurisdiction. Vermont Wholesale Bldg. products, Inc. v. J.W. Jones Lumber Co., Inc., 154 N.H. 625, 628 (2006). Defendants argue that Triple C has not established that it is engaging "in any business in New Hampshire, let alone continuous or systematic business." (Jurisdiction Mot. to Dismiss, at 8.) In response, Triple C has filed documents which would suggest that both Defendants have, in fact, done business in New Hampshire. (See generally Pl.'s Mem. in Support of Obj. to Def.'s Mot. to Dismiss for Lack of Personal Jurisdiction.)
The Court need not, however decide this issue. Defendants have waived their jurisdictional defense. In New Hampshire courts, a party may waive jurisdictional defenses either expressly or by implication. G. MacDonald, Wiebusch on New Hampshire Civil Practice and Procedure, § 2.10 (3rd ed. 2010). A party waives a jurisdictional defense by implication it seeks adjudication of issues beyond the challenge to jurisdiction. See generally Lunt v. Gaylor, 150 N.H. 96, 97 (2003); Barton v. Hayes, 141 N.H. 118, 120 (1996); Patten v. Patten, 79 N.H. 388 (1920); Merrill v. Houghton, 51 N.H. 61 (1871). In this case, Defendants filed the Jurisdiction Motion to Dismiss after they had invoked the aid of the Court to transfer the case to Maryland, or compel arbitration. In doing so, they consented to the jurisdiction of the Court. The Court therefore turns to the Merits Motion to Dismiss.
Moreover, even if they had not impliedly consented to jurisdiction, it is likely that they explicitly assented to jurisdiction. Both SSL VI and BVSL VII filed regulatory notices with the Bureau of Securities Regulation ("BSR") in Concord ,New Hampshire and have tendered checks in the amount of $350 and $500 for the filings. The notices irrevocably appoint the BSR as the Defendants' agents for service of process within the State. The New Hampshire Supreme Court has noted that "[o]ne of the most solidly established ways of giving such consent to jurisdiction is to designate an agent for service of process within the State." Chick v. C & F Enterprises, LLC, 156 N.H. 556, 558 (2007). Defendants argue that the filings arise from the Subscription Agreements between each Defendant and Triple C, but recognize that if the Court determines that the Subscription Agreements and Operating Agreement are one under Maryland law — as Defendants argue in their merits Motion to Dismiss — then they are bound by their designation of the BSR as their agent. (Def.'s Reply Mem. in Further Supp. of Def.'s Mot. to Dismiss for Lack of Personal Jurisdiction, at 7-8.)
III
On a Motion to Dismiss, a court must consider whether the plaintiff's allegations are reasonably susceptible of a construction that would permit recovery. Williams v. O'Brien, 140 N.H. 595, 597-98 (1995). Triple C's rights depend completely upon the Subscription Agreement it signed with respect to SSSL VI and BVSL VII and the Operating Agreement of the LLCs. Defendants have filed copies of the Subscription Agreements and the Operating Agreements of both LLCs, and Plaintiff does not appear to challenge the authenticity of the documents. The trial court may consider documents attached to the plaintiff's pleadings or documents, the authenticity of which is not disputed by the parties. Beane, 160 N.H. at 711.
Triple C is a Class B member of both LLCs. Triple C invested in both SSL VI and BVSL VII by executing a Subscription Agreement. The Agreements contain similar, but not precisely the same terms.
The SSL VI subscription agreement provides in relevant part that in order to subscribe a person must:
(c) Sign both the signature page of this Subscription Agreement and the signature page of the Operating Agreement; and(SSL VI Subscriptions Agreement, at 1.)
(d) Return the entire original of the Subscription Agreement and the original of the signature page of the Operating Agreement to the Company together with the payment described in Section 2 below.
The Subscription Agreement provides in relevant part that:
This Subscription Agreement (the "Subscription Agreement") is submitted to the Company in accordance with and subject to the terms and conditions described in this Subscription Agreement and the Articles of Organization (the "Articles") and the Operating Agreement (the "Operating Agreement") of the Company attached hereto as Exhibits A and B (collectively, the "Organizational Documents").(SSL VI Subscription Agreement, at 1.)
It further states that "[a]ll exhibits, supplements and attachments hereto are hereby incorporated by reference and form an integral part of this Subscription Agreement." (SSL VI Subscription Agreement at 16, § 12.) Defendants therefore argue that the SSL VI Subscription Agreement and the SSL VI Operating Agreement are all part of one contract.
The BVSL VII Subscription agreement contains terms which are essentially indistinguishable. (See BVSL VII Subscription Agreement, at 1 § 1, 3 § 4.) The BVSL VII Subscription Agreement specifically provides at 18 § 12 that "[a]ll exhibits, supplements and attachments hereto are hereby incorporated by reference and form an integral part of this Subscription Agreement." Defendants therefore similarly argue that the BVSL VII Subscription Agreement and the BVSL VII Operating Agreement are all part of one contract.
Both Agreements contained forum selection clauses which are virtually identical, and vest jurisdiction in Maryland courts:
The only distinction between the two Agreements is that the final sentence of the BVSL VII Subscription Agreement refers to "Baltimore County, Maryland" rather than "Baltimore City, Maryland."
17. Choice of Jurisdiction. Subject to Section 16 [requiring arbitration] hereof, the parties agree that any action or proceeding arising, directly, indirectly or otherwise in connection with, out of, or from this Subscription Agreement, any breach hereof, or any transaction covered hereby shall be resolved within Baltimore City, Maryland or the federal courts of Maryland. To the extent any matter related hereto shall be brought in any court, the parties consent and submit to the jurisdiction of the United States federal courts located within Baltimore, Maryland and the state courts located within Baltimore City, Maryland as the exclusive judicial forum.(SSL VI Subscription Agreement, at 17 § 17); (BVSL Subscription Agreement, at 19, § 17.)
Similarly, while the language is not exactly alike, both Subscription Agreements contain arbitration clauses. The SSL VI arbitration provision specifically provides that any claim arising out of "this Subscription Agreement" shall be resolved exclusively "in accordance with this Section 16," which refers to arbitration. (SSL Subscription Agreement, at 17 § 16.) The BVSL VII subscription agreement specifically mandates arbitration not only for claims arising out of the subscription agreement but from "this Subscription Agreement or the Operating Agreement." Both agreements provide they are governed by Maryland law. (SSL VI Subscription Agreement, at 17 §17); (BVSL Subscription Agreement, at 18 § 15.)
A
New Hampshire enforces forum selection clauses. See generally RSA 508-A: 3; Strafford Technology, Inc. v. Camcar Division of Textron, Inc., 147 N.H. 174, 177 (2001). Similarly, where parties to a contract select the law of a particular jurisdiction to govern their affairs, that choice will be honored if the agreement has a "significant relationship" to that jurisdiction. Hobin v. Coldwell Banker Residential Affiliates Inc., 144 N.H. 626, 628 (2000); Allied Adjustment Services v. Heney, 125 N.H. 698, 700 (1984). The Court has further held that where a corporation is incorporated in the state to which the choice of law provision refers, the agreement bears a significant relationship to that state. Hobin, 144 N.H. at 628-29; Heney, 125 N.H. at 700; see also Allot Communications, Ltd. v. Cullen, 2010 WL 6620308 (N.H. Super. Feb. 7, 2010); Meyer v. Callahan, 2010 WL 4916563 (D.N.H. Nov. 29, 2010). Both Defendant LLCs are Maryland limited liability corporations.
Maryland law is in accord. Secure Financial Services, Inc. v. Popular Leasing USA, Inc., 892 A.2d 571, 576 (Md.2006). --------
Defendants argue that since the Subscription Agreement for both LLCs provides a forum selection clause requiring disputes be resolved in Maryland, this case must be dismissed. Triple C argues, however, that its right to inspect documents, the basis of his lawsuit, arises out of the SSL VI Operating Agreement and the BVSL Operating Agreement, which contains no forum selection clause. (Pl.'s Obj. to Def.'s Motion to Cancel the November 14, 2019 Hearing and Dismiss the Compl., or in the Alternative to Compel Arbitration and Stay Pl.'s Claims, at 7-8.) Triple C argues that the fact that each agreement has an integration clause means that they are intended to be read separately. (Id at 9.) It also argues that because the subscription agreements stated that they are "subject to the terms and conditions described... in the Operating Agreement", they cannot incorporate the operating agreement. (Id.) The Court is not persuaded.
B
Both the SSL VI Subscription Agreement and the BCSL VI Subscription Agreement specifically state that "[a]ll exhibits, supplements and attachments hereto are hereby incorporated by reference and form an integral part of the Subscription Agreement." (SSL VI Subscription Agreement at 16, § 12); (BVSL Subscription Agreement at 18, § 12.) The Operating Agreement, under which Triple C asserts its claims to inspect, is an attachment to the Subscription Agreements for both SSL IV and BVSL VII. Moreover, in order to invest in either LLC, a party is required to sign the signature page of both the Subscription Agreement and the Operating Agreement. (SSL VI Subscription Agreement, at 1); (BVSL Subscription Agreement, at 1, 3 § 4.)
Under Maryland law "where several instruments are made part of a single transaction they will all be read and construed together as evidencing the intention of the parties in regard to the single transaction". Ford v. Antwerpen Motor Cars Ltd., 117 A. 3d 21, 27 (Md. 2015). Similarly, "where a contract comprises two or more documents, the documents are to be construed together, harmoniously, so that to the extent possible, all of the provisions can be given effect." Rourke v. Amchem Products, Inc., 863 A.2d 926, 941 (Md. 2004). With respect to both Defendant LLCs, the Subscription Agreements and the Operating Agreements must be considered "part of a single transaction". Ford, 117 A. 3d at 27. They specifically so state. To become a member of either LLC, both the sSubscription Agreement and the Operating Agreement must be executed and returned to the LLC's.
C
It follows that, in accordance with the terms of the contract between the parties any dispute between the parties must be litigated in the State of Maryland. Therefore, for the reasons stated in this Order, the Jurisdiction Motion to Dismiss is DENIED. The Merits Motion to Dismiss is GRANTED IN PART and this case is DISMISSED WITHOUT PREJUDICE in light of the forum selection clause in the agreements between the parties. In light of this disposition, the Court need not consider whether or not it must compel arbitration.
SO ORDERED
1/10/2020
DATE
s/Richard B . McNamara
Richard B. McNamara,
Presiding Justice RBM/