AFC Franchising, LLC v. Purugganan

New York resident Danilo Purugganan (defendant) entered a franchise agreement with Doctors Express that allowed Purugganan to open Doctors Express urgent-care centers in New York and Connecticut. The agreement contained a forum-selection clause stating that any litigation was to be brought in the state or federal jurisdiction “in which we have our principal place of business at the time the action is commenced.” “We” referred to Doctors Express, which at contracting had its principal place of business in Maryland. Doctors Express was subsequently acquired by AFC Franchising, LLC (AFC) (plaintiff), and the franchise agreement was assigned to AFC as permitted by the agreement’s terms. AFC’s principal place of business was Alabama. When the relationship between AFC and Purugganan soured, Purugganan threatened to sue in New York or Connecticut. AFC preemptively filed a declaratory-judgment action in an Alabama state court, seeking a declaration that any litigation must occur in Alabama per the agreement’s forum-selection clause. Purugganan removed the case to federal court, then moved to dismiss, arguing that the court lacked personal jurisdiction over him. He claimed that the agreement’s forum-selection clause did not constitute consent to jurisdiction in Alabama because the clause applied to Doctors Express’s place of business, not AFC’s place of business. The district court agreed and dismissed the declaratory-judgment action. AFC appealed.