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Forum Selection Clause

Defendant Total Quality Logistics, LLC (TQL) filed an appeal with the Appellate Division of a judgment for plaintiff Narrow Path Transport, LLC (Narrow Path) entered in the Special Civil Part, Small Claims Division, after the trial court had denied defendant’s motion to dismiss the complaint based upon a contractual forum selection clause.  This matter concerned claims under the contract between the parties, which contained a clause requiring the parties to litigate any dispute in state court in Ohio.  The issue in Narrow Path Transportation, LLC v. Total Quality Logistics, LLC, 2026 N.J. Super. Unpub. LEXIS 217 (App. Div. Feb. 9, 2026) was whether the trial court had properly considered the defendant’s motion to dismiss the complaint based upon this forum selection clause.

The parties had entered into a “Broker-Carrier” agreement by which Narrow Path would transport vehicle trailers for TQL’s customers on request.  That agreement contained a provision requiring Narrow Path to indemnify TQL against certain claims related to its performance under the agreement.  The agreement also contained a clause which required it to be governed by the laws of the state of Ohio, as well as the parties’ consent to the jurisdiction of the state court located in Clermont County, Ohio (the forum selection clause).  Pursuant to the contract, the parties waived any objection to the jurisdiction of that court and all claims arising under or related to the agreement would need to be brought in that court, which would have exclusive jurisdiction over any such dispute.

Despite this forum selection clause, Narrow Path filed a New Jersey small claims complaint against TQL seeking reimbursement of an amount TQL had deducted from Narrow Path’s earnings on other TQL jobs to pay for a customer’s damages.  Narrow Path claimed entitlement based upon the contract’s indemnification and offset provisions.  This complaint was filed in the Superior Court of New Jersey, Law Division, Burlington County (Special Civil Part, Small Claims Division). 

A few days before the trial, TQL filed a motion to dismiss the complaint based upon the contract’s forum selection clause (which required litigation to proceed in an Ohio state court).  Narrow Path’s representatives were present in the courtroom for the New Jersey trial and were later joined by TQL’s representative remotely.  The record did not reflect that any of the individuals were sworn in before providing trial testimony.

At the trial, Narrow Path did not argue the forum selection clause was inapplicable in opposition to TQL’s motion.  After the judge heard from Narrow Path as to its request for the entry of judgment, the judge denied TQL’s dismissal motion and stated that TQL had subjected itself to the jurisdiction of New Jersey courts based upon the parties’ course of conduct, which included seventy prior transports.  The judge then entered a monetary judgment in favor of Narrow Path based upon unsworn trial proofs.

TQL filed this appeal of the trial court’s decision.  It argued that the judge made a mistake by denying its dismissal motion, seeking to enforce the contract’s forum selection clause, and by entry of judgment absent subject matter jurisdiction. 

After reviewing the record and the applicable law, the Appellate Division stated that it was “constrained to vacate the  judgment” and remanded the matter for the court to comply with Rule 1:7-4 as to its denial of TQL’s dismissal motion, because the court’s determination not to enforce the forum selection clause was made without explanation. 

The Court noted that under well-established law, contracting parties may agree to resolve any dispute arising from their agreement in a particular forum. Under New Jersey law, forum selection clauses are prima facie valid and enforceable.

The Appellate Division noted that forum selection clauses would be enforced “unless the party objecting thereto demonstrates: (1) the clause is a result of fraud or overweening bargaining power, or (2) the enforcement in a foreign forum would violate strong public policy of the local forum, or (3) enforcement would be seriously inconvenient for the trial.”

The Court further noted that a party may waive their rights to enforce a forum selection clause.  However, a waiver would constitute “the voluntary and intentional relinquishment of a known right.”  The Appellate Division held that a court’s analysis regarding the waiver of a forum selection clause would be similar to the analysis conducted regarding the waiver of an arbitration clause.

Thus, the Court vacated the judgment and remanded the matter back to the trial judge to issue a statement of reasons, “stating clearly its factual findings and correlating them with relevant legal conclusions.”  Further, the Appellate Division held that if the trial court concluded that the contract’s forum selection clause was unenforceable or TQL waived enforcement of that clause and determined that the litigation should proceed in New Jersey, then the matter should be scheduled for a new trial and any trial witnesses must be sworn prior to providing testimony.

Agreements often contain forum selection clauses whereby parties can agree on a forum where any disputes would be litigated. Absent certain exceptions, New Jersey courts will uphold a forum selection clause as valid and enforceable. In Ogorodnikov v. Dikker, 2016 N.J. Super. Unpub. LEXIS 1388 (App. Div. June 17, 2016), the Appellate Division upheld a forum selection clause which provided that any disputes would be litigated in Russia.

New Jersey courts will uphold the parties’ choice of a forum selection clause unless the clause fits into one of three exceptions to the general rule: “(1) the clause is a result of fraud or “overweening” bargaining power; (2) enforcement would violate the strong public policy of New Jersey; or (3) enforcement would seriously inconvenience trial.” Caspi v. Microsoft Network, 323 N.J. Super. 118 (App. Div. 1999).

None of these exceptions applied in this case. The complaint concerned a commercial deal that the parties negotiated in Russia, involving property located in Russia. Further, the contract was drafted by plaintiff’s attorney in Russia and was signed in Russia. Also, important witnesses and public records concerning the case were all located in Russia.

In this case, it was the plaintiff seeking to invalidate the clause based upon the concern that the defendant, who now resides in New Jersey, would be unwilling to return to Russia to participate in the litigation there. He had additional concerns over whether a Russian complaint could be subject to dismissal based upon lack of in personam jurisdiction over the defendant, as well as the enforceability of any Russian judgment in New Jersey.

However, the Appellate Division noted that the plaintiff cited to no Russian statutes or cases or offered a Russian legal expert to support his supposition that the Russian courts would not have jurisdiction over the defendant merely because he now resides in New Jersey. Further, at the oral argument in this case, the defendant’s counsel conceded that his client would not raise the defense of lack of personal jurisdiction. By agreeing to the forum selection clause, he admitted that his client had waived that defense.

The trial court had dismissed the complaint without prejudice to the plaintiff’s right to file his complaint in a Russian court, as provided in the forum selection clause. The Appellate Division agreed with the trial court’s decision and affirmed.

This case points out the importance of some of the “boilerplate” clauses found in agreements. Clauses in a contract such as choice of law, forum selection, and arbitration provisions can impact and/or limit a party’s ability to litigate a dispute, should one arise. One must carefully read not only the substantive terms of a contract but also pay close attention to these boilerplate type of provisions, typically placed at the end of an agreement. Otherwise, you may get stuck litigate with the court applying law from another state, litigating in another state (or country!), or giving up your rights to litigate in a court of law and be forced to arbitrate your dispute. Before you sign, read your contract closely and be certain you understand the significance of these “boilerplate” clauses.

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