The opinion of the court was delivered by: Wolin, District Judge.
This matter is opened before the Court upon the motion of defendants
Mody Enterprises, Inc., Bharat Mody and Champa Mody for dismissal of the
complaint against them pursuant to Federal Rule of Civil Procedure 12
(b)(2) for lack of personal jurisdiction in this Court over defendants
and Rule 12(b)(3) for improper venue. In the alternative, defendants
move for a transfer of this matter to the United States District Court
for the District of New Mexico pursuant to 28 U.S.C. § 1404 (a). The
motion has been decided upon the written submissions of the parties
pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth
below, the motion will be denied.
The facts relevant to the instant motion are not in dispute and are
briefly stated. This matter involves the complaint of Park Inn
International, L.L.C., alleging that defendants are in default on the
terms of franchise agreement*fn1 between the parties and that Park Inn
has suffered damages thereby. Defendants/franchisees operate four hotels
in New Mexico (Mody Supp. Cert. ¶ 3) and are citizens of that state.
One of these hotels operates under the Park Inn service mark pursuant to
the parties' agreement. Defendants claim that they terminated the
franchise agreement pursuant to a right of unilateral termination
negotiated by the parties and rightfully deemed part of the franchise
Plaintiffs have brought suit here and rely upon a forum selection
clause in the franchise agreement that reads:
This Agreement will be construed in accordance with
the laws of the State of New Jersey. Licensee consents
to the nonexclusive personal jurisdiction of the state
and federal courts situated in the State of New Jersey
and further waives objection to venue in any such
Defendants have raised arguments relying on other terms of the
franchise agreement and manner in which it was negotiated. Certain other
features of the agreement are relevant, therefore. Defendants say that
they were solicited by a Mr. Kilcullen, allegedly a representative of
Park Inn's parent, to make one of their hotels a Park Inn franchisee.
Defendants aver that they approached the possibility of a long-term
relationship with Park Inn warily and with trepidation.
However, defendants also maintain that their principal, Mr. Bahrat Mody
is a native of India and is not fluent in the English language. Mr. Mody
avers that he received the final draft of the proposed franchise
agreement in the mail and that he executed it without carefully reading
its provisions. He states that he relied upon the term sheet he had
received earlier and upon the representations of Park Inn representatives
that the agreement would contain the provisions of the term sheet. More
directly relevant to this motion, defendants claim that they had no idea
that the agreement contained a waiver of their right to contest
jurisdiction or venue in courts outside of New Mexico. Throughout,
defendants maintain, they lacked advice of counsel.
Defendants now say that the franchise did not perform as they had been
led to expect. Defendants contend that when they attempted to exercise
the special, unilateral termination right defendants believed they had
negotiated, Park Inn sued for breach of the agreement. This motion
Federal Rule of Civil Procedure 4(e) mandates that the federal courts
exercise personal jurisdiction over non-resident defendants as provided
by the long-arm jurisdiction statute of the state where the court sits.
New Jersey's long-arm statute extends the reach of the New Jersey courts'
jurisdiction to the maximum extent permitted by the Due Process Clause of
the Fourteenth Amendment to the United States Constitution. N.J.Rule
4:4-4(c); DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d
Cir.), cert. denied, 454 U.S. 1085, 102 S.Ct. 642, 70 L.Ed.2d 620
(1981). Therefore, though technically applying a New Jersey Rule, the
courts look to federal constitutional case law to determine matters of
The United States Supreme Court has held that a contractual consent to
personal jurisdiction should be enforced unless it would be unreasonable
or unjust to do so. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.
14, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). A forum selection clause will
be invalidated only if it was the product of fraud or overreaching, if
the agreed forum is so inconvenient as to deprive the litigant of his day
in court, or where enforcement would contravene a strong public policy of
the forum in which the suit is brought. The M/S Bremen v. Zapata
Off-Shore Co., 407 U.S. 1, 10, 18, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972).
Yet defendants argue, correctly, that where a forum selection clause
will influence a personal jurisdiction question, the validity of that
clause as an element of the parties' agreement is evaluated under state
law. General Engineering Corp. v. Martin Marietta Alumina, Inc.,
783 F.2d 352, 356-57 (3d Cir. 1986). Somewhat inconsistently, defendants
argue that New Jersey law would control the validity of the clause at
issue here, presumably applying New Jersey's governmental interest test
for choice of law questions and finding that this state has the greater
interest in the dispute. See Gantes v. Kason Corp., 145 N.J. 478, 484,
679 A.2d 106 (1996).
Leading back yet again to federal law, however, New Jersey has adopted
the approach of the United States Supreme Court in M/S Bremen, 407 U.S.
at 10, 92 S.Ct. 1907, with respect to forum-selection clauses. See Kubis
& Perszyk Assoc. Inc. v. Sun Microsystems, Inc., 146 N.J. 176, 186-93,
680 A.2d 618 (1996) (stating that Bremen represents the modern approach
to the enforceability of forum-selection clauses). This Court will
therefore apply the Bremen standard as it has been applied in New Jersey
and this Circuit.
Indeed, outside of Franchise Practices Act cases, New Jersey courts
find forum selection clauses prima facie valid and enforceable. See Caspi
v. Microsoft Network, L.L.C., 323 N.J.Super. 118, 123, 732 A.2d 528
(App. Div. 1999), certif. denied, 162 N.J. 199, 743 A.2d 851 (1999);
Wilfred MacDonald, Inc. v. Cushman, Inc.; 256 N.J. Super. 58, 63,
606 A.2d 407 (App. Div.), certif. denied, 130 N.J. 17, 611 A.2d 655
(1992). In fact, New Jersey's treatment of forum selection clauses
substantially mirrors the favorable treatment espoused in federal
courts. See McNeill, 297 N.J.Super. at 219, 687 A.2d 1052; Wilfred
MacDonald, 256 N.J.Super. at 63, 606 A.2d 407.
Finally, the Court rejects defendants' argument that the policy of the
State of New Jersey as announced in Kubis, 146 N.J. 176, 680 A.2d 618,
requires invalidation of the forum selection clause or that Kubis has
modified the New Jersey law of forum selection clauses outside of the
statutory context in which that case arose. Kubis held that in cases
governed by the New Jersey Franchise Practices Act, forum selection
clauses requiring suit outside this state were subject to a rebuttable
presumption of invalidity. 146 N.J. at 186-93, 680 A.2d 618. It is patent
that Kubis was driven by the view that the policies of the New Jersey Act
are served by ensuring that New Jersey ...