Opinion
015605/2008.
Decided October 6, 2008.
Rastogi Associates, New York, NY, for Plaintiff.
Herten, Burstein, Sheridan, Cevasco, Bottinelli, Litt Harz, L.L.C., New York, NY, for Defendant.
In this action for breach of contract, account stated and unjust enrichment, defendants Spectrasoft Technologies, Inc. ("Spectrasoft") and Gopi Nath ("Nath") (collectively "defendants") move to dismiss the complaint of plaintiff Compunnel Software Group, Inc.("Compunnel"): (a) for lack of jurisdiction; and (b) as against defendant Nath because there is no basis for personal liability.
Compunnel seeks to recover unpaid fees arising out of a sub-contract consulting agreement between Spectrasoft and Compunnel. Compunnel is an IT consulting company incorporated under the laws of the State of Georgia, authorized to do business in New York, with offices in New Jersey and elsewhere. Spectrasoft also works in the IT consulting industry and is incorporated under the laws of the State of New Jersey, with offices located in New Jersey. Defendant Nath is President and Managing Director of Spectrasoft, and has at all times worked at Spectrasoft's New Jersey offices.
This action arises out of a contract between Compunnel and Spectrasoft, entered into on or around November 2, 2006 (the "Agreement"). Pursuant to the Agreement, a Compunnel consultant was sub-contracted to Spectrasoft to work on an IT project for a Spectrasoft client. Spectrasoft collected fees from the client for the consultant's work, and was to pay a portion of the fees it collected to Compunnel. Per the terms of the contract, Compunnel was responsible for paying its consultant from the fees it received from Spectrasoft.
The Agreement provided, in pertinent part, that it "shall be governed by the laws of the State of New Jersey, regardless of where the Contractor's [Compunnel's] work is performed, and any litigation shall be brought in the state or federal courts of the State of New Jersey." (Agreement, ¶ 15). After the parties executed the Agreement, Compunnel sought to amend the Agreement; to that end, the parties executed an addendum on or around November 3, 2006 (the "Addendum"). The Addendum provides, in pertinent part, that "In case of non-payment of any properly submitted invoice "Contractor" [Compunnel] shall have the right to take appropriate action in any competent court of the county of New York, state of New York. . . . The provisions of this Addendum will prevail over any conflicting clause of the Agreement. . . ." (Addendum, ¶ 3.)
Compunnel commenced this action on or around February 18, 2008, seeking payment of invoices it alleges are due and owing from Spectrasoft for consulting services provided by a Compunnel employee pursuant to the Agreement and Addendum. Spectrasoft moves to dismiss the action, and asserts the allegations of the Complaint are insufficient to establish jurisdiction in New York. Spectrasoft further alleges that the complaint fails to establish a basis for personal liability against Nath.
Discussion
"New York law requires this court to respect the parties' right to contract for choice of law and forum." Mena Films, inc. v. Painted Zebra Productions, Inc. , 13 Misc 3d 1221A (Sup.Ct. NY Co. 2006). See also Boss v. Am. Express Fin. Advisors, Inc., 15 AD3d 306, 307 (1st Dep't 2005) ("It is well-settled policy of the courts of this State to enforce contractual provisions for choice of law and selection of a forum for litigation"), aff'd 6 NY3d 242 (2006); Marine Midland Bank, N.A. v. United Missouri Bank, N.A., 223 AD2d 119, 123 (1st Dep't 1996) (choice of law provisions are valid and enforceable). Here, the Agreement provides that New Jersey law governs and there is no conflicting language in the Addendum. This Court must therefore use New Jersey law, not New York law, in interpreting the forum selection clauses contained in the Agreement and Addendum. Id.
The rules of contract construction in New Jersey dictate that "[t]he court makes the determination whether a contractual term is clear or ambiguous. . . . To determine the meaning of the terms of the agreement by the objective manifestations of the parties' intent, the terms of the contract must be given their plain and ordinary meaning. The court should examine the document as a whole and the court should not torture the language of a contact to create ambiguity." Schor v. FMS Financial Corp., 357 N.J. Super. 185, 191 (App.Div. 2002) (citations omitted) (emphasis added). Moreover, "[t]he court will not make a different or better contract than the parties have seen fit to make for themselves. In the interpretation of a contract the intention of the parties is to be gathered from the language used in the instrument as a whole." A P, Inc. v. Checchio, 335 N.J. Super. 495, 501 (App.Div. 2000) (quoting Schnakenberg v. Gibraltar Savings Loan Ass'n, 37 N.J. Super 150 (App.Div. 1955)) (emphasis added).
When read together as a whole, and giving all language its plain and ordinary meaning, this Court has jurisdiction over this action. While the parties chose New Jersey as the proper forum in the Agreement, they then changed the selected forum when they executed the Addendum, and the Agreement and Addendum must be treated as one complete instrument.
In addition to the Addendum's language providing that "In case of non-payment of any properly submitted invoice Contractor [Compunnel] shall have the right to take appropriate action in any competent court of the county of New York, state of New York," the Addendum also states that "The provisions of this Addendum will prevail over any conflicting clause of the Agreement. . . ." Any conflict between the forum selection language of the Agreement and the Addendum must be determined by the Addendum's language, thus the forum selection clause in the Addendum is the relevant provision.
Moreover, the Addendum's forum selection cause should be enforced. "Forum selection provisions have long been enforced in New Jersey." Wilfred MacDonald, Inc. v. Cushman, Inc., 256 N.J. Super. 58, 63 (App. Div. 1992), cert. den'd 130 N.J. 17 (1992). As a general rule, under New Jersey law, a forum selection clause is enforced unless the provision was a result of "fraud or coercive bargaining power, or if enforcement of the clause would be seriously inconvenient for the trial." Copelco Capital, Inc. v. Shapiro, 331 N.J. Super. 1, 3 (App.Div. 2000) (citations omitted).
Spectrasoft has not alleged fraud or overreaching in the formulation of the forum selection clause in the Agreement or the Addendum. Nor is the inconvenience exception implicated. "The latter exception does not apply in cases where geographic distance merely inconveniences production of non-party witnesses; rather it is reserved for the situation where the trial in the contractual forum will be so gravely difficult and inconvenient that the party will for all practical purposes be deprived of his day in court." Copelco, 331 N.J. Super. at 3. See also Paradise Enterprises Ltd. v. Sapir, 356 N.J. Super. 96, 103 (App.Div. 2002), cert den'd 175 N.J. 549 (2003). Trial of this action in New York as opposed to New Jersey will not result in a deprivation of defendants' "day in court." New York and New Jersey are neighboring states, and travel between the two is a commonplace occurrence.
Spectrasoft argues that New Jersey has greater interest in litigating this case as it requires the application of New Jersey law and policy regarding "Temporary Help Service Firms," including New Jersey's Private Employment Agency Act, N.J.S.A. 34:8-43, which is applicable to both Spectrasoft and Compunnel. This argument in unavailing. The courts of New Jersey have enforced forum selection provisions which required litigation of cases outside New Jersey even when New Jersey statutes were at issue.
In Wilfred MacDonald, Inc. v. Cushman, Inc., the New Jersey court addressed a forum selection clause which indicated use of the Nebraska courts for an action involving the New Jersey Franchise Practices Act. In MacDonald, the court considered and rejected "the contention [that] enforcement of a forum selection clause resulting in application of the [Franchise Practices] Act by another state court is contrary to public policy." 256 N.J. Super. at 65. In rejecting this contention, the MacDonald court noted that just as the courts of New Jersey can "fairly and competently analyze and apply other states' laws," the courts of other states can fairly and competently analyze and apply the laws of New Jersey. Id. at 66.
Finally, Spectrasoft argues that this case should be moved to New Jersey on the ground of forum non conveniens. A forum non conveniens analysis requires the Court to examine a number of public interest and private interest factors. Kurzke v. Nissan Motor Corp., 164 N.J. 159, 165 (2000). However, where, as here, "settled principles of New Jersey law with respect to forum selection agreements provide adequate protection for private and public interests, . . . it is unnecessary to rely on forum non conveniens doctrine." Paradise Enterprises, 356 N. J. Super. at 107. As discussed above, the forum selection provision contained in the Addendum is enforceable and governs. There is therefore no need to address the forum non conveniens factors.
Defendants also move to dismiss the complaint against Nath, on the grounds that, as an employee and corporate officer, Nath cannot be personally liable for any action he took in furtherance of Spectrasoft's business. In opposition, Compunnel argues that it has alleged a viable claim for conversion against Nath.
An officer or director may be held individually liable for conversion. See McGlynn v. Schultz, 95 N.J. Super. 412, 416 (App.Div. 1967) ("any officer or director who aids, instigate or assists in a conversion by his corporation becomes personally liable") However, "[t]o establish a cause of action for conversion, plaintiff must not only prove that it was entitled to possession of the property, but also an act of the defendant wilfully done constituting a deprivation to plaintiff of such right to possession, i.e., an act by defendant of dominion over the property." Royal Store Fixture Co. v. New Jersey Butter Co., 114 N.J. Super. 263, 268-9 (App.Div. 1971).
In the case of conversion of money, the specific money at issue must have belonged to the plaintiff. "An action for conversion will not lie in the context of a mere debt or chose in action, however. Where there is no obligation to return the identical money, but only a relationship of a debtor and creditor, an action for conversion of funds representing the indebtedness will not lie against the debtor." Advanced Enterprises Recycling, Inc. v. Bercaw, 376 N.J. Super. 153, 161 (App.Div. 2005).
Against this standard, Compunnel does not allege facts sufficient to plead a cause of action for conversion against Nath personally. This action stems from an alleged breach of contract. There is a "well established rule that a director or officer acting for his corporation does not incur individual liability simply by causing the corporation to breach its contract with another entity." Zeiger v. Wilf, 333 N.J. Super 258, 287 (App.Div. 2000). The Court cannot allow Compunnel to convert this action into a tort as a way to attempt to find liability against Nath. See Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 280 (2002) (rejecting plaintiffs attempt to "enhance to benefit of the bargain she contracted for" by adding tort allegations to her breach of contract case).
Moreover, Compunnel fails to assert any distinct allegations against Nath. All allegations are made against the defendants collectively. In its demand for judgment, Compunnel makes no mention of Nath, instead seeking recover from Spectrasoft and Deepak Chopra, who is not a party to this action.
Similarly, Compunnel cannot recover against Nath on the basis of unjust enrichment. To establish unjust enrichment, a plaintiff must show both that defendant received a benefit and that retention of that benefit without payment would be unjust. The unjust enrichment doctrine requires that plaintiff show that it expected remuneration from the defendant at the time it performed or conferred a benefit on defendant and that the failure of remuneration enriched defendant beyond its contractual rights. Cameco, Inc. v. Gedicke, 299 N.J. Super. 203, 218 (App.Div. 1997) (citation omitted). Compunnel and Nath were not parties to an agreement, and therefore Compunnel cannot expect remuneration from Nath.
In accordance with the foregoing, it is
ORDERED that defendants' motion to dismiss the complaint for lack of jurisdiction is denied; and it is
ORDERED that defendants' motion to dismiss the complaint as against Gopi Nath is granted, and the Clerk of the Court is directed to sever and enter judgment dismissing the complaint as against defendant Gopi Nath.
This constitutes the decision and order of the Court.