Glen & Co. v Popular Leasing USA, Inc.

[*1] Glen & Co. v Popular Leasing USA, Inc. 2006 NY Slip Op 51015(U) [12 Misc 3d 1163(A)] Decided on April 24, 2006 Supreme Court, Westchester County Rudolph, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on April 24, 2006
Supreme Court, Westchester County

GLEN & CO., WILLIAM WEISS INTERIORS, INC. On behalf of themselves and all others similarly situated, Plaintiffs,

against

POPULAR LEASING USA, INC.; ABB LEASING; BB & T; CCL (Commerce Commercial Leasing, LLC); CELTIC BANK CORPORATION; CIT TECHNOLOGY FINANCING SERVICES, INC.; COURT SQUARE LEASING CORPORATION; CROWN BANK LEASING; DOLPHIN CAPITAL CORP.; FIRST LEASE, INC.; GENERAL ELECTRIC CAPITAL CORPORATION; IFC CREDIT CORP.; ILC (Information Leasing Corp.), A subsidiary of Provident Bank; INTERCHANGE CAPITAL COMPANY, LLC, a subsidiary of Interchange Bank; IRWIN BUSINESS FINANCE; LAKELAND BANK; LIBERTY BANK; De LAGE LANDEN FINANCIAL SERVICES, INC., NORV CAPITAL, a division od De Lage Landen; OFC CAPITAL, a division of ALFA FINANCIAL PATRIOT COMMERCIAL LEASING; POPULAR LEASING USA, INC., PREFERRED CAPITAL, INC.; STERLING NATIONAL BANK; STUDABAKER-WORTHINGTON LEASING CORP.; TCF EXPRESS LEASING; US BANCORP EQUIPMENT FINANCE, INC; WELLS FARGO FINANCIAL LEASING; and DOE CORPS. 1-40; ET ALS., Defendants.



15952/04



FOLEY & LARDNER LLP

Attorneys for Defendant

POPULAR LEASING USA, INC.

90 Park Avenue

New York, New York 10016

KANTROWITZ, GOLDHAMER

& GRAIFMAN, P.C.

Attorneys for Plaintiffs

747 Chestnut Ridge Road

Chestnut Ridge, New York 10977

Kenneth W. Rudolph, J.

Upon the foregoing papers, it is ORDERED that this motion is granted and the action is dismissed as to defendant Popular Leasing USA Inc.

This is a putative nationwide class action in which plaintiffs allege, inter alia, fraudulent misrepresentation by non-party NorVergence in the lease of "Matrix" telephone equipment to plaintiffs and others similarly situated. Movant, defendant Popular Leasing USA Inc. (hereinafter Popular Leasing USA) is assignee of NorVergence. NorVergence is in Chapter 11 bankruptcy proceedings. NorVergence assigned its leases to various assignees including movant Popular Leasing USA and the numerous other defendants named in this action. Plaintiffs allege that Popular Leasing USA, as well as the other named defendant assignees, knew of the alleged misrepresentations by NorVergence at the time of the assignments of the respective leases.

After the Matrix equipment failed to work and/or failed to save money as was claimed by NorVergence, plaintiffs and other purchasers stopped making the payments required under their respective leases and this action and several hundred other actions in other states have been commenced by and against the assignees. According to plaintiffs, approximately 11,000 customers were defrauded by NorVergence. The lease agreements given to plaintiffs and other purchasers is substantially the same agreement.

In this action plaintiffs seek declaratory judgment, rescission of the lease agreements and monetary damages and allege, inter alia, deceptive unlawful and unfair business practices in violation of New York General Business Law §349, violation of the FTC Holder Rule (16 CFR §433.2), violation of the FTC Act (15 USC §§45[a], 52, 53 and 57b), breach of contract, and breach of implied warranties of merchantability and fitness for a particular purpose. Plaintiffs allege the fraudulent misrepresentations of NorVergence and that the assignees knew of the alleged misrepresentations at the time of the assignments and are therefore liable. Plaintiff Glen and Co.'s lease was assigned to movant Popular Leasing USA. Plaintiff William Weiss Interiors Inc.'s lease was assigned to CIT Corporation, alleged to be a Massachusetts corporation with its principal place of business in New Jersey.

Movant Popular Leasing USA moves to dismiss on the ground of forum non-conveniens based on CPLR 327 and/or on a forum selection clause contained in the lease agreement.

CPLR 327(a) provides that "[w]hen the court finds that in the interest of substantial justice the action should be heard in another forum, the court...may stay or dismiss the action...The domicile or residence in this state of any party to the action shall not preclude the court from staying or dismissing the action." [*2]

"The common-law doctrine of forum non conveniens, also articulated in CPLR 327... permits a court to stay or dismiss such actions where it is determined that the action, although jurisdictionally sound, would be better adjudicated elsewhere (cites omitted). The burden rests upon the defendant challenging the forum to demonstrate relevant private or public interest factors which militate against accepting the litigation (cites omitted) and the court, after considering and balancing the various competing factors, must determine in the exercise of its sound discretion whether to retain jurisdiction or not. Among the factors to be considered are the burden on the New York courts, the potential hardship to the defendant, and the unavailability of an alternative forum in which plaintiff may bring suit (cites omitted)" (Islamic Republic of Iran v. Pahlavi, 62 NY2d 474, 478-479 [1984]). The court may also consider whether the parties to the action are residents or nonresidents and where the transaction out of which the cause of action arose occurred (id. at 479). "No one factor is controlling (cites omitted). The great advantage of the rule of forum non conveniens is its flexibility based upon the facts and circumstances of each case ( cites omitted). The rule rests upon justice, fairness and convenience..." (id. at 479).

In this case the plaintiff Glen & Company is a New York resident, the lease transaction between plaintiff and NorVergence and the alleged fraud and misrepresentation by NorVergence are alleged to have occurred in New York, and the equipment is located in New York. NorVergence is or was domiciled in New Jersey and is now in a Chapter 11 bankruptcy proceeding. Other than plaintiff, any witnesses as to the alleged fraud and misrepresentation by NorVergence would be located in New Jersey. Popular Leasing USA is incorporated in Delaware with its principal place of business in Missouri. Any documents and witnesses relevant to the assignment of the leases to Popular Leasing USA by NorVergence would be located in Missouri and New Jersey. Movant Popular Leasing USA Inc. has already commenced approximately 530 collection actions in its home state of Missouri based on failure to make the payments required under the leases including approximately 40 actions brought against New York residents. Fourteen actions have been commenced against Popular Leasing USA in Missouri. A forum in Missouri is available to plaintiff. It is undisputed that all of these actions pending in Missouri involve the same issues that are presented in this case, i.e. the responsibility of the lessees to make continued payments under the lease, the alleged fraud and misrepresentations by NorVergence and whether Popular Leasing USA, as assignee of NorVergence is liable for the alleged fraud and misrepresentations of NorVergence. All of these cases are pending in St. Louis County.

Although a New York resident plaintiff's choice of forum is not to be lightly disturbed, a balancing of all the above factors demonstrates that in the interest of substantial justice (CPLR 327[a]), this action against Popular Leasing is more appropriately heard in St. Louis County, Missouri; and the action against movant is dismissed pursuant to CPLR 327 (see e.g.Utica Mut. Ins. Co. v. Bristol-Myers Squibb [*3]Co., 213 AD2d 1046 (4th Dep't 1995).

The subject forum selection clause, which appears in all the NorVergence leases, provides as follows: "This agreement shall be governed by, construed and enforced in accordance with the laws of the State in which Rentor's principal offices are located, or if this Lease is assigned by Rentor, the State in which the assignee's principal offices are located, without regard to such State's choice of law considerations and all legal actions relating to the Lease shall be venued exclusively in state or federal court located within that State, such court to be chosen at Rentor or Rentor's assignee's sole option..."

Courts in several states have addressed the validity of this forum selection clause (see cases set forth in Sterling National Bank, as assignee of Norvergence Inc., v. Kings Manor Estates LLC, 9 Misc 3d 1116A, n.7 [App. Tern, lst Dept., 2005]). Some courts have found the clause to be enforceable while other courts have held it to be invalid and unenforceable because the selected venue cannot reasonably be determined from the language of the clause, including two courts in New York (see (Studebaker-Worthington Leasing Corp v. A-1 Quality Plumbing Corp., New York Law Journal, October 28, 2005, p. 28 [Nassau County Supreme Court, J. Feinman] - The "clause lacks specificity as it does not designate a specific forum or choice of law for the determination of the controversies that may arise out of the contract. Therefore, enforcement of the clause would be unreasonable and unjust as it is overreaching. Moreover, the goal in achieving certainty and predictability by providing a specific forum has not been met;" (Sterling National Bank v. Borger, New York Law Journal, April 28, 2005, p. 21 [New York County, J. Scarpulla] - "the selected' forum, as it is described in the Agreement, could be anywhere in the United States," permits the selection of the forum by an unknown, not yet identified, assignee; and therefore the forum is unknowable at the time the parties entered the Agreement and "in reality no forum is selected at the time the parties entered into the Agreement").

Whether the forum selection clause is enforceable, which would place venue of this action in Missouri, or unenforceable, requiring the Court to then consider whether New York or Missouri is a proper venue for this action pursuant to CPLR327 as set forth above, venue would in either event be in Missouri. Therefore a ruling by this Court as to the validity of the clause is unnecessary as to defendant's motion in this particular case. [*4]

The foregoing constitutes the Decision and Order of this Court.

Dated: White Plains, New York

April 24, 2006

E N T E R,

HON. KENNETH W. RUDOLPH

Justice of the Supreme Court

TO: