Versatile Housewares & Gardening Systems, Inc. v. Thill Logistics, Inc.
819 F. Supp. 2d 230
S.D.N.Y.2011Background
- Versatile sued SAS, SAS Group and Jordan Drew and others in Wisconsin in 2009 for trademark, copyright, and contract claims related to the Ground Aug/Auger line.
- Two agreements between Versatile and SAS contain New York forum-selection clauses designating Westchester County, New York as the exclusive forum and New York law governs interpretation.
- In June 2008 SAS stopped royalty payments after alleging Versatile’s competing tool was not covered by the ’227 patent, and Versatile allegedly filed trademark applications for related marks on behalf of Jordan Drew.
- The Distribution Agreement terminated January 1, 2009; the parties exchanged post-termination royalty and cost claims in 2009.
- Wisconsin transfer order held the forum-selection clause mandatory and transferred the case to this Court for adjudication; the parties later cross-moved for summary judgment on SAS’s breach claim.
- The court evaluates damages for breach of the forum-selection clause, including whether attorneys’ fees are recoverable and what other damages are available.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Versatile breached the forum selection clause | SAS argues Versatile breached by filing in Wisconsin despite exclusive NY forum | Versatile contends no breach or non-coverage under clause; transfer cleansed issues | Yes, Versatile breached the clause by forum wrongfully filing in Wisconsin |
| Whether SAS is entitled to damages beyond the venue transfer | Damages flow from breach; transfer alone does not fully compensate | Transfer resolved breach, so no further damages; only specific performance occurred | SAS entitled to damages other than attorneys’ fees from the breach; venue transfer not sole remedy |
| Whether SAS may recover attorneys' fees as contract damages | Certain NY authorities allow fee recovery as damages for breach of forum-selection clause | American Rule generally bars fee recovery; no contract provision or applicable exception exists here | No, SAS may not recover attorneys’ fees as contract damages |
| Amount and scope of recoverable damages and mitigation | Damages include non-attorney costs and possibly other losses caused by breach | Need to mitigate and assess exact damages; attorney fees excluded; potential further damages to be briefed | Damages other than attorneys’ fees are recoverable; mitigate duties may apply; party to brief further damages |
Key Cases Cited
- Nash v. Bd. of Educ., 38 N.Y.2d 686 (1975) (state-law interpretation guided by predictability of highest court)
- Sokoloff v. Harriman Estates Dev. Corp., 96 N.Y.2d 409 (N.Y. 2001) (integrates breach and remedies in NY contract law context)
- Karpinski v. Ingrasci, 28 N.Y.2d 45 (N.Y. 1970) (damages and equitable relief interplay in contract cases)
- Allendale Mut. Ins. Co. v. Excess Ins. Co., 992 F. Supp. 278 (S.D.N.Y. 1998) (considered in context of forum-selection damages and remedies)
- Indosuez Int'l Fin., B.V. v. Nat'l Reserve Bank, 304 A.D.2d 429 (N.Y. App. Div. 2003) (considered for damages available for breach of forum selection clause)
- Artvale, Inc. v. Rugby Fabrics Corp., 232 F. Supp. 814 (S.D.N.Y. 1964) (Shindler-like framework for consequential damages in contract context)
- Hunt v. Sharp, 85 N.Y.2d 883 (N.Y. 1995) (limits on American Rule exceptions when the third-party wrongdoer is the main adversary)