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First Tek Technologies, Inc. v. PAC Corp.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 9, 2010

FIRST TEK TECHNOLOGIES, INC., PLAINTIFF-APPELLANT,
v.
PAC CORPORATION, IQUEST SERVICES, INC., WALLY F. KULESZA AND QUINTEGRA SOLUTIONS, INC., DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1145-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted January 19, 2010

Before Judges Alvarez and Coburn.

On defendants' motions in this commercial litigation, the trial court dismissed plaintiff's complaint on the grounds that the parties had agreed to arbitrate their disputes and had further agreed in a forum selection clause that the State of Maryland had exclusive jurisdiction over the case. We reverse and remand for further proceedings.

This case arose from a contract between plaintiff First Tek Technologies, Inc. ("Tek"), a New Jersey corporation, and defendant PAC Corporation ("PAC"), a corporation located in Virginia. Tek agreed to provide services to one of PAC's clients located in New Jersey. Tek provided the services and PAC refused to pay the bill. Thereafter, defendant Wally F. Kulesza apparently sold PAC's assets or stock, and PAC's associated company, to defendant Quintegra Solutions, Inc., a California company also located in Virginia. Apparently, Tek seeks to hold Quintegra liable for PAC's debts under theories of successor liability. With respect to successor liability, we draw the trial court's attention to Lefever v. K.P. Hovnanian Enterprises, 160 N.J. 307, 310 (1999).

In support of the motion to dismiss the complaint, PAC offered a written version of the contract at issue which contained an arbitration clause. Tek offered its written version of the contract, and this version did not contain the arbitration clause. Both versions contained the following forum selection clause:

26.0 GOVERNING LAW

The Agreement shall be governed and construed in accordance with the laws of the State of Maryland and each party hereby submits to the venue and jurisdiction thereof. [(Emphasis added.)]

The question of whether a case should be decided by arbitration is for the court. Raritan Plaza I Assocs., L.P. v. Cushman & Wakefield, 273 N.J. Super. 64, 70-71 (App. Div. 1994). But, the trial court's terse opinion omitted reference to the factual dispute between Tek and PAC regarding the presence or absence of the arbitration clause. Based on the record, that dispute could not be resolved without a testimonial hearing. If the court determines on remand that the arbitration clause is in the contract, it must then consider whether Tek is nonetheless entitled to proceed in court with respect to those defendants who did not enter the contract, which is an issue that the trial court did not address.

The forum selection clause did not provide a basis for dismissal of the complaint. As the court observed in John Boutari & Son v. Attiki Importers, 22 F.3d 51, 52 (2d Cir. 1994):

[t]he general rule in cases containing forum selection clauses is that "when only jurisdiction is specified the clause will generally not be enforced without some further language indicating the parties' intent to make jurisdiction exclusive." [(Citation omitted.)]

The clause at issue in this case provided that disputes between the parties "shall come within the jurisdiction of the competent Greek Courts, specifically of the Thessaloniki Courts." Ibid. Despite the use of the word "shall," the court held that it did not create exclusive jurisdiction and the case could proceed in the New York federal court. Id. at 53. See also Marjorie A. Shields, Annotation, Permissive or Mandatory Nature of Forum Selection Clauses Under State Law, 32 A.L.R.6th 419 (2008).

Here, the forum selection clause is in a section titled "GOVERNING LAW," and the word "shall" only makes reference to which state's law shall govern the contract. The portion of the section respecting jurisdiction merely states that "each party hereby submits to the venue and jurisdiction" of Maryland. Nothing in that phrase indicates that the parties intended that Maryland would have exclusive jurisdiction of their disputes, which is hardly surprising considering that neither party has any relationship to Maryland and the contract was to be performed in New Jersey. Since there was no agreement that Maryland would have exclusive jurisdiction, the forum selection clause provided no basis for dismissing the case.

Reversed and remanded for consideration of the issues relating to the arbitration clause.

20100309

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