TATKO STONE PRODUCTS INC v. Great American Insurance Company, Respondent.

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Supreme Court, Appellate Division, Third Department, New York.

TATKO STONE PRODUCTS, INC., Appellants, v. DAVIS-GIOVINZAZZO CONSTRUCTION COMPANY, INC., et al., Defendants, Great American Insurance Company, Respondent.

Decided: August 13, 2009

Before:  PETERS, J.P., SPAIN, LAHTINEN, KAVANAGH and McCARTHY, JJ. Macero & Associates, P.C., Cambridge, Massachusetts (Rosemary A. Macero of counsel), for appellants. Neil B. Connelly, P.L.L.C., White Plains (Aaron A. Mitchell of counsel), for respondent.

Appeal from an order of the Supreme Court (Krogmann, J.), entered May 22, 2008 in Washington County, which granted a motion by defendant Great American Insurance Company to dismiss the complaint.

Defendant Great American Insurance Company issued a surety bond for masonry work performed by defendant Davis-Giovinzazzo Construction Company, Inc. on a construction project located in New Jersey.   Plaintiff contracted to supply material to Davis for the project and now seeks payment under the surety bond for unpaid invoices.   The bond, however, contains a forum selection clause which requires that any suit or action on it be brought in the state where the project was located, i.e., New Jersey.   At issue is an order of Supreme Court granting a motion by Great American to dismiss the complaint on the ground of improper venue.

We note first that, having raised the issue of improper venue as an affirmative defense in the answer, Great American did not waive the issue and could thereafter rely upon this defense in seeking dismissal of the action (see Lischinskaya v. Carnival Corp., 56 A.D.3d 116, 118, 865 N.Y.S.2d 334 [2008], lv. denied --- N.Y.3d ----, 2009 WL 1851758 [June 30, 2009] ).   In addition, as Great American did not follow the precise statutory procedures outlined under CPLR 511 (see CPLR 511[a], [b] ), the relief sought in its application became a discretionary matter (see Callanan Indus. v. Sovereign Constr. Co., 44 A.D.2d 292, 295, 354 N.Y.S.2d 486 [1974] ).1  While Supreme Court may have erred in deciding the matter on subject matter jurisdiction grounds (see Matter of Lucchese v. Rotella, 97 A.D.2d 645, 646, 468 N.Y.S.2d 948 [1983], affd. 60 N.Y.2d 815, 469 N.Y.S.2d 690, 457 N.E.2d 796 [1983] ), we find that dismissal of the complaint was nevertheless warranted based on the venue provision of the bond (see CPLR 501;  see also Dogmoch Intl. Corp. v. Dresdner Bank AG, 304 A.D.2d 396, 397, 757 N.Y.S.2d 557 [2003];  Premium Risk Group v. Legion Ins. Co., 294 A.D.2d 345, 345-346, 741 N.Y.S.2d 563 [2002];  B & H Interior Contr. v. Yonkers Contr. Co., 234 A.D.2d 44, 45, 650 N.Y.S.2d 218 [1996];  Alwinseal, Inc. v. Travelers Indem. Co., 61 A.D.2d 803, 803-804, 402 N.Y.S.2d 33 [1978] ).

 “It is well established that forum selection clauses are valid absent a showing that enforcement would be unreasonable and unjust or that the clause is invalid because of fraud or overreaching” (VOR Assoc. v. Ontario Aircraft Sales & Leasing, 198 A.D.2d 638, 639, 603 N.Y.S.2d 601 [1993] [citations omitted];  see Brooke Group v. JCH Syndicate 488, 87 N.Y.2d 530, 534, 640 N.Y.S.2d 479, 663 N.E.2d 635 [1996];  Harry Casper, Inc. v. Pines Assoc., L.P., 53 A.D.3d 764, 764-765, 861 N.Y.S.2d 820 [2008] ).   Here, in seeking to enforce the bond as a third-party beneficiary of it, plaintiff, in absence of any evidence of unreasonableness, fraud or overreaching (compare 3H Enters. v. Bennett, 276 A.D.2d 965, 966, 715 N.Y.S.2d 90 [2000], lv. denied 96 N.Y.2d 710, 726 N.Y.S.2d 373, 750 N.E.2d 75 [2001] ), is bound by its forum selection provision (see B & H Interior Contr. v. Yonkers Contr. Co., 234 A.D.2d at 45, 650 N.Y.S.2d 218;  Buhler v. French Woods Festival of Performing Arts, 154 A.D.2d 303, 305, 546 N.Y.S.2d 591 [1989];  Alwinseal, Inc. v. Travelers Indem. Co., 61 A.D.2d at 803-804, 402 N.Y.S.2d 33;  Callanan Indus. v. Sovereign Constr. Co., 44 A.D.2d at 294, 354 N.Y.S.2d 486;  Khan Enter. Constr., Inc. v. P & K Contr., Inc., 13 Misc.3d 1207(A), 2006 WL 2614232 [2006];  Flush Metal Partition Corp. v. Nuovo Corp., 57 Misc.2d 900, 901, 293 N.Y.S.2d 867 [1968];  Frontier Excavating v. St. Paul Fire & Mar. Ins. Co., 50 Misc.2d 232, 233, 269 N.Y.S.2d 782 [1966];  see generally Harry Casper, Inc. v. Pines Assoc., L.P., 53 A.D.3d at 765, 861 N.Y.S.2d 820).   As plaintiff has advanced unpersuasive grounds upon which this Court might disregard the forum selection provision in the bond, we affirm dismissal of the action (see e.g. Dogmoch Intl. Corp. v. Dresdner Bank AG, 304 A.D.2d at 397, 757 N.Y.S.2d 557;  Premium Risk Group v. Legion Ins. Co., 294 A.D.2d at 346, 741 N.Y.S.2d 563;  British W. Indies Guar. Trust Co. v. Banque Internationale A Luxembourg, 172 A.D.2d 234, 234, 567 N.Y.S.2d 731 [1991];  Di Ruocco v. Flamingo Beach Hotel & Casino, 163 A.D.2d 270, 271-272, 557 N.Y.S.2d 140 [1990] ).

Particularly unpersuasive is plaintiff's claim that dismissal is improper because Great American failed to demonstrate that the subject bond was “properly authenticated.”   While it would have been preferable for Great American to include the entire, properly-executed bond agreement in its moving papers, we are unpersuaded that this omission was fatal to the requested relief.   First, there can be no real dispute that a valid and enforceable surety bond exists;  indeed, plaintiff is relying upon it for relief in the first instance.   More importantly, Great American submitted an affidavit of a senior claims analyst who averred that the subject bond contained a “venue provision” which requires that this action be venued in New Jersey.   The analyst attached the relevant excerpt from a copy of the bond to his affidavit.   This evidence was sufficient for Great American to establish the precise language of the subject forum selection clause.

ORDERED that the order is affirmed, with costs.


1.   Great American moved to dismiss the action on venue grounds 17 days after an improperly-entered default judgment was vacated.



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