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Foley & Lewis Racing, Inc. v. Burling

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY


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 subject-matter of the documents, as well as the effective dates of each, that the Agreement was intended to supercede the Commitment.*fn8

Plaintiff further contends that Defendant lacks standing to enforce the forum selection clause because he did not sign the Agreement in his individual capacity, but rather as CEO of Erie. This argument fails because, "where a third party's conduct is 'closely related to the contractual relationship,' the forum selection clause applies to the third party." Affiliated Mortg. Prot., LLC v. Tareen, 2007 U.S. Dist. LEXIS 5106, *11 (D.N.J. 2007)(holding that, where a company is party to a contract, its employees who derive benefit from the contract are closely related to the contractual relationship and, thus are bound by the forum selection clause in the contract) (quoting TAAG Linhas Aereas v. Transam. Air., Inc., 915 F.2d 1351, 1354 (9th Cir. 1990)).*fn9 Because Defendant is the CEO of Erie, signed the agreement in that capacity, and derived benefit from the Agreement, he is closely related to Erie and has standing to enforce the forum selection clause.

Having found that the choice of forum clause applies to this dispute, the Court must next consider the § 1404(a) factors (convenience of parties, convenience of witnesses, or interests of justice),*fn10 but also the public and private interests affected by the transfer.*fn11 See Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).

Within this framework, a forum selection clause is treated as a manifestation of the parties' preferences as to a convenient forum. . . . Although the parties' agreement as to the most proper forum should not receive dispositive weight, it is entitled to substantial consideration. . . . Thus, while courts normally defer to a plaintiff's choice of forum, such deference is inappropriate where the plaintiff has already freely contractually chosen an appropriate venue.

Jumara, 55 F.3d at 879-880 (3d Cir. 1995) (internal citations and quotations omitted).

Plaintiff has not satisfied its burden of demonstrating why it should not be bound by its contractual choice of forum. See id. According to Defendant's unchallenged assertion, Plaintiff's race team travels extensively along the East Coast and participates in several races each year in Florida. (Burling Aff. ¶ 3). Although this does not appear to be a very document-or witness-intensive action, a key defense witness, Defendant's former CFO who assisted Defendant with negotiating the Agreement, is located in Florida. (Burling Aff. ¶ 6).

Plaintiff contends that this Court should retain jurisdiction because it is incorporated and has its principle place of business in New Jersey. Additionally, its potential, but unidentified witnesses are located in New Jersey, Canada and upstate New York. Plaintiff also asserts that both it and New Jersey have an interest in the litigation because the contracts were signed in New Jersey. These considerations alone, particularly considering the minimal number of witnesses and documents potentially involved in the lawsuit, are insufficient to satisfy Plaintiff's burden of demonstrating that it should not be bound by the forum selection clause in the Agreement.

Accordingly, the Court concludes that the forum selection clause is valid and enforceable. The Court gives substantial weight to the forum selection clause, see Jumara, 55 F.3d at 880, which effectively trumps Plaintiff's choice of the District of New Jersey for this action.

III.

For the reasons given above, the Court will grant Defendant's motion to transfer venue to the United States District Court for the Middle District of Florida. The Court will issue an appropriate order.

JOSEPH E. IRENAS, S.U.S.D.J.


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