Copelco Capital, Inc. v. Shapiro

331 N.J. Super. 1, 750 A.2d 773 (App. Div. 2000)
  • Opinion Date: May 12, 2000

CONTRACTS; FORUM SELECTION—A personal property lease provision making the home state of a potential, but not yet known, assignee of the lessor’s rights the exclusive forum for lawsuit was held to be unenforceable.

A Missouri attorney entered into a lease agreement for a copy machine. The agreement was negotiated and entered into in Missouri, and then the copier was delivered and used solely in Missouri. Shortly after the lease agreement was executed, the leasing company assigned its rights to lease payments to a Delaware corporation with New Jersey as its principal place of business. When the lease went into default, the assignee filed suit in New Jersey to recover the monies due it, relying on a clause in the agreement, written in capital letters, stating that the lessee consented to the jurisdiction of “any local, state, or federal court located within our or our assignee’s state, and waived any objection relating to improper venue.” The Court noted that forum selection clauses are generally enforced in New Jersey. It also pointed out that such provisions are not given effect if they are the result of “fraud or coercive bargaining power,” or if enforcement of the clause would “be seriously inconvenient for the trial.” Further, it stated that a court should not enforce a forum selection provision that violates “strong public policy of the local forum.” “In New Jersey, the enforceability of forum selection clauses is governed by requirements of notice, ..., and reasonableness ... .” According to the Court, in the circumstances presented here, those requirements weighed against enforcement of the clause. “From the ‘four corners of the instrument’ a prospective lessee cannot identify the jurisdiction in which an action will be brought, as the contract states in the most general terms that the proper forum is contingent upon the location of an unnamed assignee’s principal office. On the face of the provision itself, it is fair to assume that the assignee’s identity may be unknown even to the lessor at the time the contract is created.” The Court was concerned that enforcing a clause such as this one would be inconsistent with the doctrinal underpinnings of the majority rule that forum selection clauses should be given effect. “The rule rests, at least in part, on the idea that in a realm of free contract the parties should be allowed to agree in advance to a mutually satisfactory forum, thus insuring a predictable and neutral locus for the resolution of any dispute.” The Court was disturbed that the forum selection clause could have easily resulted in a “proper forum” anywhere in the entire country which would violate the notice requirement under New Jersey law. Further, the Court was concerned that the unreasonableness of the provision offended the public policy of Missouri.