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Associates, LLC v. Report and Recommendation

December 30, 2010

ASSOCIATES, LLC, PLAINTIFF,
v.
REPORT AND RECOMMENDATION ROBERT SHENFELD, DEFENDANT.



The opinion of the court was delivered by: Falk, U.S.M.J.

NOT FOR PUBLICATION

This matter comes before the Court upon: (1) Plaintiff's motion to remand this case to state court [CM/ECF No. 8]; and (2) Defendant's cross-motion to dismiss Plaintiff's Complaint [CM/ECF No. 15.] The motions are decided on the papers submitted. Fed. R. Civ. P. 78(b). For the reasons set forth below, it is respectfully recommended that Plaintiff's motion to remand be granted and Defendant's motion to dismiss be denied without prejudice.

BACKGROUND*fn1 This is a breach of contract case. Plaintiff, Salibello Consulting Associates, LLC ("Plaintiff"), is a limited liability company with a New Jersey resident, Anna Salibello, as its sole member. Plaintiff entered into an agreement with Robert Shenfeld ("Defendant" or "Shenfeld"), an individual residing in the State of New York, to provide consulting services related to the tile manufacturing and design business. The consulting agreement was entered into in connection with an asset purchase agreement between Shenfeld and another of Salibello's companies, Terra Designs, Inc. The present motions turn on exclusive forum selection provisions contained in those agreements.

1. The Asset Purchase Agreement

On January 17, 2007, Shenfeld entered into an Asset Purchase Agreement to purchase certain business assets from Terra Designs, Inc ("Terra Designs") for $125,000. (See Declaration of the Mark A. Trokan, Esq. ("Trokan Decl.") at Exhibit B (Asset Purchase Agreement); CM/ECF No. 15-6.) Terra Designs is a closely held tile fabrication company owned and operated by Anna Salibello. In connection with the asset purchase, the parties contemplated that Shenfeld would retain Ms. Salibello as a consultant. This understanding was set forth in the Asset Purchase Agreement, which provided that Ms. Salibello would form a limited liability company that would enter into a separate consulting agreement with Shenfeld. (Trokan Decl., Ex. B at ¶ 27.) Accordingly, Ms. Salibello formed the Plaintiff, Salibello Consulting Associates, LLC, in order to execute the Consulting Agreement.*fn2

2. The Consulting Agreement

On July 11, 2007, Salibello Consulting and Shenfeld executed the Consulting Agreement.

(See Certification of Salvatore Salibello, Esq. ("Salibello Cert.") at Exhibit A (Consulting Agreement); CM/ECF No. 13-1.) The agreement provides that Salibello Consulting would perform various services for Shenfeld for a period of 60 months, including consultation regarding the tile fabrication process, tile design, and customer and client relationships.

3. The Forum Selection Provisions

Both the Consulting Agreement and the Asset Purchase Agreement contain specific provisions regarding the appropriate forum to raise any future claims. The Consulting Agreement provides:

[A]ny legal proceeding which may be commenced for any purpose with respect to the rights and/or obligations that are established under the provisions of this Agreement including, but not limited to, for the purpose of either enforcing or securing an interpretation of those terms and provisions, shall only be commenced in the Superior Court of New Jersey, Morris County and may not be commenced in any other federal or state court. (Salibello Cert., Ex. A at ¶ 7) (emphasis added).

Likewise, the Asset Purchase Agreement states:

In addition, the Superior Court of New Jersey, Morris County, shall have exclusive jurisdiction over any and all legal proceedings which may be commenced with respect to or which may otherwise involve any of the rights, liabilities or obligations that are established under the provisions of this Asset Sale Agreement and accordingly any such legal proceeding may only be commenced in the Superior Court of New Jersey, Morris County and may not be commenced in any other federal or state court. (Trokan Decl., Ex. B at ¶ 12) (emphases in original).

However, unlike the Consulting Agreement, the Asset Purchase Agreement also contains an arbitration provision, which provides that disputes arising under the Asset Agreement would be subject to binding ...


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