Tecfolks, LLC v. Claimtek Systems
2012 WL 6019280
E.D.N.Y2012Background
- TecFolks, LLC filed a diversity action against Claimtek Systems, Sydasoft, Inc., Kyle Farhat, and Nishat Kurtz for fraud and breach of contract.
- The November 30, 2010 Contract and Addendum required Claimtek to provide TecFolks with a medical claims processing system and related services.
- TecFolks alleges it paid $15,095 at signing and executed a $5,000 promissory note.
- Paragraph 18 of the Contract contains a forum selection clause providing disputes shall be brought in California, in the city where the Licensee/Buyer/Purchaser is located.
- TecFolks filed the complaint on September 9, 2011; defendants moved to dismiss under Rule 12(b)(1) and 12(b)(3) based on the forum clause.
- The court grants the motion to dismiss based on the forum selection clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the forum selection clause is enforceable. | TecFolks argues clause is invalid or unenforceable. | Claimtek/Sydasoft contend the clause should be enforced. | Enforceable; clause presumptively enforceable. |
| Whether the forum selection clause is mandatory or permissive. | Clause may be permissive, not exclusive. | Clause is mandatory, conferring exclusive jurisdiction in California. | Clause is mandatory and confers exclusive California jurisdiction. |
| Whether the mediation/arbitration clause affects the forum clause. | Arbitration/mediation clause may negate forum clause. | Clauses complement rather than negate each other; dispute must be in California. | Mediation/arbitration clause does not negate the forum clause; forum clause governs where to sue. |
Key Cases Cited
- Asoma Corp. v. SK Shipping Co., 467 F.3d 817 (2d Cir. 2006) (standard for enforcing forum-selection clauses)
- Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007) (four-part test for forum-selection enforceability)
- S.K.I. Beer Corp. v. Baltika Brewery, 612 F.3d 705 (2d Cir. 2010) (enforceability and rebuttal standards for forum clauses)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (Sup. Ct. 1972) (presumption of enforceability; grounds to avoid)
- John Boutari & Son Wines & Spirits, S.A. v. Importers & Distribs. Inc., 22 F.3d 51 (2d Cir. 1994) (when jurisdiction is exclusive vs. merely proper venue)
- Baosteel America, Inc. v. M/V 'Ocean Lord', 257 F. Supp. 2d 687 (S.D.N.Y. 2003) (interpretation of exclusive vs. non-exclusive forum language)