Rabbi Jacob Joseph School v. Province of Mendoza

• Decision Date: 25 October 2004
• Docket Number: No. 04 CV 4511 ILG.,04 CV 4511 ILG.
• Citation: 342 F.Supp.2d 124
• Parties: RABBI JACOB JOSEPH SCHOOL, Plaintiff, v. The PROVINCE OF MENDOZA, the Bank of New York and J.P. Morgan Chase Bank, Defendants.
• Court: U.S. District Court — Eastern District of New York

Page 124

342 F.Supp.2d 124

RABBI JACOB JOSEPH SCHOOL, Plaintiff, v. The PROVINCE OF MENDOZA, the Bank of New York and J.P. Morgan Chase Bank, Defendants.

No. 04 CV 4511 ILG.

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

October 25, 2004.

Eli Feit, Heller, Horowitz & Feit, P.C., New York City, for Plaintiff.

Jonathan I. Blackman, Cleary, Gottlieb, Steen & Hamilton, New York City, for Defendants.

MEMORANDUM AND ORDER

GLASSER, District Judge.

BACKGROUND

Defendant, the Province of Mendoza (the "Province" or "Defendant"), one of the 24 provinces of the Republic of Argentina, removed this case from the Supreme Court of the State of New York, Richmond County, where it was originally filed on October 19, 2004. A temporary restraining order was issued by that court, ex parte, without notice for the application of that relief having been given or attempted to be given to the Defendant or its counsel. That order temporarily enjoined Defendant from, inter alia, declaring effective or otherwise consummating a restructuring of a bond offering (the "Exchange Offer") which was scheduled to close on October 21.

By letter application dated October 20, Defendant requested this Court to vacate the temporary restraining order and transfer this case to the Southern District of New York pursuant to 28 U.S.C. § 1404(a), where on October 12, 2004, that court issued a decision in Greylock Global Opportunity Master Fund Ltd. and Greylock Global Distressed Debt Master Fund Ltd. v. Province of Mendoza, 04 Civ. 7643, 2004 WL 2290900 (S.D.N.Y. Oct.12, 2004) (Baer, J.). In Greylock, the plaintiff sought the same relief sought here based upon the same facts and virtually identical claims advanced by Rabbi Jacob Joseph School ("RJJS" or the "Plaintiff") in this case. Judge Baer denied the plaintiff's application for a preliminary injunction in Greylock in a carefully reasoned opinion, familiarity with which is assumed.

In opposition to Defendant's requests, Plaintiff argued that this Court should remand this case to the state court pursuant to 28 U.S.C. § 1447(c) because Defendant waived its right to remove this case to federal court based on the forum selection clause in the indenture (the "Indenture") which governs the underlying bond offering. The forum selection clause states as follows:

The Province hereby irrevocably submits to the non-exclusive jurisdiction of any New York State or United States federal court sitting in The City of New York, and any appellate court from any thereof and the Supreme Court of Argentina or any other Argentine federal court, in any action or proceeding arising out of or relating to this Indenture, and the Province hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State or United States Federal Court and the Supreme Court of Argentina or any other Argentine federal court. The Province hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding any right of jurisdiction in such action or proceeding and on account of the place of residence or domicile of the Province.

Indenture, § 9.7(b). In addition, Plaintiff contends that Defendant's transfer motion should be denied because the claims in Greylock and this case are substantially different, and Plaintiff's choice of forum should be given preference and therefore honored.

A hearing was held on October 21, 2004 on Defendant's requests and Plaintiff's opposition to them and at the conclusion thereof the temporary restraining order issued by the state court was vacated for the reasons that the harm allegedly to be suffered by the Plaintiff is compensable by money damages and for the additional reason that the temporary restraining order was improvidently granted. Upon Plaintiff's request, the Court received supplemental briefing from the parties on October 25 on the issue whether this case should be remanded to the state court. Against this background, this memorandum and opinion confirms the Court's decision to vacate the ex parte temporary restraining order. Further, for the reasons set forth below, the Court grants Defendant's motion to transfer the case to the Southern District of New York pursuant to 28 U.S.C. § 1404(a) and denies Plaintiff's motion to remand the case to state court pursuant to 28 U.S.C. § 1447(c).

DISCUSSION

I. Motion to Vacate the Ex Parte State Court Temporary Restraining Order

The touchstone informing a determination of a motion for injunctive relief is a showing by the movant that absent its issuance, he will suffer irreparable harm. The other prerequisites for granting such relief, likelihood of success on the merits, or sufficiently serious questions going to the merits to make them a fair ground for litigation, and a balance of hardships tipping decidedly toward the party requesting the relief, need not be reached because it "has always been true that irreparable injury means injury for which a monetary award cannot be adequate compensation." Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979); Sperry International Trade, Inc. v. Government of Israel, 670 F.2d 8, 12 (2d Cir.1982). The Court is aware that even where a money award may be adequate, injunctive relief may be granted where, for example, the defendant "intended to frustrate any judgment on the merits" by "transferring its assets out of the jurisdiction," In re Feit & Drexler, 760 F.2d 406, 416 (2d Cir.1985) (citations and internal quotations omitted), or where the movant shows that the loss would force him into bankruptcy, Sperry International Trade, supra. Neither of those contingencies is applicable here where the potential harm is strictly financial and injunctive relief is thus not warranted.¹

Further, the case having been removed to this Court from the state court, federal law is applied as though the action was originally commenced here. 14 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3738. The temporary restraining order that was issued without notice to the attorney for the Defendant whose identity was known, without declaring in an affidavit or verified complaint that immediate and irreparable harm would result before the adverse party or his attorney could be heard in opposition, was plainly in violation of Fed.R.Civ.P. 65(b), and the temporary restraining order was vacated for the additional reason that it was improperly issued. See Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers Local No. 70 of Alameda County, 415 U.S. 423, 439, 94 S.Ct. 1113, 39 L.Ed.2d 435 (1974) (it is only on rare occasions that an ex parte temporary restraining order is proper and then such orders "should be limited to preserving the status quo only for so long as is necessary to hold a hearing"); North Dakota v. United States Army Corps of Engineers, 264 F.Supp.2d 871, 878-79 (D.N.D.2003) (vacating ex parte state court temporary restraining order following removal).²

II. Plaintiff's Motion to Remand This Case to the State Court Pursuant to 28 U.S.C. § 1447(c)

Plaintiff argues that pursuant to 28 U.S.C. § 1447(c), the Court should remand this case to the state court because the Province waived its right to remove this case to federal court in the forum selection clause in the Indenture.³ However, it is well established in this Circuit that waiver of a party's statutory right to remove a case to federal court must be clear and unequivocal. See, e.g., Karl Koch Erecting Co. v. New York Convention Ctr. Dev. Corp., 838 F.2d 656, 659 (2d Cir.1988) (clause providing that no action shall be commenced "except in the Supreme Court of the State of New York" operated as a waiver); Refco, Inc. v. Galadari, 755 F.Supp. 79, 84 (S.D.N.Y.1991). For example, in Elliott Associates, LP v. Republic of Panama, 1996 WL 474173, at *1 (S.D.N.Y. Aug. 21, 1996), the loan agreement stated that the borrower "irrevocably waives any right it may now or hereafter have to remove to a United States federal court any action brought hereunder or under the Notes in a state court of the State of New York." Based on this explicit language, the court held that the foreign government waived its right to remove the state court action to federal court.

Consistent with the holding in Elliott Associates, LP, courts in this Circuit have generally found a waiver of the right to remove a case to federal court only if the forum selection clause contains explicit language evidencing waiver or "where the forum selection clause identifies a particular court in which disputes will be heard." Unity Creations, Inc. v. Trafcon Indus., Inc., 137 F.Supp.2d 108, 110 (E.D.N.Y.2001); see also Hamakua Sugar Co. v. The Fiji Sugar Corp., 778 F.Supp. 503, 504-05 (D.Haw.1991) (finding that foreign sovereign waived right to removal where contract "states that the parties will submit irrevocably to the jurisdiction of the Circuit Court of the Third Circuit of the State of Hawaii"); see generally Fabe v. Aneco Reinsurance Underwriting Ltd., 784 F.Supp. 448, 451 (S.D.Ohio 1991) (no waiver found and holding that "[a]bsent a valid, explicit waiver, a foreign state enjoys and absolute right of removal of a case to federal court"); In re Texas Eastern Transmission Corp. PCB Contamination Ins. Coverage Litig., 15 F.3d 1230, 1243 (3d Cir.1994) ("it would contravene strong public policy to permit a less than absolutely unequivocal contractual provision to divest a federal district court of FSIA subject matter jurisdiction"), cert. denied, 513 U.S. 915, 115 S.Ct. 291, 130 L.Ed.2d 206 (1994). Here, the clear language of the forum selection clause in the Indenture does not contain any reference to removal, and thus the Court concludes that the Province did not make a "clear and unequivocal waiver" of its right to remove this case to federal court. Indeed, the forum selection clause indicates that the Province...