ORDER GRANTING MOTION TO TRANSFER VENUE
Before the Court is a Motion to Transfer Venue or Dismiss the Amended Complaint filed by Defendant Deutsche Bank AG (“Defendant” or “Deutsche Bank”). (Dkt. # 9.) On September 15, 2016, the Court held a hearing on the motion: Stuart M. Riback of Wilk Auslander LLP and John A. Huddleston of Strasburger & Price, LLP appeared on behalf of Sabal Limited LP (“Plaintiff” or “Sabal”); David L. Goldberg of Katten Muchin Rosenman LLP appeared on behalf of Deutsche Bank. After careful consideration of the memoranda filed in support of and in opposition to the motion, as well as the arguments made at the hearing, the Court, for the reasons that follow, GRANTS the Motion to Transfer (Dkt. # 9).
Sabal is a Texas limited partnership and private investment company based out of San Antonio, Texas, that manages a single family’s investments. (“Am. Compl.,” Dkt. #3 ¶¶ 3, 8.) Deutsche Bank is a German Aktiengesellschaft
I. The Securities Account Agreement
On February 23, 2010, Sabal, Deutsche Bank Securities Inc.
The SACA and Sabal’s Securities Accounts “shall be governed by, and construed in accordance with, the laws of the State of New York.” (Id. § 4.1.) The SACA also contains a forum-selection clause stating:
In any action or proceeding arising out of or relating to this Agreement, the parties hereto hereby irrevocably submit to the exclusive jurisdiction of the courts of the State of New York and the federal courts in New York City ... [Sabal] hereby irrevocably waives any objection [it] may now or hereafter have to the laying of venue in the aforesaid courts, and any claim that any of the aforesaid courts is an inconvenient forum ... [Sa-bal] further agrees that any action or proceeding by Sabal against [Deutsche Bank] in any respect to any matter arising out of, or in any way relating to, this Agreement or the obligations of [Sabal] hereunder shall be brought only in the State and County of New York.
(Id. § 4.2.) Section Five of the SACA pertains to “Conflict with Other Agreements” and states in relevant part:
In the event of any conflict between this Agreement (or any portion thereof) and any other agreement now existing or hereafter entered into, the terms of this Agreement shall prevail.
(Id. § 5.1.)
II. The Swap Agreement
On July 15, 2011, Deutsche Bank and Sabal entered into a swap agreement.' (“Confirmation,” Dkt. # 13-9, Ex. 8.) Under the terms of the swap, Deutsche Bank would pay Sabal a fixed rate of 4.65% on a notional $16 million every quarter from November 1, 2011, through August 1, 2021. (Id. at 2.) In exchange, Sabal would make payments to Deutsche Bank in two separate tranches. First, from August 1, 2011, through November 1, 2015,
Sabal and Deutsche Bank memorialized the swap agreement using four separate, industry standard, 'and integrated instruments. The four instruments are: (1) the International Swap Dealers Association (“ISDA”) Master Agreement (“Master Swap Agreement”); (2) the Schedule to the ISDA Master Swap Agreement (“Swap Schedule”); (3) the Credit Support Annex to the Swap Schedule (“CSA”); and (4) the trade confirmation (“Confirmation”) (collectively “Swap Documents”). (“Master Swap Agreement,” Dkt. # 13-6, Ex. 5; “Swap Schedule,” Dkt. # 13-7, Ex. 6; “CSA,” Dkt. # 13-8, Ex. 7; Confirmation.) The Swap Documents expressly provide that they “shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.” (Master Swap Agreement § 13(a); Swap Schedule Part 4(h).) The Master Swap Agreement also contains a forum-selection clause stating in relevant part:
With respect to any suit, action or proceedings relating to this Agreement (“Proceedings”), each party irrevocably submits ... to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York.
(Master Swap Agreement § 13(b)(i).) Further, the Master Swap Agreement ■ provides that “[njothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction.” (Id. § 13(b).) Finally, the Master Swap Agreement contains a merger clause stating that it “constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto.” (Id. § 9(a).)
III. The Dispute
The present dispute arises out of two discrete actions allegedly taken by Deutsche Bank. First, Sabal alleges that at the inception of the swap, Deutsche Bank took an “Independent Amount” of $960,000 as collateral from Sabal’s accounts held at DBSI. (Am. Compl. ¶¶ 16-17.) The CSA expressly provides that the primary and secondary accounts—the accounts established by the SACA—are used to hold eligible collateral for the swap. (CSA § 13(g)(i); id. Ex. A.) However, Sabal contends that the Swap Documents do not provide Deutsche Bank authorization to take the “Independent Amount.” (Am. Compl. ¶ 19.) Further, Sabal alleges that Deutsche Bank wrongfully took more collateral by locking Sabal’s primary or secondary accounts at DBSI, preventing Sa-bal from accessing almost $4.5 million. (Id. ¶ 18.) Finally, Sabal alleges that Deutsche Bank fraudulently altered language in the original Confirmation after the parties executed the Swap Documents to give it authority to take an “Independent Amount” as collateral.
On December 22, 2015, Deutsche Bank sent Sabal a potential default notice because Sabal refused to make payment on November 2, 2015. (Am. Compl. ¶ 30.) To avoid default, Sabal made a good faith payment to Deutsche Bank in the requested amount of $152,288.89. (Id.) Subsequently, Deutsche Bank sent another notice to Sabal indicating that the floating rate was 8.5% and a payment was due on February 1, 2016. (Id. ¶ 32.)
On March 7, 2016, Sabal demanded that Deutsche Bank return the good faith payment, release the “Independent Amount” collateral worth $960,000, and unlock the remaining collateral in Sabal’s secondary account located at DBSI. (Id. ¶ 34.) Deutsche Bank did not comply with Sa-bal’s demand, so Sabal sent to Deutsche Bank a notice of potential default on March 18, 2016. (Id. ¶ 36.) Deutsche Bank countered by serving notices of potential default on Sabal in San Antonio, Texas. (Id. ¶ 37.) On March 24, 2016, Sabal terminated the Master Swap Agreement by delivering notice on Deutsche Bank in Frankfurt, Germany. (Am. Compl. ¶ 38.) Deutsche Bank sent a termination notice and a calculation notice to Sabal the same day. (Id. ¶¶ 38-39.)
On March 24, 2016, Sabal filed suit in this Court. (Dkt. # 1.) On March 30, 2016, Sabal filed an Amended Complaint. (Am. Compl.) Sabal seeks declaratory judgment, asserts a cause of action for conversion, and two causes of action for breach of contract. (Id. ¶¶ 40-54.)
On May 5, 2016, Deutsche Bank and DBSI sued Sabal in the United States District Court for the Southern District of New York (“the NY Action”) for conduct arising out of the same facts of this case. (Dkt. # 13-5, Ex. 4.) In the NY Action Complaint, Deutsche Bank admits that it has calculated the floating rate using a “minus 1,” but contends that its omission in the original Swap Documents was a scrivener’s error. (Id. ¶ 4.) Deutsche Bank and DBSI seek declaratory judgment to reform the Swap Documents due to the scrivener’s error, and to order DBSI to transfer certain collateral obligations to
On June 20, 2016, Deutsche Bank filed a Motion to Transfer Venue or Dismiss the Amended Complaint for lack of Personal Jurisdiction and Improper Venue. (Dkt. # 9.) Sabal filed a Response (Dkt. # 13) and Deutsche Bank filed a Reply (Dkt. #15.)
LEGAL STANDARD
I. Venue Transfers Based on Forum Selection Clauses
The Supreme Court held that a party may not enforce a forum-selection clause by seeking dismissal of the suit under 28 U.S.C. § 1406(a) and Rule 12(b)(3) because those provisions only apply when venue is “wrong” or “improper,” as determined by federal venue law, 28 U.S.C. § 1391. Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court for the Western District of Texas, — U.S. -,
In the typical § 1404(a) analysis, the district court weighs the relevant public and private factors and decides whether, on balance, a transfer would serve “the convenience of parties and witnesses” and otherwise promote “the interest of justice.” Id. at 581 n. 6; see also In re Volkswagen, AG,
However, the usual § 1404(a) calculus changes when the transfer motion is premised on a forum-selection clause. Id. This is primarily because “a forum-selection clause ... may have figured centrally in the parties’ negotiations and may have affected how they set monetary and other contractual terms .Id. at 583. In fact, it may “have been a critical factor in their agreement to do business together in the first place.” Id. As such, “when parties have contracted in advance to litigate disputes in a particular forum,” district courts should adjust their usual § 1404(a) analysis in three ways to “not unnecessarily disrupt the parties’ settled expectations.” Id. at 582-83.
First, where a forum selection clause applies, the plaintiffs choice of forum merits no weight. Although the plaintiff is ordinarily allowed to select whatever forum it considers most advantageous, “when a plaintiff agrees by contract to bring suit only in a specified forum, the
Second, a court should not consider arguments about the parties’ private interests because when parties agree to a forum-selection clause, they have effectively waived their right to challenge the preselected forum. Id. “[A] court must deem the private-interest factors to weigh entirely in favor of the preselected forum” because “ ‘whatever inconvenience [the parties] would suffer by being forced to litigate in the contractual forum as [they] agreed to do was clearly foreseeable at the time of contracting.’” Id. (quoting M/S Bremen v. Zapata Off-Shore Co.,
Third, “when a party bound by a forum-selection clause flouts its contractual obligation and flies suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue’s choice-of-law rules—a factor that in some circumstances may affect public-interest considerations.” Id. Rather, the court in the contractually selected venue should not apply the law of the transferor venue; instead, it should apply its own law. Atlantic Marine,
In sum, Atlantic Marine held that if a contractually valid forum-selection clause exists and applies to the lawsuit, a court should grant the motion to transfer in accordance with the forum-selection clause absent extraordinary circumstances. Id. at 581. The party opposing the transfer bears a heavy burden of establishing that the transfer is unwarranted due to the extraordinary circumstances as “[i]n all but the most unusual cases,” no extraordinary circumstances will exist that warrant refusal to transfer in accordance with a forum-selection clause. Id. at 582-83.
When determining whether extraordinary circumstances exist that warrant denial of transfer, only the public-interest factors of a traditional § 1404(a) analysis may be considered, including: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws of the application of foreign law. Id. at 581-82.
DISCUSSION
This case calls upon the Court to first determine which forum selection clause applies, and depending on that determination, whether to transfer venue.
I. The Forum Selection Clauses
A court must first determine whether a forum selection clause is mandatory or permissive. Weber v. PACT XPP Tech., AG,
A. Choice of Law
As a threshold matter, the Court must determine what substantive law to apply to various parts of the analysis below. The Fifth Circuit holds that federal law applies to determine the enforceability of forum-selection clauses in both diversity and federal question cases.
Here, both the SACA and the Swap Documents expressly provide that they should be interpreted and construed using New York Law. (SACA § 4.1; Master Swap Agreement § 13(a); Swap Schedule Part 4(h).) “Texas law gives effect to choice of law clauses regarding construction of a contract.” Benchmark Electronics, Inc. v. J.M. Huber Corp.,
It is important to also note that cases analyzing forum selection clauses are wrought with ambiguous legal reasoning. The vast majority of federal courts have not clearly articulated the applicable law used to interpret the meaning and scope of forum selection clauses. Instead, to the detriment of sound legal analysis, the vast majority of federal district and circuit courts have simply cited to federal precedent when interpreting forum selection clauses without conducting a choice-of-law analysis to identify the source of the substantive law. See e.g., Mendoza,
Here, the Court declines to continue the trend of inelegant and confusing analysis by simply citing federal precedent and general common law contract principles to interpret the meaning and scope of the forum selection clauses at issue. Indeed, following that trend is wrong because “there is no federal common law of contracts.” Barnett,
B. Mandatory and Permissive Nature of the Forum Selection Clauses
“The general rule in cases containing forum selection clauses is that ‘[w]hen only jurisdiction is specified the clause will generally not be enforced without some further language indicating the parties’ intent to make jurisdiction exclusive.” Fear & Fear, Inc. v. N.I.L Brokerage, L.L.C.,
The Court has no difficulty in concluding that the SACA’s forum selection clause is mandatory, and the forum selection clause in the Master Swap Agreement is permissive. The SACA’s forum selection clause states “the parties hereto hereby irrevocably submit to the exclusive jurisdiction of the courts of the States of New York and the federal courts in New York City.” (SACA § 4.2.) (emphasis added). This clause is unambiguously mandatory. The presence of the words “irrevocably submit” and “exclusive” demonstrates the parties’ intent to bind themselves to the particular forum of New York state courts or federal courts in New York City. See Fear & Fear,
Having determined the nature of each relevant forum selection clause, the Court must address the enforceability and applicability of the forum selection clauses.
C. Enforceability of the Forum Selection Clauses
Typically, parties litigate the enforceability of a forum selection clause on grounds that it is unreasonable.
1. The Merger Clause and Parol Evidence
Sabal’s principle argument is that the merger clause in the Master Swap Agreement voids the SACA or its forum selection clause. In the alternative, Sabal argues that the merger clause prohibits consideration of the SACA’s forum selection clause pursuant to the parol evidence rule.
“The purpose of a merger clause is to require the full application of the parol evidence rule in order to bar the introduction of extrinsic evidence to alter, vary or contradict the terms of the writing.” Jarecki v. Shung Moo Louie,
Further, the Court finds that the merger clause in the Master Swap Agreement does not void or supersede the SACA. Under New York law, the general language of a merger clause like that included in the Master Swap Agreement, “is insufficient to establish any intent of the parties to revoke retroactively their contractual obligations.” Gen. Motors Corp. v. Fiat S.p.A,
Accordingly, since the SACA is an antecedent contract, and both agreements focus on different subject-matter, the Master Swap Agreement’s merger clause neither voids the SACA nor prevents its consideration in this lawsuit pursuant to the parol evidence rule. See Regions Bank v. Baldwin Cnty. Sewer Service, LLC,
2. Sabal’s Other Arguments
Sabal also contends that the Master Swap Agreement controls over the SACA because it was entered into later in time. (Dkt. # 13 at 15.) Sabal correctly points out that in New York “[i]t is well established that a subsequent contract regarding the same matter will supersede the prior contract.” Barnum v. Millbrook Care LP,
Sabal next argues that the Master Swap Agreement controls because it is specific to the matters in dispute. (Dkt. # 13 at 16.) Under New York law, “[w]here two documents are to be construed—one specifically prepared for the transaction in question and the other a general form—the former takes precedence as to all provisions [that] are repugnant in' the two documents.” Oakgrove Const., Inc. v. Genesee Valley Nurseries, Inc.,
Finally, the first-to-file rule does not otherwise require this lawsuit to remain in this Court. “The first-to-file rule is a discretionary doctrine.” Cadle Co. v. Whataburger of Alice, Inc.,
Accordingly, the Court finds that the SACA is not a voided instrument under principles of New York contract law, and may be applicable to this lawsuit if the issues presented fall within the scope of its forum selection clause.
D. Scope of the Forum Selection Clauses at Issue
Fifth Circuit and New York law apply similar standards to determine whether the scope of a forum selection clause reaches the instant dispute. To determine whether the forum-selection clause applies to the type of claims asserted in the lawsuit, courts “look to the language of the parties’ contract to determine which causes of action are governed by the forum selection clause .... ” Marinechance Shipping, Ltd. v. Sebastian,
The New York trend is that broadly worded forum selection clauses encompass a wide variety of claims. For example, the Appellate Division-Third Department found a mandatory forum selection clause encompassed third-party claims where the clause extended to “any dispute arising under or in connection with” the agreement. Couvertier,
The SACA’s forum selection clause states:
In any action or proceeding arising out of or relating to this Agreement, the parties hereto hereby irrevocably submit to the exclusive jurisdiction of the courts of the States of New York and the federal courts in New York City.
(SACA § 4.2.) In this case, the SACA is a broadly worded forum selection clause that will encompass a wide variety of claims and remedies. Sabal has pled a cause of action for conversion of its money held in the collateral Securities Account, and seeks a remedy of declaratory relief, both of which, despite artful pleading, are clearly “related to” the SACA. The SACA provides that Deutsche Bank has exclusive authority over collateral held in the Securities Account maintained at DBSI. The authority is so exclusive that the SACA grants Sabal no authority to transfer its money held in that account. Here, Sabal alleges that Deutsche Bank has “locked”
It is irrelevant that Sabal has also asserted breach of contract claims that indisputably arise out of the Master Swap Agreement. Pleading claims that do not relate to the SACA does not immunize Sabal from the SACA’s mandatory forum selection clause because Sabal has also sought relief related to the SACA. Indeed, in New York, a plaintiff “cannot circumvent application of [a] forum selection clause by pleading parallel and/or additional related noncontractual claims.” Tourtellot v. Harza Architects,
For the reasons explained above, the Court finds that the SACA contains a mandatory forum selection clause requiring disputes related to it be brought in New York State courts or the federal courts in New York City. The Court also finds that the scope of the SACA extends to certain claims and remedies of relief that Sabal has affirmatively pled. Accordingly, this dispute “relates to” the SACA. See Rubens v. UBS AG,
II. Whether to Transfer Venue
If a contractually valid forum-selection clause exists and applies to the lawsuit, a court should grant the motion to transfer in accordance with the forum-selection clause absent extraordinary circumstances. Atlantic Marine,
Second, the local interest in having localized interests decided at home is not sufficient to demonstrate an extraordinary circumstance. Even though Sabal is a San Antonio, Texas, based investment firm, there is no feature of this case or question presented that is unique to the area. A party’s residence does not necessarily es
Third, the familiarity of the Southern District of New York with the law that will govern the case favors transfer. Even though “federal judges routinely apply the law of a State other than the State in which they sit,” Atlantic Marine,
The final factor—avoiding unnecessary problems of conflict of laws or application of foreign law—is neutral. Neither party identifies any reason that transfer would implicate problems involving conflicts of law or the application of a foreign law.
Accordingly, the Court finds that transfer of venue to the Southern District of New York is appropriate pursuant to 28 U.S.C. § 1404(a).
CONCLUSION
For the reasons explained, the Court GRANTS Deutsche Bank’s Motion to Transfer Venue and ORDERS the Clerk of Court to TRANSFER this case to the United States District Court for the Southern District of New York.
IT IS SO ORDERED.
Notes
. Aktiengesellschaft translated to English refers to a German public limited company whose shares are offered to the general public and traded on a public stock exchange.
. DBSI is a Deutsche Bank affiliate and a broker-dealer that executes securities transactions for Deutsche Bank and its clients. (Dkt. # 9 at 2.)
.Sabal’s payments commenced November 1, 2011, but included the August 1, 2011 payment. (Confirmation at 2.)
. The Floating Rate equals: 2.25% + 5 * [Strike—(Index£nd of Period/lnáeKInitial) ], where “Strike” means 3.20% from and in-eluding November 1, 2015, increasing 0.20% every quarter thereafter. Confirmation at 2-3.)
. Sabal alleges that Deutsche Bank confirmed that it had calculated the floating rate using a "minus 1." (Am. Compl. ¶ 31.)
. Neither party has raised a challenge to the enforceability of the relevant forum selection clauses.
. In such a case, a court applies a four factor test considering whether:
(1) the incorporation of the forum selection clause into the agreement was the product of fraud or overreaching; (2) the party seeking to escape enforcement "will for all practical purposes be deprived of his day in court” because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; or (4) enforcement of the forum selection clause
would contravene a strong public policy of the forum state.
Haynsworth,
. Recently, the Fifth Circuit declined to determine whether a court should apply federal or state law to determine the "validity” of a contract’s forum-selection clause. Barnett,
. The Court takes judicial notice of statistics published on the official United States Courts website.
. Deutsche Bank argues that this Court lacks personal jurisdiction over it. The Supreme Court holds that a court may order the transfer of venue of a case involving a defendant over whom the court lacks personal jurisdiction. Goldlawr, Inc. v. Heiman,