JURISDICTION, CHOICE OF LAW AND THE GENERAL OBLIGATIONS LAW

SETTER CAPITAL, INC. v. CHATEAUVERT, 2020 NY Slip Op 20199 - NY: Supreme Court July 15, 2020:

"As a threshold issue, there is a question as to whether this court has jurisdiction over defendant, a Canadian resident. Although the Agreement includes a choice of law and forum selection clause in which the parties agreed to submit to this court's jurisdiction, it is unclear that such tender is enforceable under the NY General Obligations Law (GOL). GOL § 5-1401 provides for the enforcement of choice of law provisions in contracts over $250,000 and GOL § 5-1402 provides for the enforcement of forum selection provisions in contracts over $1,000,000. (IRB-Brasil Resseguros, S.A. v Inepar Investments, S.A., 20 NY3d 310, 316 [2012] ("The goal of General Obligations Law § 5-1401 was to promote and preserve New York's status as a commercial center and to maintain predictability for the parties."), cert denied 569 US 994 [2013]).

However, GOL §5-1401 does not apply to contracts "for labor or personal services," and the Agreement here states that the employee is "to provide a highly personal service on a sustained and recurring basis to the Clients of Setter Capital." (NYSCEF 8, Agreement at 1.) Further, "NY-GOL § 5-1402 provides that an action based on a contract may be maintained in a New York court against a non-resident where: (1) the contract contains a choice of law clause pursuant to NY-GOL § 5-1401." (CPI NA Parnassub B.V. v Ornelas-Hernandez, 2009 NY Slip Op 30259[U], *7 [Sup Ct, NY County 2009].) Thus, if GOL §5-1401 is not applicable here, in turn neither is GOL §5-1402. (Barden Solutions, Inc. v Bassetti, 18 Misc 3d 1144[A], 1144A, 2005 NY Slip Op 52351[U], *2 [Sup Ct, Monroe County 2005].) Moreover, the court questions whether defendant, two years out of college when she signed the Agreement, was the sophisticated business person the legislature envisioned in 1985 when GOL §5-1401 and §5-1402 were enacted. (See IRB-Brasil Resseguros, S.A., 20 NY3d 310, 314 [2012] (The Sponsor's Memorandum states, "In order to encourage the parties of significant commercial, mercantile or financial contracts to choose New York law, it is important . . . that the parties be certain that their choice of law will not be rejected by a New York Court" [id. at 8]. The Legislature desired for parties with multi-jurisdictional contacts to avail themselves of New York law if they so designate in their choice-of-law provisions, in order to eliminate uncertainty and to permit the parties to choose New York's "well-developed system of commercial jurisprudence." [id. at 7])."