BKJRT v. Sovereign Bank dba Merchant Services (2011)

MEMORANDUM OF DECISION RE MOTION TO DISMISS # 105

FACTS

In this action for declaratory judgment and breach of contract, the plaintiff, BKJRT, Inc. d/b/a Chuck's Steakhouse and Margaritagrill, brought suit against the defendant, Sovereign Bank d/b/a Merchant Services,¹ seeking a determination with respect to fines assessed pursuant to a “merchant processing agreement” (agreement).   On September 8, 2010, the defendant filed a motion to dismiss for improper venue and a memorandum of law in support of the motion.   On October 13, 2010, the plaintiff filed an objection to the motion to dismiss and a memorandum of law in support of the objection.   On October 15, 2010, the defendant filed a reply to the plaintiff's objection.

The plaintiff alleges the following facts in its complaint.   The plaintiff is a Massachusetts corporation with a principal office in Auburn, Massachusetts.   In 2003, the plaintiff entered into the agreement with the defendant for the purpose of processing credit card payments by MasterCard International Incorporated (MasterCard).   Pursuant to the plaintiff's agreement with the defendant, the plaintiff agreed to be “PCI compliant” when dealing with the storage of cardholder accounts data.   The plaintiff breached the agreement when it failed to be PCI compliant.   The defendant informed the plaintiff that MasterCard assessed a $50,000 fine based on the breach.   Pursuant to the plaintiff's agreement with the defendant, the plaintiff agreed to pay any fines imposed on the defendant by MasterCard and the defendant withdrew the fine from the plaintiff's account.   The fine imposed was arbitrary and not based upon the actual amount of card data that was compromised.

DISCUSSION

“A motion to dismiss ․ properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court ․ A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction.”  (Internal quotation marks omitted.)  R.C. Equity Group, LLC v. Zoning Commission, 285 Conn. 240, 248, 939 A.2d 1122 (2008).   “The motion to dismiss shall be used to assert ․ improper venue ․” Practice Book § 10-31(a).

When considering a motion to dismiss, the trial court “must consider the allegations of the complaint in their most favorable light ․ In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader.”  (Internal quotation marks omitted.)   Conboy v. State, 292 Conn. 642, 651, 974 A.2d 669 (2009).   However, “if the complaint is supplemented by undisputed facts established by affidavits submitted in support of the motion to dismiss ․ other types of undisputed evidence ․ and/or public records of which judicial notice may be taken ․ the trial court, in determining the jurisdictional issue, may consider these supplementary undisputed facts and need not conclusively presume the validity of the allegations of the complaint ․ If affidavits and/or other evidence submitted in support of a defendant's motion to dismiss conclusively establish that jurisdiction is lacking, and the plaintiff fails to undermine this conclusion with counteraffidavits ․ or other evidence, the trial court may dismiss the action without further proceedings ․ If, however, the defendant submits either no proof to rebut the plaintiff's jurisdictional allegations ․ or only evidence that fails to call those allegations into question ․ the plaintiff need not supply counteraffidavits or other evidence to support the complaint, but may rest on the jurisdictional allegations therein.”  (Citations omitted;  internal quotation marks omitted.)  Id., 651-52.

The defendant moves to dismiss the plaintiff's complaint for improper venue.   The defendant argues that the plaintiff alleges in its complaint that the defendant complied with the terms and conditions of the agreement.   The defendant asserts that, also pursuant to the agreement, the plaintiff agreed that the state or federal court in Suffolk County, New York is the proper venue for all claims arising out of or related to the agreement.   The defendant argues that this court is not the proper venue for these proceedings in light of the fact that the plaintiff's claims arise out of and are related to the agreement between the plaintiff and the defendant.   In support of its motion to dismiss, the defendant submits a signed copy of the “merchant services application” (application) and the “merchant's processing agreement program guide” (program guide) that are applicable to this case.

In response, the plaintiff argues that the forum selection clause is contained within an adhesion contract that was not specifically negotiated and unsigned.   Further, the plaintiff argues that the clause is entitled improperly and in small font.   The plaintiff asserts that the inclusion of the forum selection clause was deceptive in nature and therefore the clause should not be enforced.   In support of its objection, the plaintiff submits the affidavits of Jill Wawiernia a/k/a Jill Napieralski and Stephen F. Londregan.

“The existence of [a forum selection] clause does not deprive the trial court of personal jurisdiction over the parties, but presents the question whether it is reasonable for the court to exercise its jurisdiction in the particular circumstances of the case.”  Reiner, Reiner & Bendett, P.C. v. Cadle Co., 278 Conn. 92, 103, 897 A.2d 58 (2006).  “[P]arties to a contract may agree in advance to submit to the jurisdiction of a given court ․ Absent a showing of fraud or overreaching, such forum clauses will be enforced by the courts ․ At the same time, jurisdiction may not be asserted in such a way as to make litigation so gravely difficult and inconvenient that a party unfairly is at a severe disadvantage in comparison to his opponent.”  (Citations omitted;  internal quotation marks omitted.)  United States Trust Co. v. Bohart, 197 Conn. 34, 42, 495 A.2d 1034 (1985);  see also Reiner, Reiner & Bendett, P.C. v. Cadle Co., supra, 278 Conn. 102 n.9.

Judges of the Superior Court have adopted a two-part analysis to determine whether a forum selection clause should be enforced.   First, “the court must look to contract formation itself to ascertain whether the clause was the product of fraud or deception or whether the bargaining power of the parties was so out of balance that the clause should not be enforced ․ This step allows, inter alia, consideration [of] whether the provision is contained in an adhesion or take or leave it contract which the party was compelled to accept without argument or discussion.”  (Citation omitted;  internal quotation marks omitted.)   Powell v. Spruce Peak Realty, LLC, Superior Court, judicial district of Middlesex, Docket No. CV 09 5006181 (September 17, 2009;  Jones, J.).   Second, the court considers “whether, even if there existed no fraud, deception, or significantly uneven bargaining power, enforcement of the clause would cause such inconvenience to the party bringing suit that the otherwise valid contractual provision should not be enforced.”   Alliance Food Management Corp. v. Rensselaer Hartford Graduate Center, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 05 5002441 (April 10, 2007, Gallagher, J.) (43 Conn. L. Rptr. 146, 147).

With respect to the first step, the fact that a forum selection clause is contained within a “take it or leave it contract” does not, in and of itself, make the clause the product of fraud or deception.   See, e.g., Powell v. Spruce Peak Realty, LLC, supra, Docket No. CV 09 5006181;  Arute v. Carnival Corp., Superior Court, judicial district of New Haven, Docket No. CV 05 5001407 (September 10, 2008, Corradino, J.).   Nor is the court precluded from finding that a forum selection clause is valid because the clause is in small print or the clause is contained in a document other than the one that was signed by the parties.   See, e.g., Alliance Food Management Corp. v. Rensselaer Hartford Graduate Center, Inc., supra, 43 Conn. L. Rptr. 147.   Trial courts have found forum selection clauses to be valid in far more extreme situations than the present case.   For example, one court found that there was no showing of fraud or deception even when the plaintiff did not receive all of the pages of the terms and conditions by facsimile, including the pages of the agreement that contained the forum selection clause.   Post Road Furniture Group, Inc. v. Landmark Merchant Solutions, LLC, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 04 0085820 (November 18, 2004, Moran, J.).   The reasoning in cases such as Post Road is based on the rule that “where a person [who is] of mature years and who can read and write, signs or accepts a formal written contract affecting his pecuniary interests, it is [that person's] duty to read it and notice of its contents will be imputed to [that person] if [that person] negligently fails to do so.”  (Internal quotation marks omitted.)  Phoenix Leasing, Inc. v. Kosinski, 47 Conn.App. 650, 654, 707 A.2d 314 (1998).

In the present case, the plaintiff's arguments regarding fraud or deception and unequal bargaining power are unavailing.   The clause is contained within the program guide;  Merchant Processing Agreement Program Guide, p. 24, § 35.2;  which is specifically referenced in the application that was signed by the plaintiff's officer.   Merchant Processing Application, p. 1. The application contains the following statement:  “The statements made in this Merchant Processing Agreement are true.   Client acknowledges having received and read a copy of the attached Program Guide and Service Fee Schedule and agrees to be bound by all provisions as printed herein.”   Merchant Processing Application, p. 1. Although the program guide is printed in a small type size, the section containing forum selection clause is not any smaller than the rest of the document.   Further, although the plaintiff's officer states that “no one told him to read the Program Guide before signing the Application” and that “the Program Guide was presented to him in a folder after the Application was signed”;  Affidavit of Stephen F. Londregan, ¶¶ 8, 9;  these facts do not overcome the plaintiff's duty to read the application prior to signing it and take notice of its contents.   Finally, the plaintiff's argument that there was unequal bargaining power is unpersuasive because the plaintiff is an incorporated business that sent its representative to the defendant for the purposes of entering into an agreement with respect to the processing of credit card payments.   The affidavit of Stephen F. Londregan details that the plaintiff chose to deal with an out of state vendor, the defendant, for this service and that the plaintiff's officer was savvy enough to negotiate the transaction rate with respect to the agreement.   Affidavit of Stephen F. Londregan, ¶¶ 3, 5. The court cannot conclude that the agreement was the product of fraud, deception or significantly unequal bargaining power, even when considering the size of the plaintiff's business and the lack of other negotiations regarding the agreement.

The court must now consider whether, even though the forum selection clause is otherwise valid, enforcement of the provision would cause such inconvenience to the plaintiff that the clause should not be enforced.   There is little evidence on the record that the court may consider regarding this factor.   The plaintiff alleges in the complaint that it is a Massachusetts corporation with a principal office in Auburn, Massachusetts.   Complaint, Count I, ¶ 1.   The affidavit of Stephen F. Londregan states that the plaintiff's dealings with the defendant were limited to interactions in East Hartford, Connecticut and that “all of Plaintiff's witnesses, including employees, evidence, and breaches giving rise to this dispute occurred in and/or are located in Massachusetts and Connecticut.”   Affidavit of Stephen F. Londregan, ¶¶ 3, 14.   The court will not consider any arguments of the parties that are unsupported by evidence, such as the arguments regarding forum selection clauses in other agreements or the defendant's issues with respect to document and witness production.   These facts are not alleged in the complaint or presented in the form of admissible, undisputed evidence.

The court is left with the issue of whether the allegations in the complaint and the evidence presented in the affidavit of Stephen F. Londregan show that enforcement of the forum selection clause would cause an unreasonable amount of inconvenience to the plaintiff.  “It has been repeatedly held that the ‘inconvenience’ necessary to persuade a court to decline to enforce a forum selection clause that has been found to be valid must be serious inconvenience, such inconvenience as would effectively deprive a plaintiff ․ of a forum in which to pursue its claim ․ The added expense and time of litigating in the selected forum falls far short of meeting that standard.”   Total Telecommunications, Inc. v. Target Telecom, Inc., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 96 053516 (March 11, 1997, Corradino, J.), see also Post Road Furniture Group, Inc. v. Landmark Merchant Solutions, LLC, supra, Docket No. CV 04 0085820 (“Although the Connecticut appellate courts have not defined the degree of inconvenience necessary to persuade a court to decline to enforce a forum selection clause courts have held that the additional time and expense required to travel to the selected forum are not, standing alone, adequate reasons to disregard the clause.”).   Further, the fact that potential witnesses are in a location other than the one selected by the forum selection clause does not necessarily show significant inconvenience to the plaintiff.   See, e.g., Gator Wash, LLC v. Lighthouse Carwash Systems, Inc., Superior Court, judicial district of New Britain, Docket No. CV 07 5003323 (June 12, 2007, Shapiro, J.).   Trial courts have noted that the use of deposition testimony can be used to mitigate some of the hardships related to the use of out-of-state witnesses.   See, e.g., Total Telecommunications, Inc. v. Target Telecom, Inc., supra, Docket No. CV 96 053516, and cases cited therein.

In the present case, the plaintiff's arguments regarding inconvenience are based primarily on the location of potential witnesses and the location of the plaintiff's past dealings with the defendant.   The location contained within the forum selection clause, however, is not substantially further from the plaintiff's principal office than is this court.   Additionally, the plaintiff has provided little evidence that it would be inconvenienced in any way other than the increased amount of travel.   The court cannot find that there would be a substantial inconvenience to the plaintiff based on the evidence presented in the present case.

CONCLUSION

Based on the foregoing, the motion to dismiss is granted.

Martin, J.

FOOTNOTES

FN1. Sovereign Bank d/b/a Merchant Services is one of two named defendants in this action.   This motion to dismiss, however, was filed only by Sovereign Bank d/b/a Merchant Services.   Accordingly, Sovereign Bank d/b/a Merchant Services will be referred to singularly as “the defendant” hereinafter..  FN1. Sovereign Bank d/b/a Merchant Services is one of two named defendants in this action.   This motion to dismiss, however, was filed only by Sovereign Bank d/b/a Merchant Services.   Accordingly, Sovereign Bank d/b/a Merchant Services will be referred to singularly as “the defendant” hereinafter.

Martin, Robert A., J.