Opinion
No. 156899/2012.
2013-01-9
M.B.S. MODA, INC., Plaintiff, v. FUZZI S.P.A., Defendant.
Stern & Zingman LLP, Joel S. Stern, Esq., New York, for Plaintiff M.B.S. Moda, Inc. Reinhardt LLP, Andrea Fiocchi, Esq., New York, for Defendant Fuzzi S.P.A.
Stern & Zingman LLP, Joel S. Stern, Esq., New York, for Plaintiff M.B.S. Moda, Inc. Reinhardt LLP, Andrea Fiocchi, Esq., New York, for Defendant Fuzzi S.P.A.
MEMORANDUM DECISION
CAROL R. EDMEAD, J.
Defendant Fuzzi S.P.A. (“defendant”) moves to dismiss the complaint of plaintiff M.B.S. Moda, Inc. (“plaintiff”) pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction and pursuant to CPLR 327 on inconvenient forum grounds.
Background Facts
Defendant is a designer and manufacturer of women's clothing, having its principal place of business in Rimini, Italy. In 2002, defendant entered into a contract with plaintiff, pursuant to which plaintiff was to serve as its agent/sales representative in New York and other states for defendant's products (the “agency agreement”). Pursuant to this agreement, plaintiff was to receive 12% sales commissions. Plaintiff alleges that defendant failed to pay several invoices and now owes defendant $44,542.42. Plaintiff commenced this action in New York and attempted service upon defendant in Italy by regular mail and by Federal Express.
In support of its motion, defendant argues that plaintiff's complaint against it should be dismissed because personal jurisdiction over defendant was never obtained. As an Italian resident, it is not amenable to service in the United States, and it was not served in accordance with the requirements of the Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (the “Hague Convention”) or any New York's statutory requirements. Plaintiff attempted service by registered mail and/or Federal Express (“FedEx”), purportedly pursuant to CPLR 312–a, however, such service was ineffective because plaintiff did not include an acknowledgment form and pre-paid postage pursuant to CPLR 312–a.
Further, defendant is not doing business in New York within the meaning of CPLR 301 as it has no bank accounts, property, offices/employees or pays taxes in New York and only had occasional or incidental contacts with a small number of customers in New York. Neither can it be subject to jurisdiction under the New York long-arm statute (CPLR 302) because any contacts/transactions to supply goods to New York are not substantially related to plaintiff's claim which arises out of the agency agreement executed in Italy; and the remaining provisions of CPLR 302 do not apply because plaintiff's claims are not tort-based or related to real property.
And in any event, the complaint should be dismissed pursuant to CPLR 327 on the ground of an inconvenient forum. The agency agreement contains an express forum selection clause, which requires that any disputes in connection with the agreement be brought exclusively in the courts of Rimini, Italy. In addition, the balancing factors weigh in favor of the Italian forum because most of the witnesses and documents are in Italy and the agency agreement was executed in Italy and is governed by Italian law.
Plaintiff opposes the motion arguing that defendant is amenable to New York's jurisdiction because service by mail was proper under the Hague Convention. Further, defendant is doing business in New York by selling its products in six New York stores and it employs a factor located in New York.
Furthermore, the court should not enforce the forum selection clause because the agency agreement is not admissible in support of defendant's motion as it is not accompanied by a certified translation of this document as required by CPLR 2101(b). Further, this action is based on the unpaid invoices in the amount of $44,542 .42, which is undisputed, since it was defendant who issued invoices to plaintiff. In light of the amount owed, the costs of litigating this action in Italy, involving the costs of retaining Italian counsel and traveling to Italy, would be disproportionate to the recovery sought by plaintiff.
In reply, defendant argues that plaintiff does not dispute that it had agreed to the exclusive jurisdiction of the courts in Rimini. The relevant portion of the agency agreement has been translated by defendant's attorney who affirms that she is fluent in both Italian and English and that the translation is accurate ( see Affirmation of Andrea Fiochhi, Esq., in support of Reply).
Further, Italy is the most convenient forum because this dispute requires a court to construe the provisions of the parties' contract, governed by the Italian law. Furthermore, if the case is litigated in New York, defendant would have to incur legal and travel expenses.
The court lacks personal jurisdiction over defendant because the service of process was invalid, either under the Hague Convention or CPLR. Plaintiff admits in paragraph 34 of the opposition that it did not comply with the CPLR 312–a requirement for service. And, there is no basis for jurisdiction under CPLR 301 or 302.
Furthermore, the alleged commission amounts owed are incorrect because, due to an error, defendant overpaid plaintiff $98,795.26, and therefore, is entitled to a set off of any claimed amounts owed.
In sur-reply,
plaintiff contends that defendant's argument of its entitlement to a set off based on overpayment is improperly brought in its reply, rather than in its moving papers. In any event, the amounts of commission were established by the parties' conduct pursuant to the UCC 2–208 . And, defendant could not have miscalculated the amounts of the commissions in the course of 12 years.
Defendant, for the first time in its reply, claimed overpayment of the commissions to defendant, and plaintiff availed itself of an opportunity to oppose the claim in its sur-reply. Thus, consideration of this issue results in no prejudice to a substantial right of defendant ( see Fiore v. Oakwood Plaza Shopping Center, Inc., 164 A.D.2d 737, 565 N.Y.S.2d 799 [1st Dept 1991] ). However, the court disregards plaintiff's remaining arguments, involving the issues of jurisdiction and forum, which were previously argued in plaintiff's opposition.
Likewise, to the extent that defendant's further response to plaintiff's sur-reply does no more than reiterates the arguments previously asserted in defendant's reply, it is disregarded.
Discussion
For the purposes of CPLR 327(a), the court must first determine that it has personal jurisdiction over defendant ( see Wyser–Pratte Mgt. Co., Inc. v. Babcock Borsig AG., 23 A.D.3d 269, 808 N.Y.S.2d 3 [1st Dept 2005][holding that the trial court could not issue binding forum non conveniens ruling as to certain defendants which were not New York residents and did not maintain any New York presence, since the court lacked jurisdiction over them] ). Lack of Personal Jurisdiction: CPLR 3211(a)(8) Improper Service
Personal jurisdiction requires (1) a constitutional basis to assert jurisdiction and (2) adequate notice to the defendant (see generally WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286 [1980] ). “Service” means a formal delivery of documents that is legally sufficient to charge the defendant with notice of a pending action (Volkswagewerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 108 S.Ct. 2104 [1988] ).
Since plaintiff served the summons and complaint in this action upon defendant in Italy, the service requirements of this dispute are governed by the Hague Convention
(20 UST 361, TIAS No. 6638). Both Italy and the United States are signatories to the Hague Convention ( see G.A. Modefine, S.A. v. Burlington Coat Factory Warehouse Corp., 164 F.R.D. 24 [SDNY 1995] ). The Hague Convention requires service upon parties in a signatory nation to be made through a Central Authority designated by the signatory nation (20 UST 361, supra, at Ch. 1, Art. 2–3). The Central Authority must then arrange to have process served on a defendant ( G.A. Modefine, 164 F.R.D. 24,supra ).
The Hague Convention is a treaty that provides mechanisms by which plaintiffs can effect service of process on defendants in foreign countries. As a ratified treaty, the Convention is the supreme law of the land, and has controlling effect ( seeU.S. CONST Art VI, cl 2).
Here, plaintiff's attempted service by registered mail and/or FedEx did not comply with any of the Hague Convention requirements insofar as they pertain to Italy, sufficient to confer personal jurisdiction over defendant.
Contrary to plaintiff's contention, while Article 10(a) of the Hague Convention provides that the Convention “shall not interfere with [ ... ] freedom to send judicial documents by postal channels directly to persons abroad,” provided that the country of destination does not object, the First Department held that Article 10(a) pertains to the forwarding of informational material, not the “service” of documents for jurisdictional purposes (Sardanis v. Sumitomo Corp., 279 A.D.2d 225, 229, 718 N.Y.S.2d 66 [1st Dept 2001]; see e.g., Optic Plus Enterprises Ltd. v. Bausch & Lomb B.V. Netherlands, 2003 WL 25780846 (Trial Order) [Supreme Court, New York] [“stating that “while the Netherlands has lodged no objection to Article 10 (20 UST 361, TIAS No. 6638), the First Department has interpreted that paragraph to pertain to the forwarding of informational material, not the service' of documents for jurisdictional purposes.' ”)).
It should be noted that the Second Circuit has permitted service on corporations via international registered mail pursuant to the Hague Convention where the party effecting service submits sufficient proof of service ( see G.A. Modefine, S.A. v. Burlington Coat Factory Warehouse Corp., 164 F.R.D. 24, 25 [SDNY1995] [upholding service of summons and complaint on an Italian entity and an Italian national through international registered mail as consistent with the Hague Convention] ).
Plaintiff's reliance on caselaw from the Second and Fourth Departments
expressing the view that service by mail is permissible in this instance are not controlling. In “New York there has been a division of authority among the departments of the Appellate Division” ( Sardanis v. Sumitomo Corp., 279 A.D.2d at 229, 718 N.Y.S.2d 66 [1st Dept 2001] ). As pointed out in New York State Thruway Authority v. Fenech (94 A.D.3d 17, 938 N.Y.S.2d 654 [3d Dept 2012] ), the First Department has concluded that “the use of the term send' in article 10(a)—as opposed to service,' which is ubiquitous elsewhere in the treaty—signifies something other than service' in the legal sense, such as the mere transmittal of notices and legal documents which need not be served' “ [whereas] [t]he Second and Fourth Departments have held to the contrary, pointing to the history and usage of the Hague Convention in determining that article 10(a), while perhaps carelessly drafted, nevertheless allows service by mail.” Indeed, the First Department has stated that “the contrary interpretation, as expressed by the Third Department in Reynolds v. Woosup Koh, 109 A.D.2d 97, 490 N.Y.S.2d 295, is the better reasoned, especially in light of the U.S. Supreme Court's reading of service' in the Hague Convention as a term of art, referring specifically to the process that initiates a lawsuit and secures jurisdiction over an adversary party” ( Sardanis v. Sumitomo Corp., 279 A.D.2d at 229, 718 N.Y.S.2d 66).
Fernandez v. Univan Leasing, 15 A.D.3d 343, 790 N.Y.S.2d 155 [2d Dept 2005] and Cantara v. Peeler, 267 AD2s 997, 267 A.D.2d 997, 701 N.Y.S.2d 556 [4th Dept 1999]; Rissew v. Yamaha Motor Co., Ltd., 129 A.D.2d 94, 515 N.Y.S.2d 352 [4th Dept 1987] ).
Therefore, under First Department caselaw, which interprets article 10 as only permitting service by mail of notices and legal documents that do not require “service,” the complaint must be dismissed on this ground alone.
However, even if jurisdiction over defendant were obtained (by proper service and based on its presence in New York
), dismissal of the complaint is warranted on the ground of forum nonconvenience.
Given that defendant, through plaintiff as its agent, has been selling its merchandise in six clothing stores in New York, over an almost 12–year period, defendant is “present” in New York under CPLR § 301, “not occasionally or casually, but with a fair measure of permanence and continuity” (Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 77 N.Y.2d 28, 33–34, 563 N.Y.S.2d 739, 741 [1990] ). Furthermore, defendant's commercial activities in shipping and selling goods in New York, warrant the exercise of this court's long arm jurisdiction over defendant pursuant to CPLR 302(a)(1).
Inconvenient Forum: CPLR 327
CPLR 327 permits a court, in its discretion, to dismiss an action “where it is determined that the action, although jurisdictionally sound, would be better adjudicated elsewhere” (CPLR 327; see Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 479 [1984],cert denied469 U.S. 1108 [1985] ). However, here, “the dismissal is not discretionary, but is the necessary consequence of enforcing the contract between the parties” (Lischinskaya v. Carnival Corp., 56 A.D.3d 116, 865 N.Y.S.2d 334 [2d Dept 2008] ).
It is well-established that parties to a contract may freely select a forum which will resolve any disputes over the interpretation or performance of the contract (Brooke Group v. JCH Syndicate 488, 87 N.Y.2d 530, 640 N.Y.S.2d 479 [1996] ). It is also well-accepted policy that forum-selection clauses are prima facie valid, unless it is shown that enforcement would be unreasonable and unjust or that the clause is invalid because of fraud or overreaching, such that a trial in the contractual forum would be so gravely difficult and inconvenient that the challenging party would, for all practical purposes, be deprived of his or her day in court (Scarcella v. America Online, Inc., 11 Misc.3d 19, 811 N.Y.S.2d 858 [App Term, 1st Dept 2005], citing British W. Indies Guar. Trust Co. v. Banque Internationale A Luxembourg, 172 A.D.2d 234, 567 N.Y.S.2d 731 [1st Dept 1991]; M/S Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 92 S.Ct. 1907 [1972] ).
Here, the forum selection clause in the parties' agreement reads, translated from Italian, as follows:
“13. Exclusive Forum
All controversies out or in connection with the interpretation, execution, or termination of this agreement, shall be submitted to the exclusive jurisdiction of the courts of Rimini, which shall have exclusive jurisdiction. The relationship between the parties shall be governed by Italian law.”
(Agency agreement, ¶ 13, exhibit B to reply).
Thus, the plain language of the contract unambiguously provides that any disputes are to be decided “exclusively” in the courts of Italy. It is clear from this language, that the parties' reasonable expectations were that all litigation would take place in Italy. Thus, plaintiff, having voluntarily executed said contract, “waived any privilege to have [its] claims heard elsewhere” (Boss v. American Express Financial Advisors, Inc., 6 N.Y.3d 242, 844 N.E.2d 1142 [2006] ).
And, plaintiff failed to demonstrate that enforcement of the forum selection clause would be unreasonable and unjust or that the clause is invalid because of fraud or overreaching, such that a trial in the contractual forum would be so gravely difficult and inconvenient that plaintiff would be deprived of its day in court so as justify the setting aside of the forum selection clause.
Plaintiff's contention that the relevant portion of the agreement submitted by defendant in its moving papers is inadmissible for lack of a proper translation, is rendered moot as defendant cured this irregularity by attaching a certified translation of the relevant portion of the agreement to their reply.
Furthermore, plaintiff's assertions of costs of retaining Italian counsel and inconvenience of having to travel to Italy are insufficient, standing alone, to demonstrate that enforcement of the forum selection clause would be unjust. Plaintiff offered no evidence that it would incur travel or other expenses, disproportionate to the damages sought, such that it would be so financially prohibitive that, for all practical purposes, plaintiff would be deprived of its day in court ( cf. Scarcella v. America Online, Inc., 11 Misc.3d 19, 811 N.Y.S.2d 858,supra ). Furthermore, “[t]hese factors were-or should have been-considered by the parties in arriving at their agreement upon a forum” (Arthur Young & Company v. Leong, 53 A.D.2d 515, 383 N.Y.S.2d 618 [1st Dept 1976] ). Thus, none of plaintiff's asserted reasons militate against enforcement of the clause.
Plaintiff's cited cases holding the forum selection clauses unenforceable, are distinguishable.
They all involve small claims (from $2,500 to $5,000) and thus, the courts found a just basis for denying enforcement of a forum selection clause because the costs and inconvenience of litigating in a foreign forum would, for all intents and purposes, deprived each of the litigants of his day in court.
See Scarcella, supra; Full House entertainment v. Auto Life RX (31 Misc.3d 64, 922 N.Y.S.2d 912 [App Term, 9th and 10th Distr 2011] and Strujan v. AOL (12 Misc.3d 1160(A), 819 N.Y.S.2d 213 [Civ Ct, New York County 2006].
Unlike in those case, plaintiff in the instant case voluntarily agreed to settle any disputes in the Italian court miles away from its place of business and there is no indication that its claim will be limited by the type of court or jurisdictional amount in the selected forum. Plaintiff has therefore failed to show that the enforcement of the forum selection clause is unreasonable or unjust, depriving it of its day in court.
Finally, the court expresses no opinion as to the merits of plaintiff's argument of the allegedly owed amounts of commission (or, plaintiff's counter argument of the offset of those amounts). These arguments should be made in a court in Italy-the forum the parties chose by contract. “Forum selection clauses are enforced because they provide certainty and predictability in the resolution of disputes” (see Boss v. American Express Financial Advisors, Inc., 6 N.Y.3d 242, 811 N.Y.S.2d 620, 844 N.E.2d 1142,supra, citing Brooke Group v. JCH Syndicate 488, 87 N.Y.2d 530, 534, 640 N.Y.S.2d 479 [1996] ).
Accordingly, even if jurisdictionally sound, this action would be better adjudicated in the Italian courts ( see Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 478 N.Y.S.2d 597, 467 N.E.2d 245).
Conclusion
Based on the foregoing, it is hereby
ORDERED that defendant Fuzzi S.P.A.'s motion pursuant to CPLR 3211(a)(8) and/or CPLR 327 to dismiss plaintiff M.B.S. Moda, Inc.'s complaint is granted in its entirety, and said complaint is dismissed; and it is further
ORDERED that defendant's counsel shall serve a copy of this order with a notice of entry upon plaintiff's counsel within 20 days of this order.
This constitutes the decision and order fo the court.
Dated: January 9, 2013__________________________________
Hon. Carol R. Edmead, J.S.C.
In accordance with the accompanying memorandum decision, it is hereby
ORDERED that defendant Fuzzi S.P.A.'s motion pursuant to CPLR 3211(a)(8) and/or CPLR 327 to dismiss plaintiff M.B.S. Moda, Inc.'s complaint is granted in its entirety, and said complaint is dismissed; and it is further
ORDERED that defendant's counsel shall serve a copy of this order with a notice of entry upon plaintiff's counsel within 20 days of this order.
This constitutes the decision and order fo the court.