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Current Developments in the Commercial Divisions of the
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Posted: July 7, 2015

Contractual Venue-Selection Clause Trumps Requirement of CPLR 507 That An Action Concerning Title to Real Property Be Brought In the County Where the Property is Located

On June 8, 2015, Justice Sherwood of the New York County Commercial Division issued a decision in NCCMI Inc. v. Bersin Props., LLC, 2015 NY Slip Op. 30972(U), ruling that a choice of venue clause in the parties’ loan agreement trumped the rule set forth in CPLR 507, which otherwise provides that “an action in which the judgment demanded would affect the title to . . . real property shall be in the county in which any part of the subject of the action is located.”

NCCMI Inc. was an action to foreclose on mortgaged properties located in Monroe County. The plaintiff-lender filed suit in New York County, relying on the loan agreement’s choice of venue clause, and the defendant moved to transfer venue to Monroe County, relying on the seemingly mandatory language of CPLR 507. The Court denied the defendant’s motion and upheld the forum-selection clause, explaining:

The terms of section 501 [of the CPLR] . . . provide that an agreement as to venue “shall be enforced” subject only to section 510(2), which allows a trial to be moved if “there is reason to believe that an impartial trial cannot be had in the proper county.” Therefore, section 501 is not subordinate to section 510(1), which holds a trial may be moved if “the county designated for that purpose is not a proper county.” Accordingly, if the suit is brought in a location pursuant to a forum selection clause, it may be held in an improper county . . . .

This decision highlights to degree of deference that courts afford to contractual forum selection clauses.

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