Studebaker-Worthington Leasing, Corp. v New Concepts Realty, Inc.

[*1] Studebaker-Worthington Leasing, Corp. v New Concepts Realty, Inc. 2007 NY Slip Op 51474(U) [16 Misc 3d 1119(A)] Decided on July 27, 2007 Nassau Dist Ct Engel, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 27, 2007
Nassau Dist Ct

Studebaker-Worthington Leasing, Corp., Plaintiff,

against

New Concepts Realty, Inc. and Charles E. Blood, Defendants.



10748/05



Attorneys for Plaintiff: Reisman, Peirez & Reisman, LLP

Attorneys for Defendant: Weinstein, Kaplan & Cohen, PC

Andrew M. Engel, J.

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 (Engel, J.) dated February 22, 2007 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, New Concepts Realty, Inc. ("New Concepts") and the Plaintiff's assignor, NorVergence, Inc. ("NorVergence"), guaranteed by the Defendant, Charles E. Blood, ("Blood"), the President of New Concepts, for the lease of telecommunication equipment and services. The Agreement contained, inter alia, a forum selection clause, in the event of litigation, as follows:

APPLICABLE LAW: ... 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 this lease shall be venued exclusively in a state or federal court located within that State, such court to be chosen at Rentor or Rentor's assignee's sole option. (bold in original)

As indicated, the Defendants, a Colorado corporation and a Colorado resident, previously [*2]moved to dismiss this action, based upon a claim of lack of personal jurisdiction and forum non conveniens, alleging that they conduct business solely in the State of Colorado, have never transacted business in the State of New York and have no connection or contact with the State of New York. The Defendants further alleged that the transaction in question occurred in Colorado and that they have never directly transacted any business with the Plaintiff, which has its principal place of business in the State of New York. As to the forum selection clause, the Defendants argued that same is invalid and unenforceable. The Defendants claimed that the forum selection clause lacks specificity, failing to advise the parties of the actual forum(s) in which suit may be maintained, is part of an agreement obtained by fraud and overreaching, and its enforcement would be unjust and unreasonable, virtually denying the Defendants their day in court.

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, as well as the following language which appears immediately above Blood's signature on his personal guarantee: THE SAME STATE LAW AS THE RENTAL WILL GOVERN THIS GUARANTY. YOU AGREE TO JURISDICTION AND VENUE AS STATED IN THE PARAGRAPH TITLED APPLICABLE LAW OF THE RENTAL. (bold and capitalization in original)

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, M/S Bremen v. Zapata Off-Shore Company, 407 U.S. 1, 92 S. Ct. 1907 (1972) Brooke Group Ltd. v. JCH Syndicate 488, 87 NY2d 530, 640 NYS2d 479 (1996); LSPA Enterprise, Inc. v. Jani-King of New York, Inc., 31 AD3d 394, 817 NYS2d 657 (2nd Dept. 2006); are enforced "because they provide certainty and predictability in the resolution of disputes ...." Brooke Group Ltd. v. JCH Syndicate 488, supra .; M/S Bremen v. Zapata Off-Shore Company, supra .; Premium Risk Group, Inc. v. Legion Insurance Company, 294 AD2d 345, 741 N.Y.S.2d 563 (2nd Dept. 2002) and, in theory, "avoid litigation over personal jurisdiction and disputes over the application of the long-arm statute (CPLR 302[a])." National Union Fire Insurance Company of Pittsburgh, PA. V. Williams, 223 AD2d 395, 637 NYS2d 36 (1st Dept. 1996) Based thereon, the court held that before a forum selection clause will be set aside it must be demonstrated that it is invalid due to fraud or overreaching, that its enforcement would be unreasonable or unjust or that "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." British West Indies Guaranty Trust Co., Ltd. v. Banque Internationale A Luxembourg, 172 AD2d 234, 567 NYS2d 731 (1st Dept. 1991); Best Cheese Corporation v. All-Ways Forwarding Int'l, Inc., 24 AD3d 580, 808 NYS2d 694 (2nd Dept. 2005); Fleet Capital Leasing/Global Vendor Finance v. Angiuli Motors, Inc., 15 AD3d 535, 790 NYS2d 684 (2nd Dept. 2005)

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 [New Jersey] 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 [*3]or in a foreign country. The court also took into consideration a significant body of authority, consisting primarily of unreported cases, involving this very forum selection clause, which supports this position. Sterling National Bank v. Chang, 10 Misc 3d 131(A), 809 NYS2d 484 (App. Term, First Dept. 2005); Sterling National Bank v. Borger, Jones & Keeley-Cain, (Civ. Ct. NY Co.); Sterling National Bank v. 4 Seasons Windows Inc. (S.C. NY Co.); Studebaker-Worthington Leasing Corp. v. A-1 Quality Plumbing Corporation, (S.C. Nassau Co.); Sterling National Bank v. Til Mar Design (Civ. Ct. NY Co.); Sterling National Bank v. David Stanley Consultants, LLC (S.C. NY Co); Sterling National Bank v. Home Mortgage Co., Inc. (S.C. NY Co.); Sterling National Bank v. Insurance Center of Patrick, Inc., (Civ. Ct. NY Co.); Sterling National Bank v. Battery Power, Inc. (S.C. NY Co.); Sterling National Bank v. Kings Manor Estates, LLC, 9 Misc 3d 1116(A), 808 NY S.2d 920 (Civ. Ct. NY Co.); Studebaker-Worthington Leasing Corp. v. Codisco, Inc. (S.C. Nassau Co.); IFC Credit Corp v. Eastcom, Inc., 2005 WL 43159 (N.D. Ill. 2005) and IFC Credit Corp v. Aliano Bros. General Contractors, Inc., 2005 WL 643288 (N.D. Ill. 2005)

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. IFC Credit Corp v. Aliano Bros. General Contractors, Inc., 2005 WL 643288 (N.D. Ill. 2005); Studebaker-Worthington Leasing Corp. v. O'Keefe Architects, Inc., (S.C. Nassau Co.); Studebaker-Worthington Leasing Corp. v. Manatee Radiation Oncology, Inc. (S.C. Nassau Co.); Studebaker-Worthington Leasing Corp. v. Tim Barrett Designs, Inc. (S.C. Nassau Co.); Sterling National Bank v. Exposures Unlimited Inc., (Civ. Ct. NY Co.); Edge Telecom, Inc. v. Sterling Bank, 143 P.3d 1155 (Colo. Ct. App. 2006); Preferred Capital, Inc. v. Associates in Urology, 453 F.3d 718 (6th Cir. 2006); and Preferred Capital, Inc. v. Aetna Maintenance, Inc., 2006 WL 3421829 (6th Cir. 2006).

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. While none of these cases are of binding authority on this court, the court noted that there was a recent decision by the Appellate Division, First Department, in Sterling National Bank v. Eastern Shipping Worldwide, Inc., 35 AD3d 222, 826 NYS2d 235 (1st Dept. 2006), unanimously reversing the dismissal of the plaintiff's complaint on forum non conveniens grounds and upholding this very forum selection clause, which is binding on this court[FN1], as well as a decision in the Fourth Judicial Department, B & R management & Leasing Corporation v. Triarc Restaurant Group, 269 AD2d 804, 703 NYS2d 635 (4th Dept. 2000), upholding the enforcement of a similar forum selection clause.

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." (Order 2/22/07, p. 11) As to these latter issues, the court took [*4]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" (Order 2/22/07, p. 13) but adhered to the prevailing rule in this state to the effect that to invalidate a forum selection clause on the ground of fraud and overreaching the fraud alleged must be specific to the jurisdictional provision itself and not addressed to the contract in general. British West Indies Guaranty Trust Co., Ltd. v. Banque Internationale A Luxembourg, supra .; Zurich Insurance Company v. R. Electric, Inc., 5 AD3d 388, 773 NYS2d 560 (1st Dept. 2004); Serling National Bank v. Eastern Shipping Worldwide, Inc., supra . Finally, the court rejected the Defendants' forum non conveniens argument, noting that this branch of the Defendants' application was based upon nothing more than their unsupported claim that it would be onerous for their witnesses to travel from Colorado to New York, holding that distance alone does not render a trial in New York so difficult as to deprive the Defendants of their day in court, See: Koko Contracting, Inc. v. Continental Environmental Asbestos Removal Corp., 272 AD2d 585, 709 NYS2d 825 (2nd Dept. 2005) [upholding forum selection clause mandating trial in Colorado not New York]; Bell Constructor, Inc. v. Evergreen Caissons, Inc., 236 AD2d 859, 654 NYS2d 80 (4th Dept. 1997) [upholding forum selection clause mandating suit in New York not Colorado]; Boss v. American Express Financial Advisors, Inc., 6 NY3d 242, 811 NYS2d 620 (2006) [upholding forum selection clause requiring suit in Minnesota, not New York]; Zurich Insurance Company v. R. Electric, Inc., supra . [upholding jurisdiction in New York, instead of Hawaii, pursuant to a forum selection clause], and reiterating the finding of Sterling National Bank v. Eastern Shipping Worldwide, Inc., supra .:

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.

The Defendants do not now challenge the find of the court on the issue of forumnon conveniens or the specificity of the forum selection clause. The Defendants have restricted their motion to reargue and renew to the issues surrounding whether or not the forum selection clause was procured by fraud or overreaching.

MOTION TO RENEW

"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 (citations omitted)." O'Connell v. Post, 27 AD3d 631, 810 NYS2d 668 (2nd Dept. 2006); See also: CPLR § 2221(e)(2); Riccio v. DePeralta, 274 AD2d 384, 711 NYS2d 17 (2nd Dept. 2000); Rush v. County of Nassau, 24AD2d 560, 806 NYS2d 232, (2nd Dept. 2005); Yarde v. New York City Transit Authority, 4 AD3d 352, 771 NYS2d 185 (2nd Dept. 2004). "Leave to renew is not warranted where the factual material adduced in connection with the subsequent motion is merely cumulative with respect to the factual material submitted in connection with the original motion (citations omitted)." Stone v. Bridgehampton Race Circuit, 244 [*5]AD2d 403, 665 NYS2d 554 (2nd Dept. 1997); See also: Riglioni v. Chambers Ford Tractor Sales, Inc., 36 AD3d 785, 828 NYS2d 520 (2nd Dept. 2007); City of New York v. St. Paul Fire and Marine Insurance Company, 21 AD3d 982, 801 NYS2d 389 (2nd Dept. 2005); Orange and Rockland Utilities, Inc. v. Assessor of Town of Haverstraw, 304 AD2d 668, 758 NYS2d 151 (2nd Dept. 2003)

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" (DeVoe Affirmation 3/23/07, ¶ 40) 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 ...." (DeVoe Affirmation 6/18/07, ¶ 17)

Belying this latter representation is the fact that the affidavits of Ron Zirkin, Don Weibel and David Silverman, upon which the Defendants rely, are dated December 27, 2004, January 4, 2005 and December 17, 2004, respectively. Clearly, these affidavits were available more than one year before the Defendants' original motion to dismiss was made. While the Defendants may not have been in possession of these documents in March, 2006, when their prior motion was made, the Defendants neither represent that they were not aware of their existence, nor make any effort to explain why they have only recently been obtained and brought to the court's attention. Given the Defendants' acknowledgment that they were aware of the other actions around the country and had access to the website and list-serve wherein the litigants were exchanging documents and information, the court finds that the Defendants have not proffered a reasonable excuse for their failure to submit these affidavits previously. Guerrero v. Dublin Up Corp. Of New York, 260 AD2d 435, 687 NYS2d 721 (2nd Dept. 1999) ["the allegedly new additional facts proffered by the defendants in support of their motion for renewal were readily available at the time of their original opposition to the plaintiff's motion, such facts did not constitute newly discovered evidence within the meaning of CPLR 2221 (citations omitted)"]; Delvecchio v. Bayside Chrysler Plymouth Jeep Eagle, Inc., 271 AD2d 636, 706 NYS2d 724 (2nd Dept. 2000); Brown v. Citibank, N.A. 5 AD3d 342, 772 NYS2d 528 (2nd Dept. 2004)

The affidavit of David Rodriguez, a Screening Manager for NorVergence, dated January 31, 2007, upon which the Defendants now principally rely, is a bit different. Without question, this affidavit did not exist at the time the Defendants' previous motion was denied. As such, this affidavit could properly serve as the basis for a motion to renew if the facts contained therein are new, were not previously presented to the court, are not cumulative. As will be discussed, however, this is not the case.

Mr. Rodriguez worked for NorVergence in 2003, the year before the Defendants entered into the Agreement with NorVergence. He has no knowledge, personal or otherwise, as to what actually transpired between the Defendants and the NorVergence representative with whom they dealt. Relying on his training with NorVergence, and the Screening Manager's Training Manual provided to him by NorVergence, Mr. Rodriguez, in sum and substance, raises the following allegations: NorVergence Screening Managers, such as himself, where required to memorize the scripts contained in the training manual; the Screening Managers were required to memorize "rebuttal scripts" to use to "deflect or avoid certain questions or prevent certain behaviors by [*6]NorVergence customers[]" (Rodriguez Affidavit 1/31/07, ¶ 11); each time a customer asked a question NorVergence did not want answered the Screening Manager was to deflect the question; if three such questions were asked the Screening Manager was to terminate the meeting with the customer; examples of such questions included asking about the financial details of the contracts, asking about NorVergence's financial status, asking about the functionality of the "Matrix box" being leased, or asking what happens if NorVergence goes out of business; customers were told that the paperwork was non-binding; Screening Managers were not trained to answer questions about the Terms and Conditions page of the contracts; the price for each customer was determined based upon the telecommunications costs previously being paid by the customer; and, that he had personal misgivings about NorVergence's sales practices. The affidavits of Zirkin, Weibel and Silverman, while much less detailed, similarly alleged fraudulent practices by NorVergence in the marketing and sale of the subject telecommunications equipment and services.

As serious as these allegations concerning fraud committed by NorVergence in procuring these lease agreements with customers appear, they were all raised in the Defendants' previous motion to dismiss. See: Affidavit in Support of Robert N. Cohen, Esq., dated March 28, 2006 at ¶¶ 18 and 24; the Complaint and Jury demand dated December 17, 2004 in New Horizons Electric, Inc., et. al. v. IFC Credit Corporation, et. al., annexed to Mr. Cohen's affidavit, as Exhibit 4, at ¶¶ 33, 51, 70 and 93; the Reply Affirmation in Further Support of Motion to Dismiss of Daniele D. De Voe, Esq. dated January 30, 2007 at ¶¶ 20-22, 26, 30 and 43-44); Exhibit 11 annexed to Ms. De Voe's reply affirmation, including papers submitted by and on behalf of these Defendants in an action entitled New Horizons Electric, Inc., et. al. v. IFC Credit Corporation, et. al., in which these parties are also involved, seeking reconsideration by the District Court of Arapahoe County, Colorado, of orders previously issued upholding the forum selection clause; the NorVergence Screening Manager Training Manual annexed to Ms. De Voe's previous reply affirmation as Exhibit 15; an application made by the Chapter 7 Trustee in the bankruptcy estate of NorVergence to the United States Bankruptcy Court, District of New Jersey, annexed to Ms. De Voe's previous reply affirmation as Exhibit 16; a letter from NorVergence's counsel to Norvergence annexed to Ms. De Voe's previous reply affirmation as Exhibit 19; and the Affidavit of Defendant, Blood, dated January 16, 2007, submitted in the New Horizons Electric, Inc., et. al. v. IFC Credit Corporation, et. al. action and annexed to Ms. De Voe's previous reply affirmation as Exhibit 20.

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 (citation omitted)." Stone v. Bridgehampton Race Circuit, supra . This is all but admitted by the Defendants, who aver that their previous claim of fraud "is further buttressed by new evidence obtained by defendants herein[.]" (De Voe Affirmation 3/23/07, ¶ 20) Having failed to present any new factual material, this motion to renew and reargue is, in fact, a motion for reargument only. Anchor Savings Bank, F.S.B. v. Alpha Developers, Ltd., 143 AD2d 711, 533 NYS2d 314 (2nd Dept. 1988).

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

MOTION TO REARGUE

A motion to reargue is addressed to the discretion of the Court and may be granted upon a [*7]showing that the Court overlooked or misapprehended the facts or misapplied the law or for some other reason improperly decided the prior motion. CPLR §2221(d)(2); Foley v. Roche, 68 AD2d 558, 418 NYS2d 588 (1st Dept. 1979); Collins v. Stone, 8 AD3d 321, 778 NYS2d 79 (2nd Dept. 2004). It is not to be used by the unsuccessful party to obtain successive opportunities to argue issues previously decided or to present new arguments different from those originally presented. Gellert & Rodner v. Gem Community Management, Inc., 20 AD3d 388, 797 NYS2d 316 (2nd Dept. 2005); Amato v. Lord & Taylor, Inc., 10 AD3d 374, 781 NYS2d 125 (2nd Dept. 2004); McGill v. Goldman, 261 AD2d 593, 691 NYS2d 75 (2nd Dept. 1999).

The Defendants suggest that the court misapplied New York's Uniform Commercial Code, in determining that the Agreement herein was not a consumer lease, and misinterpreted, misconstrued and/or misapplied the holding in Sterling National Bank v. Eastern Shipping Worldwide, Inc., 35 AD3d 222, 826 NYS2d 235 (1st Dept. 2006) in upholding the forum selection clause herein. The Defendants further suggest that the court misconstrued the facts in finding that the forum selection clause, as set forth in the Agreement, was noticeable and that the Defendants had the opportunity to read same. The court finds that these issues and arguments raised by the Defendants are sufficient to cause the court to take another look at them. Accordingly, that branch of the Defendants' motion seeking leave to reargue is granted; and, the court shall address each of these issues below.

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.

Relying on the alleged opinion of legal scholars and Attorneys General around the country, the Defendants now suggest that the Agreement herein "has actually been defined as a consumer lease contract where said contract is for the lease of a product for personal use and not for resale, and it therefore comports with the definition of consumer lease' contained in N.Y.U.C.C § 2-A-103." (italics in original) (De Voe Affirmation 3/23/07, ¶ 22a) The Defendants further argue that these scholars and Attorneys General "have defined the very contract involved herein as a consumer contract as it comports with the definition of consumer' utilized by most states, derived from the Uniform Commercial Code, where a consumer' is defined as any entity who buys a product or service, or leases a product or service for its own consumption and not for resale." (italics in original) (De Voe Affirmation 3/23/07, ¶ 27) Similarly, the Defendants argue that "As this is a consumer lease, the definition set forth in N.Y.U.C.C.§ 2-A-103 would apply. A lease agreement where the lessor is regularly engaged in the business of leasing, and where the lessee takes under the lease primarily for personal use (rather than for resale) is a consumer lease' withing the meaning of N.Y.U.C.C.§ 2-A-103." (italics in original) (De Voe Affirmation 3/23/07, ¶¶ 28 & 29)

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 [*8]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." As noted in the Official Comments of the National Conference of Commissioners on Uniform State Laws and The American Law Institute, pertaining to this section, "This definition focuses on the parties as well as the transaction. If a lease is within this definition, ... the lessee must be an individual not an organization." This definition is consistent with the definitions of "consumer goods," "consumer goods transaction," "consumer obligor" and "consumer transaction" set forth in U.C.C. § 9-102(a)(23), (24), (25) and (26), relating to secured transactions.

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.

The Defendants' argument that the court misapplied the holding in Sterling National Bank v. Eastern Shipping Worldwide, Inc., supra . is equally unavailing. The Defendants are correct that the court in that case held that a forum selection clause will not be set aside unless, inter alia, a party demonstrates "that the clause is invalid because of fraud or overreaching ...." id. at 222, 826 NYS2d at 237. The Defendants are incorrect, however, in claiming that "the holding in Eastern Shipping Worldwide, Inc., supra ., was explicitly limited to the facts presented in that case." (emphasis in original) (De Voe Affirmation 6/18/07, ¶ 15)The Defendants similarly fail in their attempt to distinguish that case from the one sub judice, by alleging that "the court found that the defendant failed in its burden of proving that its initial on the Terms and Conditions' page was obtained by fraud." (De Voe Affirmation 3/23/07, ¶ 18)

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' attempt to distinguish these facts, by referring to the "new evidence," discussed at length hereinabove, and claiming that "it is reasonable to conclude that this evidence was not available a year or so ago when the briefs were submitted in Eastern Shipping Worldwide, Inc., supra ., is without merit. As previously indicated, all of these "new" affidavits are merely cumulative of the facts previously in existence; and, three of the four affidavits were available over two years ago. Similarly, contrary to the Defendants' representation, the court in Sterling National Bank v. Eastern [*9]Shipping Worldwide, Inc., supra . did not specifically address the "Terms and Conditions" page of the Agreement, but found "defendants have not alleged any fraud or overreaching on the part of the assignee with respect to the provision itself ...." id. at 222, 826 NYS2d at 237, much like the Defendants herein.

In addition to the foregoing, the decision in Sterling National Bank v. Eastern Shipping Worldwide, Inc., supra . is consistent with the prevailing rule, that to invalidate a forum selection clause on the ground of fraud and overreaching the fraud alleged must be specific to the jurisdictional provision itself. British West Indies Guaranty Trust Co., Ltd. v. Banque Internationale A Luxembourg, 172 AD2d 234, 567 NYS2d 731 (1st Dept. 1991); Zurich Insurance Company v. R. Electric, Inc., 5 AD3d 338, 773 NYS2d 560 (1st Dept. 2004); Hunt v. Landers, 309 AD2d 900, 766 NYS2d 384 (2nd Dept. 2003); Hirschman v. National Textbook Co., 184 AD2d 494, 584 NYS2d 199 (2nd Dept.1992) As can be seen, the Defendants' argument that the conduct of the NorVergence employees, as detailed above, demonstrate fraud in factum, which relieves the them from "demonstra[ing] that the forum selection clause, itself, was obtained by virtue of fraud," (De Voe Affirmation 6/18/07, ¶ 18) is without merit.

It is the Defendants who overlook that the statement made by the court in DeSola Group, Inc. v. Coors Brewing Company, 199 AD2d 141, 605 NYS2d 83 (1st Dept. 1993), upon which they rely, to the effect that "Since ... allegations of fraud pervading the agreement would render the entire agreement void, the forum selection clause contained therein is unenforceable (citation omitted)," is nothing more than dicta, with the court itself noting, "the forum selection clause is inapplicable since plaintiff's complaint does not pertain to the Agreement." The Defendants also overlook that Rokeby-Johnson v. Kentucky Agricultural Energy Corp., 108 AD2d 336, 489 NYS2d 69 (1st Dept. 1985), upon which the court in DeSola Group, Inc. v. Coors Brewing Company, supra . relied in stating that general allegations of fraud are sufficient to defeat a forum selection clause, as opposed to allegations specific to the forum selection clause itself, was subsequently overruled by Columbia Casualty Company v. Bristol-Meyers Squibb Company, 215 AD2d 91, 635 NY2d 173 (1st Dept. 1995); See also: Brooke Group Ltd. v. JCH Syndicate 488, supra ., also decided after Rokeby-Johnson v. Kentucky Agricultural Energy Corp., supra .

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. Whether or not the Defendants acknowledge that the forum selection clause was noticeable, they admit that the clause appears in "bold font" (DeVoe Affirmation 1/30/07, ¶ 50) and do not deny that the personal guarantee signed by Blood contains a specific reference to "JURISDICTION AND VENUE AS STATED IN THE PARAGRAPH TITLED APPLICABLE LAW OF THE RENTAL." (capitalization and bold in original)

This court further notes that at the time of the Defendants' original motion to dismiss, the Defendants discussed the pending action in Arapahoe County, Colorado entitled New Horizons Electric, Inc., et. al. v. IFC Credit Corporation, et. al., in which the Defendants are among the Plaintiffs therein and the Plaintiff is among the Defendants therein, where the Colorado court held [*10]this very forum selection clause to be enforceable. At that time, the Defendants advised this court that a motion for reconsideration had been filed and that:

it is likely that the order dismissing the Colorado action will be withdrawn and the Colorado action will be reinstated based upon both the trial court's misinterpretation of the decision in Edge Telecom, Inc. v. Sterling Bank, 143 P.3d 1155 (Colo. Ct. App. 2006) (Acknowledging that fraud is, in fact, a defense to the enforceability of a forum selection clause, and where there is evidence of fraud an evidentiary hearing ought to be held), and more importantly, where based upon newly discovered evidence provided by NorVergence's Bankruptcy Trustee, it cannot be disputed that NorVergence unitized fraud in factum and coercion to obtain customers' initials (including the defendants' herein) on the "Terms" page that includes the forum selection clause at issue herein, and therefore, the entire contract, including the forum selection clause, may not be enforced as the contract is void ab initio.[FN2] (De Voe Affidavit 1/30/07, ¶ 7)

On May 25, 2007, however, after this court's order denying the Defendants' motion to dismiss, the District Court of Arapahoe County, Colorado denied the motion for reconsideration, noting that:

This court has already concluded that it is not unfair or unreasonable to require the Plaintiffs [including the Defendants herein] to pursue their claims against the Leasing Defendants [including the Plaintiff herein] in the jurisdictions designated in the forum selection clauses. However, the court must also determine whether the Plaintiffs have proved by a preponderance of the evidence that the clauses themselves were procured through fraud.

and finding that:

Plaintiffs' affidavits, screening manager training manual, and other documents that compose their offer of proof support their claim that the [agreements] were procured by fraud. But they do not prove that the inclusion of the forum selection clause itself a part of the terms, conditions, and disclaimers was the product of fraud.

Based upon all of the foregoing, there is no reason why the result reached by this court in denying the Defendants' motion to dismiss should be any different at this time. Accordingly, that branch of the Defendants' motion seeking leave to reargue having been granted, the court adheres to its original decision; and, that branch of the Defendants' motion seeking an order dismissing this action is denied.

All other matters not decided herein are hereby denied

This constitutes the decision and order of this court.

Dated: Hempstead, New York

July 27, 2007

___________________________ [*11]

ANDREW M. ENGEL

J.D.C. Footnotes

Footnote 1: See: Mountain View Coach Lines, Inc. v. Storms, 102 AD2d 663, 476 NYS2d (2nd Dept. 1984); People v. Turner, 5 NY3d 476, 806 NYS2d 154 (2005)

Footnote 2: As can be seen, these are the exact same arguments made at the time of the Defendants' original motion to dismiss and make at this time as well.