Affiliates of Contracting Party Bound by Contract’s Terms, Including its Forum Selection Clause

On October 28, 2021, the First Department issued a decision in Oberon Sec., LLC v. Titanic Entertainment Holdings LLC, 2021 NY Slip Op. 05929, holding that the affiliates of a contracting party were bound by the contract’s terms, including its forum selection clause, explaining:

The relevant agreement, by which Titanic Holdings Entertainment Holdings LLC (Titanic Holdings) retained plaintiff to act as its consultant and exclusive financial advisor, provides:

“For purposes of this Agreement, the ‘Company’ shall be defined as Client [Titanic Holdings] together with all subsidiaries, affiliates, successors and other controlled units, either existing or formed subsequent to the execution of this agreement . . . The Company agrees to cause the financing or acquisition vehicle upon its formation, and each other investor in such vehicle as a condition to participation in the Transaction, to agree in writing to be bound (jointly and severally with the Company) by the terms of this Agreement.”

This language, together with the documents submitted by the parties, supports a finding that defendants Titanic Tennessee LLC, Cedar Bay Entertainment LLC, and Alan Entertainment Holdings LLC are bound by the agreement, notwithstanding that they are not signatories.

. . .

The court properly relied on the forum selection clause in exercising personal jurisdiction over defendants, all Delaware limited liability companies. Pursuant to the agreement, the term “Company,” which includes affiliates, subsidiaries, and subsequently formed entities, was used in the forum selection clause to which Titanic Holdings, as agent of the nonsignatory defendants, agreed to be bound. Thus, the record reflects a sufficiently close relationship among defendants to make the application of the clause foreseeable, rendering a separate minimum-contacts analysis unnecessary.

(Internal citations omitted).

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