Summary
enforcing forum selection clause selecting Cook or Lake County, Illinois as the proper venue
Summary of this case from Peacock v. Ins. & Bonds Agency of Texas, PLLCOpinion
No. 4:02-CV-518-A
September 13, 2002
MEMORANDUM OPINION and ORDER
After having considered the motion of defendant, James Schiffman, to dismiss or, in the alternative, to transfer, the opposition of plaintiff, Ward Packaging, Inc., to the motion, defendant's reply, and applicable authorities, the court has concluded that the action should be dismissed.
I. Background and Procedural History
On April 11, 2002, plaintiff, a Texas corporation, sued defendant, a citizen of Illinois, in the District Court of Tarrant County, Texas, 236th Judicial District. Plaintiff claims breach of contract and violations of the Texas Deceptive Trade Practices Act ("DTPA"). On June 13, 2002, defendant removed the case to this court. Defendant asserted subject matter jurisdiction under 28 U.S.C. § 1332.
Defendant has filed a "Motion to Dismiss or for Alternative Relief," moving the court (a) to dismiss for improper venue because of a forum-selection clause in the disputed contracts, (b) in the alternative, to dismiss pursuant to the authority of 28 U.S.C. § 1406(a), and (c) in the further alternative, to transfer the case to the Northern District of Illinois, Eastern Division, under the authority of 28 U.S.C. § 1404(a). Plaintiff opposes the motion, contending (a) that the forum-selection clause should not be enforced because its enforcement would be unreasonable and (b) that the standards for transfer under § 1404(a) have not been met. Also, plaintiff makes the assertion that "[i]f Global Equipment, Ltd., is a viable corporation and Defendant contends that he is not individually liable, Defendant has no authority to enforce the forum-selection clause at issue in the Contracts." Resp. at 4.
II. Analysis
A. Plaintiff's Contention That Defendant Does Not Have Authority to Enforce the Forum-Selection Clauses.
The basis of plaintiff's contention that defendant does not have authority to enforce the forum-selection clauses is puzzling. Plaintiff sued defendant "individually and d/b/a Global Equipment, Ltd." Notice of Removal, tab A-2 at 1. According to plaintiff's pleading, defendant is an individual who has his home office address in Illinois. The pleading recites that plaintiff and defendant entered into the contracts at issue, and then states causes of action against defendant based on alleged breaches of those contracts and alleged violations of the Texas Deceptive Trade Practices Act growing out of alleged failures of defendant to perform as, according to plaintiff, he promised to perform under the contracts.
In response to defendant's motion to dismiss and for alternative relief, plaintiff reiterated the allegations of his initial pleading by asserting, under the heading "Facts," that the contracts in question were entered into between plaintiff and defendant, and that defendant breached the contracts, causing plaintiff to suffer damages. Then, in a sudden shifting of gears, plaintiff, by allegations that are almost incoherent, takes the position, under the heading "Defendant Cannot Use The Contracts as a Sword and as a Shield," that "[i]f Global Equipment, Ltd., is a viable corporation and Defendant contends that he is not individually liable, Defendant has no authority to enforce the forum-selection clause at issue in the Contracts." Resp. at 4. So far as the court can determine, there is no pleading on file in which defendant has taken the position that he is not individually liable or that Global Equipment, Ltd., is a viable corporation.
Plaintiff hardly is in a position to legitimately assert that defendant cannot rely on the terms and conditions of the contracts at issue. Having been accused by plaintiff of being a party to the contracts, breaching them, and being liable in damages because of those breaches, defendant certainly is entitled to take defensive positions based on the terms and conditions of the contracts. Defendant is not to be deprived of that right simply because he might at a future date also take the position that he was not a party to the contracts.
B. Enforcement of the Forum-Selection Clauses
In addition to providing that they shall be governed by the laws of Illinois, each of the contracts at issue provides that "any and all actions in connection with the enforcement or breach of this Contract shall be filed and maintained only in the Circuit Court of Cook or Lake County, Illinois." Mot. to Dismiss, App., Ex. A at second page, Ex. B at second page. Plaintiff seeks to avoid the effect of these clauses by contending that, if given effect, they would "effectively deprive Plaintiff of its day in Court and [would) violate the public policies of the State of Texas regarding a Texas resident's right to choose venue according to the statutory venue provisions, except where a contract relates to a major transaction, and to have a Texas court litigate Plaintiff's cause of action that is grounded in Texas statutory law." Resp. at 5-6. The court has concluded that plaintiff's efforts to avoid the forum-selection clauses are without merit.
Federal law determines the enforceability of a forum-selection clause in a diversity action. See Haynsworth v. Corporation, 121 F.3d 956, 962 (5th Cir. 1997). There is a presumption that forum-selection clauses are valid and should be enforced:
[F]orum selection clauses "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances," and that courts should enforce such clauses unless the resisting party "could clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching."Int'l Software Sys., Inc. v. Amplicon, 77 F.3d 112, 114 (5th Cir. 1996) (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9-11 (1972)). While enforcement of a forum-selection clause that violates public policy or deprives a party of its day in court would be unreasonable, see Mitsui Co. USA, Inc. v. Mira M/V, 111 F.3d 33, 35 (5th Cir. 1997), proving unreasonableness is a heavy burden that the party opposing the clause must meet. Id.
The Supreme Court has indicated that "serious inconvenience" of the designated forum so as to deprive a party of a meaningful day in court limits a clause's enforcement. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 594 (1991). That plaintiff may face travel inconveniences and expenses for itself and its witnesses, however, is insufficient to preclude enforcement of the clause: "Inconvenience and expense alone are insufficient to form a basis for not enforcing a contractual forum selection clause." Carron v. Holland Am. Line-Westours Inc., 51 F. Supp.2d 322, 326 (E.D.N.Y. 1999) (citing Bense v. Interstate Battery Sys. of Am., 683 F.2d 718, 722 (2d Cir. 1982)).
There has been no showing by plaintiff that enforcement of the forum-selection clauses would be unreasonable or unjust. There is no suggestion that the clauses are invalid for any reason. Nor has plaintiff shown that it would be deprived of its day in court if the causes are enforced. While federal law controls, the court notes that Texas law recognizes the validity of forum-selection clauses, see Mabon Ltd. v. Afri-Carib Enters., Inc., 29 S.W.3d 291, 296 (Tex.App.-Houston [14th Dist.] 2000, no pet.), as do the laws of Illinois, see Yamada Corp. v. Yasuda Fire Marine Ins. Co., Ltd., 712 N.E.2d 926, 930 (Ill.App.Ct. 1999).
There is simply no reason why the forum-selection clauses should not be enforced in this case. The fact that claims are being made by plaintiff under the Texas Deceptive Trade Practices Act does not prohibit enforcement of the clauses. Those claims quite clearly constitute "actions in connection with the enforcement or breach" of the contracts. Plaintiff cannot defeat operation of the clauses by tag-along statutory claims of that kind.
For the reasons given above, the court has concluded that the forum-selection clauses should be given effect.
C. Dismissal Without Prejudice is the Appropriate Enforcement Mechanism.
The forum-selection clauses designate a non-federal forum, providing for a particular state Circuit Court in either Cook or Lake County, Illinois. Accordingly, if the clauses are to be given effect, plaintiff may only maintain a suit in the Illinois state courts enumerated in the forum-selection clause. Therefore, the appropriate action to be taken to give effect to the clauses is to dismiss this action without prejudice so that there can be a refiling in an appropriate court of the State of Illinois.
III. ORDER
For the reasons discussed herein,
The court ORDERS that the above-captioned action be, and is hereby, dismissed without prejudice.