Leasing Service Corp. v. Patterson Enterprises, 85 Civ. 5343 (JMW).

• Decision Date: 25 March 1986
• Docket Number: No. 85 Civ. 5343 (JMW).,85 Civ. 5343 (JMW).
• Citation: 633 F. Supp. 282
• Parties: LEASING SERVICE CORPORATION and Credit Alliance Corporation, Plaintiffs, v. PATTERSON ENTERPRISES, LTD., William B. Patterson, Jeanne W. Patterson, W.B. Patterson, Jr. and Jackie B. Patterson, Defendants.
• Court: U.S. District Court — Southern District of New York

633 F. Supp. 282

LEASING SERVICE CORPORATION and Credit Alliance Corporation, Plaintiffs, v. PATTERSON ENTERPRISES, LTD., William B. Patterson, Jeanne W. Patterson, W.B. Patterson, Jr. and Jackie B. Patterson, Defendants.

No. 85 Civ. 5343 (JMW).

United States District Court, S.D. New York.

March 25, 1986.

Sol D. Bromberg, New York City, for plaintiffs.

John Halebian, Pollack & Kaminsky, New York City, Jeff D. Rawlings, Young Scanlon & Sessums, Jackson, Miss., for defendants.

OPINION AND ORDER

WALKER, District Judge.

Introduction

This contract action seeks to recover a deficiency arising after public auction of repossessed heavy construction equipment. The plaintiffs, Leasing Service Corporation ("LSC") and Credit Alliance Corporation ("CAC"), are New York corporations. The defendants are Patterson Enterprises Ltd. ("Patterson"), a Mississippi corporation, and the corporation's officers. The auction of the equipment was necessitated by Patterson's default on three lease agreements and a promissory note, and by the default on a personal guarantee by the co-defendant officers of Patterson.

Presently before the Court are defendant's motion, pursuant to 28 U.S.C. § 1404, for a change of venue to the United States District Court for the Southern District of Mississippi, and a motion by LSC and CAC for summary judgment in the amount of the alleged deficiency. The Court now grants Patterson's motion to transfer and declines to decide plaintiffs' motion for summary judgment.

Facts

On November 7, 1980, Patterson entered into two lease agreements with Stribling Puckett, Inc. ("Puckett") under which Patterson leased heavy construction equipment from Puckett. A third lease of similar equipment was executed by Patterson and Puckett on May 4, 1981. Each of these three leases was then assigned by Puckett to LSC.

The terms of each of the leases were modified three times through extension agreements signed in 1982 and 1983. In addition, on December 1, 1983, Patterson executed a promissory note and security agreement mortgage on the equipment in favor of CAC. Certain officers of Patterson also signed personal guarantees on the obligations of Patterson.

In early 1985, plaintiffs repossessed the leased equipment. At the date of default, the unpaid balance on the contracts was $628,342.72. Almost immediately after the repossession, plaintiffs exercised their rights under the agreements and arranged for an auction of the equipment. In preparation for the sale, they repaired and refurbished the machinery at a cost of $104,646.21.

A public auction attended by two hundred bidders took place in Jackson, Mississippi on May 7, 1985. The sale gained $873,250.00. While Patterson contends that the proceeds were sufficient to cover the unpaid balance and plaintiffs' reasonable expenses, plaintiffs claim they are still owed $608,709.95 under the agreements, including liquidated damages, attorneys' fees, taxes, interest, late charges and the cost of repairs.

Discussion

(1) Forum-Selection Clause

All of the leases, notes and guarantees signed by Patterson's president contain the following forum-selection clause:

Patterson Enterprises Ltd. agrees to the venue and jurisdiction of any court located within the State and County of New York regarding any matter involving Patterson and CAC and LSC.

Plaintiffs argue that the terms of the clause, to which Patterson freely agreed, require this case to be heard in New York. Further, plaintiffs claim that by agreeing to the clause, Patterson waived its right to seek transfer under 28 U.S.C. § 1404. This Court disagrees.

There is a clear distinction to be made between permissive forum-selection clauses and mandatory clauses. The existence of a permissive forum-selection clause does not prevent a court from ordering a change of venue under 28 U.S.C. § 1404(a). Credit Alliance v. Crook, 567 F.Supp. 1462 (S.D.N.Y.1983); Coface v. Optique Du Monde, Ltd., 521 F.Supp. 500 (S.D.N.Y. 1980). A forum-selection clause mandates a waiver of § 1404 analysis only where the terms of the agreement identify the preselected forum as an exclusive forum for hearing disputes arising under the contract. Full-Sight Contact Lens Corp. v. Soft Lenses, Inc., 466 F.Supp. 71 (S.D.N.Y. 1978) (Clause at issue read: "Any suit ... shall be brought in either San Diego or Los Angeles County" (emphasis added)); Credit Alliance, supra; Plum Tree, Inc. v. Stockment, 488 F.2d 754 (3rd Cir.1973).

The language of the instant forum-selection clause is not mandatory. On the contrary, the wording is very similar to that in Credit Alliance: "The parties agree to the venue and jurisdiction of any court in the State and County of New York regarding any matter arising hereunder." 567 F.Supp. at 1465. There the court stated, "this language empowers the New York courts to adjudicate this matter, it does not indicate that New York is the exclusive or the only appropriate forum ..." Id. (emphasis in original).

Thus, while the forum-selection clause in this case empowers New York courts to hear actions between the parties which in the absence of the clause could not be heard, the clause does not preclude this Court from entertaining a motion to transfer pursuant to 28 U.S.C. 1404(a).

(2) Transfer

The party seeking transfer bears the burden of establishing the propriety of a § 1404(a) transfer. Teachers Insurance and Annuity Association of America v. Butler, 592 F.Supp. 1097 (S.D.N.Y.1984) (Weinfeld, J.). To determine whether the defendants have satisfied their burden, a number of factors are relevant:

(1) the convenience to parties; (2) the convenience of witnesses; (3) the relative ease of access to sources of proof; (4) the availability of process to compel attendance of unwilling witnesses; (5) the cost of obtaining willing witnesses; (6) the practical problems indicating where the case can be tried more expeditiously and inexpensively; and (7) the interests of justice, a term broad enough to cover the particular circumstances of each case, which in sum indicate that the administration of justice will be advanced by a transfer.

Id. at 1105; Coface, 521 F.Supp. at 507.

Defendants contend that this case should be transferred because their defense will be prejudiced by the unavailability of witnesses beyond this Court's subpoena power and the prohibitive expense of transporting witnesses to New York. Defendants also point out that substantially all the relevant events in this action occurred in Mississippi.

In response, plaintiffs contend that since their present summary judgment motion demonstrates there are no material issues of fact in the case, witness cost, convenience and availability are irrelevant. Plaintiffs also argue that even if convenience is considered, their inconvenience if the case is sent to Mississippi will simply be equal to defendants' inconvenience if the matter stays in New York.

Where a request to transfer an action is based upon witness cost, convenience and availability, the movant must set out the key witnesses to be called along with a general description of the substance of their testimony. Mendelson v. Fleischman, 386 F.Supp. 436 (S.D.N.Y.1973); Bastille Properties Inc. v. Hometels of America, Inc.,...