Opinion
No. 650026/2010.
2010-10-5
CP ENERGY GROUP, INC., Plaintiff, v. WINDY POINT PARTNERS, LLC, et al., Defendants.
James Cecchi, Esq., John M. Agnello, Esq., Lindsey H. Taylor, Esq ., Canella, Byrne, Cecchi, Olstein, Brody & Agnello Roseland, Howard W. Burns, Jr., Esq., New York, Edward Patrick Swan Jr., Esq., Michelle A. Herrera, Esq., Luce Forward Hamilton & Scripps LLP, San Diego, CA, for Defendants Windy Point Partners, LLC, Cascade Wind Holdings, LLC, CRG Partners, LLC, Cannon Power Corp, Windy Point Partners I, LLC, Windy Point Partners II, LLC, and Windy Flats Partners, LLC.
BERNARD J. FRIED, J.
This is a breach of contract action brought by CP Energy Group, LLC against Windy Point Partners, LLC, Cascade Wind Holdings, LLC, CRG Partners, LLC, Cannon Power Corp, Tuolomne Wind Project LLC, Windy Point Partners I, LLC, Windy Point Partners II, LLC, Windy Flats Partners, LLC, and a yet-to-be-identified escrow agent. Before me is defendants' motion to dismiss the complaint, pursuant to CPLR §§ 3211(a)(4) and 327, on the grounds that there is another action pending between many of the same parties in California and on grounds of forum non conveniens.
For the reasons that follow, I conclude that the forum selection clause in the consulting agreement signed by four of the moving parties precludes dismissal of this lawsuit against them on either basis, and that dismissal is not warranted as to the remaining three moving defendants. Consequently, defendants' motion to dismiss is denied.
Defendants Tuolumne Wind Project, LLC and John Doe Escrow Agent have not yet answered the complaint or moved to dismiss it. According to defendants' opening brief, Tuolomne Wind Project, LLC was sold before this lawsuit began and has subsequently been dissolved, and Joe Doe Escrow Agent has not yet, for obvious reasons, been served or appeared in this action. Therefore, I will refer to the remaining seven defendants, which join in the instant motion, simply as “defendants.”
According to the complaint, plaintiff CP Energy Group LLC (“CP Energy”) is a consulting firm that contracted with Windy Point Partners, LLC (“Windy Point”) for the purpose of locating investors to participate in tax equity financing or purchase of the Windy Point Project, a wind farm in the state of Washington aimed at producing renewable energy. CP Energy filed its complaint on January 8, 2010 and served it on January 30, 2010.
The relationship between the parties is as follows: Windy Point was the owner of the project; Cascade Wind Holdings, LLC was the holding company for Windy Point Partners, owning 100% of the equity interest; and CRG Partners, LLC was the majority owner of Cascade Wind Holdings. Cannon Power Corp. is an affiliate of CRG Partners. Non-defendant HSH Nordbank AG provided development financing for the Windy Point Project.
Four of the defendants—Windy Point, Cascade Wind Holdings, LLC, CRG Partners, LLC and Cannon Power Corporation—the four that signed a consulting agreement with plaintiff—filed a complaint against CP Energy on March 15, 2010, in the Superior Court of California for the County of San Diego. The California complaint alleges that CP Energy performed broker-dealer activities without registering with the Securities and Exchange Commission or the California Department of Corporations, and seeks rescission of the consulting agreement.
The complaint alleges that, as part of the consulting agreement, Cannon Power agreed to compensate CP Energy through payment of a success fee upon the closing of a successful tax equity financing or sale of the project. See Compl. ¶ 6. The agreement granted Cannon Power the right to terminate the agreement at any time but stated that if the defendants exercised this right to terminate, CP Energy would be entitled to a success fee for any project sale that closed within twelve months of the termination, of for any tax financing transaction that closed within eighteen months of the termination. Id.
The consulting agreement contains a clause, entitled “Jurisdiction,” which provides in relevant part: “each of Consultant and Client unconditionally and irrevocably submits to the jurisdiction of the courts of the State of New York sitting in the County of New York and to the United States District Court for the Southern District of New York” (the “jurisdiction clause”). See Compl. ¶ 15.
Defendants seek to dismiss plaintiff's complaint in favor of the related, later-filed action in California, and because this case lacks a “substantial nexus” to New York. Defendants maintain that the jurisdiction clause in the consulting agreement can be ignored because it is not a mandatory forum selection clause; rather, it is simply a permissive service-of-suit clause. They further argue that, under a forum non conveniens analysis, I ought to conclude that dismiss the complaint in favor of the California action. Insofar as three of the moving defendants are non-signatories, they argue that the action should be dismissed against them because they cannot be bound by a forum selection clause in a consulting agreement they did not sign.
CPLR § 3211(a)(4) provides that “a party may move for judgment dismissing one or more causes of action asserted against him on the ground that ... there is another action pending between the same parties for the same cause of action in a court of any state or the United States.”
In opposition to defendants' contention that the later-filed California action would provide an adequate resolution in a more appropriate forum, plaintiff claims that the “first-in-time rule” dictates that the court that has first taken jurisdiction is the one in which the matter should be determined. Because the California action was not filed until two months after the New York action, plaintiff insists that it was not filed sufficiently close in time to fit under the exception to the first-in-time rule: i.e., that “[a] New York court may deviate from the first-in-time rule where the actions were filed closely in time, or where the action was filed as a preemptive strike or to try to obtain a tactical advantage in filing in a more favorable forum.” L–3 Commc'ns Corp. v. Safenet, Inc., 45 AD3d 1, 8–9 (1st Dept.2007).
In fact, the California action was filed less than two months after plaintiff served its complaint. In this case, however, I do not need to decide whether the first-in-time rule requires me to deny the motion to dismiss, as I conclude that defendants have waived any objection to jurisdiction based on forum non conveniens .
The four moving defendants that signed the consulting agreement seek to avoid being bound by their consent to suit in New York in the jurisdiction clause by arguing that the jurisdiction clause is not a “forum selection clause” at all but merely a “service of suit clause,” in which the parties consented to New York jurisdiction but did not waive all objections to forum or venue in future disputes.
“[T]he very point' of forum selection clauses, which render the designated forum convenient as a matter of law, is to avoid litigation over personal jurisdiction.” Sterling Nat'l Bank v. Eastern Shipping Worldwide, Inc., 35 AD3d 222, 222 (1st Dept.2006). Accordingly, “it is the well-settled policy of the courts of this State to enforce contractual provisions for choice of law and selection of a forum for litigation. Forum selection clauses, which are prima facie valid, are enforced because they provide certainty and predictability in the resolution of disputes.” Id. (internal citations and quotations omitted).
“[W]here a party to a contract has agreed to submit to the jurisdiction of a court, that party is precluded from attacking the court's jurisdiction on forum non conveniens grounds.” Id. at 223; accord National Union Fire Ins. Co. of Pittsburgh, Pa. v. Worley, 257 A.D.2d 228, 232 (1st Dept.1999) (defendant waived any basis to dispute New York's jurisdiction by agreeing to forum selection clause in agreement); Concord Assets Finance Corp. v. Radebaugh, 172 A.D.2d 446, 448 (1st Dept.1991) (defendant's contention that New York was an inconvenient forum was misplaced, where he had consented to New York jurisdiction in forum selection clause).
A plain reading of the language of the jurisdiction clause makes clear that the signatories consented to jurisdiction in New York. The jurisdiction clause specifically and in strong language chooses New York as the forum for adjudication of disputes. To read it as a mere consent to service of suit rather than an unconditional and irrevocable consent to New York as a forum would unreasonably deprive the clause of its evident meaning. The decisions with authority over this Court, cited by defendants, in which New York courts entertained forum non conveniens motions, involved contractual clauses that did not choose a particular jurisdiction and lacked language of a mandatory nature. Cf. Brooke Group v. JCH Syndicate 488, 87 N.Y.2d 530, 534 (1996) (affirming dismissal of complaint on forum non conveniens grounds in favor of British arbitration proceeding, where clause stipulating that parties “submit to the jurisdiction of a Court of competent jurisdiction within the United States” was service-of-suit clause, not a mandatory forum selection clause); Columbia Casualty Co. v. Bristol–Myers Squibb Co., 635 N.Y.S.2d 173, 175–76 (1st Dept.1995) (holding that contractual clause requiring parties to “submit to the jurisdiction of any Court of competent jurisdiction within the United States” constituted a service of suit clause, rather than a mandatory forum selection clause”). Here, in contrast, the jurisdiction clause chose a particular forum, New York, and selected it “unconditionally and irrevocably.”
Defendants have not argued in this motion that the jurisdiction clause is unenforceable because it is unreasonable, unjust, in contravention of public policy, or invalid due to fraud or overreaching. Indeed, the signatories to the agreement could reasonably have foreseen all of the factors that they now cite as reasons why New York is an inconvenient forum when they signed the consulting agreement consenting to jurisdiction in New York.
Consequently, the four defendants that signed the consulting agreement have waived any right to object to jurisdiction in New York based on forum non conveniens under CPLR § 327. The reasoning and holding of Silver Lane Advisors Llc v. Bellatore LLC, 24 Misc.3d 1218(A), 897 N.Y.S.2d 672 (Sup.Ct. Jul 06, 2009), cited by defendants, has no pertinence to this motion, because in that case there was no similar forum selection clause.
The motion to dismiss is also denied as to the three remaining moving defendants that are not signatories to the consulting agreement, as they apparently are not parties to the litigation in California, and they have not moved to dismiss this lawsuit on any basis other than the existence of the California lawsuit and forum non conveniens. This decision should not be interpreted to constitute any holding as to personal jurisdiction over the non-signatory defendants.
Accordingly, it is
ORDERED that the motion to dismiss is denied; defendants shall serve answering papers in accordance with the CPLR.