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Nymbus, Inc. v. Sharp

United States District Court, D. Connecticut

February 5, 2018

NYMBUS, INC., Plaintiff,
v.
SCOTT SHARP, Defendant.

          ORDER DENYING MOTION TO DISMISS AND MOTION TO TRANSFER

          JEFFREY ALKER MEYER, UNITED STATES DISTRICT JUDGE

         Plaintiff Nymbus, Inc. is a software development company that used to employ defendant Scott Sharp as its chief operating officer until they had a falling out and Sharp left his employment there. Plaintiff now alleges claims against defendant for breach of fiduciary duty and breach of contract. Defendant moves to dismiss this action on grounds of lack of personal jurisdiction and improper venue or, alternatively, to have this action transferred to the Northern District of Texas. Plaintiff counters that this action should proceed in the District of Connecticut pursuant to plaintiff's choice of forum in accordance with the parties' forum selection clause. I agree with plaintiff and will deny defendant's motions.

         Background

         Plaintiff is a software company incorporated in Delaware and headquartered in Florida that develops software platforms for various industries. Around January 2015, plaintiff began working on a new core processing platform for financial institutions including community banks and credit unions.

         As part of its expansion into the financial industry, plaintiff sought to partner with a business that had an established technical competency in core processing systems in the financial industry. To that end, plaintiff acquired a core processing platform known as Sharp Banc Systems (SBS) from four banks owned by defendant and his family members by way of a stock purchase and sale agreement dated January 8, 2016. Pursuant to the agreement, plaintiff acquired all of the issued and outstanding stock of SBS from defendant's banks. Relying on defendant's representation that he possessed competency in the field of core processing platform development and operation, plaintiff hired defendant to serve as plaintiff's chief operating officer (COO). Plaintiff and defendant entered into an employment agreement (the “Agreement”) dated December 31, 2015.

         The Agreement sets forth the terms and conditions of employment, including defendant's duties and his salary and benefits. The parties agreed that defendant would work out of an office in the Dallas/Fort Worth area in Texas. The Agreement limited how much time defendant would be required to spend working outside of his home area in Texas. The Agreement is governed by Texas law. Critical to the resolution of this motion is the following clause in the Agreement under the heading “Governing Law: Submission to Jurisdiction and Waiver of Jury Trial”:

ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT . . . MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF TEXAS, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. . . . THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

Doc. #2 at 21.

         Plaintiff alleges that defendant failed in a number of ways to carry out his primary responsibilities as COO. Consequently, on April 12, 2017, plaintiff placed defendant on paid administrative leave. On June 16, 2017, defendant purported to give plaintiff a “Notice of Termination Employment with Good Reason.” Plaintiff responded on July 5, 2017, by sending defendant a “Notice of Termination of Employment For Cause” and separately responding to defendant's notice disputing that defendant had the requisite “Good Reason” to terminate his employment. Plaintiff filed this lawsuit on the same date. Defendant soon filed a lawsuit against plaintiff in Texas state court on or about July 14, 2017, which was removed to the U.S. District Court for the Northern District of Texas on July 24, 2017.[1]

         Defendant has moved to dismiss this action under Fed.R.Civ.P. 12(b)(2) & (3), arguing that this Court lacks personal jurisdiction over him and that venue is improper. In the alternative, defendant moves to transfer this case to the Northern District of Texas pursuant to 28 U.S.C. § 1404 or the “first-filed rule.” Plaintiff argues that the above-quoted forum selection clause contained in the Agreement constitutes a waiver of any challenge to plaintiff's decision to litigate this matter in this court.

         Discussion

         I will first consider the parties' arguments concerning the interpretation of the forum selection clause. Next I will consider whether the clause as applied is enforceable.

         Interpretation of the Forum Selection Clause

         Ascertaining the meaning of a forum selection clause is a “matter of contract interpretation.” Yakin v. Tyler Hill Corp., 566 F.3d 72, 75 (2d Cir. 2009). The parties agree that the interpretation of the forum selection clause is governed by Texas law as set forth in the Agreement. “To ensure that the meaning given to a forum selection clause corresponds with the parties' legitimate expectations, courts must apply the law ...


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