Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Century 21 Real Estate, LLC v. Gateway Realty

March 31, 2011

CENTURY 21 REAL ESTATE, LLC, PLAINTIFF,
v.
GATEWAY REALTY, INC. D/B/A/ CENTURY 21 GATEWAY REALTY, INC., JAY V. SMITH, AND JAN FERRELL, DEFENDANTS.



The opinion of the court was delivered by: Debevoise, Senior District Judge

NOT FOR PUBLICATION

OPINION

This matter arises out of the alleged breach of a franchise agreement. On August 3, 2010, Plaintiff Century 21 Real Estate, LLC ("Century 21") filed a Complaint against Defendants Gateway Realty, Inc. ("Gateway"), Jay V. Smith, and Jan Ferrell in the Law Division of the New Jersey Superior Court, Morris County alleging that (1) Gateway breached the terms and conditions of an October 8, 2002 Franchise Agreement, and (2) Mr. Smith and Ms. Ferrell breached the Guaranty associated with the Franchise Agreement. The Complaint also seeks recovery of fees allegedly owed to Century 21 in connection with Gateway's real estate brokerage business as a Century 21 franchise.

Defendants now move to dismiss the Complaint for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and improper venue under Federal Rule of Civil Procedure 12(b)(3). In the alternative, Defendants move to transfer venue to a Louisiana federal court pursuant to 28 U.S.C. § 1404(a).

For the reasons set forth below, Defendants' motion is denied. This Court has personal jurisdiction over Defendants pursuant to a forum selection clause in the Franchise Agreement. Venue is also proper under that clause. Finally, New Jersey, not Louisiana, is the proper forum in which to resolve this case because, in addition to the forum selection clause, the private and public interest factors taken into account when deciding a Motion to Transfer weigh in favor of proceeding in New Jersey.

I. BACKGROUND

Gateway operates a Century 21 real estate brokerage office in Lafayette, Louisiana pursuant to a Franchise Agreement. Jay V. Smith and Jan Ferrell executed the Franchise Agreement as shareholders of Gateway.*fn1 They also executed a "Guarantee of Payment and Performance" (the "Guaranty") to ensure that Gateway meets its obligations under the Franchise Agreement. The Guaranty provides that:

Each Guarantor does hereby, jointly and severally, to the extent herein provided, guaranty to CENTURY 21 the prompt payment and performance, when due of all obligations of Franchisee under that certain Franchise Agreement bearing even date hereof, including any renewal, replacement or modification of said Franchise Agreement, and any other Franchise Agreement or other Agreement now existing or hereafter entered into between Franchisee and CENTURY 21.

(Pl.'s Br. Opp'n Mot. Dismiss, Affidavit of Elior D. Shiloh ("Shiloh Aff."), Ex. B.))

The parties first entered into the Franchise Agreement in 1977, and, since then, have renewed it in successive five-year terms.*fn2 Each renewal of the Agreement contains a forum selection clause stating the following:

This Agreement shall be construed according to the laws of the State of New Jersey . . . Franchisee consents to the non-exclusive personal jurisdiction of the New Jersey state courts situated in Morris County and the United States District Court for the District of New Jersey. Franchisee waives objection to venue in any such courts.

(Shiloh Aff., Ex. 3.)

In the fall of 1997, Gateway's counsel, one of its owners, and representatives of Century 21 were in the process of negotiating the renewal of the 1992 Franchise Agreement. During the course of these negotiations, the parties discussed the possibility of modifying the forum selection clause. Ultimately, however, Century 21 told Defendants that it did not want to modify the clause and that they would have to agree to it in order to renew the Franchise Agreement. Thus, Defendants agreed to the clause and the Agreement was renewed.

The forum selection clause continued to govern Franchise Agreement until October 8, 2007 when the Agreement expired. However, just a few weeks later, the parties renewed the Franchise Agreement pursuant to a document entitled "Term Extension Addendum to Franchise Agreement" (the "2008 Term Extension"), which extended the expiration date of the Franchise Agreement to October 7, 2017. Section 2 of the 2008 Term Extension states that "[e]xcept as expressly stated in this Addendum, no further additions, modifications or deletions to the [Franchise] Agreement are intended by the parties or made by this Agreement." (Shiloh Aff., Ex. 8.) Section 1A of the document further indicates the parties' intent to continue operating under the terms of the Franchise Agreement: "Other than as modified by this Addendum, the [Franchise] Agreement shall continue in full force and effect." (Id.)

On August 3, 2010, Century 21 filed a Complaint against Defendants in the Law Division of the New Jersey Superior Court, Morris County alleging that Defendants breached the terms of the Franchise Agreement "by failing to pay amounts due and failing to report and pay on closed transactions," (Compl. ¶ 17), and asserting causes of action for breach of contract, accounting, and unjust enrichment. On September 29, 2010, Defendants removed the action to this Court.

II. DISCUSSION

Defendants now move to dismiss Century 21's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) and (3) or, in the alternative, to transfer venue to a Louisiana federal court pursuant to 28 U.S.C. § 1404(a). In doing so, they argue that the Court lacks personal jurisdiction over them because (1) the forum selection clause expired and therefore is no longer enforceable against Gateway; (2) the forum selection clause was never enforceable against Mr. Smith and Ms. Ferrell as individual guarantors; and (3) the forum selection clause is unenforceable in general because it violates New Jersey Public Policy and is otherwise inconvenient and unreasonable.*fn3 Defendants further argue that New Jersey is an improper venue, or in the alternative, that this case should be transferred to Louisiana because (1) Century 21's claims arose in Louisiana; (2) Defendants reside in Louisiana; (3) Gateway's books and records are located in Louisiana; and (4) Louisiana has a substantial interest in resolving this case.

Century 21 argues that the Court has personal jurisdiction over Defendants because the forum selection clause (1) is enforceable against all Defendants and still in effect by virtue of the 2008 Term Extension; and (2) is neither against New Jersey Public Policy nor otherwise inconvenient or unreasonable. Century 21 also argues that New Jersey is a proper venue under the forum selection clause and because a substantial portion of the events giving rise to this case occurred there. Finally, it maintains that this case should not be ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.