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Jacobs v. Syndicat Des Coproprietaires Chateau Beauvallon


April 27, 2009


On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-149-07.

Per curiam.


Submitted September 29, 2008

Before Judges Skillman, Collester and Grall.

Plaintiffs Roger B. Jacobs and Robin Hodes Jacobs appeal from an order by Judge Harriet Klein dismissing their complaint against defendants, residents of Canada, on the ground of forum non conveniens. Defendants cross-appeal from the denial of their motion to dismiss for lack of jurisdiction. We affirm the dismissal of the complaint based on forum non conveniens.

The central facts are not in dispute. Plaintiffs are long-time residents of West Orange who planned a vacation to Quebec in August 2005. Searching the internet, they located a website advertising Chateau Beauvallon in Mont-Tremblant, Quebec, which was about 180 kilometers northwest of Montreal and two kilometers from the entrance to a well-known ski resort. The website provided a toll-free "800" telephone number for further information. Plaintiffs called and were directed to Keith Brown, who indicated he was a representative of both Chateau Beauvallon and the developer, Syndicat. Brown told plaintiffs Chateau Beauvallon was not ready for occupancy but invited them to consider the purchase of a condominium unit as an investment. He directed them to an item in a recent issue of a regionalized edition of the Wall Street Journal which plaintiffs received at their home. The advertisement stated Chateau Beauvallon was a member of the Small Luxury Hotel Association, and the development was to consist of seventy-one condominium units with one, two, or three bedrooms.

Plaintiffs spoke with Brown on numerous occasions during August 2005 about purchasing a unit. They assert that Brown told them Chateau Beauvallon was on a small lake suitable for swimming and that row boats and pontoons would be available for use. They received promotional materials picturing Chateau Beauvallon in front of a large lake with an abutting dock and listing boating and fly-fishing as amenities. The official website of Small Luxury Hotels of the World also stated that Chateau Beauvallon offered "water sports of all sorts."

Brown arranged a site visit for plaintiffs in early September 2005, while the property was still under construction. On their arrival he showed them the units available for sale as well as a mock-up of a model unit. He added that the property would be listed in the "Small Luxury Hotel" group listing. He also said that based on his knowledge of real estate in the area, unit owners could expect a positive cash flow from the onset and an annual appreciation of more than ten percent. He also gave plaintiffs an analysis and projection done by KPMG, an accounting firm hired by the developer, which estimated for a two-bedroom unit annual owner revenue in Canadian dollars of $29,912 with operating cash flow of $3,138 and direct costs of $10,075.

After their visit, plaintiffs decided to purchase unit 202 because of its proximity to the lake. They received in the mail a "Final Prospectus" which described the hotel and gave detailed information about investing in a unit. Under the heading "Risk Factors" was the following statement: "Prospective purchasers are cautioned there is significant risk that actual revenue and actual costs may vary perhaps materially from the result projected. There is absolutely no guarantee that the projections will be received in whole or in part."

The Final Prospectus described Chateau Beauvallon as "a four-season condominium resort hotel on a five-acre site beside Lake Beauvallon in Mont-Tremblant, Quebec." While the facilities listed an indoor and outdoor swimming pool as well as other amenities, there was a statement that "Lake Beauvallon is a private lake owned by an adjacent landowner and to which unit holders and hotel guests have no legal right of access."

Plaintiffs agreed to the purchase, and transaction documents sent to their West Orange home included a contract for purchase of unit 202, a two-bedroom unit, for $458,788 including furnishings. The contract contained a clause stating that its acceptance "shall be governed by, and construed in accordance with, the laws of the province of Quebec and the laws of Canada applicable thereto." Plaintiffs signed the contract on August 25, 2005, and it was accepted by defendants on August 30, 2005. Thereafter, plaintiffs signed a power of attorney to purchase the unit for $398,860 subject to a mortgage arranged by defendants in the amount of $299,145. Closing documents received in December 2005, included a document of sale and mortgage documents, as well as a "pool lease" which contained a clause specifying that it was governed by the laws of the province of Quebec.

Over the course of the next few months plaintiffs experienced losses from their investment contrary to the representations made by Brown and the KPMG projections. They wrote to the general manager of Chateau Beauvallon on April 7, 2006, but received no satisfactory response. Accordingly, they attended the General Special Meeting of owners on June 3, 2006, in Quebec to express their dissatisfaction. They state that at that meeting they learned for the first time that Brown's representations were false and that as unit owners they had no right of use to Lake Beauvallon.

On May 14, 2007, plaintiffs filed their complaint in New Jersey alleging misrepresentation, fraud, breach of contract, and violations of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to 56:12-70. They alleged that the likelihood of profit from their unit was exaggerated; that Brown misrepresented to them that the hotel owned, leased or had extensive access to the lake; and that they suffered losses from defendants' mismanagement. They sought damages of $450,000 in Canadian dollars plus $20,000 in U.S. dollars. On July 3, 2007 defendants filed a motion to dismiss the complaint on alternative grounds of lack of personal jurisdiction and forum non conveniens. In her written opinion, Judge Klein dismissed the complaint based upon forum non conveniens, and she later denied plaintiffs' motion for reconsideration. The appeal and cross-appeal followed.

Forum non conveniens is an equitable doctrine, and its application is left to the sound discretion of the trial judge. Kurzke v. Nissan Motor Corp. in U.S.A., 164 N.J. 159, 165 (2000). Accordingly, we will not intervene to substitute judgment absent a clear abuse of discretion. Civic Southern Factors Corp. v. Bonat, 65 N.J. 329, 332 (1974). The essence of forum non conveniens is that a court may decline jurisdiction "whenever the ends of justice indicate a trial in the forum selected by the plaintiff would be inappropriate." D'Agostino v. Johnson & Johnson, Inc., 225 N.J. Super. 250, 259 (App. Div. 1988), aff'd, 155 N.J. 491 (1989). A plaintiff's choice of forum is generally given deference, absent defendant showing significant hardship. Civic Southern, supra, 65 N.J. at 333. Accordingly, to obtain a dismissal based on the doctrine, a defendant must demonstrate that "serious inconvenience" would result if the case were tried in the plaintiff's chosen forum and that transferring the case to a different forum would not result in undue hardship to the plaintiff. D'Agostino, supra, 225 N.J. Super. at 262.

The first inquiry by the court on a dismissal application based on forum non conveniens is whether there is an adequate alternative forum for the case where the defendant is amenable to service of process and the subject matter of the dispute may be litigated. Varo v. Owens-Illinois, Inc., 400 N.J. Super. 508, 519-20 (App. Div. 2008). Assuming a proper alternative forum, the court must consider and weight both public and private interest factors to determine whether the plaintiff's choice of forum is appropriate for the matters in issue. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 843, 91 L.Ed. 2d 1055, 1062-63 (1947); see also Kurzke, supra, 164 N.J. at 165; D'Agostino, supra, 115 N.J. at 494-95; Gore v. United States Steel Corp., 15 N.J. 301, 305, cert. denied, 348 U.S. 861, 75 S.Ct. 84, 99 L.Ed. 678 (1954).

The public interest factors are as follows:

(1) the administrative difficulties which follow from having litigation "pile up in congested centers" rather than being handled at its origin, (2) the imposition of jury duty on members of a community having no relation to the litigation, (3) the local interest in the subject matter such that affected members of the community may wish to view the trial and (4) the local interest "in having localized controversies decided at home." [Aguerre v. Schering-Plough Corp., 393 N.J. Super. 459, 474 (App. Div.), certif. denied, 193 N.J. 293 (2007) (quoting Gulf Oil Corp., supra, 330 U.S. at 508-09, 67 S.Ct. at 843, 91 L.Ed. 1062-63).]

The private interest factors are:

(1) the relative ease of access to sources of proof, (2) the availability of compulsory process for attendance of unwilling witnesses and the cost of obtaining the attendance of willing witnesses, (3) whether a view of the premises is appropriate to the action and (4) all other practical problems that make trial of the case "easy, expeditious and inexpensive," including the enforceability of the ultimate judgment. [Ibid.]

Judge Klein stated in her letter opinion that Quebec was a proper alternative forum since defendants and all witnesses other than plaintiffs were Quebec residents, the property was in Quebec, and a Quebec court would recognize plaintiffs causes of action. She then considered the public interest factors, stating:

[T]he Court is not aware of any unfavorable docket... that would create undue judicial burdens in Canada. On the other hand, the general equity part of the Chancery Division in Essex County, New Jersey, has been combating a serious backlog problem for over five years. This factor points in the direction of Canada.

With respect to jurisdictional interests and community burden, Quebec is the location of the property and certainly has an interest.... This, however, does not seem any stronger than New Jersey's interest....

These two factors are in balance.

In addressing the private interest factors, Judge Klein emphasized that Brown was a key witness and was beyond the subpoena power of a New Jersey forum.

The critical evidence is the unavailability of Brown. The circumstances of his disassociation with defendants are unknown, and given aspersions directed toward him by plaintiffs, it must be assumed that he would prefer not to be involved in this case.....

The importance of Brown as a witness cannot be underestimated. He is the person who allegedly made misrepresentations to plaintiffs. He is the only one who can provide direct evidence to refute plaintiffs' claims. This case will largely be determined on credibility. The doctrine of forum non conveniens exists for such situations, to avoid giving one party an unfair advantage even though it may technically have jurisdiction.

Judge Klein underscored that Brown's credibility was so crucial by stating a videotaped deposition of his testimony would be inadequate even if it could be compelled.

The prejudice thereby visited on Defendants is similar to that in Kultur International Films v. Covent Garden Pioneer, FSP., 860 F. Supp. 1055 (D.N.J. 1994), where the crucial witness was located in England. The court noted the clear preference for live testimony over a videotaped deposition in a case that turns on representations made by a live witness.

A deposition - videotaped or otherwise - simply does not simulate the conditions of trial, where the witness must testify in a courtroom, on the witness stand, before a judge and a jury. These inimitable conditions may mean everything when the opportunity for the factfinder to appraise the credibility of key witnesses in this case. [Quoting from Kultur, supra, 860 F. Supp. at 1067.]

Contrary to plaintiffs' arguments on appeal, we find no clear showing of an abuse of discretion by Judge Klein. There is no suggestion that Canada would not provide a proper forum to adjudge the matter. The property is "localized" in Canada, not New Jersey, and some documents signed by plaintiffs contain a choice of law clause requiring application of Canadian law. As found by Judge Klein, the public interest factors overcome the presumption that plaintiffs' suit was properly based in New Jersey. And the private interest factors weigh in favor of defendants because, with the exception of plaintiffs, the witnesses are outside the subpoena power of New Jersey while Canadian process can be used to compel Brown and others to appear before the applicable Canadian court.

In light of our decision we do not address the cross-appeal.



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