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Plaintiff Brings Motion to Dismiss Family Case



In this family case, the Defendants bring this motion seeking to reargue and renew their prior motion to dismiss, pursuant to CPLR §§ 3211 and 327, which resulted in an order of this court denying the motion. The Plaintiff opposes the present motion. Before addressing the substance of the Defendants’ present motion it is worthwhile to review the nature of the underlying action, the Defendants’ prior motion and the claims made therein.

This is an action to recover monies allegedly due and owing pursuant to an equipment rental agreement (the “Agreement”) entered into by the defendant corporation and the Plaintiff’s assignor, guaranteed by the Defendant, the President of the corporation for the lease of telecommunication equipment and services.

The Plaintiff opposed that motion arguing that jurisdiction was properly acquired over the Defendants in New York by virtue of the forum selection clause contained in the Agreement. In denying the Defendants’ motion, the court began with a recognition of the well accepted policy that forum selection clauses are prima facie valid and enforceable unless shown to be unreasonable.

The court took into consideration the Defendants’ argument that because the forum selection clause herein allows for claims to be brought in the State where the “Rentor” [NorVergence] maintains its principal place of business or in the State where any assignee of the Agreement maintains its principal place of business, at the time of its execution, the Agreement would allow for jurisdiction to potentially lie in any one (1) of the fifty (50) states or in a foreign country.

After distinguishing a number of those cases from the one sub judice, the court also took note of a number of related actions in New York and around the country, cited by the Plaintiff, which have found this same forum selection clause valid and enforceable.

The court’s review of all of these cases, and other cases addressing the forum selection clause herein, revealed that the majority of nisi prius decisions rendered on the issue invalidated the clause, while the appellate decisions around the country, both state and federal, by and large favor the clause’s validity.

Based thereon, the court found the forum selection clause herein to be clear and specific enough to be enforceable, “absent Defendants demonstration that the forum selection clause was obtained because of fraud or overreaching, or is so manifestly unfair as to effective deprive the Defendants of their day in court.” As to these latter issues, the court took note of the Defendants’ extensive argument that the Agreement, including the forum selection clause, was procured by fraud, allegedly rendering the entire Agreement void ab initio, found that the Defendants’ allegations “make a compelling argument against the validity of the contracts in general, and even raise some question as to whether or not the Plaintiff herein is a good faith purchaser for value of the Equipment Rental Agreement”

Indeed, defendant corporation, a sophisticated business entity, agreed when it originally entered into the lease agreement that venue would be placed in New Jersey and, in our view, cannot now be heard to argue that the change in venue from New Jersey to New York, as the result of the subsequent assignment, is so oppressive as to warrant rendering the provision void.

“A motion for leave to renew must (1) be based upon new facts not offered on the prior motion that would change the prior determination and (2) set forth a reasonable justification for the failure to present such facts on the prior motion.”

The “new facts” upon which the Defendants rely are purportedly contained in the affidavits of former NorVergence employees, which the Defendants submit as their Exhibits 5 through 8, inclusive. The Defendants allege that these affidavits are “newly obtained” from a network of attorneys around the country who are handling cases involving other lessees of equipment from NorVergence, via a password protected website and an email list-serve created for the sharing of evidence and information. The Defendants summarily aver that “it is reasonable to conclude that this evidence was not available a year or so ago.”

As serious as these allegations concerning fraud committed in procuring these lease agreements with customers appear, they were all raised in the Defendants’ previous motion to dismiss.

A comparison of all of the papers previously submitted on the Defendants’ prior motion to dismiss with the “new evidence” now proffered by the Defendants leads to the inescapable conclusion that these factual allegations are not new, but are “merely cumulative with respect to the factual material submitted in connection with the original motion.”

Accordingly, that branch of the Defendants’ motion which seeks to renew their prior motion to dismiss is denied.

A motion to reargue is addressed to the discretion of the Court and may be granted upon a showing that the Court overlooked or misapprehended the facts or misapplied the law or for some other reason improperly decided the prior motion.

The Defendants originally argued that consumer contracts entered into in the State of New York must be in 10-point type to be enforceable, unless the transaction is governed by maritime law, which permits 4-point type; and, that the forum selection clause herein is unenforceable, inter alia, because it is in 6-point type. This court did not find the Agreement to be a consumer contract, but an arms length transaction between two commercial enterprises.

The problems with the Defendants’ arguments are three-fold. In the first instance, this court is not bound by the opinions of legal scholars and Attorneys General. The Defendants do not offer one case which supports their tendered definition of a consumer lease. The second problem with the Defendants’ argument is that this is not “most states,” it is New York State; and, the definitions of “consumer” and “consumer lease” utilized in “most states” are not controlling in this State. The third problem faced by the Defendants is that their suggested definition of “consumer” and “consumer lease” is not supported by U.C.C. § 2-A-103, upon which they rely.

U.C.C. § 2-A-103, upon which the Defendants rely, does not provide a definition for “consumer.” Subparagraph (1)(e) thereof, defines “consumer lease” as “a lease that the lessor regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for personal, family or household purposes.”

This controlling statutory definition of “consumer lease” is significantly different from the one proffered by the Defendants. Conspicuously absent from the Defendants’ proposed definition is the phrase, “a lessee who is an individual.” There is no question, however, that the lessee herein, the Defendant, New Concepts Realty, Inc., is not an individual who entered into this Agreement primarily for personal, family or household purposes,” but is a corporate entity who entered into this Agreement for commercial business purposes. It therefore remains the opinion of this court that this was not a consumer lease and was, in fact, a commercial transaction between two commercial entities.

There is nothing in the language of the Sterling National Bank v. Eastern Shipping Worldwide, Inc., supra. decision which can reasonably be interpreted as either explicitly or implicitly limiting its holdings to the peculiar facts of that case. To the contrary, the First Department’s analysis of the validity of forum selection clauses in general, as well as the absence of fraud or overreaching with respect to this specific forum selection clause, is amenable to universal application. Moreover, contrary to the Defendants’ suggestion, the facts of that case, involving a commercial transaction between two commercial entities, involving the very same agreement and the same forum selection clause as the matter before this court, are virtually the same.

The Defendants simply do not present any evidence that the forum selection clause herein itself was obtained by fraud. While they raise serious questions about the manner in which this Agreement was obtained and present significant evidence, both old and “new,” demonstrating that fraud, either in the inducement and/or in factum, played a significant role in obtaining the execution of the Agreement, including the “Terms and Conditions” page, the Defendants present no evidence addressed specifically to the forum selection clause.

Here in Stephen Bilkis and Associates, our experienced attorneys will represent you before the courts on your filed cases. Call them today for an appointment. They have locations throughout New York, including locations in Manhattan, Queens, the Bronx, Brooklyn, Staten Island, Long Island, Suffolk County, Nassau County and Westchester County.

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