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Foley & Lewis Racing, Inc. v. Burling

February 27, 2008

FOLEY & LEWIS RACING, INC., PLAINTIFF,
v.
MARK J. BURLING, DEFENDANT.



The opinion of the court was delivered by: Irenas, Senior District Judge

OPINION

This lawsuit arises out of Defendant's alleged failure to make payments in accordance with his contract with Plaintiff. Plaintiff commenced the instant action in the Superior Court of New Jersey, alleging breach of contract, detrimental reliance, and fraud.*fn1 On March 1, 2007, Defendant removed to federal court in the District of New Jersey (Docket # 1). Presently before the Court is Defendant's Motion to Transfer Venue to the Middle District of Florida.*fn2

I.

Plaintiff, Foley & Lewis Racing, Inc., is a company in the business of drag racing. It participates in drag racing events throughout the nation and operates a drag racing school in New Jersey. (Foley Cert. ¶ 2). Defendant, Marc J. Burling, is a Florida resident and the owner and Chief Executive Officer ("CEO") of Erie Processing Corporation ("Erie"). In June of 2005, Doug Foley, Plaintiff's President, and Defendant executed an "Associate Sponsorship Commitment" (the "Commitment").*fn3 (Foley Cert. Ex. A). The Commitment governs Defendant's rights to use logo display space on Plaintiff's cars to promote Erie or Marc Burling Racing, Defendant's other company. In exchange, the Commitment obligates Burling to "assist Foley and Lewis Racing, Inc. with a $175,000.00 contribution for the balance of the 2005 IHRA [International Hot Rod Association] racing season." It further requires that Burling assist in: (1) marketing Plaintiff's racing team, (2) marketing Plaintiff's sponsor's products and apparel, and (3) promoting Plaintiff's team sponsors. In exchange, Burling is to receive the title of Vice President of Marketing and to be considered an associate sponsor.*fn4

Approximately six months later, in December, 2005, Foley and Burling, in their official capacities as president and CEO of their respective companies, executed an "Associate Sponsorship Agreement" ("the Agreement"). (Foley Cert Ex. B). The Agreement was "entered into to be effective as of May 1, 2005." (Id. p.1). It obligates Defendant "to provide financial support to [Plaintiff] in exchange for certain promotional and advertising rights with respect to the Vehicle as a [sic] Associate Sponsor[.]" (Agreement, p.1). Specifically, it sets forth Defendant's rights to display logos on Plaintiff's vehicle, and requires Defendant to pay Plaintiff $117,000.00 for the initial term of the Agreement,*fn5 and up to $100,000.00 for one renewal term in exchange for the "promotional rights." (Id. ¶ 4).

The Agreement contains a choice of forum clause, which, for a federal dispute, selects the United States District Court for the Middle District of Florida.*fn6 The Commitment contains no such forum selection clause. The question before the Court is whether the Agreement or the Commitment controls for purposes of this dispute. For the reasons set forth below, the Court concludes that the Agreement controls, and that the parties are bound by the contractual choice of forum articulated in the Agreement.

II.

In a diversity case such as this, "the effect to be given a contractual forum selection clause . . . is determined by federal not state law." Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir. 1995); see also Stewart Org., Inc., v. Ricoh Corp., 487 U.S. 22, 27-32 (1988); Mathews v. Rescuecom Corp., No. 05-4834, 2006 U.S. Dist. LEXIS 8608, *15 (D.N.J. 2006).

A forum selection clause is presumptively valid unless the resisting party can show that enforcement of the clause would be unreasonable under the circumstances. M/S Bremen v. Zapata Off- Shore Co., 407 U.S. 1, 10 (1972). To show that a forum selection clause is unreasonable and unenforceable, the resisting party must establish: "(1) that it is the result of fraud or overreaching, (2) that enforcement would violate a strong public policy of the forum, or (3) that enforcement would in the particular circumstances of the case result in litigation in a jurisdiction so seriously inconvenient as to be unreasonable." Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190, 202 (3d Cir. 1983); see also Mathews, 2006 U.S. Dist. LEXIS 8608, at *16.

Here, Plaintiff does not argue that the forum selection clause is unenforceable because of fraud or public policy. Rather, Plaintiff argues that the forum selection clause simply does not apply to this dispute, and alternatively, even if it does, fairness and convenience factors weigh against transferring this case to Florida.

Plaintiff's suit arises out of Defendant's purported breach of the terms of the Commitment. Plaintiff maintains that the Commitment exists independent of the Agreement, and thus the forum selection clause does not control this dispute. Based upon the plain language of the Commitment and the Agreement, however, it is clear that the Agreement was intended to supercede the Commitment.

Both the Commitment and Agreement govern the associate sponsorship of Plaintiff's vehicles.*fn7 It would belie logic for the parties to execute two contacts for the same purpose, particularly where the second has an effective date that predates the first. Indeed, if the Commitment and the Agreement were intended to co-exist, Defendant would be obligated to pay two separate amounts - $175,000.00 and $117,000.00 - for what appears to be the identical right to advertise on Plaintiff's vehicles. "The construction of a written instrument to be adopted is the one which appears to be in accord with justice and common sense and the probable intention of the parties. It is to be interpreted as a business transaction entered into by practical [people] to accomplish an honest and straightforward end." Kaufman v. Provident Life & Casualty Ins. Co., 828 F. Supp. 275, 283 (D.N.J. 1992) (internal quotations omitted)(modification in original). Although the terms of Agreement and the Commitment do not overlap completely, the general purpose of both contracts is the same.

Plaintiff argues that the Commitment contains no forum selection clause because it was solely intended to cover IHRA sanctioned events, which never occur in Florida. Both the Commitment and the Agreement, however, expressly govern Plaintiff's activities with the IHRA and the NHRA. (Commitment ¶¶ 1, 3; Agreement p.1). See Kaufman, 828 F. Supp. at 283 ("To determine the meaning of the terms of an agreement by the objective manifestations of the parties' intent, the terms of the contract must be given their 'plain and ordinary meaning.'").

Because the contracts are unambiguous, we have no occasion to look beyond the four corners of the documents. See Sanford Inv. Co. v. Ahlstrom Mach. Holdings, Inc., 198 F.3d 415, 421 (3d Cir. 1999)("In determining whether a contract is ambiguous, the court assumes the intent of the parties to an instrument is embodied in the writing itself, and when the words are clear and unambiguous the intent is to be discovered only from the express language of the agreement."). It is apparent from the ...


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