901 F.2d 17 (2nd Cir. 1990), 932, Jones v. Weibrecht

Docket Nº:932, 933, Dockets 89-9079, 89-9081.
Citation:901 F.2d 17
Party Name:Nettie Marie JONES, Plaintiff-Appellant, v. Edwin H. WEIBRECHT, Jr., Defendant-Appellee. Edwin H. WEIBRECHT, Jr., Plaintiff-Appellee, v. Nettie Marie JONES, Defendant-Appellant.
Case Date:April 11, 1990
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 17

901 F.2d 17 (2nd Cir. 1990)

Nettie Marie JONES, Plaintiff-Appellant,

v.

Edwin H. WEIBRECHT, Jr., Defendant-Appellee.

Edwin H. WEIBRECHT, Jr., Plaintiff-Appellee,

v.

Nettie Marie JONES, Defendant-Appellant.

Nos. 932, 933, Dockets 89-9079, 89-9081.

United States Court of Appeals, Second Circuit

April 11, 1990

Argued March 5, 1990.

Michael J. Hutter, Albany, N.Y. (Henry Neal Conolly, Thuillez, Ford, Gold & Conolly, of counsel), for plaintiff-appellant.

J. Michael Naughton, Albany, N.Y. (Shanley, Sweeney & Reilly, Albany, N.Y., James M. Brooks, Brooks & Meyer, Lake Placid, N.Y., of counsel), for defendant-appellee.

Before TIMBERS, MESKILL and ALTIMARI, Circuit Judges.

PER CURIAM:

The issue on appeal is, in light of the Supreme Court's decision in Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988), what standard governs the enforceability of contractual forum selection clauses in diversity cases. Appellant Jones appeals from two judgments entered in the United States District Court for the Northern District of New York, Munson, J., dismissing Jones' complaint seeking recision of two agreements

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between the parties and remanding to state court appellee Weibrecht's action seeking damages for breach of the same agreements. Because we conclude that the district court applied the appropriate standard derived from THE BREMEN v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), we affirm.

BACKGROUND

These actions arise out of a dispute involving two agreements entered into by the parties on August 10, 1983. The two agreements were the product of a series of developments between the parties beginning with the 1977 sale by Jones to Weibrecht of the stock of Culspar, Inc. (Culspar) and followed by the alleged default by Weibrecht and his partner, Henry Gelles, on the promissory note executed as part of the Culspar transaction and the sale by Jones of her interests in Culspar's assets to third parties. The first agreement purports to be a release of Weibrecht by Jones of any liability resulting from the Culspar stock transaction. In the second agreement, Jones purportedly agreed to indemnify Weibrecht from any liability or claim in any action Jones had brought or would bring involving the Culspar sale. Both agreements contain identical forum selection clauses, designating the Supreme Court of New York, Essex County, as the exclusive venue for any action between the parties on the basis of the agreements.

On July 11, 1989, Jones commenced an action in the federal district court in the Northern District of New York against Weibrecht, seeking recision of the two agreements, a declaration that the indemnity agreement was void, and damages. In her complaint, Jones alleges that the agreements lack legally sufficient consideration, that Weibrecht failed to satisfy a condition subsequent and that the indemnity agreement was the product of fraud and compulsion.

Weibrecht then filed an action on July 25, 1989 in the Supreme Court of New York, Essex County, against Jones for breach of the two agreements. Weibrecht's complaint alleges that Jones violated the agreements by failing to pay and by causing him to incur legal fees in Jones' unsuccessful state action against him and Gelles for default on the promissory note. Jones removed Weibrecht's state action to federal court. Subject matter jurisdiction in both cases is premised on diversity of citizenship.

On Weibrecht's motions, the district court dismissed Jones' complaint for improper venue and remanded Weibrecht's action to state court, concluding that the agreements' forum selection clauses, which designated the state court in Essex County as the exclusive venue for litigation, were enforceable.

DISCUSSION

The sole issue on appeal is what standard should govern contractual forum selection clauses in diversity cases....

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