Continental Cas. Co. v Naegele Inc. Bakery Sys.
Annotate this CaseDecided on March 30, 2017
Supreme Court, Westchester County
Continental Casualty Company a/s/o Caribbean Food Delights, Inc., Plaintiff,
against
Naegele Incorporated Bakery Systems, Defendants.
Naegele Incorporated Bakery Systems, Third-Party Plaintiff,
against
Dfemeincke, Haas-Meincke A/S, and Franz Haas Machinery of America, Inc., Third-Party Defendants.
31362/2015
Virginia Markovich, Esq.
Cozen O'Connor
Attorneys for Plaintiff Continental Casualty Company
45 Broadway, 23rd Floor
New York, NY 10006
Mark E. Opalisky
Cozen O'Connor
Of Counsel
Continental Casualty Company
1900 Market Street
Philadelphia, PA 19103
Louis E. Valvo, Esq.
Koster, Brady & Nagler, LLP
Attorneys for Defendant/Third-Party Plaintiff Naegele Incorporated Bakery Systems
One Whitehall Street
New York, New York 10004
Karen Schnur, Esq.
Biedermann Hoenig Semprevivo
Attorneys for Third-Party Defendant Haas-Meincke
One Grand Central Place
60 East 42nd Street, Suite 660
New York, New York 10165
Linda Christopher, J.
The following papers numbered 1-14 were considered in connection with third-party defendant, Haas-Meincke A/S f/k/a DFE Meincke's (hereafter DFE Meincke) motion for an Order: 1) pursuant to CPLR §3211(a)(1) and CPLR §501, dismissing the third-party plaintiff's complaint based on the forum selection clause of the Agency Agreement; and 2) awarding costs, in the form of reimbursement for actual expenses reasonably incurred and reasonable attorneys' fees, and sanctions:
PAPERS NUMBERED
Notice of Motion/Affirmation of Karen Schnur, Esq./Exhibits 1-12
A-G/Affidavit of Frank Muntzberg/Exhibits 1-2
Affirmation of Louis E. Valvo, Esq. in Opposition 13
Reply Affirmation of Karen Schnur, Esq. 14
Procedural History
In this matter the main action is a subrogation action alleging negligence, breach of express and implied warranties, breach of contract and strict products liability. The action arises out of an alleged fire that occurred on or about April 17, 2014, in a Tunnel Oven located in plaintiff's insured business, Caribbean Food Delights, Inc. (hereafter Carribean Foods) located at 117 Route 303, Tappan, NY. Plaintiff, Continental Casualty Company, commenced the main action with the filing of the Summons and Complaint through the NYSCEF system on April 1, 2015. Issue was joined in the main action by the filing of a Verified Answer by defendant, Naegele Incorporated Bakery Systems (hereafter Naegele) on April 15, 2015.
On April 22, 2015 Naegele filed a Third-Party Summons and Complaint through the NYSCEF system, impleading third-party defendants DFE Meincke and Franz Haas Machinery of America, Inc. On June 1, 2015 DFE Meincke filed a Verified Answer to Naegele's Third-Party Complaint and on June 4, 2015 Franz Haas Machinery of America, Inc. filed its Verified Answer. [*2]On July 30, 2015 DFE Meincke filed a motion to dismiss the Third-Party Complaint on the grounds that there was no jurisdiction over DFE Meincke due to improper service. Said motion was granted by the Decision and Order of the Hon. Margaret Garvey, J.S.C. dated November 25, 2015.
On March 11, 2016, third-party defendant DFE Meincke was served with a Third-Party Summons and Complaint via the Hague Convention. On April 11, 2016 DFE Meincke filed a motion to dismiss the Third-Party Complaint on the grounds that: 1) there is no jurisdiction over DFE Meincke since Naegele never commenced a new third-party action, and the Third-Party Complaint was served more than 120 days after the filing of the Third-Party Summons and Complaint on April 22, 2015; and 2) the forum selection clause in the Agency Agreement between Naegele and DFE Meincke provides that the So-og Handelsretten (the Maritime and Commercial Court) in Copenhagen is the court of jurisdiction for any action arising out of events in connection with the Agency Agreement. Naegele cross-moved, inter alia, pursuant to CPLR§306-b for an extension of time to serve its Third Party Summons and Complaint. Pursuant to the Decision and Order of Justice Garvey dated June 8, 2016, the Court granted DFE Meincke's motion to the extent that it dismissed the Third-Party Complaint against DFE Meincke for lack of personal jurisdiction over DFE Meincke because Naegele failed to commence a new third party action. In said Decision and Order Justice Garvey wrote that because the Third-Party Complaint was dismissed due to lack of personal jurisdiction over DFE Meincke, the Court did not need to address DFE Meincke's motion seeking dismissal of the Third-Party Complaint based on the forum selection clause.
On September 14, 2016 Naegele filed a Supplemental Third-Party Summons and Amended Third-Party Complaint without purchasing an index number. On September 21, 2016 Naegele purchased an index number and filed the Supplemental Third-Party Summons and Amended Third-Party Complaint. On December 22, 2016 DFE Meincke received a copy of the Supplemental Third-Party Summons and Amended Third-Party Complaint. DFE Meincke now moves to dismiss the Supplemental Summons and Amended Third-Party Complaint pursuant to CPLR §3211(a)(1) and CPLR §501 on the grounds that Denmark is the proper forum for the third-party action to be heard as set forth in the Agency Agreement's forum selection clause.
Background
On December 2, 2005, Naegele and DFE Meincke entered into an Agency Agreement which was effective as of August 15, 2005. Pursuant to said Agreement, except for 2 products, Naegele was the exclusive agent for DFE Meincke in the United States for Food Industry Equipment manufactured and sold by DFE Meincke. The Tunnel Oven sold to Carribean Foods at issue in the instant matter was not one of the excluded items. Paragraph 24 of the Agency Agreement provides
"This Agreement shall be governed by the laws of Denmark; So-og Handelstretten (The Maritime and Commercial Court) in Copenhagen shall be the Court of Jurisdiction in any action arising out of events in connection with this agreement."Exhibit 1 annexed to Affidavit of Frank Muntzberg.
In May 2006, Naegele and DFE Meincke entered into an Order Confirmation No. 100890 for Caribbean Foods, for the purchase of the Tunnel Oven at issue in the underlying, main action. The Order Confirmation contains a section entitled "General conditions" which states that DFE Meincke General Conditions for Supply and Installation (hereafter General Conditions) apply to the Caribbean order for purchase of the Tunnel Oven. Section 29 of the General Conditions entitled "Disputes and Arbitration" of the General Conditions states in pertinent part at 29.1 "Any dispute [*3]arising out of the Contract and anything related can be subjected to the process of law in the country or state in which the seller is registered." Exhibit 2 annexed to Affidavit of Frank Muntzberg.
MOTION TO DISMISS
Arguments
In support of its motion to dismiss Naegele's Third-Party Complaint on the basis of the forum selection clause agreed to by the parties, third-party defendant DFE Meincke argues that the Agency Agreement signed by it and Naegele in 2005 was in effect at the time the Tunnel Oven was purchased by Caribbean through Naegele, and that the forum selection clause in that Agreement is controlling in this matter. DFE Meincke contends that the forum selection in that Agreement is unambiguous and provides that So-og Handelstretten (The Maritime and Commercial Court) in Copenhagen shall be the Court of Jurisdiction for any action arising out of events in connection with the agreement and that such disputes shall be governed by the laws of Denmark. DFE Meincke also points out that this Agency Agreement is an international agreement between sophisticated commercial entities.
DFE Meincke also asserts that the language in the General Conditions that are incorporated in the Order Confirmation entered into by DFE Meincke and Naegele for Caribbean to purchase the Tunnel Oven in May 2006 further supports its argument that the forum selection clause is valid and should be enforced. Paragraph 29 entitled Disputes and Arbitration of the General Conditions states in pertinent part at 29.1 "Any dispute arising out of the Contract and anything related can be subjected to the process of law in the country or state in which the seller is registered", which in this case is Denmark.
DFE Meincke submits that the forum selection clause at issue here contains broad, all encompassing language in that it states that it is applicable to "any action arising out of events in connection with this agreement." Therefore, DFE Meincke argues that all actions, including the instant third-party action, are governed by the forum selection clause, regardless of the underlying plaintiff's claims. DFE Meincke asserts that the sale of the Tunnel Oven was a direct result of the Agency Agreement, pursuant to which Naegele was the exclusive agent for DFE Meincke in the United States, and pursuant to which Naegele was to "receive complaints and other observations from the customers and immediately pass them on to the Manufacturer..." Paragraph 8 of Exhibit 1 annexed to Affidavit of Frank Muntzberg. Therefore, DFE asserts that Naegele's third-party action seeking contribution and/or indemnification arises out of events in connection with the Agency Agreement considering Naegele's exclusive role in obtaining Caribbean as a customer and Naegele's duty to receive complaints and other observations from Caribbean and pass them on to DFE Meincke.
In opposition, Naegele argues that the documentary evidence relied upon by DFE Meincke is contrary to other evidence in the record and therefore does not conclusively establish that the forum selection clause in the Agency Agreement applies to an action sounding in products liability. It is Naegele's position that the Agency Agreement and Order of Confirmation cannot be a basis for dismissal pursuant to CPLR §3211(a)(1).
In support of his argument, counsel for Naegele relies on paragraph 25 of the General Conditions that are incorporated in the Order Confirmation entered into by DFE Meincke and Naegele for Caribbean to purchase the Tunnel Oven. Paragraph 25 is entitled "Liability for Damage or injury caused by the Supply after Takeover (Product Liability)" and states in pertinent part "The [*4]Seller and the Purchaser each undertake to allow action to be brought against them at the court or by arbitration, with any claim for damages raised against one of them on grounds of damage alleged to have been caused by the Supply." It is counsel's position that paragraph 25 is in conflict with paragraph 29.1 which states that "[a]ny dispute arising out of the Contract and anything related can be subjected to the process of law in the country or state in which the seller is registered." Counsel avers that while paragraph 29.1 designates a particular court for disputes arising out of the contract, paragraph 25 specifically allows for a products liability claim to be brought against either DFE Meincke or Naegele in any court, and in no way limits or restricts the ability of the one party against who a claim for damages is raised, to implead the other party. Naegele's counsel further asserts that paragraph 25 which designates "any court" prevails over the forum selection clause of the Agency Agreement that designates the Court in Denmark. He contends that while the Agency Agreement addresses issues arising out of the agency relationship between Naegele and DFE Meincke, the Order Confirmation addresses issues arising out of the product itself.
Counsel for Naegele further argues that even if the Court found the documentary evidence to be conclusive, the forum selection clause should not be enforced in this mater. Counsel claims that inasmuch as the underlying case against Naegele will remain in New York, requiring Naegele to initiate a second action to seek contribution and/or indemnification from DFE Meincke in Denmark would be inefficient, unreasonable and unduly burdensome. Additionally, Naegele opines that the determination of whether Naegele is entitled to contribution and/or indemnification from DFE Meincke will result from the outcome of the underlying litigation based on theories of negligence and strict product liability, thus creating the potential for re-litigation of issues in the third-party claim if DFE Meincke is not required to participate in the instant litigation. Furthermore, Naegele claims that if plaintiff establishes negligence or strict liability, DFE Meincke will be held liable, and is in the best position to speak about design and manufacturing related issues. Moreover, Naegele asserts that since the incident occurred in New York, all the physical evidence is in New York and all necessary parties with the exception of DFE Meincke are within the state or the country. It is Naegele's contention that since DFE Meincke transacts business in New York, it should have reasonably anticipated being sued in New York.
Law
A motion to dismiss founded upon documentary evidence [CPLR §3211(a)(1)] will only be granted if the documentary evidence resolves all factual issues, and conclusively establishes a defense to plaintiff's claims as a matter of law. Jones v. Rochdale Village, Inc., 96 AD3d 1014 (2nd Dept. 2012). "In order for evidence to qualify as 'documentary,' it must be unambiguous, authentic, and undeniable (citation omitted)." Granada Condominium III Association v. Palomino, 78 AD3d 996, 997 (2nd Dept. 2010).
"[A] contractual forum selection clause is documentary evidence (citations omitted) that may provide a basis for dismissal pursuant to CPLR 3211 (a)(1) (citation omitted). Lischinskaya v. Carninval Corp., 56 AD3d 116, 123 (2nd Dept. 2008).
"The parties to an agreement 'may freely select a forum which will resolve any disputes over the interpretation or performance of the contract' (citation omitted). " Horton v. Concerns of Police Survivors, Inc., 62 AD3d 836 (2nd Dept. 2009). "It is the policy of the courts of this State to enforce contractual provisions for choice of law and selection of a forum for litigation (citations omitted)." Koob v. IDS Financial Services, Inc., 213 AD2d 26, 33 (1st Dept. 1995). " 'Forum selection clauses [*5]are enforced because they provide certainty and predictability in the resolution of disputes, particularly those involving international business agreements' (citation omitted)." Pratik Apparels, Ltd. v. Shintex Apparel Group, Inc., 96 AD3d 922, 923 (2nd Dept. 2012).
" ' A contractual form 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. Absent a strong showing that it should be set aside, a forum selection agreement will control' (citations omitted)." Id.
"The applicability of a forum selection clause does not depend on the nature of the underlying action...Rather, it is the language of the forum selection clause itself that determines which claims fall within its scope (citation omitted)." Couvertier v. Concourse Rehabilitation and Nursing, Inc., 117 AD3d 772, 773 (2nd Dept. 2014). Forum selection clauses have been found to be applicable to third-party claims in personal injury and products liability actions. Tourtellot v. Harza Architects, Engineers and Construction Managers, 55 AD3d 1096 (3rd Dept. 2008).
Decision
The Court finds that the forum selection clause in the Agency Agreement between Naegele and DFE Meincke is clear and unambiguous. As previously set forth, the Agreement states, "This Agreement shall be governed by the laws of Denmark; So-og Handelstretten (The Maritime and Commercial Court) in Copenhagen shall be the Court of Jurisdiction in any action arising out of events in connection with this agreement." The language used in the forum selection clause is broad and all encompassing, and is applicable to issues arising out of the agency relationship, as well as any action that arises out of events in connection with the agency relationship. Here, the third-party action for contribution and/or indemnification arises out the sale of the Tunnel Oven to Caribbean which was an event that occurred in connection with the Agency Agreement. The sale of the Tunnel Oven was a direct result of the Agency Agreement, pursuant to which Naegele was the exclusive agent for DFE Meincke in the United States and pursuant to which Naegele was to "receive complaints and other observations from the customers and immediately pass them on to the Manufacturer..." A broad forum selection clause such as the one in the instant matter does not turn on the type or nature of the dispute, but applies to "any action arising out of events in connection with [the Agency] agreement." See, Tourtellot, 55 AD3d 1096. Therefore, the forum selection clause applies to the third-party action between Naegele and DFE Meincke and the underlying tort claim.
The Court does not find merit in Naegele's argument that the documentary evidence relied upon by DFE Meincke is contrary to other evidence in the record and therefore does not conclusively establish that the forum selection clause in the Agency Agreement applies to an action sounding in products liability. Contrary to Naegele's assertions, paragraph 25 of the General Conditions, that are incorporated in the Order Confirmation entered into by DFE Meincke and Naegele in order for Carribean to purchase the Tunnel Oven, does not provide for a products liability claim to be brought in any Court. Rather, paragraph 25, addressing product liability, states that "The Seller and the Purchaser each undertake to allow action to be brought against them at the court or by arbitration, with any claim for damages raised against one of them on grounds of damage alleged to have been caused by the Supply." (emphasis added). Paragraph 25 does not address the issue of [*6]forum or jurisdiction; it merely sets forth that product liability actions may be brought to court or arbitration. However, reading paragraph 25 in conjunction with paragraph 29.1 of the General Conditions, which states that "[a]ny dispute arising out of the Contract and anything related can be subjected to the process in the country or state where the seller is registered" (which is Denmark), and in conjunction with the Agency Agreement, that places jurisdiction in the Maritime and Commercial Court in Denmark, leads to the conclusion that "the court" referred to in paragraph 25, is the court in Denmark.
The Court finds that the forum selection clause at issue is valid and should be enforced. Naegele has failed to meet its burden of making a "strong showing" that said forum selection clause should be set aside. Naegele does not allege that the clause was procured by fraud or overreaching. Nor does Naegle claim that the forum selection clause is in contravention of public policy, or that a trial in Denmark would be so gravely difficult that it would for all practical purposes deprive Naegele of its day in court. Naegele's claims that it would be inefficient, unjust and unduly burdensome to require it to initiate a second action in Denmark to seek contribution and/or indemnification when the underlying action will be heard in New York; that if DFE Meincke is not required to participate in the New York litigation, there is a potential for re-litigation of issues in the third-party claim; and that if liability is established by plaintiff, DFE Meincke will be held liable and is in the best position to speak about design and manufacturing related issues, are not enough to disregard the forum designation set forth in the Agency Agreement. Additionally, Naegele's arguments that the forum selection clause should not be enforced because the physical evidence is in New York, all necessary parties other than DFE Meincke are in New York, and that DFE Meincke should have reasonably anticipated being sued in New York, all fail. "[W]here a party to a contract has agreed to submit to the jurisdiction of a court, that party is precluded from attacking the court's jurisdiction on forum non conveniens grounds (citations omitted). Sterling National Bank as Assignee of Norvergence, Inc. v. Eastern Shipping Worldwide, Inc., 35 AD3d 222, 223 (1st Dept. 2006).
None of Naegel's arguments are sufficient to overcome a valid, enforceable forum selection clause entered into between a United States entity and a Danish entity.
MOTION FOR SANCTIONS
DFE Meincke seeks costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorneys' fees, and sanctions pursuant to 22 NYCRR 130-1.1(a). DFE Meincke alleges that Naegele's actions in requiring DFE Meincke to file 3 motions to dismiss (including the instant motion), and oppose a cross-motion brought by Naegele have been nothing short of frivolous. Naegele opposes the request, asserting that Naegele's actions were not meant to harass DFE Meincke. With regard to the motions to dismiss for lack of jurisdiction, Naegele claims it was simply trying to properly effectuate service upon DFE Meincke, a foreign third-party defendant. With regard to the instant motion, Naegele argues there is nothing frivolous about its attempt to implead DFE Meincke, and to obtain a judicial determination regarding the validity of the forum selection provisions in the Agency Agreement and the Order Confirmation.
Based on the foregoing, the Court in its discretion, declines to award costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorneys' fees, and sanctions to DFE Meincke.
Accordingly, it is
ORDERED that the branch of DHE Meincke's motion seeking an order pursuant to CPLR §3211(a)(1) and CPLR §501, dismissing the third-party plaintiff's complaint based on the forum selection clause of the Agency Agreement is granted; and it further
ORDERED that the branch of DHE Meincke's motion seeking an order awarding costs, in the form of reimbursement for actual expenses reasonably incurred and reasonable attorneys' fees, and sanctions is denied.
A conference is scheduled on April 13, 2017 at 9:15 a.m.
To the extent any relief requested in Motion Number 6 was not addressed by the Court it is hereby denied.
This decision shall constitute the order of the Court.
Dated: March 30, 2017
New City, New York
HON. LINDA CHRISTOPHER, J.S.C.
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