BMR & Associates, LLP v. SFW Capital Partners, LLC
92 F. Supp. 3d 128
S.D.N.Y.2015Background
- BMR & Associates LLP and BMR Advisors (Indian professional services firms) provided tax, regulatory, due diligence, valuation, and deal-implementation services to SFW Capital Partners between Aug 2012–Feb 2013 in connection with a proposed investment in an Indian target; the deal was not consummated and SFW did not pay for the services.
- BMR alleges >1,800 hours and over $400,000 in work, performed under: (a) an August 3–4, 2012 email engagement for an initial review (Email Agreement); (b) an August 30, 2012 engagement letter for financial/tax due diligence (August 30 Agreement) that included Appendix B labeled “Standard Terms of Business”; and (c) later tax-structuring and implementation work (disputed whether governed by contract).
- Appendix B to the August 30 Agreement contains a governing-law and exclusive-jurisdiction clause: Indian law governs and disputes are subject to exclusive jurisdiction of Indian courts.
- BMR sued in SDNY asserting breach of contract, account stated, quantum meruit, unjust enrichment, and fraudulent inducement (ten counts total). SFW moved to dismiss based on the forum-selection clause and, alternatively, forum non conveniens.
- The court treated Plaintiffs’ pleading and affidavits as true for the motion and evaluated (1) enforceability/scope of the forum-selection clause and (2) forum non conveniens factors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability and scope of forum-selection clause in Appendix B | Clause applies only to the August 30 due-diligence engagement, not to all BMR work; some work was not under that contract | Clause is mandatory, was reasonably communicated (BMR drafted it), and applies to all work covered by BMR’s Standard Terms of Business, including later tax-structuring/implementation work | Clause is enforceable and covers due diligence and post-August-30 tax/implementation claims; those claims must be litigated in India |
| Fraudulent-inducement claims as defense to forum clause | Fraud claims defeat enforcement of forum clause | Fraud-in-the-inducement of the whole contract does not avoid a forum clause unless fraud induced agreement to the clause specifically | Fraud claims do not defeat the forum-selection clause here |
| Applicability of clause to non-signatory BMR & Associates | BMR & Associates not a signatory, so not bound | Non-signatories closely related to signatories and voluntarily joined suit can be bound | BMR & Associates is bound given close relation to BMR Advisors and joint prosecution |
| Forum non conveniens (if clause inapplicable) | SDNY is an appropriate forum; Indian courts backlog makes Indian forum inadequate and unfairly inconvenient | India is an adequate, more appropriate forum given parties, witnesses, and Indian law choice; public interest favors India | Forum non conveniens dismissal warranted; SDNY gives minimal deference to foreign plaintiff, India is adequate, private factors neutral, public factors strongly favor India; dismissal conditioned on defendant consenting to Indian jurisdiction and waiving new statute-of-limitations defenses |
Key Cases Cited
- Martinez v. Bloomberg LP, 740 F.3d 211 (2d Cir. 2014) (four-part test for forum-selection clause enforcement)
- Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007) (mandatory vs. permissive forum-clause analysis)
- New Moon Shipping Co. v. MAN B & W Diesel AG, 121 F.3d 24 (2d Cir. 1997) (plaintiff bears burden to overcome enforceable forum clause)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses presumptively valid; narrow exceptions)
- Roby v. Corporation of Lloyd’s, 996 F.2d 1353 (2d Cir. 1993) (circumstances that render forum-selection clause unreasonable)
- Gulf Oil Co. v. Gilbert, 330 U.S. 501 (1947) (forum non conveniens balancing of private and public interest factors)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) (foreign plaintiff’s forum choice gets less deference)
- Union Carbide Corp. v. Union Carbide Philippines, 809 F.2d 195 (2d Cir. 1987) (India an adequate forum for contract disputes; conditioning dismissal on jurisdictional and limitations waivers)
- Aguas Lenders Recovery Group v. Suez, 585 F.3d 696 (2d Cir. 2009) (non-signatories may be bound by forum clauses in certain circumstances)
- LaSalle Bank Nat. Ass’n v. Nomura Asset Capital Corp., 424 F.3d 195 (2d Cir. 2005) (contract interpretation principles to give effect to all provisions)