Delaware Business Litigation Report

Federal Court Approves Transfer Of Case To Connecticut Court Based On Valid Forum-Selection Clause In Franchise Agreement

Bbdova, LLC v. Automotive Technologies, Inc., 358 F.Supp.2d 387 (D.Del. 2005). This is a diversity suit between plaintiff, a New Jersey limited liability corporation authorized to do business in Delaware with its principal place of business in Newark, Delaware and a Connecticut corporation with its principal place of business in that state. Defendant operated a business of franchising third parties to own and operate retail wireless stores. The plaintiff filed for declaratory judgment, challenging the validity of the Franchise Agreement and its Amendment. The defendant removed the case to the Federal District Court for the District of Delaware and then sought to either dismiss the case or transfer it to a court in Connecticut. The Court approved the forum selection clause and ordered transfer. The plaintiff and defendant entered into a Franchise Agreement that specified that all disputes were to be governed by Connecticut law and brought only in state or federal courts situated in that state. Subsequently, the parties amended the Franchise Agreement and the plaintiff brought a declaratory judgment action in the Superior Court of the State of Delaware, seeking to declare the legality of the Amendment. The defendant removed the matter to the Federal Court on the basis of diversity and sought to dismiss the case under Fed.R.Civ.P 12(b)(6)or transfer the matter to a court in Connecticut under 28 U.S.C. § 1404(a). The Court approved the forum selection clause designating Connecticut law as the law of choice and Connecticut as the authorized forum for dispute resolution under the authority of M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) and Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988). The Court examined the claims made by the plaintiff that the forum selection clause was invalid, for fraud or undue influence. Finding no evidence of either, the Court validated the clause and upheld the transfer. Authored by: Raj Srivatsan 302.888.6831 rsrivatsan@morrisjames.com Share