A New York Law Firm - Gallagher & Faller

This case was filed in the United States District Court for the Eastern District of New York and was assigned to District Judge Sandra L. Townes. The Complaint alleged that Mr. Wood had purchased a 2004 Gulf Stream Motor Home from Gulf Stream Coach. Mr. Wood had certain warranty work done on his motor home approximately 3 months after the purchase and subsequent thereto in June, of 2004, without any fault on his part, a fire ignited in the wiring of the motor home causing a complete loss.

The plaintiff insurer as subrogee of Mr. Wood filed the instant action in March of 2006. The Complaint alleged causes of action in negligence, breaches of express and implied warranties and design defect. Choosing not to answer, we instead moved on behalf of Gulf Stream Coach, for an order dismissing the action under Federal Rule of Civil Procedure 12(b)(3) for improper venue or, in the alternative, transferring the action to the United States District Court in Indiana. Our motion was based upon a forum selection provision contained in the written Limited Warranty executed by the parties in connection with the sale of the motor home. That provision provided as follows:

Initially in our motion papers, we presented a copy of what was designated by the defendant as a Subsequent Owner’s Warranty which, while not containing the forum selection clause contained in the Gulf Stream Limited Warranty, sought to include that provision by reference to the Limited Warranty. Several federal court decisions had approved such an incorporation by reference. At the time of the motion, our client was unable to locate an executed Gulf Stream Limited Warranty which contained the forum selection provision. In opposition to the motion, the plaintiff argued that Gulf Stream’s motion papers failed to show that the Limited Warranty was presented to the plaintiff at the time of the transaction and defendant was likewise unable to produce an executed copy of the agreement purportedly containing the forum selection provision.

The court heard oral argument on the motion and essentially directed the defendant to either submit an executed copy of the Limited Warranty containing the forum selection provision or proceed with an evidentiary hearing on the issue as to whether plaintiff ever received notice of the Limited Warranty with the forum selection provision.

Subsequently, Gulf Stream was able to locate an executed copy of the Limited Warranty with its distributor in the State of Florida and a subsequent application was made to the court for reconsideration of the motion to dismiss based upon the grounds that an executed copy of the Limited Warranty had now been located.

In the course of its discussion, the court noted that although the defendant’s motion was based upon Rule 12(b)(3) and 28 U.S.C.§1406(a), which are improper venue provisions, the argument was not literally based on such provisions but was predicated on the existence of a valid forum selection clause. The court further noted that the decision to proceed under Rule 12(b)(3) by the defendant was based upon several District Court cases which had applied that rule to such a motion. District Judge Townes noted, however, that while some courts in the Second Circuit have analyzed such motions to dismiss based upon a forum selection clause under Rule 12(b)(3), the Second Circuit appears to have analyzed such motions under Rule 12(b)(1), lack of subject matter jurisdiction.

District Judge Townes referred to the Second Circuit case of New Moon Shipping Co. v. Man B&W Diesel AG, 121 F.3rd 24 (2d Circuit 1997), in which the Second Circuit acknowledged a split in authority among the circuits indicating no consensus as to the proper procedural mechanism to request dismissal of a suit based upon a valid forum selection clause. Recognizing there was no existing mechanism with which forum selection enforcement is a perfect fit, the Second Circuit refused to pigeon hole such claims into a particular clause of Rule 12(b). Instead, the Second Circuit has established a separate framework for analyzing such cases. Under that framework, the moving party must submit evidence of an apparently governing forum selection clause. The burden then shifts to the plaintiff to make a strong showing to overcome the presumption of enforceability. Such a burden, the Second Circuit noted is analogous to that imposed on plaintiff to prove that the Federal Court has subject matter jurisdiction over his suit or person jurisdiction over the defendant. Moreover, the Second Circuit indicated that in analyzing that preliminary showing, the facts must be viewed in a light most favorable to the plaintiff and any disputed fact may be resolved in a manner adverse to the plaintiff only after an evidentiary hearing.

Justice Townes then found that the defendant had met its burden of producing sufficient evidence that the executed Limited Warranty included a valid forum selection clause. The court further noted that the plaintiff did not dispute this and that the language of the clause was unambiguous and expressly provided that any claims, demands or causes of action were to be determined in the courts of the State of Manufacture. Since the plaintiff had not made a strong showing to overcome the presumption of the validity of the forum selection provision, the court dismissed the plaintiff’s action pursuant to Rule 12(b). The court further found, based upon its initial determination, that it was not necessary to address the defendant’s second alternative argument seeking a transfer to the United States District Court in Indiana.