Commercial Division Blog
Guarantor of Corporation’s Performance of Covenants Under Contract Bound By Corporation’s Consent To Jurisdiction In New York
On December 31, 2014, the Second Department issued a decision in Professional Merchant Advance Capital, LLC v. Your Trading Room, LLC, 2014 NY Slip Op. 09115, holding that the principal of a corporation who personally guaranteed the corporation's performance of contractual covenants was bound by the corporation's consent to jurisdiction in New York in a lawsuit for breach of the contract.
In Professional Merchant, the plaintiff commenced an action against defendant Your Trading Room, LLC ("YTR") and its principal Richard Waryn, for breach of a contract to sell a portion of YTR's future credit card receivables to plaintiff. The contract contained a forum selection clause stating that YTR "submits to the exclusive jurisdiction of any New York state or federal court sitting in the County of Suffolk in the state of New York." Another provision of the contract stated that YTR's owners "personally guarantee the performance of the covenants made by [YTR] in this Agreement." Waryn, a principal of YTR, moved to dismiss for lack of personal jurisdiction, arguing that he was not bound by the forum selection clause. The Second Department disagreed and affirmed the denial of Waryn's motion to dismiss, concluding that "[s]ince YTR consented to New York jurisdiction in the Agreement, Waryn, by assuming YTR’s obligations in the Agreement, also consented to New York jurisdiction."