LISCHINSKAYA v. CARNIVAL CORPORATION (2008)

This appeal presents two issues with respect to a contractual forum selection clause.   First, does a forum selection clause in a cruise ship contract of passage that limits an injured passenger to suit in federal court, where such jurisdiction is available, and allows a state court action only where it is not, violate either the Saving to Suitors Clause of the Judiciary Act of 1789 (28 USC § 1333[1] ) or 46 USC § 30509, which governs clauses in maritime contracts that purport to limit liability?   Second, if the forum selection clause is enforceable, does it deprive the court of subject matter jurisdiction, and thereby foreclose the court's consideration of equitable relief in favor of the plaintiff?   We conclude that the forum selection clause at issue here is enforceable and that, although the enforcement of a contractual forum selection clause does not impair the subject matter jurisdiction of the court, equitable relief in favor of the plaintiff is nevertheless unavailable.

The plaintiff allegedly was injured when she fell while a passenger on a cruise ship owned by the defendant Carnival Corporation, d/b/a Carnival Cruise Lines (hereinafter Carnival) in January 2005.   She commenced this action in April 2005 to recover damages for her injuries.   In its answer, served in June 2005, Carnival raised affirmative defenses alleging that the court was without subject matter jurisdiction of the action and that the action had been brought in an improper forum.   These defenses were based on a clause in the passenger contract requiring that “all disputes and matters whatsoever arising under, in connection with or incident to this Contract or the Guest's cruise, including travel to and from the vessel, shall be litigated, if at all, before the United States District Court for the Southern District of Florida in Miami, or as to those lawsuits to which the Federal Courts of the United States lack subject matter jurisdiction, before a court located in Miami-Dade County, Florida, U.S.A. to the exclusion of the Courts of any other county, state or country.”   The contract also provided that any action against Carnival must be brought within one year of the event giving rise to the claim.

In February 2006, after serving discovery demands and participating in a preliminary conference that scheduled the depositions of the parties, but before those depositions had commenced, Carnival moved to dismiss the complaint on the basis of the forum selection clause.   The plaintiff opposed the motion on the grounds that Carnival had waived its right to rely upon the forum selection clause by participating in the litigation for nearly a year, and that issues of fact as to the adequacy of the notice to the plaintiff of the terms of the contract precluded judgment in favor of Carnival before trial.   In the alternative, the plaintiff requested that if the forum selection clause were found to be enforceable, the court condition dismissal of the complaint on Carnival's acceptance of service and waiver of jurisdictional and statute of limitations defenses in a Florida action.

The Supreme Court granted Carnival's motion to dismiss the complaint on the ground that it was without jurisdiction of the subject matter of the action by reason of the forum selection clause. Consistent with that conclusion, the Supreme Court denied the alternative relief requested by the plaintiff, reasoning that without subject matter jurisdiction of the action, it had no authority to do anything other than dismiss the complaint.   The plaintiff appeals.

 Contrary to the plaintiff's argument, Carnival's participation in this litigation did not waive the defense afforded by the forum selection clause.   Having raised the defense in its answer, Carnival was entitled to rely on it later in the litigation (see Calloway v. National Servs. Indus., 93 A.D.2d 734, 461 N.Y.S.2d 280, affd. on opn. below 60 N.Y.2d 906, 470 N.Y.S.2d 583, 458 N.E.2d 1260) and was not under any obligation to move on it more quickly than it did (see Les Constructions Beauce-Atlas v. Tocci Bldg. Corp. of N.Y., 294 A.D.2d 409, 410, 742 N.Y.S.2d 356;  Ruttura & Sons Constr. Co. v. Petrocelli Constr., 257 A.D.2d 614, 615, 684 N.Y.S.2d 286).   If the plaintiff desired a more prompt resolution of the issue, she could have moved to strike the defense on the same grounds that she asserts in response to Carnival's motion (see CPLR 3211[b] ), but she did not do so.

 The plaintiff is also incorrect in arguing that issues of fact preclude a determination at this time that the forum selection clause is enforceable.   The facts in that regard are undisputed.   The plaintiff paid for the cruise and received a confirmation from Carnival on November 13, 2004.   The cruise was “booked” by the plaintiff's travel agent on November 29, 2004.   Carnival sent the plaintiff's ticket to her travel agent on December 3, 2004.   The plaintiff presented the ticket when she boarded the ship on January 8, 2005.

The validity of the terms of a contract for a cruise turn on federal principles of maritime law (see Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 590, 111 S.Ct. 1522, 113 L.Ed.2d 622;  Lerner v. Karageorgis Lines, 66 N.Y.2d 479, 484-485, 497 N.Y.S.2d 894, 488 N.E.2d 824).   In deciding such issues, “we must look to the decisions of the Federal courts to define the liabilities of shipowners for maritime torts, leaving out of consideration decisions of our own courts or statutes of the State which conflict with the rules of liability established in the Federal courts” (Riley v. Agwilines, Inc., 296 N.Y. 402, 405, 73 N.E.2d 718).   Applying federal maritime principles, forum selection clauses in cruise ship contracts are generally enforceable (see Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 593, 111 S.Ct. 1522;  M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 8-12, 92 S.Ct. 1907, 32 L.Ed.2d 513), provided that the terms have been reasonably communicated to the passenger (see Ward v. Cross Sound Ferry, 273 F.3d 520) and do not violate notions of “fundamental fairness,” either because the passenger's assent was the result of fraud or overreaching or the forum restriction is inconvenient (Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 593-595, 111 S.Ct. 1522;  Effron v. Sun Line Cruises, Inc., 67 F.3d 7, 9-11).

The situation presented here falls squarely within the class of cases in which a forum selection clause is enforceable.   The plaintiff had the opportunity to review the ticket (see Lousararian v. Royal Caribbean Corp., 951 F.2d 7, 11;  Colby v. Norwegian Cruise Lines, Inc., 921 F.Supp. 86, 88), as she received it more than a month before the date on which she embarked (see Foster v. Cunard White Star, 121 F.2d 12, 13;  Golden v. Celebrity Cruises Inc., 4 Misc.3d 33, 36, 780 N.Y.S.2d 701).   The front portion of the ticket explicitly directed the attention of the passenger to a page within to read “important limitations.”   Those restrictions included the complete terms of the forum selection clause.   The forum selected, either the federal or state courts in Miami, Florida, is not inconvenient (see Effron v. Sun Line Cruises, Inc., 67 F.3d at 10-11;  Melnik v. Cunard Line Ltd., 875 F.Supp. 103, 107-108), particularly since that is the port at which the plaintiff embarked.

Although it appears from the copy of the ticket that is part of the record that the plaintiff would have forfeited her fare had she attempted to cancel the cruise upon receiving the ticket and reviewing the forum selection clause, an argument that might be a basis for the relief she seeks (see Schaff v. Sun Line Cruises, Inc., 999 F.Supp. 924;  but see Lurie v. Norwegian Cruise Lines, Ltd., 305 F.Supp.2d 352), the plaintiff did not assert before the Supreme Court that she was thereby effectively bound by that clause against her will.   Since such an argument potentially presents factual issues that Carnival was prevented from addressing by the plaintiff's failure to raise the argument before the Supreme Court, we decline to address the argument for the first time on appeal (see Matter of Matarrese v. New York City Health & Hosp. Corp., 247 A.D.2d 475, 476, 668 N.Y.S.2d 686).

By contrast, the plaintiff's contentions that the forum selection clause at issue contravenes the Saving to Suitors Clause of the Judiciary Act of 1789 (28 USC § 1333[1] ) and 46 USC § 30509 (formerly 46 App USCA § 183c), which governs clauses in maritime contracts that purport to limit liability, although also raised for the first time on appeal, present issues of law that appear on the face of the record and could not have been avoided had they been raised before the Supreme Court (see Weiner v. MKVII-Westchester, 292 A.D.2d 597, 739 N.Y.S.2d 432).   It is therefore appropriate that we consider those issues (see Matter of Besedina v. New York City Tr. Auth., 47 A.D.3d 924, 850 N.Y.S.2d 199).

 The Saving to Suitors Clause preserves the jurisdiction of state courts to entertain in personam maritime causes of action (see Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 121 S.Ct. 993, 148 L.Ed.2d 931;  Madruga v. Superior Court of State of Cal. in and for San Diego County, 346 U.S. 556, 560-561, 74 S.Ct. 298, 98 L.Ed. 290), provided that they apply federal maritime law (see Lerner v. Karageorgis Lines, 66 N.Y.2d 479, 497 N.Y.S.2d 894, 488 N.E.2d 824).   The Saving to Suitors Clause, however, does not purport to limit the right of a party to agree that he or she will not litigate in a particular forum that has jurisdiction.   Rather, the Saving to Suitors Clause was included in the statutory provision granting admiralty jurisdiction to federal courts “probably, from abundant caution, lest the exclusive terms in which the power is conferred on the District Courts might be deemed to have taken away the concurrent remedy which had before existed” (Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 444, 121 S.Ct. 993, 148 L.Ed.2d 931, quoting New Jersey Steam Nav. Co. v. Merchant's Bank of Boston, 47 U.S. 344, 6 How. 344, 12 L.Ed. 465).   Since a cruise ship passenger is otherwise competent to contract away that choice of forum (see Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 593, 111 S.Ct. 1522), and the clause at issue here is not otherwise unenforceable under Shute, the Saving to Suitors Clause does not bar dismissal of the plaintiff's claim on the basis of the forum selection clause to which she agreed.   The forum selection clause at issue here also does not violate 46 USC § 30509, since it “allows for judicial resolution of claims” and does not “purport to limit [Carnival's] liability for negligence” (Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 596-597, 111 S.Ct. 1522;  see Reynolds-Naughton v. Norwegian Cruise Line Ltd., 386 F.3d 1).

 While we thus find that the forum selection clause upon which Carnival relies does not contravene federal law, we nevertheless conclude that the Supreme Court was incorrect in holding that enforcement of that clause deprived it of subject matter jurisdiction.  “A court lacks subject matter jurisdiction when it lacks the competence to adjudicate a particular kind of controversy in the first place” (Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 A.D.3d 239, 243, 837 N.Y.S.2d 247).   The competence of the Supreme Court to adjudicate maritime tort cases has not been questioned (see e.g. Mulhern v. Manhasset Bay Yacht Club, 43 A.D.3d 425, 840 N.Y.S.2d 821;   Ayala v. S.S. Fortaleza, 40 A.D.3d 440, 836 N.Y.S.2d 584;  Hayes v. City of New York, 34 A.D.3d 208, 824 N.Y.S.2d 24;  Smith v. Lone Star Indus., 1 A.D.3d 860, 769 N.Y.S.2d 62).   Rather, the defendant's argument here is that the jurisdiction of the court has been divested by a term of the contract between the parties.   That argument has been rejected, for good reason, as “hardly more than a vestigial legal fiction” (M/S Bremen v. Zapata Off-Shore Co., 407 U.S. at 12, 92 S.Ct. 1907).

 “Subject matter jurisdiction ․ is not dependent upon the state of facts which may appear in a particular case, arising, or which is claimed to have arisen, under that general question” (Thrasher v. United States Liab. Ins. Co., 19 N.Y.2d 159, 166, 278 N.Y.S.2d 793, 225 N.E.2d 503, quoting Hunt v. Hunt, 72 N.Y. 217, 229).   As “a court of original, unlimited and unqualified jurisdiction” (Matter of Fry v. Village of Tarrytown, 89 N.Y.2d 714, 718, 658 N.Y.S.2d 205, 680 N.E.2d 578, quoting Kagen v. Kagen, 21 N.Y.2d 532, 537, 289 N.Y.S.2d 195, 236 N.E.2d 475;  see Lacks v. Lacks, 41 N.Y.2d 71, 75, 390 N.Y.S.2d 875, 359 N.E.2d 384), the Supreme Court of the State of New York cannot be divested of its jurisdiction even by the Legislature (see Pollicina v. Misericordia Hosp. Med. Ctr., 82 N.Y.2d 332, 339, 604 N.Y.S.2d 879, 624 N.E.2d 974).   It is axiomatic that a court cannot be divested of its subject matter jurisdiction by a contract (see Wm. H. Muller & Co. v. Swedish American Line Ltd., 224 F.2d 806, 808, cert. denied 350 U.S. 903, 76 S.Ct. 182, 100 L.Ed. 793;  Sliosberg v. New York Life Ins. Co., 217 App.Div. 685, 688-689, 217 N.Y.S. 226).   Thus, while the forum selection clause at issue here may be enforceable as a term of the contract between the parties, it does not affect the jurisdiction of the Supreme Court (see LFC Lessors, Inc. v. Pacific Sewer Maintenance Corp., 739 F.2d 4, 6-7;  Central Contracting Co. v. Maryland Cas. Co., 367 F.2d 341, 345).

We recognize that there is an ongoing debate in the federal courts as to the nature of a dismissal pursuant to a contractual forum selection clause (see Asoma Corp. v. SK Shipping Co., Ltd., 467 F.3d 817, 822;  New Moon Shipping Co., Ltd. v. MAN B & W Diesel AG, 121 F.3d 24, 28;  Licensed Practical Nurses, Technicians and Health Care Workers of New York, Inc. v. Ulysses Cruises, Inc., 131 F.Supp.2d 393, 402-409) and that we have, in the past, affirmed such dismissals for lack of subject matter jurisdiction, pursuant to CPLR 3211(a)(2) (see LSPA Enter., Inc. v. Jani-King of N.Y., Inc., 31 A.D.3d 394, 817 N.Y.S.2d 657;  Fleet Capital Leasing/Global Vendor Fin. v. Angiuli Motors, Inc., 15 A.D.3d 535, 790 N.Y.S.2d 684).   These two cases should no longer be followed in that regard.   As a term of the contract between the parties, however, a contractual forum selection clause is documentary evidence (see Trataros Constr., Inc. v. New York City Hous. Auth., 34 A.D.3d 451, 452, 823 N.Y.S.2d 534;  Holiday Mgt. Assoc. v. New York Inst. of Tech., 149 A.D.2d 462, 465, 539 N.Y.S.2d 958;  Siegel, N.Y. Prac. § 259 [4th ed.];   see also 150 Broadway N.Y. Assoc., L.P. v. Bodner, 14 A.D.3d 1, 784 N.Y.S.2d 63) that may provide a proper basis for dismissal pursuant to CPLR 3211(a)(1) (see Boss v. American Express Fin. Advisors, Inc., 6 N.Y.3d 242, 811 N.Y.S.2d 620, 844 N.E.2d 1142).

Since the Supreme Court was not without subject matter jurisdiction of the action by virtue of the enforcement of the contractual forum selection clause, it was not foreclosed from considering the availability, upon dismissing the complaint, of granting relief to the plaintiff pursuant to CPLR 327.   Nevertheless, we affirm the Supreme Court's denial of the plaintiff's request for such relief, on a different ground.

CPLR 327 articulates the common-law doctrine of forum non conveniens (see Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 478, 478 N.Y.S.2d 597, 467 N.E.2d 245, cert. denied 469 U.S. 1108, 105 S.Ct. 783, 83 L.Ed.2d 778;  Alexander, Practice Commentaries, McKinneys Cons Laws of N.Y., Book 7B, C327:1 [2001 ed.] ).   It permits a court, in its discretion, to impose “any conditions that may be just” when dismissing an action on the ground that “in the interest of substantial justice the action should be heard in another forum” (CPLR 327;  see Demenus v. Sylvester, 146 A.D.2d 668, 537 N.Y.S.2d 43).

 Here, however, the dismissal is not discretionary, but is the necessary consequence of enforcing the contract between the parties.   As a result, considerations such as the impact of the dismissal on the plaintiff and whether fatality to the plaintiff's claims can be avoided, which are legitimate in applying CPLR 327 (see Singh v. Zuidema, 221 A.D.2d 1020, 634 N.Y.S.2d 301;  Crown Cork & Seal Co. v. Rheem Mfg. Co., 64 A.D.2d 545, 406 N.Y.S.2d 849), where the court is balancing interests (see Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 478 N.Y.S.2d 597, 467 N.E.2d 245;  Chawafaty v. Chase Manhattan Bank, N.A., 288 A.D.2d 58, 733 N.Y.S.2d 12), are irrelevant.   Rather, in this regard, the dismissal is analogous to a dismissal based upon lack of personal jurisdiction, where those considerations play no role (see Ehrlich-Bober & Co. v. University of Houston, 49 N.Y.2d 574, 579, 427 N.Y.S.2d 604, 404 N.E.2d 726;  Sanchez v. Major, 289 A.D.2d 320, 321, 734 N.Y.S.2d 211;  Sarfaty v. Rainbow Helicopters, Inc., 221 A.D.2d 618, 619, 634 N.Y.S.2d 164;  Foley v. Roche, 68 A.D.2d 558, 565, 418 N.Y.S.2d 588).

Thus, contrary to the plaintiff's argument, even though the Supreme Court had jurisdiction of the matter despite the forum selection clause, it had no authority to grant discretionary relief to the plaintiff pursuant to CPLR 327 once it determined that the contract required that the complaint be dismissed.   We therefore affirm the order of the Supreme Court.

ORDERED that the order is affirmed, with costs.

SPOLZINO, J.P.

SANTUCCI, ANGIOLILLO and CARNI, JJ., concur.