May a New Jersey Court enforce a floating forum selection clause in which someone from another jurisdiction is required to appear in New Jersey? The issue was recently dealt with in Professional Solutions Financial Services v. Cregar et al. Superior Court of New Jersey, Appellate Division, Docket No. A-2239-11T3 (February 28, 2013).
In that case, the Court first defined the term, “floating forum selection clause” as one in which the signatory to a contract agrees that jurisdiction to enforce that contract will be in a different location according the prevailing circumstances at the time it is enforced. In Cregar, the clause stated:
You [Cregar] agree this Lease is to be performed in Dade County, Florida and this Lease will be governed by the laws of the State of Florida. You consent to personal jurisdiction and venue in the State or Federal Court located in Miami, Dade County, Florida . . . . You specifically agree to waive any right to transfer venue and that agreement is knowing and voluntarily and is an essential term to Lessor’s willingness to enter into this Lease. If this Lease is assigned by Lessor, You consent to personal jurisdiction and venue in the State or Federal Court located where the Assignee’s Corporate Headquarters is located. This is known as a floating forum selection clause and You agree that this is done knowingly and voluntarily and is an essential term to Assignee’s willingness to take an assignment of this Lease. You specifically agree to waive any right to transfer venue and that agreement is knowing and voluntary and is an essential term to Assignee’s willingness to take an assignment of this Lease.
Emphasis added.
After the lease was executed, Cregar stopped making payments. Cregar was sued in Iowa and did not enter an appearance. As a result, a default judgment was entered against him.
Cregar lost his motion for relief from the judgment and appealed, stating that he was denied due process and that it was an error to use the floating forum selection clause to apply Iowa law instead of New Jersey law. The Appellate Division rejected his arguments.
The Appellate Division ruled that a sister state’s judgment is enforceable absent a due process violation. The Court held that Cregar was given adequate notice of the lawsuit, and he entered into an agreement which required him to litigate any disputes where the assignee’s headquarters was located.
Although the Court acknowledged that New Jersey law might not authorize a floating forum selection clause, that was irrelevant. Since Iowa law did, the judgment would be enforced in New Jersey.
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