Summary
recognizing the enforceability of choice-of-law and forum-selection clauses
Summary of this case from E. Bay Women's Health, Inc. v. Glostream, Inc.Opinion
Docket No. 196104.
Submitted May 13, 1997, at Marquette.
Decided July 8, 1997, at 9:20 A.M.
Mika, Meyers, Beckett Jones, P.L.C. (by Neil P. Jansen), for the plaintiffs. Doyle Group Attorneys, P.C. (by James D. Stone), for the defendant.
Before: O'CONNELL, P.J., and SAWYER and MARKMAN, JJ.
In this declaratory action, plaintiffs appeal as of right the order of the circuit court granting summary disposition in favor of defendant on the ground that the court lacked subject-matter jurisdiction. MCR 2.116(C)(4). We vacate and remand.
Davna Investments Limited, owner of an apartment building in Grand Rapids, Michigan, entered into an agreement with defendant whereby defendant was permitted to maintain coin-operated laundry equipment in the laundry areas of the apartment building. Paragraph twelve of the agreement provided that "[t]his Agreement shall be governed by the laws of the State of Illinois with the courts of Cook County having sole and exclusive jurisdiction." Plaintiffs purchased the building from Davna Investments and, soon thereafter, filed a declaratory action in the Kent Circuit Court, Michigan, to determine their rights vis-à-vis defendant's rights with respect to the laundry areas of the building.
The circuit court ruled that, because the forum selection clause in the agreement provided that the courts of Cook County, Illinois, had exclusive jurisdiction over disputes pertaining to the contract, it lacked jurisdiction to hear plaintiffs' complaint. Implicit in the circuit court's reasoning was its assumption that only the courts of Cook County had jurisdiction to determine whether plaintiffs were, in fact, subject to the terms of the agreement. Accordingly, the court granted summary disposition in favor of defendant pursuant to MCR 2.116(C)(4). Plaintiffs now appeal as of right. Our review is de novo. Steele v Dep't of Corrections, 215 Mich. App. 710, 712; 546 N.W.2d 725 (1996).
As stated in Jones v State Farm Mut Automobile Ins Co, 202 Mich. App. 393, 397; 509 N.W.2d 829 (1993), "[g]enerally, matters relating to [a] right of action are governed by the laws of the state where the cause of action arose." However, parties may, in general, agree that all causes of action pertaining to a particular matter will be brought in a particular venue, MCL 600.745; MSA 27A.745, or be subject to the law of a particular jurisdiction. Hardy v Monsanto Enviro-Chem Systems, Inc, 414 Mich. 29, 86, n 60; 323 N.W.2d 270 (1982); Chrysler Corp v Skyline Industrial Services, Inc, 199 Mich. App. 366, 369-371; 502 N.W.2d 715 (1993). The former are typically termed forum selection provisions and the latter choice-of-law provisions. See Banek Inc v Yogurt Ventures USA, Inc, 6 F.3d 357, 360 (CA 6, 1993) (recognizing the distinction between forum selection provisions and choice-of-law provisions under the Franchise Investment Law, MCL 445.1501 et seq.; MSA 19.854[1] et seq.).
In the instant case, we believe that the circuit court erred in ruling that the forum selection provision set forth in the agreement dictated that the threshold question, that is, whether plaintiffs were bound by the agreement, be answered by an Illinois court. The present situation is analogous to disputes concerning whether a particular party is subject to an arbitration agreement. As stated by our Supreme Court, Kaleva-Norman-Dickson School Dist No 6, Counties of Manistee, Lake Mason v Kaleva-Norman-Dickson School Teachers' Ass'n, 393 Mich. 583, 591; 227 N.W.2d 500 (1975), relying on United Steelworkers of America v American Mfg Co, 363 U.S. 564, 568; 80 S Ct 1343; 4 L Ed 2d 1403 (1960), "the question whether a dispute is arbitrable is for a court. . . ." More specifically, a "party cannot be required to arbitrate an issue that he has not agreed to submit to arbitration." St Clair Prosecutor v AFSCME, 425 Mich. 204, 220-224; 388 N.W.2d 231 (1986), quoting Kaleva, supra, p 587. Thus, in the context of arbitration, the threshold issue is not governed by the terms of the arbitration agreement, which would be a circular proposition, but by the court.
We see no reason why this approach is not equally applicable to contracts bestowing jurisdiction on a particular court. A contractual forum selection clause, though otherwise valid, may not be enforced against one not bound by the contract. See St Clair Prosecutor, supra. Just as the courts have jurisdiction to determine the threshold issue whether a party is bound to arbitrate pursuant to an agreement, we believe the courts of the state "where the cause of action arose," Jones, supra, p 397, have jurisdiction to determine the threshold issue whether a party is bound by a contract, and, accordingly, any forum selection and choice-of-law provision in the contract.
Here, plaintiffs contended that they were not bound by the agreement of the previous owner of the property. Plaintiffs were not signatories to the contract, and they argued that because the contract in question constituted a license, in contrast to a lease, it was revoked upon conveyance of the underlying property. Thus, before concluding that the present action should have been brought in Illinois, the circuit court should first have determined the threshold question whether plaintiffs were properly subject to the agreement. The court did not make this determination. Therefore, we vacate the order appealed and remand to allow the court to rule on this issue.
Vacated and remanded. Jurisdiction is not retained.