Merchants Automotive Group, Inc. Alpine Limousine Service, Inc., et al. BMW of N. Am., LLC and BMW of Manhattan, Inc. No.

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1 MERRIMACK, SS SUPERIOR COURT Merchants Automotive Group, Inc. v. Alpine Limousine Service, Inc., et al. v. BMW of N. Am., LLC and BMW of Manhattan, Inc. No CV-677 ORDER This case arises out of a commercial lease transaction between two businesses. Plaintiff, Merchants Automotive Group, Inc. ( Merchants ), entered an agreement with Alpine Limousine Service, Inc. ( Alpine Limosine ) and two of its principals, Doron and Gena Avishay (the Avishays, collectively, Alpine ), under which Merchants would purchase automobiles and lease them to Alpine. The lease would be guaranteed by the Avishays. Pursuant to this agreement, Merchants executed contracts with BMW of Manhattan Inc. ( BMW Manhattan collectively BMW Defendants ) for the purchase of fifteen (15) BMW vehicles. These vehicles were then leased pursuant to a Master Open End Lease Agreement ( MOELA ) to Alpine, and the Avishays guaranteed the lease. Under the MOELA, Merchants extended $1,500,000 of financing for Alpine s purchase of 15 BMW automobiles. In December 2015, Merchants brought suit, alleging breach of contract against

2 Alpine and breach of a guarantee agreement against the Avishays. Alpine and the Avishays brought a Third-Party Complaint, pursuant to Superior Court Rule 27, against BMW Manhattan and BMWNA, LLC, the franchisor of BMW. BMW Manhattan and BMWNA LLC moved to dismiss the Third-Party Complaint against them on the grounds of forum non conveniens 1. Merchants joins in the Motion, but in the alternative requests that if the Motion to Dismiss is not granted, the cases be severed. For the reasons stated in this Order, the Motion to Dismiss is DENIED. The Court will defer ruling on the request by Merchants and the BMW Defendants to sever the cases until the parties brief the issue of whether or not the agreement between Merchants and Alpine bars Alpine s breach of warranty claim against Merchants. The Court orders that the parties submit a memorandum on this issue by October 1, I The lease entered into by Merchants and Alpine Limousine and guaranteed by the Avishays is attached to Merchants Complaint and its terms do not appear to be in dispute. Several of the terms are germane to this litigation. Under the MOELA, all vehicles were to be registered in Merchants name during the entire lease term and any certificates of title would be in Merchants name. Lease, 6. The MOELA purported to disclaim any warranties; it provides in bold and capitalized type: MOELA, 1. Lessor makes no representation or warranty of any kind, express or implied, with respect to (a) any vehicle, including, but not limited to the merchantability or fitness for a particular purpose of a vehicle; the design, quality or capacity of the vehicle; or compliance of a vehicle with applicable law... The agreement also provides that: 1 Neither party moved to dismiss on jurisdictional grounds

3 MOELA 1. Customer s vehicle order shall authorize lessor to purchase such vehicles subject to the current warranty of the manufacturer. Lessor hereby assigns the manufacturer s warranty to customer for the lease term. Customer agrees that lessor is not the manufacturer, designer or distributor of the vehicles and that each vehicle (including any specified modification) is of a design specified by customer and suitable for its purposes. Under the MOELA, except for the lessee s obligations of indemnity, both parties agreed that their sole and exclusive remedy for any cause of action related directly or indirectly to a claim related to the subject matter of the lease is a contract action and damages are limited to actual and direct consequential damages incurred. MOELA, 18. Both parties agreed to waive their right to jury trial in any action involving the lease. MOELA, 26. Both parties agreed that the law of the State of New Hampshire would govern all disputes relating to the agreement and that the lessees consented to the jurisdiction of the courts of the State of New Hampshire and United States District Court for the District of New Hampshire. MOELA 27. Merchants Complaint is based upon an alleged failure by Alpine to make payments under the terms of the MOELA. Defendant s Answer to the Complaint alleges in part that the vehicles were defective and could not be used in their limousine business. Answer 1 (e). Alpine s Answer alleges that the Plaintiffs attempt to disclaim all warranties and representations regarding the condition of the leased vehicles is ineffective as a disclaimer and fails to comply with New Hampshire RSA 382-A: Affirmative Defense, 8. The Answer recites that other terms and purported disclosures violate New Hampshire, 2 Since this is a lease transaction and not a transaction for sale of goods, RSA 382-A: ("U.C.C ") is inapplicable. Rather, this case is governed by article 2A of the Uniform Commercial Code, RSA 382:2-A, et.seq. U.C.C. 2A-214 is, however, essentially a cognate of U.C.C

4 New Jersey and other applicable law. Id. At various points in its Answer, Alpine alleges that the BMW vehicles leased were defective and that when it became clear that the problems were significant, Merchants agreed to assist in addressing problems with the vehicles, advised Alpine that the vehicles could be returned and they would be disposed of under the lease agreement, and that Merchants would work with the dealer and BMW for a satisfactory resolution. Answer, 1 (g), (h). In Counterclaim III, Alpine alleges that: By operation of law or in its conduct of the transaction, Merchants provided or adopted express or implied warranties which were breached as a result of which Alpine suffered damage. Any disclaimer is invalid. Counterclaim III, 3. Alpine also asserts a claim for defamation and for negligent dissemination of information in Count I of its Counterclaim and a Claim for violation of the New Jersey Plain Language Law in Count III of its Counterclaim. In its Third-Party Complaint against BMW Manhattan and BMWNA, Alpine claims in substance that the vehicles it leased had a design defect and that, as a result of the defect, Alpine Limousine s business suffered injury. Third-Party Complaint, 8. Alpine has brought actions against BMW Manhattan and BMWNA for breach of implied warranty, breach of express warranty, violation of the Magnuson-Moss act, breach of contract, breach of warranty of fitness for a particular purpose, a claim for deceptive acts and practices under New Jersey law, and common law fraud. The BMW Defendants have moved to dismiss on the grounds of forum non conveniens. Merchants has joined in the Motion

5 II The guiding principle of the doctrine of forum non conveniens is that a State will not exercise jurisdiction if it is a seriously inconvenient forum for the trial of the action provided that a more appropriate forum is available to the plaintiff. Restatement (Second) Conflict of Laws 84; Van Dam v. Smit, 101 N.H. 508, 509 (1959). Whether to grant a motion to dismiss based on forum non conveniens is generally said to be in the discretion of the trial court. Digital Equipment Corporation v. Int l Digital systems Corporation, 130 N.H. 362, 364 (1988). In Leeper v. Leeper, 116 N.H. 116, 118 (1976) the New Hampshire Supreme Court cited Gulf Oil v. Gilbert, 330 U.S. 501, 508 (1947), which enumerated the considerations applicable when a court considers whether to apply the doctrine: Courts are directed to look at the interest of the litigant, relative ease of access to sources of proof, availability of compulsory process, the cost of obtaining attendance of unwilling witnesses, the possibility of view of premises if appropriate, the question of enforceability of the foreign judgment and other concerns relating to the public interest. However, a plaintiff s choice of forum enjoys a favorable presumption which will not be disturbed except when the defendant will suffer a gross injustice. Vazifdar v. Vazifdar, 130 N.H. 694, 697 (1988). The New Hampshire Supreme Court has stated that the plaintiff s choice of forum is disturbed by reason of forum non-conveniens only rarely, and never except for weighty reasons. Digital Equipment Corporation v. Int l Digital Systems Corporation, 130 N.H. at 364. The Court must therefore consider the factors set forth by the New Hampshire Supreme Court in Leeper v. Leeper. Private interest factors: The BMW Defendants argue that they have no connection to the claims raised in the Complaint and no connection to the State of New Hampshire. In support of this proposition, BMWNA has provided an affidavit from its general counsel - 5 -

6 which recites that based upon the facts set forth in this third-party action, BMWNA at no time had any expectation of being subject to the jurisdiction of the courts of the State of New Hampshire. Caulfield Aff., 7. She further states, however, that BMWNA is the authorized BMW distributor throughout North America. Caulfield Aff., 6. Presumably therefore, it could anticipate being sued in New Hampshire, albeit not as a result of this transaction. She recites that any warranty work or maintenance services performed on any of the fifteen subject BMW motor vehicles was performed at authorized BMW dealerships in the States of New York, New Jersey, Massachusetts and Connecticut. Caulfield Aff., 9. BMW Manhattan has provided an affidavit of its general counsel which recites that it entered into agreements for the fifteen BMW motor vehicles in question in New York, that its place of business is in New York, New York, that it never anticipated being sued in New Hampshire, and that the anticipated BMW Manhattan sales and technical witnesses needed to provide testimony and conduct litigation inspections of the vehicles are not residents of the State of New Hampshire, and all work in the State of New York. Bowman Aff. 5, 8, 9, 14. But BMW Manhattan does not dispute the assertion by BMWNA that the vehicles in question were serviced in New York, New Jersey, Massachusetts and Connecticut. Plainly, the vehicles were not designed in New York City, where BMW Manhattan is located. To the extent that a design defect claim is made, it is unlikely that relevant witnesses could be found in New York, New Jersey, Connecticut or Massachusetts. Therefore, whether a lawsuit were brought in New Jersey, New York or New Hampshire, it is likely that witnesses will be either testifying by deposition or forced to travel. Witnesses in civil cases cannot be compelled to travel to another state to testify - 6 -

7 outside of the jurisdiction in which they are served; based on the location of repairs, it is likely that relevant evidence exists in New Jersey, New York, Massachusetts and Connecticut, and possibly outside the United States if a design defect claim is made. Therefore, the availability of compulsory process does not weigh heavily in favor of either Alpine or the BMW Defendants. The Court notes that the BMW Defendants have the advantage of bringing their employee witnesses or related party employee witnesses to trial, while Alpine will need to present its case through deposition testimony if the BMW Defendant witnesses do not voluntarily appear. Moreover, there is a significant consideration which supports allowing Alpine to bring its action in New Hampshire. If Alpine litigates its warranty claims against the BMW Defendants in New York or New Jersey and defends the action brought by Merchants in New Hampshire (on a claim that the vehicles were defective, and that Merchants therefore breached warranties to it), Alpine would be required to litigate the same claims twice. Alpine runs the risk that an unfavorable decision in one jurisdiction on the warranty claims would bar it from proceeding in another jurisdiction on such claims on the ground of non-mutual collateral estoppel. Simpson v. Callivas, 139 N.H. 1, 7 (1994). In sum, this factor does not weigh heavily in favor of disturbing Alpine s choice of forum. Public interest factors: there is nothing particularly burdensome about this case which would cause congestion in the Merrimack County docket. The BMW Defendants assert that the purchase and sale agreement between BMW Manhattan and Merchants provides that New York law applies to the contracts because the fifteen BMW vehicles were sold in New York, and the purchase agreements contained a choice of law provision - 7 -

8 which provided that New York law will apply. However, a court s obligation to apply foreign law to the controversy is not a sufficient justification for dismissal. Leeper v. Leeper, 116 N.H. at 119. This factor therefore does not weigh heavily in favor of disturbing the Alpine s choice of forum. It follows that this is not a case in which Alpine s choice of forum, apparently rationally made and based on considerations of collateral estoppel and judicial economy, should be disturbed by the Court. II However, the same considerations which relate to choice of forum militate in favor of a prompt decision on whether or not a warranty claim may be made against Merchants. Alpine seeks a jury trial against the BMW Defendants; under the lease agreement made with Merchants, it specifically waived its right to a jury trial. MOELA, 26. It specifically waived its right to any damages other than actual and direct damages against Merchants; the agreement between the parties provides that no indirect, consequential enhanced compensatory or punitive damages may be claimed. MOELA 18. Moreover, it specifically agreed that New Hampshire law should apply to the agreement. Id. If the case against the BMW Defendants and the case brought by Merchants against Alpine are tried together, the jury will presumably need to be instructed on foreign law, because the contracts between BMW Manhattan and Merchants are governed by New York law, and any warranties running in favor of Merchants were, by the terms of the MOELA, assigned to Alpine. The Court, as trier of fact in the MOELA claim, will need to decide the case brought by Merchants against Alpine based on New Hampshire law. These practical difficulties will make the case cumbersome to try. Moreover, Merchants would be - 8 -

9 prejudiced because its straightforward collection case would be combined with a complicated breach of warranty/defective design case against an automobile manufacturer. However, there will be no need to consolidate the cases if Alpine has waived any warranty claims against Merchants as the MOELA, on its face, recites. Accordingly, the Court orders as follows: 1. The parties shall brief the issue of whether or not, under the agreement between Merchants and Alpine, Alpine has waived any and all claims for breach of warranty, including merchantability or fitness for particular purpose, under the provisions of 1 of the MOELA. 2. The parties shall file memoranda on this issue, limited to 10 pages in length, on or before October 1, The Court will then determine whether or not severance of the case in chief and the third-party case is appropriate. 8/30/16 s/richard B. McNamara DATE Richard B. McNamara, Presiding Justice RBM/ - 9 -