Haagen-Dazs Shoppe Co., Inc. v. Born
| Decision Date | 30 August 1995 |
| Docket Number | No. 94 Civ. 6759 (DAB).,94 Civ. 6759 (DAB). |
| Citation | 897 F. Supp. 122 |
| Parties | The HÄAGEN-DAZS SHOPPE COMPANY, INC., Plaintiff, v. Janie E. BORN and Randall A. Born, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Schnader, Harrison, Segal & Lewis, New York City (W. Michael Garner, of counsel), for plaintiff.
Kreindler & Relkin, P.C., New York City (Donald B. Relkin, S. Robert Schrager, of counsel), for defendants.
Defendants move, pursuant to 28 U.S.C. § 1404(a), to transfer venue to the Southern District of California. In the alternative, Defendants move to dismiss "in the interests of justice," arguing that a tort action currently pending in the Superior Court of California between Plaintiff and Defendants renders this contract action duplicative. For the following reasons, the motion to transfer is denied, and the motion to stay is granted.
In 1982, Jamie E. and Randall A. Born (the "Borns") became franchisees of Häagen-Dazs and began operating a store in Orange County, California. In 1992, representatives of Häagen-Dazs contacted the Borns regarding an opportunity to invest in a San Diego Häagen-Dazs franchise, and in the course of discussing and negotiating the franchise agreement between 1992 and 1993, according to the Borns, made certain representations as to the potential for profit, the costs of operation, and the risks involved. In 1993, the Borns entered into a franchise agreement to operate a store in the San Diego area. Sometime after purchasing the franchise, the Borns ceased operating the San Diego shop.
On April 22, 1994, the Borns filed a complaint in Orange County Superior Court against Häagen-Dazs, Mike Reynolds, and fifty (50) John Does alleging, inter alia, that promises and representations made regarding the San Diego franchise were false. This action sounds not in contract, however, but in tort, with causes of actions stated for negligence, negligent misrepresentation, fraud, negligent infliction of emotional distress, and intentional infliction of emotional distress. The Borns allege personal injuries and financial losses to support recovery.
While the California action was filed in April 1994, it appears not to have been served on Defendant Häagen-Dazs until late June 1994. On July 28, 1994, Häagen-Dazs filed the present Complaint in the New York County Supreme Court, seeking declaratory judgment as to the rights and liabilities of the parties with respect to the Borns' abandonment of the San Diego franchise. Further, the Häagen-Dazs Complaint points to language in the offering circular, the franchise agreement, and the closing statement disclaiming any representations outside those documents and seeks a declaratory judgment that the Borns are contractually estopped by that language from asserting any claim against Häagen-Dazs on account of any statements, representations, or conduct not expressly contained in the franchise agreement or offering circular.
On the basis of diversity of citizenship, the Borns removed the New York action to this Court on September 16, 1994; they now move to dismiss or stay this action "pursuant to the duplicative suit rule and in the interests of justice" because of the prior pending California action, and for an order transferring this action to the United States District Court for the Southern District of California for the convenience of the parties and in the interest of justice.
Title 28, United States Code, Section 1404(a) provides:
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.
The decision to transfer venue rests within the sound discretion of the Court. Elite Parfums, Ltd. v. Rivera, 872 F.Supp. 1269, 1272 (S.D.N.Y.1995). In consideration of a motion to transfer venue, however, a plaintiff's choice of forum should not be disturbed by the Court unless certain criteria weigh strongly in defendant's favor. Schwartz v. R.H. Macy's, Inc., 791 F.Supp. 94, 95 (S.D.N.Y.1992). Such criteria include, among others: the convenience of the parties and witnesses, location of counsel, the interests of justice, and the court's familiarity with the law to be applied. Id.; Elite Parfums, 872 F.Supp. at 1271; International Commodities Export Corp. v. North Pacific Lumber Co., 737 F.Supp. 242, 245 (S.D.N.Y. 1990). The defendant-movant bears the burden of establishing that a change of forum should occur. Filmline (Cross-Country) Productions, Inc. v. United Artists Corp., 865 F.2d 513, 521 (2d Cir.1989); Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir.1978), cert. denied, 440 U.S. 908, 99 S.Ct. 1215, 59 L.Ed.2d 455 (1979).
Defendants have not satisfied their burden. Although they allege that none of the parties reside in New York, Defendants have set forth no facts indicating that either the witnesses, parties, or counsel would be inconvenienced if the action were to be litigated here. Additionally, familiarity with governing law favors this Court because the franchise agreement provides that it will be "interpreted, governed and construed" pursuant to New York law.
Further, the franchise agreement contains a forum selection clause stating that "New York shall be a forum where any cause of action arising under this Franchise may be instituted." (Franchise Agreement ¶ 28, Def. Ex. F). In deciding whether to transfer venue, forum selection clauses are afforded considerable weight. See The Bremen v. Zapata-Off Shore Co., 407 U.S. 1, 9-13, 92 S.Ct. 1907, 1912-14, 32 L.Ed.2d 513 (1972); Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 594, 111 S.Ct. 1522, 1527-28, 113 L.Ed.2d 622 (1991). The permissive nature of the forum selection clause need not affect the weight it is given. See Cambridge Nutrition A.G. v. Fotheringham, 840 F.Supp. 299, 301 (S.D.N.Y.1994) ().
This Court is not convinced that transferring the action to the Southern District of California would be in the interest of justice. Further, transfer would not serve the goal of judicial economy, as the state court action pending in California could not be consolidated with this federal action. For these reasons, Defendants' motion to transfer venue is denied.
Defendants' argue that this action should be stayed or dismissed in light of the prior state court action pending in California. To support this argument, Defendants' rely on Colorado River Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). Colorado River and its progeny counsel that federal courts may abstain from hearing the merits of a case if a duplicative state court action exists and exceptional "reasons of wise judicial administration" favor abstention. See 424 U.S. at 817-18, 96 S.Ct. at 1246-47; Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 14-16, 103 S.Ct. 927, 936-37, 74 L.Ed.2d 765 (1983). The doctrine is a narrow one, however, for as our Circuit has said, "abstention jurisdiction begins with the principle that federal courts have a `virtually unflagging obligation' to exercise jurisdiction over all cases properly before them." Youell v. Exxon Corp., 48 F.3d 105, 108 (2d Cir. 1995) (quoting Colorado River, 424 U.S. at 817-18, 96 S.Ct. at 1246-47).
Colorado River is inapposite to this case, however, since last term the Supreme Court held in Wilton v. Seven Falls Company, ___ U.S. ___, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995), that the discretionary standard set forth in Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), not the Colorado River "exceptional circumstances" test, governs a district court's decision to stay a declaratory judgment action during the pendency of parallel state court proceedings.1 ___ U.S. at ___, 115 S.Ct. at 2142.
Wilton and Brillhart teach that "district courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites." Wilton, 115 S.Ct. at 2140. In reaching its conclusion, the Wilton Court found support in the discretionary language of the Declaratory Judgment Act:
Since its inception, the Declaratory Judgment Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants. On its face, the statute provides that a court "may declare the rights and other legal relations of any interested party seeking such declaration." The statute's textual commitment to discretion, and the breadth of leeway we have always understood it to suggest, distinguish the declaratory judgment context from other areas of the law in which concepts of discretion surface.
Wilton, 115 S.Ct. at 2142 (citations omitted) (emphasis in original). Because the Declaratory Judgment Act is procedural,2 Wilton and Brillhart apply with full force in this removal action premised on diversity of citizenship.
The Supreme Court in Brillhart discussed a district court's discretion with respect to actions for declaratory judgment thus:
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