Opinion
19996/06.
Decided June 4, 2008.
Plaintiff was represented by Michael J. Good, Esq. Defendant was represented by Howard Justvig, Esq. of Becker Ross, LLP.
The Complaint of plaintiff Clean Harbors Environmental Services Inc. seeks to enforce a Massachusetts judgment for $9,905.28, obtained against defendant A. Pensato Ind. LLC on its default in the Massachusetts action. The judgment is based on Plaintiff's claim for breach of an Emergency Response Agreement, pursuant to which Plaintiff provided environmental cleanup services to Defendant in December 2005.
Defendant has asserted a counterclaim alleging that "Plaintiff performed its services for defendant in a negligent and careless manner resulting in significant extra costs and fines to remove material from their location." Defendant seeks damages in excess of $35,000, including $14,000 in additional cleanup costs and $10,000 paid to the Department of Environmental Protection.
In a decision and order dated January 2, 2008, a justice of this court granted Plaintiff's motion for summary judgment, stating that "the plaintiff is awarded judgment against the defendant in the amount of $9,905.28, together with interest and costs." The decision and order did not address either Plaintiff's claim for attorneys fees, or Defendant's counterclaim.
Defendant brought this motion by Order to Show Cause, signed by the justice who granted summary judgment, seeking an order "pursuant to CPLR 3212 (e) staying the entry and enforcement of the January 2, 2008 $9,905.28 summary judgment award of this Court pending the determination of defendant's counterclaims in this action in excess of $35,000." (Order to Show Cause dated January 28, 2008.) Plaintiff has cross-moved for summary dismissal of Defendant's counterclaim, purportedly pursuant to CPLR 3212.
The Court notes in the first instance that neither party has suggested that either the motion or cross-motion must or should be referred to the justice who granted summary judgment. ( See CPLR 2221 [a], [c].)
Because the granting of Plaintiff's cross-motion would moot Defendant's motion, the cross-motion will be addressed first. Plaintiff contends that Defendant's counterclaim must be dismissed, without prejudice to its pursuit in the Massachusetts courts, by reason of a provision in the parties' agreement that Plaintiff characterizes as a "forum selection clause." Plaintiff also contends that any question as to the enforceability of the "forum selection clause" was resolved by the decision and order granting summary judgment, and cannot be reconsidered here by reason of the law of the case doctrine.
The contractual provision at issue reads:
" Applicable Law — This agreement shall be interpreted and enforced according to the laws of the Commonwealth of Massachusetts and the parties agree to submit to the Jurisdiction [ sic] of the courts of the Commonwealth of Massachusetts for any disputes arising under this Agreement."
Plaintiff's contention that the law of the case doctrine requires that the quoted provision be given effect as a "forum selection clause," and that Defendant's counterclaim be dismissed accordingly, is based upon a single sentence in the decision and order granting summary judgment, i.e. "Massachusetts courts enforce forum selection clauses if they are fair and reasonable." But the enforceablility of the provision as a forum selection clause was not an issue either before the Massachusetts court that granted the judgment, or before the justice deciding Plaintiff's summary judgment motion.
The issue before both courts was whether Defendant, a New York limited liability company that had contracted for services of a Massachusetts corporation to be conducted in New York, was subject to the personal jurisdiction of the Massachusetts court. Neither court was called upon to determine whether the Massachusetts court was the exclusive forum for the resolution of Plaintiff's claim or any other claim that one party might assert against the other.
The quoted provision was material to the resolution of the question of personal jurisdiction because the clause clearly expresses Defendant's consent to the personal jurisdiction of the Massachusetts courts. As stated in the decision and order on summary judgment, "the Massachusetts' complaint alleges that the defendant executed a contract with Plaintiff . . . whereby Defendant expressly agreed to submit to the jurisdiction of the courts of the Commonwealth of Massachusetts."
But consent to the jurisdiction of another state does not, either expressly or by implication, include an agreement that only the courts of that other state may hear any dispute between the parties. Put another way, by agreeing that Plaintiff could sue Defendant in Massachusetts, Defendant did not agree that Defendant could not sue Plaintiff in New York. In short, the quoted contractual provision is not a "forum selection clause," and cannot be the basis for dismissal of Plaintiff's counterclaim.
CPLR 501 mandates the enforcement of a "written agreement fixing place of trial, made before an action is commenced," unless "there is reason to believe than an impartial trial cannot be had" in the designated place ( see CPLR 510.) "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." ( LSPA Enter. Inc. v Jani-King of NY, Inc., 31 AD3d 394, 395 [2d Dept 2006].)
Although neither statute nor case law requires particular language for an enforceable forum selection clause, the contract must reveal the parties' intention that all disputes, or some described kind, be resolved in the designated forum or forums, and in no other. The words "only" or "exclusive" or "exclusively" are clear enough. ( See Chiarizia v Xtreme Rydz Custom Cycles , 43 AD3d 1353, 1353 [4th Dept 2007] ["only"]; LSPA Enter. Inc. v Jani-King of NY, Inc., 31 AD3d at 395 ["exclusively"]; Fleet Capital Leasing/Global Vendor Fin. v Anguili Motors, Inc., 15 AD2d 535, 536 [2d Dept 2005] ["exclusive"]; B R Mgmt. Leasing Corp. v Triarc Restaurant Group, 269 AD2d 804, 805 [4th Dept 2000] ["only"].) In the context of the particular transaction, other language expressing the intent — such as "[a]ll actions . . . shall be heard and determined" in a designated forum" — will suffice. ( See Carematrix of Mass., Inc. v Kaplan, 385 F Supp 2d 195, 198 [SDNY 2005].)
No such intent can be gleaned from the contractual provision at issue here, and Plaintiff offers no other evidence that, by "agree[ing] to submit to the Jurisdiction [ sic] of the courts of the Commonwealth of Massachusetts for any disputes arising under [the] Agreement," Defendant was also agreeing that any claim it might have against Plaintiff could be litigated "only" in the Massachusetts courts as forums of "exclusive" jurisdiction. The "Emergency Response Agreement" also provides that it "shall be interpreted and enforced according to the laws of the Commonwealth of Massachusetts." Plaintiff makes no showing that Massachusetts law would interpret the contractual provision at issue as a forum selection clause, or would otherwise preclude resolution of Defendant's claim here and now, and so the Court offers no opinion whether that would make any difference.
Defendant rests its motion on CPLR 3212 (e), which expressly authorizes a court to grant summary judgment "as to one or more causes of action, or part thereof, in favor of any one or more parties, to the extent warranted, on such terms as may be just." Specifically, a court "may also direct . . . that the cause of action as to which summary judgment is granted shall be severed from any remaining cause of action; or . . . that the entry of the summary judgment shall be held in abeyance pending the determination of any remaining cause of action." (CPLR 3212 [e].)
The decision and order on summary judgment here does not expressly either sever any cause of action or direct that the entry of judgment be held in abeyance. And the Court notes again the prayer for attorneys fees in Plaintiff's Complaint that is not mentioned in the decision and order. A Central Compliance Part Order dated January 8, 2008 provides for disclosure only as to the counterclaim "as plaintiff has received summary judgment on its claim," and for defendant to file a Note of Issue by a specified date.
The question then becomes whether this Court should exercise discretion to stay entry or enforcement on Plaintiff's judgment, and, if so, on what conditions.
"[A] stay of execution pending resolution of the remaining claims and counterclaims . . . is an appropriate method of effectuating [the] objective" of avoiding "possible prejudice to a party against whom possible summary judgment is granted." ( Robert Stigwood Organization, Inc. v Devon Co., 44 NY2d 922, 923.) But the court's discretion "is not unlimited, and is to be exercised only if there exists some articulable reason for concluding that the failure to impose conditions might result in some prejudice, financial or otherwise, to the party against whom the partial summary judgment is granted should that party subsequently prevail on the unsettled claims." ( Id. [emphasis added].) "Among the conditions which may be imposed is a requirement that an undertaking be posted as security for an order granting partial summary judgment where enforcement of that order has been stayed pending resolution of the remaining claims and counterclaims in the action." ( Ren Hock Realty, Inc. v Fabricon Design Group, Inc., 274 AD2d 384, 384 [2d Dept 2000].) A stay might also be conditioned on the remaining claim or counterclaim being "prosecuted expeditiously." ( See Mike Michaelson Associates, Inc. v Soifer, 182 AD2d 503, 505 [1st Dept 1992].)
Defendant here offers no evidence that Plaintiff is "financially unstable," so as to suggest a risk that any judgment Defendant might obtain on its counterclaim could not be enforced. ( See Rona-Tech Corp. v LeaRonal, Inc., 254 AD2d 473, 474 [2d Dept 1998].) The primary prejudice alleged by Defendant is the delay, expense, and inconvenience in enforcing the judgment in Massachusetts, particularly where the damages alleged on the counterclaim (i.e. more than $35,000) far exceed the amount awarded on summary judgment (i.e. $9,905.28.) ( See Moody v Monacelli, 225 AD2d 926, 928 [3rd Dept 1996].)
The alleged prejudice to Defendant must be assessed in light of all of the facts and circumstances. First, and perhaps foremost, is that the grant of partial summary judgment was based entirely on the Massachusetts judgment, itself obtained on default. The merits of Plaintiff's underlying claim were not examined at all by the court, and, we may fairly assume, received limited examination by the Massachusetts court. Although Defendant defaulted, it appears that its only contact with Massachusetts was in arranging for Plaintiff's services to be rendered in New York.
Defendant has submitted the affidavits of its sole member, detailing the factual bases for the damages alleged on the counterclaim. Plaintiff submits no evidence in contradiction, and does not otherwise suggest that Defendant's counterclaim has no merit or is asserted solely or primarily to delay. Plaintiff offers no evidence of its financial ability to satisfy any judgment obtained by Defendant, and offers no other evidence that it would be prejudiced by a stay. ( See Dumser v GSL Enter., Inc., 171 AD2d 583, 584 [1st Dept 1991].)
If the terms of the January 8, 2008 Central Compliance Part Order have been complied with, disclosure as to the counterclaim should be substantially complete; and Defendant is required to file and serve a note of issue on the counterclaim no later than July 16, 2008. It appears, therefore, that the counterclaim is being prosecuted expeditiously.
The Court is aware that the statute speaks of a stay of the "entry of the summary judgment" ( see CPLR 3212 [e]), whereas the cases speak of a stay of "execution" of the judgment ( see, for example, Robert Stigwood Organization, Inc. v Devon Co., 44 NY2d at 923.) The difference could prove highly significant in some circumstances ( see Interstate Equip. Corp. v Bell, 288 AD2d 809, 810-11 [3rd Dept 2001]); and in most cases a stay of execution might sufficiently accommodate the competing interests. Here, however, because there is at least an open question as to Plaintiff's claim for attorneys fees, a stay of the entry of judgment appears more appropriate.
Defendant's motion is granted to the extent that entry of any judgment on the decision and order dated January 2, 2008 is stayed pending determination of Defendant's counterclaim; Plaintiff may, however, move to vacate the stay if the counterclaim is not expeditiously determined; and Plaintiff may move to modify the stay upon discontinuance of its claim for attorneys fees.
Plaintiff's cross-motion is denied.