168 F. Supp. 3d 556
S.D.N.Y.2016Background
- AMTO (Latvian LLC) claims Energokom assigned two unpaid loans to it: $100,000 and $54,000 lent to Bedford; Bedford accepted but did not repay. Loan documents for Bedford Loans include Latvian choice-of-law and Latvian forum clauses.
- A separate Tomkins loan (originally to Energokom, governed by English law and London exclusive-jurisdiction clause) was later acquired by UNIX and then by Bedford; Bedford asserts it holds this Tomkins claim as a right of setoff.
- AMTO sued Bedford in New York state court in 2012 to collect the Bedford Loans; that action was dismissed in favor of Latvian courts. AMTO refiled in New York federal court in 2014; Bedford counterclaimed for fraudulent conveyance and civil conspiracy and filed third-party claims against Energokom and Kuznetsov.
- AMTO moved for partial summary judgment on breach of contract and to strike defenses/counterclaims; Third-Party Defendants moved to dismiss the third-party complaint. Bedford argued its setoff, fraudulent-conveyance, and conspiracy claims depend on the Tomkins Loan.
- The court held the Tomkins Loan’s English forum-selection clause covers Bedford’s counterclaims/defenses tied to the Tomkins Loan, dismissed the third-party complaint and counterclaims (subject to AMTO/Third-Party Defendants stipulating to English jurisdiction and service), struck related affirmative defenses, and denied AMTO’s summary-judgment motion without prejudice to allow discovery into the validity of the assignment of the Bedford Loans to AMTO.
Issues
| Issue | AMTO's Argument | Bedford's Argument | Held |
|---|---|---|---|
| Whether Bedford’s counterclaims/third-party claims fall within the Tomkins Loan English forum-selection clause | The clause is mandatory and covers claims that depend on validity/enforceability of Tomkins Loan; clause should be enforced (dismiss here) | The claims sound in tort and do not arise from the Tomkins Loan; clause should not reach these claims | Clause covers Bedford’s setoff, fraudulent-conveyance, and conspiracy claims because they depend on the Tomkins Loan; clause is enforceable; third-party complaint and counterclaims dismissed (subject to stipulation) |
| Whether non-signatories (AMTO, Kuznetsov) may invoke the Tomkins forum clause against Bedford | Forum clause should bind claims that are closely related and where enforcement is foreseeable; non-signatories can enforce clause | Non-signatories shouldn’t bind parties who didn’t sign | Non-signatories (AMTO and Kuznetsov) may enforce the clause here because the counterclaims/defenses are derivative of signatory interests |
| Whether enforcement of the forum clause is unreasonable or unjust (Bremen factors) | Enforcement is appropriate; no fraud in clause inclusion; English courts can provide remedies | Enforcement would be unfair/inefficient, risk inconsistent results, and possibly leave Bedford without a remedy; alleged collusive assignment undermines clause | Bedford failed to meet heavy burden to show fraud/overreaching or unreasonableness; speculative inefficiency and piecemeal-litigation concerns insufficient to avoid clause |
| Whether AMTO is entitled to summary judgment on breach of contract for the Bedford Loans | AMTO: Bedford accepted loans and defaulted; summary judgment appropriate | Bedford: setoff based on Tomkins Loan and factual dispute about validity of assignment from Energokom to AMTO; needs discovery under Rule 56(d) | Summary judgment denied without prejudice under Rule 56(d) to permit discovery into the validity of the Energokom→AMTO assignment (standing/assignment issues material) |
Key Cases Cited
- Martinez v. Bloomberg LP, 740 F.3d 211 (2d Cir. 2014) (survey of English law and treatment of forum-selection clauses; application when non-contract tort claims depend on contract)
- Atlantic Marine Constr. Co. v. U.S. Dist. Court for the W. Dist. of Tex., 134 S. Ct. 568 (2013) (forum-selection clauses enforced via forum non conveniens analysis)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (factors for invalidating forum-selection clauses: fraud/overreaching, public policy, unavailability of remedy, extreme inconvenience)
- New Moon Shipping Co. v. MAN B & W Diesel AG, 121 F.3d 24 (2d Cir. 1997) (speculation that no remedy exists abroad insufficient to defeat forum-selection clause)