Jalee Consulting Group, Inc. v. Xenoone, Inc.

908 F. Supp. 2d 387, 2012 WL 4510676, 2012 U.S. Dist. LEXIS 142056
District Court, S.D. New York·Decided September 29, 2012·No. No. 11 Civ. 4720 (RJS)(JCF)·Published·Cited by 11 cases

Opinion

OPINION AND ORDER

RICHARD J. SULLIVAN, District Judge.

Plaintiff Jalee Consulting Group, Inc. brings this action under the Federal Arbitration Act, 9 U.S.C. § 4, and New York State common law against Defendants XenoOne Co., Ltd. (“XenoOne Korea”) and XenoOne Inc. (“XenoOne USA”). Plaintiff seeks injunctive relief requiring that any arbitration proceedings under Plaintiffs contract with XenoOne Korea occur in New York City, rather than in Seoul, South Korea, the location specified by the contract’s terms. Plaintiff also seeks monetary relief against XenoOne USA for breach of different contracts, or, in the alternative, unjust enrichment or quantum meruit.

Before the Court is Defendants’ motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons set forth below, Defendants’ motion is granted in part and denied in part.

[392] I. Background

A. Facts1

Plaintiff is a technology consulting and software development firm organized under New York State law and operating in New York City. Defendant XenoOne Korea is a foreign technology corporation organized under the laws of the Republic of Korea (“Korea”). Defendant XenoOne USA is a corporation chartered in Delaware and operating in New York City. (Am. Compl. ¶¶ 5-9.)

On October 5, 2010, Plaintiff entered into a contract (the “Agreement”) with XenoOne Korea to develop software for computers and mobile devices. (Id. ¶ 15.) The Agreement, which appears on Plaintiffs letterhead, referred to the work as “Project Mu.” (Deck of John J. Zefutie, Jr., dated Nov. 9, 2011, Doc. No. 20 (“Zefutie Deck”), Ex. C.) In addition to the primary task of developing a “fully functioning application,” Plaintiff agreed to undertake “related supportive tasks” as part of Project Mu. (Id.) The Agreement gave several nonexclusive examples of such supportive tasks, and, in vague language, it identified several other tasks that it explicitly did not cover, namely “Marketing Model,” “Business Model,” and “Operation Model.” (Id.) The Agreement also contained an arbitration and forum selection clause providing: “Any dispute, controversy, or difference which may arise between the parties hereto, out of or in relation to or in connection with this Agreement, or any breach hereof ... shall be finally settled by arbitration in Seoul, Korea” according to “the laws of [the] Republic of Korea.” (Id.)

This litigation arises, in part, from disputes between Plaintiff and XenoOne Korea over the amounts XenoOne Korea owes Plaintiff under the contract. (Am. Compl. ¶20.) At the time Plaintiff initiated this action, it was contemplating an arbitration proceeding against XenoOne Korea to resolve those disputes. (Id. ¶ 23.) Plaintiff also alleges that XenoOne Korea was contemplating initiating an arbitration proceeding against Plaintiff for the same purpose. (Id. ¶ 24.) Plaintiff now seeks to invalidate the provision in the Agreement requiring that any arbitration occur in Seoul so that arbitration can proceed in New York. (Id. ¶ 35.)

Plaintiff also alleges that, besides its work for XenoOne Korea, it began working with Defendant XenoOne USA on “additional matters related to the scope of work established by the Agreement.” (Id. ¶ 36.) Significantly, Plaintiff alleges that its work with XenoOne USA on those additional matters was pursuant to contracts separate from and independent of the Agreement governing Plaintiffs work with XenoOne Korea. (Id. ¶¶ 37, 42.) Those contracts allegedly were memorialized in “numerous e-mails and correspondence” between Plaintiff and XenoOne USA. (Id. ¶¶ 36-38, 40-42.) For its services, Plaintiff issued at least five invoices directly to XenoOne USA demanding payments totaling over $400,000. (Id. ¶ 39.) Plaintiffs contract and quasi-contract claims against XenoOne USA arise from unpaid fees and expenses totaling $389,559.18. (Id. ¶¶ 43-45, 55-60.)

B. Procedural History

Plaintiff initially brought this action in the New York State Supreme Court, New York County, on June 27, 2011. Defendants removed the action to federal district court pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 203, 205 and to 28 U.S.C. §§ 1331, 1332, 1441(a), 1441(b), and [393]*3931446. (Notice of Removal ¶¶ 8-17.) On October 11, 2011, with the Court’s leave, Plaintiff filed an Amended Complaint. (Doc. No. 18.) Defendants then jointly filed a motion to dismiss on November 9, 2011, and the motion was fully briefed on December 22, 2011.

II. Legal Standard

Neither the Second Circuit nor the Supreme Court has specifically designated a single clause of Rule 12(b) as the proper procedural mechanism for seeking dismissal of a suit based upon a valid forum selection clause. See Asoma Corp. v. SK Shipping Co., 467 F.3d 817, 822 (2d Cir. 2006); Cfirstclass Corp. v. Silverjet PLC, 560 F.Supp.2d 324, 326-27 (S.D.N.Y.2008) (“There is a split of authority in the Second Circuit regarding the appropriate procedural mechanism by which to enforce a forum selection clause.”). At various times, the Second Circuit has considered such motions on grounds of lack of subject matter jurisdiction pursuant to Rule 12(b)(1), improper venue pursuant to Rule 12(b)(3), and failure to state a claim pursuant to Rule 12(b)(6). See Cfirstclass Corp., 560 F.Supp.2d at 327 (collecting cases). Defendants bring their motion to dismiss under Rule 12(b)(6), and Plaintiff does not challenge that choice.

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Jalee Consulting Group, Inc. v. Xenoone, Inc., 908 F. Supp. 2d 387, 2012 WL 4510676, 2012 U.S. Dist. LEXIS 142056 (S.D.N.Y. 2012).

908 F. Supp. 2d 387 (Jalee Consulting Group, Inc. v. Xenoone, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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