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Kane v. Manufacturers Life Insurance Co.

January 9, 2009

THOMAS F. KANE, SR., PLAINTIFF,
v.
THE MANUFACTURERS LIFE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Katharine S. Hayden, U.S.D.J.

OPINION

I. INTRODUCTION

Plaintiff Thomas Kane ("Kane") filed this state declaratory judgment action alleging that his obligations under certain non-recourse notes have been satisfied. When defendant, The Manufacturers Life Insurance Company ("Manulife"), removed the case to federal court, Kane timely filed this motion to remand. The motion is denied.

II. FACTUAL BACKGROUND & PROCEDURAL HISTORY

The facts of this case are somewhat intricate. Kane was a principal of Printon Kane Government Securities, L.P. ("Printon Kane"), a now-defunct limited liability partnership organized under the laws of Delaware. Compl. ¶ 5. During the liquidation of Printon Kane in 1995, two state court actions were pending against it in the New Jersey Superior Court, Chancery Division (the "Chancery Actions"). Compl. ¶ 14. These actions were eventually resolved by a stipulated settlement, consisting of five documents: a "Memorandum of Understanding and Settlement ("MOU"), two "Stipulations of Settlement" ("SOS"), and two Stipulations of Dismissal ("SOD") (collectively, the "settlement documents").*fn1 Compl. ¶ 14; Certification of Jonathan I. Rabinowitz ("Rabinowitz Cert") Exs. A, B, C. The SOS and SOD were court submissions formally disposing of the pending litigation, while the MOU is a contractual document outlining the terms of dismissal. Manulife, which was not a party to the Chancery Actions, did not sign either the SOS or SOD, but did execute the MOU. See Brief in Opposition to Motion to Remand ("Def. Br.") at 2-3. The settlement documents all contain retention of jurisdiction provisions in favor of the state court. These forum selection clauses are the same or in substantially similar form in each of the settlement documents:

This agreement is subject to . . . [r]etention of jurisdiction by the Court for the purpose of enforcing the judgment. . . . The Court shall retain jurisdiction over the settlement and that [sic] the settlement shall be memorialized in the form of a final judgment or other pleading closing the case.*fn2

Rabinowitz Cert. Ex. A, ¶ 20.

Pursuant to the stipulated settlement, Kane executed three non-recourse notes (the "Notes") in favor of Manulife, secured by Kane‟s interests in (1) a Los Angeles office building known as the "Beaudry Building"; and (2) Adare Partners, a limited partnership owning a golf course in Ireland.*fn3 Compl. ¶¶ 19-21; Plaintiff‟s Brief in Support of Motion to Remand ("Pl. Br.") at 3. The Notes themselves do not contain any forum selection provision. Kane alleges that in 2001, the Beaudry Building was sold, and the proceeds were used to satisfy in full the amounts due on the Notes. Compl. ¶¶ 26-26; Pl. Br. at 4.

In March 2006, after the Notes had matured, Manulife demanded payment from Kane. Compl. ¶ 23; Declaration of Lizanne V. Hackett ("Hackett Decl.") Ex. A. Kane rejected this demand upon the belief that the application of the proceeds from the sale of the Beaudry Building had extinguished his obligation under the Notes. Pl. Br. at 4. Manulife thereafter commenced suit in Delaware state court (the "Delaware Action") against Kane and his company, Thomas F. Kane, Inc. ("TFKI"),*fn4 seeking a judicial declaration of liability under the Notes and specific performance on the same. Compl. ¶ 23; Def. Br. at 4; Hackett Decl. Ex. B.

Kane made a motion to the Delaware court to abstain from exercising jurisdiction based upon the forum selection clauses in the settlement documents. Def. Br. at 4-5. The court denied the motion because the action involved the alleged breach of the terms of the Notes, and did not concern an alleged breach of the settlement documents themselves. The court stated:

[T]his is not an action to enforce the settlement agreement. And I think it would be an exceedingly odd interpretation of an abstention of jurisdiction to enforce the settlement agreement, to have it apply to an action 12 years after the fact by a party suing on notes it received, and under a pledge agreement it received, and which receipt essentially reflected the defendants‟ fulfillment of its obligations under the settlement agreement.

I don‟t need to interpret the settlement to decide this case. I just need to look at the notes . . . . And so I don‟t see the basis for me to bind a party . . . to something that . . . isn‟t clearly an exclusive venue provision as to a claim that‟s not covered by the plain language of that provision.

So I‟m going to deny the motion and the case will go forward.

Hackett Decl. Ex. C at 44:11-20; 45:10-18; 46:6-7; ...


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