Studebaker-Worthington Leasing Corp. V. New Concepts Realty, Inc

Court: New York Supreme Court, Appellate Term, 9th and 10th Judicial Districts (2009)

Citation: 2009 WL 1924749 (N.Y.Sup.App.Term), 2009 N.Y. Slip Op. 29284

Background: Our client, New Concepts Realty, Inc., entered into a contract with NorVergence, Inc. for bundled telecommunications equipment and services. Within the equipment rental agreement (ERA) was a "forum selection clause" allowing Studebaker-Worthington to choose the jurisdiction of any lawsuit brought against an out-of-state lessee such as New Concepts Realty.

Details of the case: Although New Concepts was a Colorado company, by the time a dispute arose, NorVergence claimed to have assigned its contract rights to Studebaker-Worthington Leasing Corp. located in New York, which brought suit in the Supreme Court in Nassau County. We moved for dismissal on New Concepts' behalf on jurisdictional grounds, but that motion was initially denied.

We moved for leave to reargue the issue and, based on newly obtained evidence, revealed that NorVergence had engaged in deceptive and unethical business practices, which NorVergence did not deny. These deceptive practices were so fundamental, we argued, the entire agreement should be unenforceable, including the forum selection provision.

Decision: Upon appeal, the Appellate Term found that "the defendants met their burden in demonstrating that the ERA was so permeated with fraud as to render the contract as a whole, including the forum selection clause contained therein, void and unenforceable." The contract was voided completely and the action was dismissed.

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