Bright Kids NYC, Inc. v. Quarterspot, Inc., 1:20-cv-09172

Plaintiffs Bright Kids NYC, Inc. and its owner Bige Doruk borrowed from QuarterSpot under several business loan agreements (notably a 2017 loan showing ~31.7% interest in the contract).
QuarterSpot sued Bright Kids in Virginia state court in 2019 for breach of the 2017 loan.
Plaintiffs then filed a putative class action in New York seeking a declaratory judgment that QuarterSpot’s business loan agreements are void under New York’s criminal usury cap (25% annual rate).
QuarterSpot moved to dismiss in New York, arguing (inter alia) improper venue based on a forum-selection clause, that the case should be dismissed or stayed because a prior Virginia action is pending, and that plaintiffs’ claim is time-barred.
The District Court held the forum-selection clause in the loan was permissive (not mandatory), found venue and personal jurisdiction proper in New York, but abstained under the Brillhart/Wilton framework because the declaratory claim duplicates issues already pending in Virginia where usury is being asserted as a defense and Virginia law would likely preclude the relief sought for business loans over $5,000.
The Court dismissed the New York declaratory action without prejudice and declined to decide the statute-of-limitations argument.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the loan's forum-selection clause makes venue in NY improper	Plaintiffs: clause does not bar NY; they may proceed here	QuarterSpot: clause mandates Virginia forum and thus NY venue improper	Court: clause is permissive (not exclusive); venue in NY is proper
Whether the federal court should abstain in favor of the earlier Virginia action	Plaintiffs: need declaratory relief in NY; usury is available under NY law	QuarterSpot: prior-filed Virginia suit raises same contract/usury issues; federal court should abstain	Court: abstention warranted under Brillhart/Wilton and related factors; dismisses NY action
Whether NY criminal usury statute can be pled as an affirmative cause of action (not just a defense)	Plaintiffs: seek a declaration voiding contracts under NY usury law	QuarterSpot: criminal usury in NY is an affirmative defense, not a standalone cause of action	Court: plaintiffs cite no authority to convert the statute into a cause of action; usury is a defense and is already asserted in Virginia
Whether transfer to Virginia under 28 U.S.C. § 1404(a) or dismissal for improper venue is required	Plaintiffs: oppose transfer; insist NY forum is proper	QuarterSpot: alternatively seeks transfer if clause enforceable	Court: because clause is not mandatory, declines to order transfer on that basis

Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (Supreme Court decision endorsing discretionary abstention in declaratory judgment cases)
Brillhart v. Excess Ins. Co. of America, 316 U.S. 491 (1942) (foundation for declining declaratory actions when parallel state proceedings exist)
Dow Jones & Co., Inc. v. Harrods Ltd., 346 F.3d 357 (2d Cir. 2003) (factors for discretionary abstention in declaratory judgment actions)
Niagara Mohawk Power Corp. v. Hudson River-Black River Regulating Dist., 673 F.3d 84 (2d Cir. 2012) (clarifying Dow Jones abstention factors)
Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007) (test for whether forum-selection clause is mandatory or permissive)
First City Nat’l Bank & Trust Co. v. Simmons, 878 F.2d 76 (2d Cir. 1989) (first-filed principle gives priority to earlier action)
Taylor v. Sturgell, 553 U.S. 880 (2008) (rules on preclusion and res judicata)
Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353 (2d Cir. 2005) (courts may consider affidavits and matters outside pleadings on venue motions)
Constellation Energy Commodities Group Inc. v. Transfield ER Cape Ltd., 801 F. Supp. 211 (S.D.N.Y. 2011) (distinguishing arbitration provisions from litigation forum clauses)
Person v. Google, Inc., 456 F. Supp. 2d 488 (S.D.N.Y. 2006) (standard for Rule 12(b)(3) venue motions)