1997 WL 607543 (S.D.N.Y.)
Oliver R. GRACE, Jr., Carolyn M. Grace, Lorraine G. Grace, Yumiko Honda, Robert
A. Posner, and Thomas V. Leeds, Plaintiffs,
CORPORATION OF LLOYDs, also known as Society of & Council of Lloyds, doing
business as Lloyds of London, Council of Lloyds, and Committee of Lloyds,
No. 96 Civ. 8334(JGK).
United States District Court, S.D. New York.
Oct. 2, 1997.
COUNSEL: Mark D. Lebow, Richard DePalma, Coudert Brothers, New York City, for plaintiffs.
Bonnie Steingart, Stephanie Goldstein, Fried Frank Harris Shriver & Jacobson, New York City, for defendants.
OPINION AND ORDER
JUDGE: KOELTL, J.
[*1] The plaintiffs, Oliver R. Grace, Jr., Carolyn M. Grace, Lorraine G. Grace, Yumiko Honda, Robert A. Posner, and Thomas V. Leeds, commenced this action in the Supreme Court of the State of New York, New York County, against defendants Corporation of Lloyds, Council of Lloyds, and Committee of Lloyds (collectively, Lloyds), and Citibank, N.A., IBJ Schroder Bank & Trust Company, Barclays Bank PLC, The Chase Manhattan Corporation, and Morgan Guarantee Trust Company of New York (collectively, the Bank defendants) by filing the summons and complaint. The defendants removed the case to federal court. The plaintiffs now move to remand this case to state court pursuant to 28 U.S.C. 1441(c), 1447(c). Defendant Lloyds cross-moves to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(3) for improper venue. For the reasons explained below, the plaintiffs motion is denied, and the defendants motion is granted.
Lloyds is a unique and complex insurance market that has been operating in London for more than 300 years. In re Lloyds Am. Trust Fund Litig., 928 F.Supp. 333, 335 (S.D.N.Y.1996). It is a market somewhat analogous to the New York Stock Exchange. Roby v.. Corporation of Lloyds, 996 F.2d 1353, 1357 (2d Cir.), cert. denied, 510 U.S. 945, 114 S.Ct. 385, 126 L.Ed.2d 333 (1993). Each plaintiff is an underwriting member of defendant Lloyds. In connection with their membership in defendant Lloyds, the plaintiffs caused the Bank defendants to issue letters of credit in favor of Lloyds that were secured by collateral including cash deposits.
On October 30, 1996, the plaintiffs commenced this action in the Supreme Court of the State of New York. In their complaint, the plaintiffs allege that defendant Lloyds engaged in a scheme to defraud them in connection with their memberships in Lloyds as underwriters. More specifically, the plaintiffs allege that Lloyds and its agents actively failed to disclose material information in connection with investment in Lloyds, including but not limited to: (a) exposure to unquantifiable liability as a result of asbestos and pollution risks underwritten decades ago and passed on to plaintiffs without disclosure; (b) joint liability for the underwriting losses of other investors despite representations that the plaintiffs were only subject to several liability for those risks they agreed to underwrite; (c) the collection of funds from plaintiffs for alleged losses which either cannot be documented, or for which Lloyds and its agents refuse to document; and (d) the transfer without plaintiffs consents of their assets and obligation to a separate insurance company other than Lloyds. (Compl. 17.) The plaintiffs contend that the actions of defendant Lloyds violate New York State consumer protection laws and constitute common law fraud, breach of fiduciary duty, and breach of the duty of utmost good faith. (Compl. 16, 128-53.) The plaintiffs assert that they are entitled to compensatory, exemplary, and punitive damages and preliminary and permanent injunctive relief. The plaintiffs also sought preliminary and permanent injunctive relief from the Bank defendants to prevent them from seizing, transferring, or conveying any of the plaintiffs assets or collateral held against letters of credit issued to defendant Lloyds. (Compl. 160-61.)
[*2] On October 31, 1996, the New York State Supreme Court entered an order to show cause that temporarily restrained the Bank defendants from seizing the plaintiffs collateral in connection with the plaintiffs status as Members or Names of defendant Lloyds. On November 6, 1996, the order to show cause was amended nunc pro tunc to include a provision restraining the Bank defendants temporarily from making or enforcing any payment to Lloyds or its agents pursuant to demands or cash calls relating directly or indirectly to plaintiffs .
On November 6, 1996, defendant Citibank filed a notice of removal of this action to the United States District Court for the Southern District of New York, alleging jurisdiction pursuant to 12 U.S.C. 632 (Edge Act jurisdiction). On November 7, 1996, defendant Lloyds filed a joinder in notice of removal, alleging jurisdiction pursuant to 12 U.S.C. 632, 28 U.S.C. 1332 and 28 U.S.C. 1441(b) (diversity of citizenship), and 9 U.S.C. 205 (the Convention on the Recognition and Enforcement of Foreign Arbitral Awards). The remaining Bank defendants filed a supplemental notice of removal on November 25, 1996, alleging jurisdiction pursuant to 12 U.S.C. 632.
On November 13, 1996, this Court vacated the temporary restraining order issued previously by the state court. Following an interim stay, the Court of Appeals denied the plaintiffs motion for a stay pending appeal of this Courts November 13, 1996 order without prejudice to the plaintiffs right to apply to this Court for a temporary restraining order pending the hearing for the preliminary injunction. On November 27, 1996, this Court denied the plaintiffs application for a temporary restraining order pending the hearing for a preliminary injunction. The plaintiffs subsequently withdrew their motion for a preliminary injunction. (Tr. of Dec. 6, 1996 Hearing at 2.)
By notice of dismissal dated December 2, 1996, pursuant to Fed.R.Civ.P. 41(a)(1), the plaintiffs voluntarily dismissed the complaint as against the Bank defendants with the exception of defendant IBJ Schroder Bank & Trust Company (IBJ Schroder) which had already answered. On December 6, 1996, the Court issued an order dismissing the complaint as to defendant IBJ Schroder without prejudice to its counterclaim against plaintiff Lorraine Grace for attorneys fees. [FN1]
FN1. In response to an inquiry by the Court, on April 3, 1997, IBJ Schroder advised the Court that its counterclaim for attorneys fees against plaintiff Lorraine Grace was now moot. Therefore, because that counterclaim is now moot, it is also dismissed. The Court is entering a separate order dismissing that counterclaim.
On January 3, 1997, defendant Lloyds filed a second notice of removal, alleging that to the extent that the Court determines that Lloyds could not have previously removed this action, the dismissal of the plaintiffs claims against all of the banks created complete diversity and thus made the case removable pursuant to 28 U.S.C. 1332 and 28 U.S.C. 1441(b).
The plaintiffs move to remand this case to the New York State Supreme Court, New York County. The plaintiffs first argue that remand is appropriate because at the time this action was removed, this Court lacked subject matter jurisdiction. See 28 U.S.C. 1447(C). [FN2] The plaintiffs also argue that, in the event that the Court finds that federal jurisdiction did exist, the Court should exercise its discretion to remand the case because state law questions are the only issues that remain in the case. See 28 U.S.C. 1441(c).
FN2. The plaintiffs also move to remand pursuant to 28 U.S.C. 1447(c) based on defects in removal procedure. However, these grounds have been mooted. Defendant Lloyds filed the state court records and proceedings in this action on November 25, 1996, in compliance with Local Civil Rule 25(c) (now Local Civil Rule 81.1(b)) of the United States District Courts for the Southern and Eastern Districts of New York. Furthermore, all of the Bank defendants joined in Citibanks notice of removal.
[*3] Two sections of the federal removal statute authorize district courts to remand cases to state court after removal. Under 28 U.S.C. 1447(c), a district court is required to remand a case [i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction. Under 28 U.S.C. 1441(c), where a federal question claim is joined with otherwise non-removable claims, a district court may determine all issues or, in its discretion, may remand all matters in which state law predominates. In determining whether an action should be remanded, a court should refer to the complaint at the time the petition for removal was filed. See In re 17,325 Liters of Liquor, 918 F.Supp. 51, 54 (N.D.N.Y.1996); Rosenberg v. GWV Travel, Inc., 480 F.Supp. 95, 96 (S.D.N.Y.1979). The removing party bears the burden of proof in demonstrating its right to a federal forum. See R.G. Barry Corp. v. Mushroom Makers, Inc., 612 F.2d 651, 655 (2d Cir.1979); Ellis v. Provident Life & Accident Ins. Co., 929 F.Supp. 751, 753 (S.D.N.Y.1996).
The plaintiffs contend that this action was improperly removed because there was no diversity jurisdiction or federal question jurisdiction at the time of removal. Defendant Lloyds contends that, at the time the petition for removal was filed, the Court had original jurisdiction under the Edge Act, 12 U.S.C. 632. Section 632 of Title 12 provides in relevant part:
Notwithstanding any other provision of law, all suits of a civil nature at common law or in equity to which any corporation organized under the laws of the United States shall be a party, arising out of transactions involving international or foreign banking or out of other international or foreign financial operations shall be deemed to arise under the laws of the United States, and the district courts of the United States shall have original jurisdiction of all such suits; and any defendant in any such suit may, at any time before the trial thereof, remove such suits from a state court into the district court of the United States for the proper district by following the procedure for the removal of causes otherwise provided by law.
Both Citibank and Chase are organized under the laws of the United States, and the remaining requirements of 632 are satisfied in this case. Indeed, in a very similar action against Lloyds and two banks, Judge Scheindlin found that the lawsuit was properly removed to this Court pursuant to 632. See Stamm v. Barclays Bank of New York, No. 96 Civ. 5158, 1996 WL 614087, at *2 (S.D.N.Y. Oct.24, 1996); see also In re Lloyds American Trust Fund Litig., 928 F.Supp. 333, 338 (S.D.N.Y.1996) (A suit satisfies the jurisdictional requisites of Section 632 if any part of it arises out of transactions involving international or foreign banking.).
In this case, the parties dispute arises out of an international or foreign banking transaction. The transaction at issue is international in nature: defendant Lloyds and one of the Bank defendants are foreign entities, and the agreements executed between the plaintiffs and Lloyds and the deposit of the plaintiffs collateral with the Bank defendants as security for the letters of credit are all part of a complex international transaction. See Stamm, 1996 WL 614087, at *2. Moreover, the issuance of letters of credit is a traditional banking activity that confers jurisdiction under 632, even when the issuer is no longer a party to the action. See Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786, 792-93 (2d Cir.1980), cert. denied, 449 U.S. 1080, 101 S.Ct. 863, 66 L.Ed.2d 804 (1981).
[*4] The plaintiffs, citing Bata v. Central-Penn Natl Bank of Philadelphia, 223 F.Supp. 91 (E.D.Pa.1963), argue that 632 does not apply in this case because the Bank defendants were neutral stakeholders and had no interest in the ultimate outcome of the suit. In Bata, the court granted a motion to remand and rejected jurisdiction under 632 upon finding that the bank defendant, which had acted as the parties escrow agent, had no real interest in the outcome of the case. See id. at 94 (Indeed, at the trial of the case [the bank defendants] counsels only problem will be to decide at which table to sit.) However, in this case, the Bank defendants made clear from the beginning that they were not just neutral stakeholders. They were exposed to the prospect of financial loss in this action and the prospect that they would be obligated to pay defendant Lloyds under the letters of credit but be prevented from seizing the plaintiffs collateral. See Stamm, 1996 WL 614087, at *3. Moreover, the Bank defendants took an active role in the litigation. Defendant Citibank filed the initial notice of removal, which the remaining Bank defendants later joined. The Bank defendants actively opposed the plaintiffs request for preliminary injunctive relief, arguing that their reputations as reliable international bankers and the integrity of the system of letters of credit were at stake. See United Technologies Corp. v. Citibank, N .A., 469 F.Supp. 473, 477 (S.D.N.Y.1979) (finding Edge Act jurisdiction where plaintiffs sought to enjoin national bank from making payments under letters of credit). The Bank defendants thus had sufficient interests at stake in this action to distinguish them from the bank defendant escrow agent in Bata. Accordingly, this action was properly removed pursuant to 12 U.S.C. 632. [FN3]
FN3. Defendant Lloyds asserts that two other bases for federal court jurisdiction existed at the time of removal. First, it argues that if Edge Act jurisdiction did not exist at the time of removal because the Bank defendants were mere stakeholders, then the Bank defendants were not parties in interest for purposes of determining diversity. See Salem Trust Co. v. Manufacturers Finance Co., 264 U.S. 182, 190, 44 S.Ct. 266, 68 L.Ed. 628 (1924). Defendant Lloyds contends that diversity jurisdiction therefore existed between the plaintiffs, who are citizens of New York and New Jersey, and defendant Lloyds, which is a citizen of the United Kingdom. However, as explained above, the Bank defendants were more than mere stakeholders and therefore there was no diversity jurisdiction at the time of removal.
Second, defendant Lloyds asserts that this Court has jurisdiction pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. 205. Defendant Lloyds argues that the plaintiffs entered into agreements with their Members Agents and Managing Agents under which they agreed to arbitrate all disputes in England and that Lloyds is entitled to enforce these agreements as a third-party beneficiary. See Roby v. Corporation of Lloyds, 824 F.Supp. 336, 342 (S.D.N.Y.1992), affd, 996 F.2d 1353 (2d Cir.), cert. denied, 510 U.S. 945, 114 S.Ct. 385, 126 L.Ed.2d 333 (1993). However, Lloyds concedes that it has not exercised its alleged right to compel arbitration because the current motion can be decided based on the Edge Act. See Lloyds Memo. In Oppn to Pl.s Mot. to Remand at 9 n. 6. Therefore, it is unnecessary to reach the question whether the existence of the arbitration clauses which have not been invoked would be a basis for jurisdiction.
The plaintiffs also contend that, even assuming that there was jurisdiction over this action pursuant to 632 at the time of removal by the defendants, that basis for jurisdiction ceased to exist upon dismissal of the plaintiffs request for an injunction against the Bank defendants and the dismissal of those defendants from the case. The plaintiffs argue that, under the circumstances, the case should be remanded to the New York State Supreme Court pursuant to 28 U.S.C. 1441(c). In Naylor v. Case & McGrath, Inc., 585 F.2d 557 (2d Cir.1978), the Court of Appeals for the Second Circuit explained:
On the issue of remanding a case to the state court when the federal ground of jurisdiction is withdrawn or fails, the cases furnish little certain guidance. Much may depend on whether the case was removed as one embracing a federal claim and pendent state claims or was a case containing a separate and independent claim or cause of action which was within the federal jurisdiction along with distinct state law claims which were not within the federal jurisdiction on any ground. Where, as in this case, the state and federal claims do derive from a common nucleus of operative facts and are such as would ordinarily be tried in one judicial proceeding, pendent jurisdiction is a doctrine of discretion (United Mine Workers v. Gibbs, 1966, 383 U.S. 715, 725-727, 86 S.Ct. 1130, 16 L.Ed.2d 218).
[*5] Naylor, 585 F.2d at 561; see also Torres v. CBS News, 879 F.Supp. 309, 321 (S.D.N.Y.) ([I]t is a matter of this courts discretion whether or not to retain the case since [i]f the federal party is eliminated from the suit after removal pursuant to [ 1442(a)(1) ], the district court does not lose its ancillary or pendent-party jurisdiction over the state law claims against the remaining non-federal parties .) (quoting District of Columbia v. Merit Sys. Protection Bd., 762 F.2d 129, 132-33 (D.C.Cir.1985)), affd, 71 F.3d 406 (2d Cir.1995); 14A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure 3739 (1985) ([T]he court has the power to continue to hear jurisdictionally insufficient claims removed under Section 1441(c) even after the claim or claims providing the basis for removal have been eliminated from the action, although the court may choose to remand the nonfederal claims.). In deciding whether to retain the case, a court should consider issues of comity, federalism, judicial economy, and fairness to the litigants. See Naylor, 585 F.2d at 562; Torres, 879 F.Supp. at 321; 805 Third Avenue Co. v. Excel Mktg. Enters. Corp., Nos. 85 Civ. 5205, 85 Civ. 7030, 85 Civ. 7031, 1987 WL 12822, at *5 (S.D.N.Y. June 18, 1987), affd, 847 F.2d 834 (2d Cir.1988); Givoh Assocs. v. American Druggists Ins. Co., 562 F.Supp. 1346, 1352 (E.D.N.Y.1983).
In this case, however, remand would be improper because the Court has a new basis of subject matter jurisdiction that was created after the action was properly removed to federal court under the Edge Act. Although jurisdiction under the Edge Act no longer exists, the dismissal of the Bank defendants from this action as of December 6, 1996 created complete diversity between the plaintiffs, who are citizens of New York and New Jersey, and defendant Lloyds, which is a citizen of the United Kingdom. [FN4] Diversity of citizenship, sufficient for removal, can in fact be created by the plaintiffs actions after a case is filed:
FN4. The plaintiffs contend that there was no diversity of citizenship as of December 6, 1996, because defendant IBJ Schroder, a New York bank, continued to assert a counterclaim against the plaintiffs. However, jurisdiction over an action is considered independently of the counterclaims so that in this case the existence of the counterclaim would not destroy diversity. The plaintiffs cite no case to the contrary. In any event, the Court has now dismissed IBJ Schroders counterclaim as moot. Furthermore, even if diversity jurisdiction did not exist, as explained below, the Court would retain jurisdiction under 1441(c) pursuant to its exercise of supplemental jurisdiction.
Diversity may be created after the filing of a complaint through voluntary acts of the plaintiff . The rationale for this rule is that although a defendant should not be allowed to change his domicile after the complaint is filed for the sole purpose of effectuating removal, there is no reason to protect the plaintiff against the adverse consequences of his own voluntary acts.
Yarnevic v. Brinks, Inc., 102 F.3d 753, 754-55 (4th Cir.1996). Because there now exists an independent basis for federal jurisdiction, the Court cannot remand this case to state court for lack of jurisdiction, whether pursuant to 28 U.S.C. 1447(c) or 28 U.S.C. 1441(c). See Brockman v. Merabank, 40 F.3d 1013, 1016-17 (9th Cir.1994); Buchner v. FDIC, 981 F.2d 816, 818-20 (5th Cir.1993). See also Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 351, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976) (noting that the District Court had no power to remand case under 1447(c) where it had diversity of citizenship jurisdiction.).
[*6] Moreover, even if this were a case where remand should be judged by the discretionary standards of comity, federalism, judicial economy, and fairness to the parties, the Court would nevertheless decline to remand. There is plainly complete diversity of the parties. Remand to the state court would be followed promptly by Lloyds immediate removal of this action back to federal court, which Lloyds has represented that it would do. [FN5] That procedure ill serves the parties, the state or the federal court. Cf. Allied Programs Corp. v. Puritan Ins. Co., 592 F.Supp. 1274, 1277 (S.D.N.Y.1984).
FN5. On January 3, 1997, defendant Lloyds filed a protective second notice of removal alleging that this action became removable on diversity grounds.
Accordingly, the plaintiffs motion to remand this action to the New York State Supreme Court is denied.
2.1 The rights and obligations of the parties arising out of or relating to the Members membership of, and/or underwriting of insurance business at, Lloyds and any other matter referred to in this Undertaking shall be governed by and construed in accordance with the laws of England. 2.2 Each party hereto irrevocably agrees that the courts of England shall have exclusive jurisdiction to settle any dispute and/or controversy of whatsoever nature arising out of or relating to the Members membership of, and/or underwriting of insurance business at, Lloyds and that accordingly any suit, action or proceeding (together in this Clause 2 referred to as Proceedings) arising out of or relating to such matters shall be brought in such courts and, to this end, each party hereto irrevocably agrees to submit to the jurisdiction of the courts of England and irrevocably waives any objection which it may have now or hereafter to (a) any Proceedings being brought in any such court as is referred to in this Clause 2 and (b) any claim that any such Proceedings have been brought in an inconvenient forum and further irrevocably agrees that a judgement in any Proceedings brought in the English courts shall be conclusive and binding upon each party and may be enforced in the courts of any other jurisdiction. (Aff. of Stephanie J. Goldstein, Exs. A-F.) Forum selection clauses are usually enforced in federal courts in general and in this Circuit in particular. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 589-97, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972); Bense v. Interstate Battery Sys. of Am., Inc., 683 F.2d 718, 721-22 (2d Cir.1982); Jasol Carpet, Inc. v. Patcraft Commercial Carpet, Inc., No. 96 CIV. 3064, 1997 WL 97831, at *2 (S.D.N.Y. March 6, 1997). In Roby v. Corporation of Lloyds, 996 F.2d 1353 (2d Cir.), cert. denied, 510 U.S. 945, 114 S.Ct. 385, 126 L.Ed.2d 333 (1993), the Court of Appeals for the Second Circuit explained:
[*7] The Supreme Court certainly has indicated that forum selection and choice of law clauses are presumptively valid where the underlying transaction is fundamentally international in character. In The Bremen, the Court explained that American parochialism would hinder the expansion of American business and trade, and more generally, interfere with the smooth functioning and growth of global commerce. Forum selection and choice of law clauses eliminate uncertainty in international commerce and insure that the parties are not unexpectedly subjected to hostile forums and laws. Moreover, international comity dictates that American courts enforce these sorts of clauses out of respect for the integrity and competence of foreign tribunals. In addition to these rationales for the presumptive validity of forum selection and choice of law clauses, the Court has noted that contracts entered into freely generally should be enforced because the financial effect of forum selection and choice of law clauses likely will be reflected in the value of the contract as a whole.
Id. at 1362-63 (citations and footnote omitted).
However, forum selection and choice of law clauses will not be enforced where there is a clear showing that the clauses are unreasonableunder the circumstances. Bremen, 407 U.S. at 10; see also Roby, 996 F.2d at 1363. They will not be enforced:
(1) if their incorporation into the agreement was the result of fraud or overreaching; (2) if the complaining party will for all practical purposes be deprived of his day in court,due to the grave inconvenience or unfairness of the selected forum; (3) if the fundamental unfairness of the chosen law may deprive the plaintiff of a remedy; or (4) if the clauses contravene a strong public policy of the forum state. Roby, 996 at 1363 (citations omitted).
These limitations on forum selection and choice of law clauses are no bar to the validity and enforceability of the particular forum selection and choice of law clauses at issue in this case since they have been specifically upheld by the Court of Appeals for the Second Circuit. Roby, 996 F.2d at 1361-66. In fact, the validity and enforceability of the same or similar clauses has been upheld by five other circuits. See Haynsworth v. The Corporation, Nos. 96- 20769, 96-20805, 1997 WL 534146 (5th Cir. Aug.29, 1997); Allen v. Lloyds of London, 94 F.3d 923 (4th Cir.1996); Shell v. R.W. Sturge, Ltd., 55 F.3d 1227 (6th Cir.1995); Bonny v. Society of Lloyds, 3 F.3d 156 (7th Cir.1993), cert. denied, 510 U.S. 1113, 114 S.Ct. 1057, 127 L.Ed.2d 378 (1994); Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953 (10th Cir.), cert. denied, 506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584 (1992). The only Court of Appeals to have disagreed with this consensus is the Court of Appeals for the Ninth Circuit which, explicitly disagreeing with the Court of Appeals for the Second Circuit and the other Circuits to have considered the issue, found the forum selection and choice of law provisions in the General Undertaking to be invalid as applied to claims under the United States securities laws, although it did conclude that claims of common law fraud and breach of fiduciary duty must be pursued according to the forum selection and choice of law clauses. Richards v. Lloyds of London, 107 F.3d 1422, 1424 (9th Cir.1997). The Court of Appeals for the Ninth Circuit has recently granted rehearing en banc in Richards. Richards v. Lloyds of London, 121 F.3d 565 (9th Cir.1997).
[*8] In this case, the plaintiffs do not contend that enforcement of the forum selection and choice of law clauses will deprive them of their day in court or deprive them of a remedy or that the clauses contravene a strong public policy. [FN6] Instead, they argue that the clauses should not be enforced because fraud vitiates not only the relationship between the parties but also any forum selection clause proffered by Lloyds. (Pls.Mem. of Law in Opp'n to Def. Lloyds Mot. to Dismiss at 2.) However, the plaintiffs do not make any specific allegations in their complaint or papers that the forum selection and choice of law clauses were procured by fraud. Although the plaintiffs allege that in 1986 they were fraudulently induced into signing a single piece of paper entitled General Undertakingwhich allegedly contained a Choice Clause, (Pls.Mem. of Law in Opp'n to Def. Lloyds Mot. to Dismiss at 10), a general allegation of fraud in the inducement of the contract as a whole is not enough to support the invalidation of the forum selection and choice of law clauses. See Haynsworth, 121 F.3d 956, 1997 WL 534146, at * 6-*7; Bonny, 3 F.3d at 160 & n. 10; Riley, 969 F.2d at 960; Tufts v. Corporation of Lloyds, No. 95 CIV. 3480, 1996 WL 533639, at *5 (S.D.N.Y. Sept.19, 1996). The plaintiffs have failed to explain with particularity that the inclusion of that clause in the contract was the product of fraud or coercion. Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 n. 14, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974); see also Riley, 969 F.2d at 960; Tufts, 1996 WL 533639, at *5; cf. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967) (Accordingly, if the claim is fraud in the inducement of the arbitration clause itselfan issue which goes to the makingof the agreement to arbitratethe federal court may proceed to adjudicate it.).
FN6. In subsequent correspondence with the Court, the plaintiffs argued for the first time that one decision of one English court cast doubt on their ability to have their fraud claims heard in England. See The Society of Lloyds and Wilkinson and Others (Wilkinson). However, that decision focused on an issue of a set off against a premium debt owed by a Name and explicitly stated that it did not exclude or restrict a remedy by way of damages for fraudulent misrepresentation. (Slip Op. at 46.) Moreover, the Court of Appeals for the Second Circuit has explicitly held that English law does in fact provide adequate remedies for pursuing claims of fraud and misrepresentation. See Roby, 996 F.2d at 1365.
The Court of Appeals for the Fifth Circuit recently analyzed similar allegations of fraud and found them wanting because they were not tied to the specific clauses in the General Undertaking and because, in any event, the forum selection and choice of law clauses were straightforward and prominent clauses in a brief and understandable document. See Haynsworth, 121 F.3d 956, 1997 WL 534146, at *7-*8. That thorough analysis is equally persuasive here. [FN7]
FN7. The plaintiffs also sought in subsequent correspondence to amend their complaint to allege a claim under the federal securities laws. See Letter of Mark D. Lebow dated May 7, 1997. No motion has been made and no prospective complaint has been proffered. The plaintiffs asserted that they had not made the claim earlier because when the Complaint was filed, the Roby case barred such claims . A letter is not an appropriate means to make a motion to amend. In any event, any such motion would be futile because it remains the law in this Circuit that, despite a claim of federal securities law violations, the choice of law and forum selection clauses will be enforced. Roby, 996 F.2d at 1361-66. Other Courts of Appeals agree. Riley, 969 F.2d at 957-58; Bonny, 3 F.3d at 161-62; Allen, 94 F.3d at 929 30; Haynsworth, 121 F.3d 956, 1997 WL 534146, at *9-*14. The decision by the Court of Appeals for the Ninth Circuit to the contrary in Richards is now the subject of a rehearing en banc. Accordingly, because the plaintiffs have failed to make any colorable showing that the forum selection and choice of law clauses should not be enforced, defendant Lloyds motion to dismiss the complaint is granted. [FN8]
FN8. Because the plaintiffs have failed to make a sufficient showing that the forum selection and choice of law clauses should not be enforced, it is unnecessary to reach defendant Lloyds arguments that the plaintiffs are barred by collateral estoppel and res judicata from contesting the enforceability of the forum selection and choice of law clauses based on their participation in the Richards and Allen cases. It is also unnecessary to reach the defendant Lloyds argument that the doctrine of forum non conveniens requires dismissal of this action.
For the reasons explained above, the plaintiffs motion to remand is denied. Defendant Lloyds motion to dismiss the complaint is granted. The Clerk is directed to enter Judgment dismissing the action and closing the case.