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Paradise Enterprises Limited v. Sapir

December 17, 2002


On appeal from Superior Court of New Jersey, Law Division, Atlantic County, ATL-L-999-01.

Before Judges Stern, Coburn, and Alley.

The opinion of the court was delivered by: Alley, J.A.D.


Argued November 13, 2002

This appeal concerns plaintiff's attempt to enforce a forum selection clause that designated New Jersey as an agreed forum for determining any disputes arising from the contract of which the clause formed a part. The forum selection clause was contained in a written agreement that was signed by defendant, Tamir A. Sapir, in the Bahamas. The agreement extended a credit line to defendant to facilitate gambling by him on a "complimentary" trip to the Bahamas at a casino operated there by plaintiff, Paradise Enterprises Limited. Defendant arranged the trip with the New Jersey office of plaintiff's marketing affiliate.

Defendant received and allegedly failed to pay for $1,120,000 he incurred in gambling credit over a period of four days on this trip, and plaintiff brought suit against defendant in New Jersey after defendant failed to pay this sum. The trial court granted defendant's motion to dismiss the complaint, looking to the law of forum non conveniens. Plaintiff appealed, contending that the trial court erred in granting the motion. We agree and reverse.


The facts are not complicated. The dispute is between defendant, who allegedly resides in Kings Point, New York, and plaintiff, a Bahamian corporation having its principal place of business at Atlantis Paradise Hotel in the Bahamas. *fn1 Plaintiff's affiliate Sun Marketing is registered to do business in New Jersey. It provides casino marketing services for plaintiff and maintains a branch office in Linwood, New Jersey. *fn2

While defendant was in New Jersey, he was referred by a "player development" executive of the Atlantic City Hilton Hotel to Sun Marketing's office near Atlantic City. Sun Marketing arranged a complimentary trip for plaintiff to the Atlantis Paradise Hotel from April 18 through April 24, 2000. According to plaintiff, the trip was worth $149,848, and included travel to and from the Bahamas, room, food, beverages, and various gifts. Defendant allegedly contacted Sun Marketing's New Jersey office numerous times in connection with the trip.

When he arrived at the Paradise Island Casino on April 18, 2000, defendant requested a $2,000,000 line of credit and signed a written credit agreement that same day which provided in relevant part:

I/we the undersigned understand and agree that: 1. This agreement shall be governed, construed and enforced in all respects in accordance with the laws of the State of New Jersey, which State recognizes the enforceability and validity of gaming debts. 2. The courts of the State of New Jersey shall have jurisdiction to hear and determine any claims or disputes pertaining directly or indirectly to this agreement and to any matter arising therefrom. 3. Each of the parties in this agreement hereby expressly submits and consents in advance to such jurisdiction in any action commenced by the other in the New Jersey courts. Defendant drew upon the credit line twenty-one times in four days in April 2000, for a total amount of $1,120,000, using personal checks drawn against his Chase Manhattan Bank account. When plaintiff attempted to cash the twenty-one personal checks, however, the bank refused to honor them, alleging insufficient funds in the account. After defendant refused to pay plaintiff the money allegedly owed, plaintiff filed suit in New Jersey, invoking the forum selection clause and seeking enforcement of the gambling debt.

Defendant moved to dismiss the action on the basis of the forum non conveniens doctrine, asserting that insufficient New Jersey contacts existed to justify suit in this State. In granting the motion, the trial court noted that plaintiff was a Florida corporation and did not operate any businesses in New Jersey. (In fact, plaintiff is a Bahamian corporation). Furthermore, the court found it significant that defendant was a New York resident, signed the credit agreement in the Bahamas, and drew on the credit line with personal checks issued from a New York bank. Even though Sun Marketing had an office in New Jersey, the trial court rejected plaintiff's argument that the New Jersey contacts were important, concluding that was "simply not sufficient."

With respect to the forum selection provision of the agreement, the court noted only that the case did not present "a question of whether he [defendant] signed the agreement or not, he did, and he would be bound if there was any reason why New Jersey would want to take this case[.]" The trial court found, however, that New Jersey had no interest in the case. It further concluded that to allow plaintiff's case to proceed would only congest the judicial docket in New Jersey and impose an expense on local taxpayers who would have to bear "the burden of contributing to the expense of trying imported controversies." In support of its ruling, the trial court cited Semanishin v. Metropolitan Life Ins. Co., 46 N.J. 531 (1966), which held that a suit filed in a New Jersey court by European citizens against a New York company was subject to dismissal on the basis of forum non conveniens.


We first address the standard of review. A trial court's decision whether or not to dismiss an action on forum non conveniens grounds is reviewed under the abuse of discretion standard, because the principles of forum non conveniens are equitable in nature. Kurzke v. Nissan Motor Corp., 164 N.J. 159, 165 (2000). Where a trial court misconceives the applicable law, however, de novo review is required because "the [trial court's] exercise of the legal discretion lacks a foundation and becomes an arbitrary act, however conscientious may have been the judge in the performance of it." Kavanaugh v. Quigley, 63 N.J. Super. 153, 158 (App. Div. 1960). "When this occurs it is the duty of the reviewing court to adjudicate the controversy in the light of the applicable law in order that a manifest denial of justice be avoided." Ibid.; see also Cobo v. Market Transition Facility, 293 N.J. Super. 374, 382 (App. Div. 1996) (reversing because trial judge misapplied law). It is also firmly established that a "trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Manalapan Tp. Committee, 140 N.J. 366, 378 (1995).

We conclude that de novo review is required here because the trial court erred as a matter of law in failing to apply the law governing forum selection clauses, and in relying instead solely on the law of forum non conveniens. *fn3

We thus examine the principles of law pertaining to forum selection agreements. As a general rule, a forum selection clause is enforceable unless it is the result of "fraud, undue influence, or overweening bargaining power," is "unreasonable," or violates a "strong public policy." M/S Bremen v. Zapata Off- Shore Co., 407 U.S. 1, 10-15, 92 S. Ct. 1907, 1913-16, 32 L. Ed. 2d 513, 520-23 (1972).

In Caspi v. Microsoft Network, 323 N.J. Super. 118, 122 (App. Div.), certif. denied, 162 N.J. 199 (1999), we quoted with approval the trial court's observation that generally such agreements "are prima facie valid and enforceable in New Jersey[,]" and that:

New Jersey courts will decline to enforce a clause only if it fits into one of three exceptions to the general rule: (1) the clause is a result of fraud or "overweening" bargaining power; (2) enforcement would violate the strong public policy of New Jersey; or (3) enforcement would seriously inconvenience trial. Wilfred MacDonald, Inc. v. Cushman, Inc., 256 N.J. Super. 58 (App. Div.), certif. denied, 130 N.J. 17 (1992). The burden falls on ...

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