Party That Did Not Sign Contract Can Invoke Contract's Forum Selection Clause Based on Close Relationship With Signatory

On February 8, 2019, Justice Borrok of the New York County Commercial Division issued a decision in Miura Golf LP v. Irving Golf, Inc., 2019 NY Slip Op. 30298(U), holding that a party that did not sign a contract's forum selection clause nonetheless could enforce it based on the party's close relationship with a signatory, explaining:

Inasmuch as the claims against Emigrant relate to the LP Agreement and the LLC Agreement, Emigrant may enforce the forum selection clauses under the closely related doctrine. Emigrant is the parent company of Circle and a general partner of MGG LLC. In its 3rd Party Complaint, the Seller alleges that MG, MGG LLC, and Circle are instrumentalities and alter egos of Emigrant. And, as the alter ego of these entities, Emigrant has shut Irving out of the corporate governance of MG and MGG LLC and mismanaged the Miura Business, deprived Irving of its distributions and diverted plaintiffs' revenues to TSG. Accordingly, Seller argues that as result, the Seller claims that Emigrant is liable for breach of the LP Agreement, LLC Agreement and fiduciary duty by MG, MGG LLC, and Circle. The Seller's allegations demonstrate the requisite close relationship necessary to permit Emigrant, to invoke the forum selection clauses in the LP Agreement and LLC Agreement as it is reasonably foreseeable that claims arising under this agreement as they relate to Emigrant would be litigated in Delaware and not in New York.

(Internal quotations omitted).

New York generally enforces contracts as written, including contractual provisions specifying where a lawsuit may be brought. In exceptional circumstances, as this decision shows, even someone who is not a party to an agreement can rely on the agreement's forum selection clause. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure whether a contract limits where an action can be brought.