Opinion
No. 2-238 / 01-0652.
Filed December 30, 2002.
Appeal from the Iowa District Court for Jefferson County, DAN F. MORRISON, Judge.
Plaintiff appeals from the order granting the defendant's motion to dismiss in which the district court found personal jurisdiction lacking. AFFIRMED.
Steven Gardner of Kiple, Denefe, Beaver, Gardner Zingg, L.L.P., Ottumwa, for appellant.
Edward W. Remsburg of Ahlers, Cooney, Dorweiler, Haynie, Smith Albee, P.C., Des Moines, for appellees.
Heard by HECHT, P.J., and VAITHESWARAN and EISENHAUER, JJ.
Telegroup, Inc., appeals from an order dismissing its action against Tech Pacific Holdings Party, Ltd. (Tech Pacific), Switch Holdings Party, Ltd. (Switch Holdings), and Frame Relay Party Limited (Frame Relay). The district court concluded it lacked personal jurisdiction over the defendants, and alternatively, that it would decline jurisdiction under the doctrine of forum non conveniens. We affirm.
I. Background facts and proceedings.
Telegroup is a corporation with its principal place of business in Fairfield, Iowa. In early 1998, Hagemeyer Asian Pacific Limited (Hagemeyer), a Netherlands-based holding company and the parent company of Tech Pacific, sought to locate a purchaser for Switch Holdings and Frame Relay. Tech Pacific, Switch Holdings, and Frame Relay are Australian companies, and do no business in Iowa. Following negotiations involving Salomon Smith Barney and Claudia Weldon, Telegroup's New York-based consultant, Telegroup acquired through a share sale agreement and an asset sale agreement the shares of Switch Holdings and Frame Relay for $36,000,000 Australian. Both of the agreements were drafted, negotiated, and executed in Sydney, Australia. Further, the agreements called for Australian law to govern their performance.
Approximately six months after Telegroup's acquisition of Switch Holdings and Frame Relay, the two companies proceeded to lose millions of dollars. Telegroup subsequently filed a voluntary bankruptcy petition, allegedly as a result of misrepresentations made by the defendants during the contract negotiations. All of Telegroup's employees, including those in Iowa, lost their jobs as a result of the financial difficulties.
Telegroup filed a petition at law against Tech Pacific, Switch Holdings, and Frame Relay for breach of contract and fraud, seeking damages in excess of $36,000,000 Australian. The defendants responded by filing a motion to dismiss, in which they claimed the District Court of Jefferson County lacked personal jurisdiction, or in the alternative that the court should dismiss the action on the ground of "forum non conveniens." Telegroup and the defendants each filed substantial documentary exhibits and affidavits in support of their positions. On March 26, 2001, the district court issued a ruling sustaining the motion to dismiss on both in personam jurisdiction and forum non conveniens grounds. Telegroup appeals.
II. Scope of review.
We review a district court's ruling on a motion to dismiss for correction of errors at law. Pa. Life Ins. Co. v. Simoni, 641 N.W.2d 807, 810 (Iowa 2002). The trial court's findings of fact have the effect of a jury verdict and are subject to challenge only if not supported by substantial evidence in the record. State ex rel. Miller v. Internal Energy Mgmt. Corp., 324 N.W.2d 707, 709-10 (Iowa 1982). We are not bound, however, by the trial court's application of legal principles or its conclusions of law. Id.
III. Waiver clause.
Telegroup entered into written contracts to purchase Switch Holdings and Frame Relay. Contained in that agreement was the following clause: Each Party irrevocably and unconditionally:
(a)submits to the non-exclusive jurisdiction of the courts of New South Wales, Australia and courts hearing appeals from those courts;
(b)waives any claim or objection based on absence of jurisdiction or inconvenient forum. . . .Telegroup urged below that this provision prevented the defendants from making a claim or objection based on the absence of jurisdiction in Iowa or that Iowa is an inconvenient forum. The defendants asserted that clause (b) should be read as only serving to waive jurisdictional defects or claims of forum non conveniens when an action is brought in the courts of New South Wales, Australia. The district court agreed with the defendants, and concluded the above clauses only apply in actions brought in Australian courts, and thus do not prohibit defendants from asserting lack of jurisdiction or forum non conveniens when the action is brought outside of Australia. The purchase agreement expressly calls for application of the laws of New South Wales, Australia. Thus, the district court looked to Australian law to govern the construction of the waiver provision. Foreign law must be pleaded and proven. Zeman v. Canton State Bank, 211 N.W.2d 346, 349 (Iowa 1973). Here, the parties provided the district court with affidavits detailing how Australian law would apply to this question. Because the question of foreign law is a factual determination for the court, we are bound by the district court's findings as to the applicable Australian law if supported by substantial evidence in the record. See Walsh v. Nelson, 622 N.W.2d 499, 502 (Iowa 2001). Evidence is substantial when a reasonable mind would accept it as adequate to reach a conclusion. Flanagan v. Consolidated Nutrition, L.C., 627 N.W.2d 573, 577 (Iowa Ct.App. 2001).
We believe the court's findings with respect to Australian law are supported by substantial evidence and are in accord with governing Australian law as shown in the affidavits. The defendants provided the court with the affidavit of Ruth McColl, a barrister of the Supreme Court of New South Wales, who analyzed the waiver provision with regard to Australian law. She noted that an Australian court is empowered to construe a document in a manner which will avoid an absurdity or illogical result. See Fitzgerald v. Masters, (1956) 95 C.L.R. 420, 426. McColl opined and the district court found that an absurdity would result if clause (b) were read to waive any objection based upon jurisdictional or inconvenience grounds in actions brought outside of Australia in a jurisdiction with little or no connection to the facts of this case. We believe the district court's findings with respect to the applicable Australian law are supported by substantial evidence, and therefore affirm the district court's determination that the agreements between the parties did not waive the defendants' challenges in this case to in personam jurisdiction and the inconvenience of the Iowa forum.
IV. Forum non conveniens.
The decision as to which forum should hear a case lies in the sound discretion of the trial court. Silversmith v. Kenosha Auto Transport, 301 N.W.2d 725, 726 (Iowa 1981). We accord considerable deference to a district court's ruling in such cases. In re Marriage of Kimura, 471 N.W.2d 869, 879 (Iowa 1991).
Forum non conveniens is a facet of venue under which a court can decline to proceed with an action, although venue and jurisdiction are proper." Id. Application of the doctrine presupposes at least two forums in which jurisdiction and venue are proper. Douglas Mach. Eng'g Co. v. Hyflow Blanking Press Corp., 229 N.W.2d 784, 791 (Iowa 1975). The doctrine was developed as a means of protecting a defendant from having to defend in an unreasonably inconvenient forum. See Hoth v. Sexton, 539 N.W.2d 137, 139 (Iowa 1995).
Factors of private interest that bear upon this determination include the following: the relative ease of access to sources of proof; the availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; the possibility of view of the premises, if view would be appropriate to the action; the enforceability of the judgment if one is obtained; and all other practical problems that make trial of a case easy, expeditious, and inexpensive. Kimura, 471 N.W.2d at 878. Factors of public interest include the administrative difficulties for courts, trial in the forum that is the home of the state law which governs the case, and the burden of jury duty imposed on citizens of a forum with no relation to the litigation. Id. at 878-79.
On our review of the district court's ruling and the relevant factors, we conclude the court did not abuse its discretion in finding the inconvenience of trying the case in Iowa outweighs any interest Iowa has in exercising jurisdiction. We first note that the lack of direct contacts with the State of Iowa during the negotiation and performance of the purchase of the defendants. No representative of the defendants ever traveled to Iowa, and no meetings between the parties took place here between the parties. The communications sent by defendants to Telegroup in Iowa were transmitted via either email or fax communications .
We acknowledge plaintiff's allegation that it relied upon the substance of these communications which included specific and fraudulent misrepresentations as to the financial condition of Switch Holdings and Frame Relay. Although this allegation would have great importance in a determination of whether the Iowa district court could maintain in personam jurisdiction over the defendants, our disposition of the forum non conveniens issue makes it unnecessary for us to reach the jurisdictional issue.
Further, although witnesses and evidence pertaining to the damages claimed by plaintiffs in this case would likely be predominately located in Iowa, the vast majority of relevant sources of proof on the liability issue will be located in Australia where the defendant companies, their employees, and their documents are located. Evidence was presented posing serious questions as to the efficacy of an Iowa court's subpoena power in Australia, the country certain to be the home of a large number of witnesses in this case. Moreover, evidence was presented in the district court calling into question whether an Iowa judgment against the defendant could be enforced in Australia. Ruth McColl's affidavit, in which she analyzed Australian law, concluded any judgment obtained by Telegroup in Iowa would not be enforceable in Australia under either statutory or common law. The simple practicalities of a trial based so extensively upon actions, individuals, and documents found in Australia would be rendered substantially more difficult if held in Iowa.
Furthermore, like the district court, we believe the factors of public interest weigh in favor of the Iowa district court declining jurisdiction. Wherever this case is tried, the court will have to apply Australian law. The task for an Iowa court, Iowa lawyers, and an Iowa jury to determine and apply Australian law will be burdensome. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 843, 91 L.Ed. 1055, 1066 (1947) (noting there is an appropriateness in having the trial in a forum that is at home with the law that must govern the case). Granting the district court all due latitude regarding this discretionary matter, we affirm the order declining jurisdiction based on the inconvenience of the Iowa forum. Accordingly, we need not reach the issue of whether several email and telefax communications sent by defendants to the plaintiff in Iowa are sufficient to support in personam jurisdiction over the defendants in this case.