Before Judges Stern, Kestin and Wefing.
The opinion of the court was delivered by: Kestin, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: September 29, 1999
On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Bergen County.
Plaintiff holds, by way of an assignment, the rights to a payment stream generated by the lease of certain office equipment. An action to recover the monies due under the lease was filed in the Law Division and the subsequent bench trial resulted in a $40,462.22 judgment against defendant lessee, a Missouri attorney. Defendant appeals, contending that jurisdiction was lacking, that the purported assignment to plaintiff was invalid, and that the lower court erred in computing damages. We agree with the first of these arguments, and therefore reverse the judgment entered by the Law Division.
Defendant leased a Konica 3135 copier system from American Business Credit Corporation ("ABCC"), a Florida corporation, in September of 1994. The lease agreement was negotiated and entered into in Missouri, and the copier was delivered and used solely in Missouri. Shortly after the lease agreement was entered into, ABCC assigned its rights to the payments *fn1 under the lease to plaintiff, a Delaware corporation with New Jersey as its principal place of business. Defendant never made a payment on the lease outside of an initial payment of some $620 (alleged by defendant to be first and last months' rental) at the time of signing. He attributes his default to the fact that he had been led to believe that the monthly payment would be considerably less than it actually turned out to be. Plaintiff filed suit in New Jersey to recover the monies due it, relying on the following clause which was written in capital letters on the second page of the lease agreement:
Choice of Law: This rental and each schedule shall be governed by the internal laws for the state in which our or our assignee's principal corporate offices are located. You consent to the jurisdiction of any local, state, or federal court located within our or our assignee's state, and waive any objection relating to improper venue.
The trial court initially dismissed the complaint on jurisdictional grounds, but then reversed itself following a motion for reconsideration filed by plaintiff.
We note, as a preliminary matter, that forum selection clauses are generally enforced in New Jersey. Caspi v. Microsoft Network, L.L.C., 323 N.J. Super. 118, 122 (App. Div. 1999); Shelter Systems v. Lanni Builders, 263 N.J. Super. 373, 375 (App. Div. 1993). Nevertheless, such provisions will not be given effect if they are the result of "fraud or coercive bargaining power," or if enforcement of the clause would "be seriously inconvenient for the trial." Shelter Systems, supra, 263 N.J. Super. at 375. The latter exception does not apply in cases where geographic distance merely inconveniences production of non-party witnesses; rather, it is reserved for the situation where "trial in the contractual forum will be so gravely difficult and inconvenient that [the party] will for all practical purposes be deprived of his day in court." MacDonald v. Cushman, Inc., 256 N.J. Super. 58, 65 (App. Div.), certif. den'd, 130 N.J. 17 (1992) (quoting M/S Bremen v. Zapata Off- Shore Co., 407 U.S. 1, 18, 92 S. Ct. 1907, 1917, 32 L. Ed. 2d 513, 525 (1972)). Lastly, a court should not enforce a forum selection provision that violates a "strong public policy of the local forum." Shelter Systems, supra, 263 N.J. Super. at 375; see also Kubis & Perszyk Assoc. Inc. v. Sun Microsystems, Inc., 146 N.J. 176, 192-93 (1996) (recognizing public policy considerations espoused by the Franchise Act, and therefore finding forum selection provisions in franchise agreements presumptively invalid); McNeill v. Zoref, 297 N.J. Super. 213, 222-24 (App. Div. 1997) (holding the same regarding the public policy considerations of the entire controversy doctrine); Param Petroleum Corp. v. Commerce and Indus. Ins. Co., 296 N.J. Super. 164, 170-71 (App. Div. 1997) (holding the same in relation to statutes involving insurance litigation).
In New Jersey, the enforceability of forum selection clauses is governed by requirements of notice, Caspi, supra, 323 N.J. Super. at 126, and reasonableness, see Restatement (Second) of Conflicts of Laws § 80 (1969) (revised 1988) (cited in Kubis, supra, 146 N.J. at 188). Whether these requirements have been met is a question of law, see Caspi, supra, 323 N.J. Super. at 126, reviewable on appeal on a de novo basis, Manalapan Realty, L.P v. Manalapan Twp. Committee, 140 N.J. 366, 378 (1995).
The notice and reasonableness requirements have their source in this State's policies promoting fundamental fairness. In the circumstances presented here, they weigh against enforcement of the clause currently before us. From the "four corners of the instrument" a prospective lessee cannot identify the jurisdiction in which an action will be brought, as the contract states in the most general terms that the proper forum is contingent upon the location of an unnamed assignee's principal office. On the face of the provision itself, it is fair to assume that the assignee's identity may be unknown even to the lessor at the time the contract is created.
These latter factors serve to distinguish Shelter Systems, in which a facially non-specific forum selection clause was held to be enforceable. The forum selection provision there stated that suit should be brought "only in courts located in the State where Seller's principal place of business is located." Shelter Systems, supra, 263 N.J. Super. at 375. Defendants contended that the provision should have been considered invalid based on the fact that they did not know where the relevant principal place of business was when they signed the contract. We disagreed.
It is tempting to rule that it does not matter if they did not know; having agreed to a forum in which to litigate disputes, they should have inquired where it was. It is clear, however, that defendants were in possession of facts that should have alerted them that New Jersey was involved. For example, defendants executed a credit application and guarantee on plaintiff's letterhead, which showed addresses for five offices. The first one listed was the New Jersey location. The remaining four were in other states, and they all related to differently named local subsidiaries or divisions of plaintiff. No one ...