ALVOGEN GROUP HOLDINGS LLC v. BAYER PHARMA AG (2019)

Order, Supreme Court, New York County (Jennifer G. Schecter, J.), entered on or about December 21, 2018, which, insofar as appealed from, granted defendants' motion to dismiss the first and third causes of action pursuant to CPLR 3211, unanimously affirmed, without costs.

The first cause of action, seeking rescission of the Asset Sale and Purchase Agreement (APA), was correctly dismissed because section 9.10 of the APA states that, except in cases of fraud, willful misconduct, or intentional misrepresentation—which plaintiffs do not allege—“the indemnification provisions of this Article 9 shall be [plaintiffs'] sole and exclusive remedy ․ for all matters arising under or in connection with this Agreement and the Transaction Documents” (see Rubinstein v. Rubinstein, 23 N.Y.2d 293, 298, 296 N.Y.S.2d 354, 244 N.E.2d 49 [1968];  L.K. Sta. Group, LLC v. Quantek Media, LLC, 62 A.D.3d 487, 493, 879 N.Y.S.2d 112 [1st Dept. 2009] );  U.S. Bank N.A. v. DLJ Mtge. Capital, Inc., 42 Misc.3d 1213[A], 2014 N.Y. Slip Op 50029[U] *4–5, 2013 WL 6997183, [Sup. Ct., N.Y. County 2014], affd on other grounds 121 A.D.3d 535, 995 N.Y.S.2d 11 [1st Dept. 2014] ).

The third cause of action, which alleges breach of the Manufacturing and Supply Agreement (MSA), was correctly dismissed because the forum selection clause in the MSA says, “Exclusive place of jurisdiction under this Agreement shall be Berlin” (all-caps omitted] ) (see e.g. Sterling Natl. Bank v Eastern Shipping Worldwide, Inc., 35 A.D.3d 222, 826 N.Y.S.2d 235 [1st Dept. 2006] ).  Plaintiffs' argument that Alvogen Malta Operations, Ltd. (Alvogen Malta), the only plaintiff who is a party to the MSA, should be allowed to litigate the breach of the MSA claim in New York because the MSA is incorporated into the APA, which chooses New York as a forum, is without merit and would lead to two contradictory forum selection clauses.  Such a result should be avoided (see generally Matter of Lipper Holdings v Trident Holdings, 1 A.D.3d 170, 171, 766 N.Y.S.2d 561 [1st Dept. 2003] ).  Furthermore, Alvogen Malta is not a party to the APA, and it is not a third-party beneficiary of that contract's forum selection clause, so it may not make use of the clause.

While the order does not specify whether the dismissal is with or without prejudice, defendants' briefs to the motion court indicate that they sought dismissal of the rescission cause of action with prejudice and dismissal of the breach of the MSA cause of action without prejudice.