Preston Frankford Shopping Center Dallas, Tx. Ltd. Partnership v. Butler Dining Services, LLC

Citations: 757 F. Supp. 2d 248; 2010 U.S. Dist. LEXIS 129690; 2010 WL 5072581Docket: 10-CV-6448L

Court: District Court, W.D. New York; December 8, 2010; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Preston Frankford Shopping Center Dallas, TX Limited Partnership filed a lawsuit against Butler Dining Services, LLC, and the Butlers in the United States District Court for the Western District of New York on July 2, 2010, after initially commencing the action in New York State Supreme Court. The plaintiff alleges that in July 2008, they entered into a ten-year lease with Newk's for a space in a Dallas shopping center, which the Butlers guaranteed. On September 18, 2010, the court denied the defendants' motion for a temporary restraining order to prevent the sale of their property seized for nonpayment of rent.

The defendants sought to dismiss the case or transfer it to a different venue, citing improper venue under Federal Rule of Civil Procedure 12(b)(3) and requesting a transfer to either the Southern District of Mississippi or the Northern District of Texas. The court denied their motion, noting that the lease agreement included a forum selection clause allowing any legal action related to the lease to be brought in the courts where the plaintiff's principal office is located, which is in Rochester, New York. The Butlers' guaranty of the lease echoed this clause, indicating their agreement to the jurisdiction in New York.

Tommy Butler provided an affidavit claiming he did not understand that signing the guaranty would compel them to bring related claims exclusively in New York and asserted that jurisdiction was not clearly explained to them. However, the court found the defendants' objections to the venue insufficient based on the explicit terms of the lease and guaranty agreements.

Defendants assert that Preston intentionally concealed or omitted material facts to induce the Butlers to sign a document, claiming this was part of a fraudulent scheme to prejudice their legal rights. They have initiated a lawsuit against Preston in the U.S. District Court for the Southern District of Mississippi, with the complaint submitted as evidence. The district court may transfer venue for the convenience of parties and witnesses, considering factors such as the plaintiff's choice of forum, witness convenience, document location, party convenience, the situs of operative facts, the ability to compel witness attendance, and the parties' relative means. The burden is on the party requesting the transfer to demonstrate a strong case for it, with a presumption favoring the plaintiff's choice of forum. 

In this case, the plaintiff chose this district, and the underlying contracts include forum selection clauses designating Monroe County, New York, as an appropriate venue, along with waivers of objections to venue. Courts engage in a four-step analysis to enforce forum selection clauses: 1) whether the clause was communicated to the resisting party; 2) whether the clause is mandatory or permissive; 3) whether the claims and parties involved are covered by the clause; and 4) whether the resisting party has shown that enforcement would be unreasonable or unjust. The forum selection clause in this case does not explicitly designate the Western District of New York as the exclusive venue for disputes.

A lawsuit may be initiated in the courts where the Owner's principal office is located, specifically Monroe County. A permissive forum selection clause, which allows for an alternative forum but does not restrict choices, does not enjoy the M/S Bremen presumption of enforceability. Instead, traditional forum non conveniens standards apply. However, if the contract includes a waiver of objections to venue, the forum selection clause becomes mandatory. In the Aguas Lenders case, it was noted that at least one contract contained such a waiver, thereby establishing a mandatory forum selection when the plaintiff selects the designated forum. The current case involves a forum selection clause complemented by clear language preventing the lessee from contesting venue based on inconvenience, thus invoking the stricter Bremen standards. 

Defendants argue they were unaware of the forum selection clause's contents, but this claim contradicts the clear language of the documents. Contract law principles dictate that signing a contract implies knowledge and acceptance of its terms. This principle has been upheld in various jurisdictions, including New York, Texas, and Mississippi, affirming that signatories are presumed to have read and understood all contract terms, including forum selection clauses. The defendants' assertion that the clause was concealed is unsubstantiated, as it is explicitly stated in both the lease agreement and the lease guaranty. While neither document directly mentions jurisdiction in Monroe County, they indicate that venue is appropriate at the Owner's principal place of business, which is identified as Rochester, New York, located in Monroe County.

The provisions in question clearly outline the forum selection clause, which is prominently presented and not obscured within the contract. Defendants failed to demonstrate any fraud or deception by the plaintiff. The clause is presumptively enforceable, and the defendants have not rebutted this presumption. To challenge enforcement, defendants would need to establish that it is unreasonable or unjust, or that the clause is invalid due to fraud or overreaching. The exceptions to enforceability are narrowly defined and include circumstances where: 1) the clause was incorporated through fraud; 2) the complaining party is effectively deprived of their day in court due to the chosen forum's inconvenience; 3) the chosen law fundamentally undermines the plaintiff’s ability to obtain a remedy; or 4) the clause contravenes strong public policy. Defendants' claims regarding the inconvenience of litigating in New York compared to Mississippi do not suffice to invalidate the clause. Financial hardship alone, such as the burden of travel, does not negate the enforcement of a valid forum selection clause. The court concludes that defendants did not present exceptional circumstances to warrant non-enforcement. Consequently, the motion to dismiss or transfer the action is denied. Additionally, neither the lease agreement nor lease guaranty includes a choice-of-law provision.