Opinion
AANCV156019107
04-12-2016
Roller Bearing Company of America, Inc. et al. v. Moog, Inc
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Theodore R. Tyma, J.
The defendant, Moog, Inc., moves to dismiss the present action claiming that Connecticut is the improper venue based upon a contractual forum selection clause that makes East Aurora, New York, the venue. The plaintiffs, Roller Bearing Company of Connecticut, Inc. and RBC Southwest Products, Inc., oppose the defendant's motion contending that Connecticut is the proper forum.
The plaintiffs and the defendant are manufacturers of products used in the aviation industry. The defendant designs and produces aircraft component parts, including flight control systems. The plaintiffs produce a variety of bearings used in the industry, including in the defendant's flight systems.
On April 21, 2010, the parties entered into an agreement titled " Technology Insertion and Sourcing Agreement" (agreement), which is also referred to in the agreement as a Long Term Agreement (LTA). Under the agreement, the plaintiffs agree to supply bearings to the defendant for use in the manufacture of their flight control systems. The purpose of the agreement is " to set forth the framework and terms under which [the defendant] and [the plaintiffs] will conduct a Technology Insertion Program for the purpose of determining the suitability of [the plaintiffs'] equipment for use in" the defendant's production process, and for the plaintiffs " to enter into a Long Term Agreement (LTA) to supply" parts to the defendant. Paragraph 1 states that the " LTA shall remain in effect for eight (8) years . . ." Under part A of the agreement, if the plaintiffs bearings are qualified for use in the defendant's production process, then, in accordance with part B, the agreement becomes one " for the supplies and services specified" for the multi-year contract term.
The word " agreement" used in this decision means the entire agreement. The use of the term " LTA" in this decision only refers to the LTA portion of the agreement. The framework of the agreement will be more fully discussed later in this decision.
The following facts are relevant to the determination of this motion. On September 21, 2012, the defendant issued purchase order number 1209210102 to the plaintiffs for the purchase of 300 bearings at a total cost of $675,000. The order required that the plaintiffs ship the bearings to the defendant at its facility in East Aurora, New York. The order form also contained a boxed area referenced as " Terms and Conditions of Purchase, " which noted that " [n]o terms or conditions, other than those stated in [the defendant's] Standard Terms and Conditions and supplements, no agreement or understanding that in any way modify [the defendant's] terms and conditions, shall be binding on [the defendant] unless agreed to in writing." In another boxed section on the form titled " Shipping Instructions, " it is noted that the " referenced documents" are available at the defendant's website.
In response to the defendant's purchase order, the plaintiffs provided the defendant with an " Acknowledgement" form on which it is stated that the " order is expressly subject to the terms and conditions of sale contained at" the plaintiffs' website. Those terms and conditions contain a " Governing Law" section providing in relevant part that " this Agreement . . . will be governed and construed for all purposes . . . in accordance with the laws of . . . Connecticut . . ." The terms and conditions also contain a " Disputes" section that provides, among other things, that " the parties agree that all actions . . . arising out of or based upon this order or the subject matter hereof shall be brought and maintained exclusively in the state or federal courts located in . . . Connecticut."
As noted in the general " Purpose" section of the agreement, the parties agree that it " shall be governed by the terms and conditions" in the appendix. The majority of the terms and conditions of' the agreement are set forth in the appendix, and not in parts A and B, to the agreement.
Paragraph 7.2 of the LTA portion of the agreement provides as follows: " The Terms and Conditions of Purchase attached hereto as Appendix A will apply to all Purchase Orders issued to procure items covered by this Agreement. Any reference to [the defendant's] Standard Terms and Conditions that may be included on the face or reverse side of any Purchase Order issued hereunder shall have no force or effect." Additionally, paragraph 7.4 states that the defendant " shall use its best efforts to place on the face of every Order a statement referencing [the] LTA as controlling the terms and conditions of the Order. However, Orders made during the Term of this LTA shall be subject to the terms of [the] LTA and its Terms and Conditions, whether they expressly so state or not."
Section 1 of the defendant's " Standard Terms and Conditions of Purchase" contained in the appendix provides as follows: " This Order constitutes [the defendant's] offer to [the plaintiffs], which becomes a binding contract under these terms and conditions when it is accepted by [the plaintiffs], either by acknowledgement or the commencement of performance. No condition stated by [the plaintiffs] in accepting or acknowledging this Order will be binding upon [the defendant] if in conflict with, inconsistent with, or in addition to these terms and conditions unless specifically accepted by [the defendant] in writing. This Order is expressly limited to the terms and conditions contained herein. (Emphasis in original.)
Paragraph 29 of the appendix, titled " Governing Law and Interpretation, " states in relevant part that " [t]he requirements of this Order will be interpreted and construed in accordance with the laws of the State and County of residence of the [defendant's] facility noted on the face of this Order, excluding choice of law rules . . . Jurisdiction and venue for any suit between the parties hereto arising out of or connected with this Order or the goods and services furnished hereunder shall lie only in the county and state in which such [defendant's] facility is located." (Emphasis added.) Further, Paragraph 31 addresses disputes between the parties. It provides in relevant part that " [a]ny dispute that arises under or is related to this Order that cannot be settled by mutual agreement of the Parties . . . may be submitted to and decided by a court of competent jurisdiction. Venue will coincide with the residence of the [defendant's] facility noted on the face of this Order, " meaning a particular purchase order issued by the defendant to the plaintiffs. The defendant's " Standard Terms and Conditions of Purchase" expressly referenced in the purchase order at issue, and available on their website, have the same venue selection provisions as set forth in paragraphs 29 and 31 of the LTA.
Based on the venue selection provisions in the LTA, and terms and conditions referenced in the purchase order issued by the defendant to the plaintiffs, the defendant moves to dismiss the action claiming that East Aurora, New York, is the proper venue. The plaintiffs oppose the motion claiming that Connecticut is the proper venue for the following reasons: (1) the " Order of Precedence" of documents contained in paragraph 10 of the LTA excludes the defendant's " Standard Terms and Conditions" referenced in the defendant's purchase order, and, therefore, " venue of [the] action is not clearly dictated by the LTA; " (2) the " Disputes" section set forth in paragraph 31 of the LTA is unclear and ambiguous, which ambiguity should be resolved in favor of the plaintiff to the extent that the " paragraph applies, at most, to disputes about the Purchase Order, but not to disputes, like the present action, which also include the LTA; " (3) the defendant accepted the plaintiff's acknowledgement form " without objection, " and the acknowledgement constituted a counteroffer by the plaintiffs that the defendant's purchase order is subject to the " terms and conditions of sale contained at" the defendant's website, which makes Connecticut the proper forum; and (4) the plaintiff finally claims that in the event that " the [c]ourt finds a conflict as to the parties selection of a judicial forum, then the [c]ourt is free to cancel out those conflicting terms" pursuant to a purported " knock out rule."
The defendant filed a memorandum of law in reply to the plaintiff's objection. The defendant claims: (1) the LTA is clear and unambiguous, controls the issue of forum selection, and, consequently, East Aurora, New York, is the proper forum; (2) the law of Connecticut provides that " if mandatory venue language is employed, the clause will be enforced, " and that the forum selection provision in the LTA mandates that East Aurora is the proper and exclusive forum; (3) the plaintiffs alleged counteroffer fails based upon the terms and conditions of the LTA; (4) the " knock out rule" is inapplicable; and (5) enforcement of the forum selection clause does not result in prejudice or undue hardship to the plaintiff.
DISCUSSION
I
DETERMINATION OF WHETHER AGREEMENT IS AMBIGUOUS
This case presents an issue of contract interpretation. Because the court concludes in part II of this decision that New York law governs the court's construction of the agreement, including the forum selection clauses, the court will first review the law controlling construction of the terms and conditions of the agreement.
" A fundamental tenant of contract law is that the agreements should be construed in accordance with the intent of the parties and the best evidence of the parties' intent is what they express in their written contract. Legal research readily discloses that the first stage of such inquiry in any breach of contract claim is whether the underlying contract . . . is [unequivocal] and contains the necessary provisions to constitute a meeting of the minds between the parties. A determination of whether or not an agreement is ambiguous is a question of law to be decided by the courts and only after an analysis of the four corners of the instrument." Brenner v. General Plumbing Corp., 46 Misc.3d 1215[A], 13 N.Y.S.3d 849, 2015 N.Y. Slip Op 50089[U] [2015]; see also Kass v. Kass, 91 N.Y.2d 554, 566, 696 N.E.2d 174, 673 N.Y.S.2d 350 (1998). " A contract is unambiguous if the language it uses has a definite precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion." (Internal quotation marks omitted.) Greenfield v. Philes Records, 98 N.Y.2d 562, 569, 780 N.E.2d 166, 750 N.Y.S.2d 565 (2002).
When a contract is susceptible to more than one interpretation and deemed ambiguous, the rules of contract construction should be invoked: " [t]he first rule is that interpretation of a contract is favored which will make every part of it effective . . . the second is that where there is an apparent repugnancy between two clauses of a contract, the court has the duty to reconcile them, if possible . . . the third is that where there are general and specific provisions relating to the same matter, the special provisions control, even if there is an inconsistency . . . and the fourth is that in the event of ambiguity as to the meaning of terms, the language must be construed most strongly against the party who prepared it." (Citations omitted.) People v. Stokes, 630 N.Y.S.2d 634, 637, 165 Misc.2d 934 (1995); see also Katz v. American Mayflower Life Ins. Co. of New York, 788 N.Y.S.2d 15, 18, 14 A.D.3d 195 (2004), aff'd, Goldman v. Metro. Life Ins. Co., 5 N.Y.3d 561, 841 N.E.2d 742, 807 N.Y.S.2d 583, (finding contract to be unambiguous despite inconsistent use of term " annual premium").
The court finds that the agreement is clear and unambiguous, specifically concerning the parties selection of a forum. The agreement is definite and precise in its terms and their meaning, and is not reasonably susceptible to more than one interpretation. The plaintiffs' contrary claims are based on their creating ambiguity by torturing and twisting the clear language of the agreement in their attempt to maintain venue in Connecticut. The plaintiffs' construction is misguided under the applicable law.
Because the court finds the agreement to be unambiguous in its terms and conditions, and consistent when read in its entirety, it is not necessary to address the plaintiffs' claim based upon the " Order of Precedence" clause in the agreement, or the so called " knock out rule."
The standard terms and conditions stated in the appendix apply to purchases by the defendant of the plaintiffs bearings. There are thirty-seven terms and conditions. The word " Order" appears throughout the terms and conditions. As discussed, that is a defined term that in the context of the present case means the purchase order for 300 bearings. In construing the agreement as a whole, meaning both parts of the agreement and the terms and conditions contained in the appendix, the parties clearly intended the following: (1) the term " Order" to mean a purchase order issued by the defendant to the plaintiffs; (2) that when a purchase order is accepted by the plaintiffs, either by acknowledgment or the commencement of performance, it becomes a binding contract based on those terms and conditions; and (3) that the contract can only be modified by way of a writing signed by the appropriate representative of the defendant.
The purchase order for 300 bearings issued by the defendant to the plaintiffs is dated September 21, 2012. The plaintiff issued a shipping document indicating its acceptance of the order, and which document expressly acknowledged the order in accordance with the agreement. At that point, a binding agreement for the purchase and sale of the required bearings was created between the parties. The language on the face of the plaintiffs' document purporting to make the order subject to the terms and conditions on the plaintiffs' website is null and void as the agreement clearly and expressly provides that the defendant's terms and conditions apply to the transaction and can only be modified by a writing signed by the defendant. For that reason, the court rejects the plaintiffs' claim that their shipping form is a counteroffer. Accordingly, the court concludes that the jurisdiction and venue provisions contained in paragraphs 29 and 31 of the agreement govern this action.
II
ANALYSIS OF MANDATORY OR PERMISSIVE NATURE OF FORUM SELECTION CLAUSE
The plaintiffs further claim that even if the agreement is controlling, the forum selection provisions are permissive, not mandatory, and, consequently, Connecticut is the proper forum. The court disagrees.
Under New York law, it is well settled 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, 534, 663 N.E.2d 635, 640 N.Y.S.2d 479. " A contractual forum selection clause is prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court." Creative Mobile Technologies, LLC v. Smart Modular Technologies, Inc., 948 N.Y.S.2d 375, 375, 97 A.D.3d 626 (2012).
In determining the enforceability of a forum selection clause, the court must determine whether the clause is permissive or mandatory. See Boss v. American Express Financial Advisors, Inc., 6 N.Y.3d 242, 246-47, 844 N.E.2d 1142, 811 N.Y.S.2d 620. " Mandatory clauses provide that contracting parties both submit to exclusive jurisdiction in a particular forum while permissive clauses provided that contracting parties 'shall' submit to jurisdiction in a particular forum but do not preclude litigation where jurisdiction is otherwise proper." PCM Recovery Group, Inc. v. Pierce, 43 Misc.3d 1212[A], 990 N.Y.S.2d 439, 2013 N.Y. Slip Op 52309[U] [2013]. Mandatory clauses are prima facie valid in New York and it is the policy of the courts to enforce provisions that have been contracted for exclusive jurisdiction in a particular forum. See Fear & Fear, Inc. v. N.I.I. Brokerage, LLC, 851 N.Y.S.2d 311, 50 A.D.3d 185 (2008); Bernstein v. Wysoki, 907 N.Y.S.2d 49, 77 A.D.3d 241 (2010).
On the other hand, the general rule for permissive forum selection clauses is that " [w]hen only jurisdiction is specified the clause will generally not be enforced without some further language indicating the parties' intent to make jurisdiction exclusive." Fear & Fear, Inc. v. N.I.I. Brokerage, LLC, supra, 851 N.Y.S.2d 313; see also PCM Recovery Group, Inc. v. Pierce, supra, 990 N.Y.S.2d 439 (finding that the language " shall be governed and interpreted under the laws of the State of Mississippi with jurisdiction and venue in Forrest County, Mississippi" is mandatory for Mississippi law and permissive as to choice of forum); Micro Balanced Products Corp. v. Hlavin Industries Ltd., 667 N.Y.S.2d 1, 2, 238 A.D.2d 284 (1997) (enforcing clause that states " [t]he courts of Tel-Aviv shall have jurisdiction over any matter arising from or concerning this agreement, " and noting that 'shall have jurisdiction' language is generally construed as mandatory); Erie Ins. Co. of New York v. AE Design, Inc., 961 N.Y.S.2d 710, 712, 104 A.D.3d 1319, cert. denied, 21 N.Y.3d 859, 993 N.E.2d 758, 971 N.Y.S.2d 80 (2013) (enforcing clause that " [a]ny litigation arising in any way from this Agreement shall be brought . . ." although not expressly characterizing such clause as mandatory).
In John Boutani & Son, Wines & Spirits, S.A. v. Attiki Importers & Distributors Inc., 22 F.3d 51, 52-53 (2d Cir. 1994), the plaintiff was a Greek corporation in business as a wine and spirits distiller and exporter. The defendant was a New York corporation that imported the plaintiffs products into the United States under an exclusive distributor agreement. The plaintiff brought a collection action against the defendant in the United States District Court for the Eastern District of New York for the value of goods shipped during the contract period. Id., 52.
The defendant filed a motion for summary judgment claiming that the court lacked jurisdiction based on the forum selection clause in the contract. The district court granted the defendant's motion. The plaintiffs appeal ensued. Id.
The forum selection clause provided as follows: " This Agreement shall be governed and construed according to the Laws of Greece. Any dispute arising between the parties hereunder shall come within the jurisdiction of the competent Greek Courts, specifically of the Thessaloniki Courts." Thessaloniki is the location of the plaintiff's principal offices. Id., 52.
The Court of Appeals for the Second Circuit held that the clause " did not deprive the district court of jurisdiction" and reversed the judgment of dismissal of the district court. Id., 53. In reaching its conclusions, the Court noted the statements of Judge Weinfeld in Asher v. Goldberg, 775 F.Supp. 709, 711 (S.D.N.Y. 1991): " an agreement conferring jurisdiction in one forum will not be interpreted as excluding jurisdiction elsewhere unless it contains specific language of exclusion . . ." and " [t]he normal construction of the jurisdiction rules includes a presumption that, where jurisdiction exists, it cannot be ousted or waived absent a clear indication of such a purpose . . ." Id.
In the present case, the plaintiffs do not claim that the agreement is the product of fraud or overreaching, unreasonable, unjust or in violation of public policy. Also, there is no dispute that the defendant's facility referred to in the forum selection provisions is located in East Aurora, New York. The parties only dispute the interpretation of the language; that is, whether the language makes New York the exclusive venue for the action. Accordingly, in addition to reviewing New York law governing contract interpretation, the court will review New York law in deciding whether the forum selection clause in this case makes East Aurora, New York, the exclusive venue for the action.
In Bernstein v. Wysoki, 907 N.Y.S.2d 49, 51, 77 A.D.3d 241 (2010), the New York Second Department Appellate Court analyzed a forum selection clause that read, " [t]he venue of any dispute that may arise out of this agreement or otherwise between the parties to which the camp or its agents is a party shall be either the local District Justice Court or the Court of Common Pleas, Wayne County, Pennsylvania." (Emphasis omitted.) The court held the clause enforceable, even though it did not include any language granting exclusive jurisdiction to Pennsylvania, because the clause addressed both jurisdiction and venue, as well as used mandatory venue language in the form of " shall be either the local District Justice Court or the Court of Common Pleas, Wayne County, Pennsylvania." Id., 56.
In Trump v. Deutsche Bank Trust Co. Americas, 887 N.Y.S.2d 121, 123, 65 A.D.3d 1329 (2009), a limited liability company entered into a construction loan agreement with Deutsche Bank. The construction loan agreement contained a forum selection clause that stated, " [a]ny legal suit, action or proceeding against any lender or agent arising out of or relating to this agreement shall be instituted in any federal or state court in New York, New York." Id. A subsequent loan agreement entered into also contained a forum selection clause stating, " [a]ny legal suit, action or proceeding against lender . . . arising out of or relating to this agreement may at lender's option be instituted in any federal or state court in New York County, New York, and borrower waives any objections which it may now or hereafter have based on venue and/or forum non conveniens of any suit, action or proceeding, and borrower hereby irrevocably submits to the jurisdiction of any such court in any suit, action or proceeding." The New York Second Department Appellate Court held that this forum selection clause was mandatory and found no evidence that the clause was invalid. Id., 124.
In Erie Insurance Co. of New York v. AE Design, Inc., 961 N.Y.S.2d 710, 712, 104 A.D.3d 1319 (2013), the New York Fourth Department Appellate Court enforced a forum selection clause located in the Standard Terms and Conditions of the contract that read, " [a]ny litigation arising in any way from this Agreement shall be brought in the Courts of Common Pleas of Pennsylvania having jurisdiction." The Standard Terms and Conditions also provided that " [t]he laws of the Commonwealth of Pennsylvania shall govern the validity of this Agreement, its interpretation and performance." Id. The court concluded that the clause did not contravene public policy and enforced the clause as mandatory and exclusive. Id.
Finally, in Silvestre v. De Loaiza, 820 N.Y.S.2d 440, 444 12 Misc.3d 492 (2006), the New York County trial court enforced a forum selection clause that stated, " [t]he present contract will be governed and interpreted pursuant to the regulatory and normative and legislation of the Bolivarian Republic of Venezuela. Any deviation or controversy that could arise concerning the interpretation or execution of the present contract, will be decided by the Tribunals of the Bolivarian Republic of Venezuela, pursuant to its legislation and other normative in force." In deciding to enforce the forum selection clause, the court noted that the use of the words " will be decided" indicated that the clause was mandatory and not permissive. Id.
Based on the foregoing, the court concludes that New York law applies to the agreement, and that based on that law the forum selection clause is mandatory and exclusive. Paragraph 29 of the agreement mandates that agreement be construed under New York law. The paragraph further addresses both jurisdiction and venue, and provides in relevant part that they " shall lie only in the county and state in which" the defendant's facility is located. (Emphasis added.) The court interprets that language as being specific language of exclusion. The clause does not merely state that the parties " shall" submit to the jurisdiction of the defendant's facility, which language may lack exclusivity, but provides the more definite language that both jurisdiction and venue " shall only lie" at the place of the defendant's facility. By agreeing to that language, the plaintiffs clearly precluded litigation in any forum other than where the defendant's facility is located. This conclusion is further supported by the fact that paragraph 31 of the agreement provides in relevant part that " [v]enue will coincide with the residence of the defendant's facility . . ." which language is equally and harmoniously mandatory.
" A contract is unambiguous when its language is clear and conveys a definite and precise intent . . . The court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity . . . Moreover, the mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous . . . In contrast, a contract is ambiguous if the intent of the parties is not clear and certain from the language of the contract itself . . . [A]ny ambiguity in a contract must emanate from the language used by the parties . . . The contract must be viewed in its entirety, with each provision read in light of the other provisions . . . and every provision must be given effect if it is possible to do so . . . If the language of the contract is susceptible to more than one reasonable interpretation, the contract is ambiguous." (Citations omitted; internal quotation marks omitted.) Cruz v. Visual Perceptions, LLC, 311 Conn. 93, 102-03, 84 A.3d 828 (2014). Further, the law on forum selection clauses in Connecticut is also well settled, applying the same standard that is followed by New York and laid out in John Boutari & Son, Wines & Spirits, S.A. v. Attiki Importers & Distributors Inc., 22 F.3d 51 (2d Cir. 1994). " The general rule in cases containing forum selection clauses is that when only jurisdiction is specified the clause will generally not be enforced without some further language indicating the parties' intent to make jurisdiction exclusive . . . Of course if mandatory venue language is employed, the clause will be enforced . . . The choice of forum must be mandatory rather than permissive." (Emphasis omitted; internal quotation marks omitted.) Alliance Food Management Corp. v. Rensselaer Hartford Graduate Center, Inc., Superior Court, judicial district of Waterbury, Docket No. CV-05-5002441-S (April 10, 2007, Gallagher, J.) (43 Conn. L. Rptr. 146), quoting John Boutari & Son, Wines & Spirits, S.A. v. Attiki Importers & Distributors, Inc., supra, 22 F.3d 52-53. The disposition of the present motion would be the same if the agreement was construed and interpreted under Connecticut law, which is essentially identical to New York law. The law of contract interpretation in this state is well settled. " The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other, and damages." (Internal quotation marks omitted.) American Express Centurion Bank v. Head, 115 Conn.App. 10, 15-16, 971 A.2d 90 (2009). " It is a fundamental principle of contract law that the existence and terms of a contract are to be determined from the intent of the parties . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the [writing] . . . Where the language of the [writing] is clear and unambiguous, the [writing] is to be given effect according to its terms." (Citations omitted; internal quotation marks omitted.) Auto Glass Express v. Hanover Insurance Co., 293 Conn. 218, 225-26, 975 A.2d 1266 (2009).
IV
CONCLUSION
In view of the foregoing, the defendant's motion to dismiss the action is granted.