| Trump v Deutsche Bank Trust Co. Ams. |
| 2009 NY Slip Op 06831 [65 AD3d 1329] |
| September 29, 2009 |
| Appellate Division, Second Department |
| Donald J. Trump et al., Respondents, v Deutsche BankTrust Company Americas et al., Defendants, and Fortress Credit Corp. et al., Appellants. (ActionNo. 1.) Deutsche Bank Trust Company Americas, Plaintiff, v Donald J. Trump, Defendant.(Action No. 2.) |
—[*1] Jaspan Schlesinger LLP, Garden City, N.Y. (Steven R. Schlesinger, Laurel R. Kretzing, andMichael A. Leon of counsel), and Meister Seelig & Fein LLP, New York, N.Y. (Stephen B.Meister and Stacey Ashby of counsel), for respondents (one brief filed).
In two related actions, inter alia, for a judgment declaring the parties' rights and obligationsarising under two loan agreements, and related injunctive relief, the defendants Fortress CreditCorp., Newcastle Investment Corp., Drawbridge Special Opportunities Fund, L.P., BlackacreInstitutional Capital Management, LLC, PCRL Investments, L.P., and Dune Capital, L.P., appealfrom so much of an order of the Supreme Court, Queens County (Kitzes, J.), dated January 15,2009, as, upon transferring venue in action No. 2 from New York County to Queens County anddirecting the Clerk of the Supreme Court, New York County, to deliver to the Clerk of theSupreme Court, Queens County, all papers filed in action No. 2 and certified copies of allminutes and entries, denied their motion pursuant to CPLR 501 and 511 to change the venue ofaction No. 1 from Queens County to New York County.
Ordered that the order is reversed insofar as appealed from, on the law, with costs, themotion of the defendants Fortress Credit Corp., Newcastle Investment Corp., DrawbridgeSpecial Opportunities Fund, L.P., Blackacre Institutional Capital Management, LLC, PCRLInvestments, L.P., and Dune Capital, L.P., pursuant to CPLR 501 and 511 to change the venue ofaction No. 1 from Queens County to New York County is granted, so much of the order astransferred venue in action No. 2 from New York County to Queens County and directed theClerk of the Supreme Court, New York County, to deliver to the Clerk of the Supreme Court,Queens County, all papers filed in action No. 2 and certified [*2]copies of all minutes and entries is vacated, and the Clerk of theSupreme Court, Queens County, is directed to deliver to the Clerk of the Supreme Court, NewYork County, all papers filed in action Nos. 1 and 2 and certified copies of all minutes andentries (see CPLR 511 [d]).
A limited liability company known as 401 North Wabash Venture, LLC (hereinafterWabash), entered into a construction loan agreement, as borrower, with Deutsche Bank TrustCompany Americas and Deutsche Bank Securities, Inc. (hereafter together Deutsche), as lenders,as part of the financing of a construction project in Chicago headed by Donald J. Trump. Theconstruction loan agreement contained a forum selection clause which provided that "[a]ny legalsuit, action or proceeding against any lender or agent arising out of or relating to this agreementshall be instituted in any federal or state court in New York, New York." Simultaneously withthe execution of the construction loan agreement, 401 Mezz Venture, LLC (hereinafter Mezz),entered into a "Mezzanine Loan and Security Agreement" (hereafter the Mezzanine LoanAgreement), as borrower, with Fortress Credit Corp. (hereafter Fortress), as lender, also as partof the financing of the subject construction project. The Mezzanine Loan Agreement contained aforum selection clause which provided, in pertinent part, that "[a]ny legal suit, action orproceeding against lender . . . arising out of or relating to this agreement may atlender's option be instituted in any federal or state court in New York County, New York, andborrower waives any objections which it may now or hereafter have based on venue and/orforum non conveniens of any such suit, action or proceeding, and borrower hereby irrevocablysubmits to the jurisdiction of any such court in any suit, action or proceeding." At the same timeas the aforementioned agreements were executed, Deutsche Bank Trust Company Americas andFortress also entered into a "Subordination and Intercreditor Agreement," whereby it was agreed,inter alia, that the right of payment under the Mezzanine Loan Agreement would be subordinatedto the construction loan agreement.
Trump, Mezz, Wabash, and Trump International Hotels Management, LLC, togethercommenced action No. 1 in the Supreme Court, Queens County, against Deutsche and asyndicate of lenders who bought participation interests in the construction loan agreement, aswell as against Fortress and a syndicate of lenders (hereafter collectively the Mezzaninedefendants) who bought participation interests in the Mezzanine Loan Agreement. The plaintiffsin action No. 1 sought, inter alia, a declaratory judgment and related injunctive relief extendingthe maturity dates of both the construction and mezzanine loans, based on an allegedeconomic-crisis, force-majeure event, which the lenders of both loans refused to accept oracknowledge. Deutsche Bank Trust Company Americas later commenced action No. 2 againstTrump in the Supreme Court, New York County. Prior to the commencement of action No. 2, theMezzanine defendants timely moved pursuant to CPLR 501 and 511 to change the venue ofaction No. 1 from Queens County to New York County, citing, inter alia, the forum selectionclause contained in the Mezzanine Loan Agreement. Thereafter, the plaintiffs in action No. 1moved to consolidate action Nos. 1 and 2, and place venue of the consolidated action in QueensCounty. The Supreme Court, Queens County, directed the two actions to be jointly tried, deniedthe motion for change of venue in action No. 1, and transferred venue in action No. 2 from NewYork County to Queens County. We reverse the order insofar as appealed from, grant the motionto change venue in action No. 1 from Queens County to New York County, and vacate so muchof the order as transferred venue in action No. 2 from New York County to Queens County.
A contractual forum selection clause is prima facie valid and enforceable "unless it is shownby the challenging party to be unreasonable, unjust, in contravention of public policy, invaliddue to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravelydifficult that the challenging party would, for all practical purposes, be deprived of its day incourt" (Horton v Concerns of Police Survivors, Inc., 62 AD3d 836, 836 [2009], lvdenied 13 NY3d 706 [2009]; see BrookeGroup v JCH Syndicate 488, 87 NY2d 530, 534 [1996]; Harry Casper, Inc. v PinesAssoc., L.P., 53 AD3d 764, 764-765 [2008]; Best Cheese Corp. v All-Ways ForwardingInt'l. Inc., 24 AD3d 580, 581 [2005]; Fleet Capital Leasing/Global Vendor Fin. v AngiuliMotors, Inc., 15 AD3d 535, 536 [2005]; Premium Risk Group v Legion Ins. Co.,294 AD2d 345, 346 [2002]). The plaintiffs failed to demonstrate that the subject clausecontained in the Mezzanine Loan Agreement was invalid for any of these reasons. Nor is thereany merit to their argument that the subject clause contained in the Mezzanine Loan Agreementwas either permissive or insufficiently mandatory, or applied only to actions commenced by thelender (see e.g. Fear & Fear, Inc. v N.I.I. Brokerage, L.L.C., 50 AD3d 185 [2008]).Further, and contrary to the plaintiffs' contention, the Mezzanine Loan Agreement forumselection clause is neither subordinate to, nor in conflict with, the forum selection clause in theconstruction loan agreement. We also reject the claim that the [*3]complaint in action No. 1 does not seek relief from the Mezzaninedefendants sufficient to trigger the forum selection clause in the Mezzanine Loan Agreement.Accordingly, the motion pursuant to CPLR 501 and 511 to change the venue of action No. 1from Queens County to New York County should have been granted, and the two actions shouldhave been directed to be jointly tried in New York County. Fisher, J.P., Balkin, Hall and Austin,JJ., concur.