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Faloni & Associates, LLC v. Citibank, N.A.

United States District Court, D. New Jersey

October 16, 2019

CITIBANK, N.A., Defendant.



         I. Introduction

         This matter comes before the Court on Defendant Citibank N.A.'s motion to transfer. Def. Mot. to Transfer, June 26, 2019, D.E. 16. The Court has considered the parties' submissions and their arguments raised in Court on October 9, 2019. For the reasons set forth below, the Court will grant Defendant's motion to transfer this case to the United States District Court for the District of South Dakota.

         II. Background

         Faloni & Associates, LLC (“Plaintiff”) is a law firm located in Fairfield, New Jersey. Notice of Removal, Apr. 10, 2019, D.E. 1, Exh. 1, Compl., ¶ 1. Defendant, a national bank, is licensed to operate in and regularly does business in New Jersey. Id. ¶ 2. Plaintiff collected delinquent debts on second mortgages on behalf of Defendant pursuant to a contract between the parties which originated in as early as April 2009, and was renewable each year thereafter. Id. ¶¶ 2-4. Plaintiff alleges that the “Attorney Collection Services Master Agreement” (“the 2013 Master Agreement”), effective January 1, 2013, provided that Plaintiff “was to receive a nineteen percent (19%) fee on any and all amounts collected on the 2nd mortgages.” Id. ¶ 5. In January 2013, Citibank received a credit from the Federal Government for more than $40 million dollars on some of the mortgages placed with it for collection. Id. ¶ 6. Based on that credit, Plaintiff contends that it is entitled to its nineteen percent fee in the amount of $8, 021, 002.05. Id. Plaintiff maintains that it billed Defendant for this amount, but that Defendant failed to pay Plaintiff. Id. ¶ 7.

         On March 7, 2019, Plaintiff its complaint in the Superior Court of New Jersey, Essex County, Law Division, alleging Breach of Contract (Count I), Promissory Estoppel (Count II), Unjust Enrichment (Count III), and Account Stated (Count IV). Id., ¶¶ 8-24. Notice of Removal, D.E. 1, at 11. In Count V, Plaintiff avers that it is owed $21, 002.50 for additional work that it did on behalf of Defendant that was not included in the 2013 Master Agreement. Id., ¶¶ 25-31. Defendant timely removed this matter to this Court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). Id. at 1.

         Defendant now seeks to transfer this case to the United States District Court for the District of South Dakota pursuant to a forum selection clause within the 2013 Master Agreement. Master Agreement, D.E. 16, Ex. A, at 3. The forum selection clause stated, inter alia, “[b]oth parties agree to be subject to the jurisdiction of South Dakota courts and that any and all claims arising from this Agreement shall be litigated if at all in the United States District Court for the District of South Dakota.” Id. at 4. Defendant argues that the forum selection clause is valid and enforceable, Counts I-IV of Plaintiff's Complaint fall within the scope of the forum selection clause, the relevant factors under a 28 U.S.C. § 1404(a) analysis support transfer to South Dakota, and Count V should also be transferred to South Dakota in the interest of judicial economy. Def. Mot. to Transfer, June 26, 2019, D.E. 16, at 7-19.

         Plaintiff opposes the motion, initially arguing that Defendant had failed to provide a signed copy of the 2013 Master Agreement between the parties; other contracts existed between the parties; and even if this Court finds that the forum selection clause in the 2013 Master Agreement is enforceable, the Court should decline to transfer this matter to South Dakota based on various equitable considerations. Memorandum of Law in Opposition, July 22, 2019, D.E. 18, at 1-6. In reply, Defendant attached a signed copy of the 2013 Master Agreement. Reply, July 29, 2019, D.E. 19, Exh. A, at 3-4. At the oral argument on October 9, 2019, the parties agreed that the signed 2013 Master Agreement is the operative and controlling agreement pertaining to the claims currently before the Court.

         III. Discussion

         Title 28 Section 1404(a) of the United States Code provides that for the “convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” Section 1404(a) exists to “prevent the waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense.” Ricoh Co. v. Honeywell, Inc., 817 F.Supp. 473, 479 (D.N.J. 1993) (internal citations and quotations omitted). The moving party bears the burden of establishing the propriety of the transfer “with any affidavits, depositions, stipulations, or other documents containing facts that would tend to establish the necessary elements for a transfer under 28 U.S.C. § 1404(a).” Plum Tree, Inc. v. Stockment, 488 F.2d 754, 756-57 (3d Cir. 1973).

         If a contract contains a valid forum selection clause, then the court must “transfer the case unless extraordinary circumstances unrelated to the convenience of parties clearly disfavor a transfer.” Atl. Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Texas, 571 U.S. 49, 52 (2013). “Although a forum-selection clause does not render venue in a court ‘wrong' or ‘improper' under § 1406(a) or Rule 12(b)(3), the clause may be enforced through a motion to transfer under § 1404(a).” Id. at 59. “[Because] the overarching consideration under § 1404(a) is whether a transfer would promote ‘the interest of justice,' a valid forum selection clause [should be] given controlling weight in all but the most exceptional cases.” Id. at 63 (citations omitted). Accordingly, this Court will first examine the enforceability of the forum selection clause, and if enforceable, determine whether transfer is warranted under § 1404(a).

         A. Validity of the Forum Selection Clause

         The Court must determine whether the clause itself is valid. Federal law governs the enforceability of a forum selection clause in a diversity case like this one. See Cadapult Graphic Systems, Inc. v. Tektronix Inc., 98 F.Supp.2d 560, 563 (D.N.J. 2000). “It is well established that a forum selection clause is prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable' under the circumstances.” Gen. Eng'g Corp. v. Martin Marietta Alumina, Inc., 783 F.2d 352, 356 (3d Cir. 1986) (quoting The Bremen v. Zapatha Off-Shore Co., 407 U.S. 1, 10 (1972)). A forum selection clause is unenforceable only if a party establishes: “(1) that it is the result of fraud or overreaching, (2) that enforcement would violate a strong public policy of the forum, or (3) that enforcement would in the particular circumstances of the case result in litigation in a jurisdiction so seriously inconvenient as to be unreasonable.” Ramada Worldwide Inc. v. SB Hotel Mgmt. Inc., No. 14-2186, 2015 WL 758536, at *3 (D.N.J. Feb. 23, 2015) (citations omitted). Accordingly, courts enforce forum selection clauses “unless the resisting party makes a strong showing that the clause is unenforceable.” Cadapult, 98 F.Supp.2d at 564 (citations and quotations omitted).

         Plaintiff's primary arguments as to why the forum selection clause is invalid are that Defendant failed to provide a signed copy of the contract between the parties, and that there were multiple contracts between the parties, of which Defendant only provided one. However, Defendant's reply papers cured this defect by including a signed copy ...

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