Opinion
04-CV-6183.
January 10, 2005
DECISION and ORDER
INTRODUCTION
Plaintiff Vanlab Corporation ("plaintiff" or "Vanlab") brings this breach of contract action against Blossom Valley Foods, Corp. ("Blossom") and its director, Robert M. Wagner ("Wagner") (collectively "defendants"), seeking to recover $224,000 it paid to Blossom to purchase an amount of vanilla extract. Defendants now move to dismiss plaintiff's complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(3), arguing that a forum selection clause contained in the contract at issue requires that any dispute arising from the contract be pursued in the courts of Santa Clara County, California. For the reasons set forth below, defendant's motion to dismiss plaintiff's claims is denied.
BACKGROUND
Plaintiff is a New York corporation with its principal place of business located in Monroe County, New York, and is engaged in the business of selling flavoring extracts. Blossom is a California corporation with its principal place of business located in South Santa Clara County, California, and is engaged in the manufacture and distribution of food products, including flavoring extracts. Wagner is the president of Blossom.
In June 2002, Blossom announced that it had entered into an agreement with vanilla product manufacturing company Tahitian Import/Export ("TIE"), whereby Blossom would become the exclusive distributor of TIE's vanilla products in the United States. On July 11, 2002, Blossom furnished plaintiff with a specification sheet for TIE's vanilla products, which describes its products in relevant part as:
A dark amber colored alcoholic extract containing all flavoring components having a true vanilla aroma and flavor. All ingredients are FDA approved for use in flavoring. This product conforms to the standard of identity for vanilla extract established for double fold strength vanilla extract and is made by direct extraction of vanilla beans.See Complaint, Ex. B (Doc. No. 1).
On March 10, 2003, plaintiff transmitted to Blossom a purchase order, requesting 2,640 gallons of 2 Fold Bourbon Vanilla Extract. That purchase order, Order No. 6972, set forth the terms of plaintiff's offer, requiring, inter alia, that the extract must meet: (1) "all federal and local regulations and standards for 2 fold vanilla extract;" and (2) "all specifications as provided by [Blossom] as of 03/10/03."See Complaint, Ex. A (Doc No. 1). Defendant Wagner, president of Blossom, signed the bottom of Purchase Order No. 6972, indicating Blossom's acceptance of plaintiff's offer.
On March 14, 2003, Blossom engaged shipping company Roadway Express to ship the requested extract to plaintiff. With the shipment, Blossom issued plaintiff an invoice and a Bill of Lading, each of which contained a provision requiring that the terms of the contract be construed under the laws of the State of California and that "[a]ny action or proceedings arising in connection with any or all rights by and among [Blossom] and [Vanlab], shall be . . . litigated exclusively in Santa Clara County, California. . . ." See Defendants' Motion to Dismiss Plaintiff's Complaint, Ex. C, p. 2 and Ex. D, p. 2 (Doc. No. 7).
As a result of what appears to be a photocopying error, the documents actually read:
Any action or proceedings arising in connection with any and all rights among Seller and Buyer shall be and litigated exclusively in Santa Clara County, California. . . .See Defendants' Motion to Dismiss Plaintiff's Complaint, Ex. C, p. 2 and Ex. D, p. 2 (Doc. No. 7).
On January 7, 2004, plaintiff requested that the University of Georgia Center for Applied Isotope Studies test a sample of the vanilla extract it purchased from Blossom. By letter dated February 25, 2004, the University of Georgia informed plaintiff of its findings, which concluded that the vanilla extract plaintiff purchased from Blossom was "not derived from vanilla bean or even entirely from a botanical product."See Complaint, Ex. C (Doc. No. 1).
In February 2004, TIE commenced litigation against Blossom in California Superior Court for Santa Clara County (the "California State Court Action"). Plaintiff then filed this action against Blossom on April 22, 2004. On June 1, 2004, Blossom filed a cross-complaint against TIE in the California State Court Action, naming plaintiff as a cross-defendant in that action, seeking a determination of the obligations of TIE and Blossom with respect to the same claims plaintiff asserts in this action pending before the Court.
DISCUSSION
Rule 12(b)(3) of the Federal Rules of Civil Procedure provides for dismissal of claims based on improper venue. FED. R. CIV. PROC. 12(b)(3). Venue is improper and thus subject to dismissal under 12(b)(3) where the action is commenced in a court other than one selected by parties by way of a valid forum selection clause. Mercury West A.G., Inc. v. R.J. Reynolds Tobacco Company, 2004 WL 421793 (S.D.N.Y. 2004).
Defendants bring this motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3), claiming that a forum selection clause contained in the invoice and bill of lading prevents plaintiff from commencing this action now pending in the Western District of New York. Plaintiff argues that the invoice and bill of lading are not part of the contract between it and Blossom, and thus, it is not bound by the terms of those documents, including the forum selection clause. However, defendants contend that plaintiff expressly agreed to the terms of the bill of lading and the invoice, and that even if the invoice and bill of lading were not part of the contract proper, the forum selection clause would still apply based on a prior course of dealings between the parties. The essential question before the Court is whether the invoice and the bill of lading constitute part of the contract between the parties. In determining defendant's motion, "this Court must accept the factual allegations of the complaint as true and must draw all reasonable inferences in favor of the plaintiff." Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996).
Under New York law a contract is formed once four elements are in place: (1) offer; (2) acceptance; (3) mutual assent; and (4) an intent to be bound. Wells Fargo Bank Minnesota v. Brooks America Mortgage Corporation, 2004 WL 2072358 at *6 (S.D.N.Y. 2004). Here, all four elements were met and the contract was formed well before Blossom issued the invoice and bill of lading. Once Wagner signed Purchase Order No. 6972, he committed Blossom to providing plaintiff with the extract under the terms plaintiff proposed in its offer. As such, the entirety of the understanding between the parties is contained in the terms of Purchase Order No. 6972, which does not contain the forum selection clause on which defendants base their motion to dismiss.
Nonetheless, a party may propose additional terms to a contract after formation has occurred, which if accepted, will be incorporated into the contract. Pursuant to § 2-207 of New York State Uniform Commercial Code, additional terms stated in a written confirmation will be incorporated into the contract unless they materially alter it. N.Y. UNIFORM COMMERCIAL CODE § 2-207(2)(b) (McKinney 2002).
Here, the invoice and bill of lading issued by Blossom fail to alter the original terms of the contract established by Purchase Order 6972. First, the addition of a forum selection clause is considered a material alteration and therefore cannot be unilaterally incorporated into a contract without the consent of the parties. One Step Up, Limited v. Kmart Corporation, 1997 WL 391117, at *2 (S.D.N.Y. 1997). Since there is no evidence that plaintiff expressly assented to the addition of the forum selection clause, plaintiff is not bound by its terms. Second, a bill of lading issued after the formation of a contract and not referred to in that contract serves only as a receipt for the transfer of the goods, and will not serve to alter the terms of the previous agreement. Greenstone Shipping Co, S.A. v. Transworld Oil, Ltd., 588 F.Supp. 574, 579-580 (D.Delaware 1984). Again, since Purchase Order No. 6972 mentions neither the invoice nor the bill of lading, plaintiff is not bound to honor the terms contained therein.
Nonetheless, defendants argue that previous business dealings between plaintiff and Blossom establish plaintiff's assent to the forum selection clause. Where a manufacturer has a well-established custom of sending purchase order confirmations, such as an invoice or a bill of lading, that contain additional terms to be incorporated into the contract, a buyer who has made numerous purchases from the manufacturer may be bound to honor those terms, even absent express consent. New Moon Shipping Company, Limited v. Man B W Diesel AG, 121 F.3d 24, 31 (2d Cir. 1997). However, an understanding that the additional terms will be incorporated into the contract requires "an indication of common knowledge and understanding of the parties." Id. There is no such common knowledge and understanding between plaintiff and Blossom. While plaintiff received a previous order from Blossom, plaintiff actually placed that order with TIE. Even if plaintiff had placed that order with Blossom, one previous transaction could not possibly establish a common understanding that the terms of the invoice and the bill of lading would be incorporated into the contract. Such common knowledge and understanding comes only after repeated dealings. Id. Therefore, any business plaintiff previously conducted with Blossom will not serve to incorporate the forum selection clause into the contract.
CONCLUSION
For the reasons set forth above, I find that the forum selection clause contained in the invoice and bill of lading is not part of the contract between plaintiff and Blossom, and that plaintiff therefore is not prevented from pursuing a legal remedy against defendants in the Western District of New York. Accordingly, defendants' motion to dismiss plaintiff's claims for improper venue is denied.
ALL OF THE ABOVE IS SO ORDERED.