Rise Development Partners, LLC v. Signature Bank
- John Koeltl
- 1:23-cv-04242
- U.S. District Court · Southern District of New York
- 5
In Rise Development Partners v. Signature Bank, Judge Cogan transferred the case to the Southern District of New York because a forum-selection clause required New York County.
The order affects Rise Development Partners, LLC and the other plaintiffs, the FDIC as receiver for Signature Bank, Signature Bank and its affiliated defendants, and the federal court that will receive the transferred case.
What happened
In Rise Development Partners, LLC v. Signature Bank, the plaintiffs brought lender-liability claims involving allegations that Signature Bank and affiliated entities induced them to borrow money and breached account agreements. The Federal Deposit Insurance Corporation, acting as Signature Bank’s receiver, removed the case to federal court and asked to transfer it.
The agreements required plaintiffs to bring related actions in a state or federal court in New York County. The plaintiffs did not oppose the transfer motion. The court also rejected arguments that the clause did not cover tort claims or was nonexclusive.
Judge Cogan granted the Federal Deposit Insurance Corporation’s motion and directed the clerk to transfer the case to the Southern District of New York. The court did not discuss each usual convenience factor because the forum-selection clause applied and the plaintiffs identified no reason to keep the case in the Eastern District of New York.
The detailed version
- Rise Development Partners, LLC v. Signature Bank · No. 1:23-cv-04242
- John Koeltl
- May 18, 2023
Background
The plaintiffs initially filed the case in New York state court, alleging lender-liability claims against Signature Bank and affiliated entities. The claims principally alleged that Signature Bank fraudulently or negligently induced the plaintiffs to borrow money and breached various account agreements.
The state court had ordered the case transferred from Kings County to New York County based on a forum-selection clause in the parties’ agreements. Before that transfer was completed, the Federal Deposit Insurance Corporation (FDIC) became Signature Bank’s receiver and removed the case to the Eastern District of New York. The plaintiffs moved to send the case back to state court, but the court denied that motion. The FDIC then moved under 28 U.S.C. § 1404(a) to transfer the case to the Southern District of New York. The plaintiffs did not oppose that motion.
Forum-Selection Clause
The agreements required the plaintiffs to bring actions against the bank relating to the agreements in a state or federal court in New York County, which the agreements identified as the exclusive venue and forum for related litigation. The court treated this as a mandatory, one-way forum-selection clause: it limited the plaintiffs’ choice of forum but did not prevent Signature Bank from suing elsewhere.
The court rejected the plaintiffs’ argument that the clause covered only contract claims. Although only one of the 16 claims was labeled breach of contract, the complaint repeatedly connected the claims to the parties’ contractual relationship and to duties allegedly arising from the agreements. The court held that the clause covered claims that related to the contracts, including the plaintiffs’ tort claims.
The court also rejected the argument that a separate provision consenting to nonexclusive personal jurisdiction in New York County made the forum-selection clause nonexclusive. According to the court, that provision allowed Signature Bank to sue in New York County or elsewhere, while the forum-selection clause required the plaintiffs to sue in New York County.
Ruling
Under § 1404(a), a federal district court may transfer a civil case to another district where it could have been brought when transfer serves convenience and the interests of justice. The court explained that valid forum-selection clauses are generally enforced, and that the party opposing enforcement bears the burden of showing exceptional circumstances. Because the plaintiffs did not oppose the FDIC’s motion and identified no factor favoring retention of the case, the court found transfer appropriate. Judge Cogan granted the FDIC’s motion and directed the clerk to transfer the case to the Southern District of New York.
The court additionally noted that the plaintiffs had continued pursuing proceedings in state court after removal, even though removal had divested the state court of jurisdiction. It stated that the transferee court would need to address that issue.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.