Opinion
No. HHB CV09 5010080
June 4, 2009
MEMORANDUM OF DECISION ON MOTION TO DISMISS
The plaintiff brings this action against the defendant, claiming damages for breach of contract, breach of warranties, and unfair trade practices, resulting from a malfunctioning computer software system sold by the defendant to the plaintiff. The defendant, a corporation located in Portland, Maine, has filed a Motion to Dismiss, alleging that the parties agreed that any litigation would take place in Portland, Maine. The plaintiff denies that any such agreement controls the jurisdiction and venue of this case and opposes the motion to dismiss.
FACTS
In December 1, 2006, the plaintiff medical practice received a proposal from the defendant for the sale of a computer system that included software for electronic medical records, billing and scheduling, together with ten workstations and a specific number of hours of on-line training. On December 5, 2006, the plaintiff accepted the proposal — which contained the price of the computer suite — by signing and returning the proposal and by sending a deposit of fifty percent of the price of the suite.
After receiving the signed proposal and the check, the defendant sent to the plaintiff a document package that consisted of three sets of documents: 1) a Business Associate Agreement, which the plaintiff was required to sign and return, 2) a document entitled Licensing Agreement, and 3) a document entitled Support/Update Policy Service Guidelines Of these documents, only the first — the Business Associate Agreement — contained a requirement for the plaintiff's signature. The other two documents contained no signature lines and the plaintiff was not required by the defendant to sign and return copies of the latter two to the defendant. The plaintiff signed the Business Associate Agreement and sent a copy of it to the defendant on January 3, 2007.
After the receipt of these documents, the plaintiff was provided with access to the defendant's product, in particular the software, available for download into a pre-installed program on the plaintiff's computers, and with two days of training for the staff of the plaintiff on December 27 and 28, 2006. By the summer of 2007 the plaintiff was experiencing significant problems with the defendant's product. On October 16, 2008, the plaintiff commenced this lawsuit against the defendant for breach of contract, breach of warranties, and violation of CUTPA.
THE FORUM SELECTION CLAUSE
The defendants sent the plaintiff the Licensing Agreement in hard copy consisting of two pages. It was included in a package of documents that contained the Business Associate Agreement, which required a signature of the plaintiff, and the Support/Update Policy Service Guidelines, which did not. The Licensing Agreement has no signature lines. The defendant did not require the plaintiff to assent in writing to the Licensing Agreement.
At the top of the first page, in all capital letters but in the same font as the succeeding text, are the words "LICENSING AGREEMENT" followed by the sentences, " PLEASE READ THIS LICENSE CAREFULLY BEFORE USING THIS SOFTWARE, BY USING THIS SOFTWARE, YOU AGREE TO BECOME BOUND BY THE TERMS OF THIS LICENSE." That set-off paragraph is then followed by paragraphs in regular text under the following headings: DISCLAIMER; 1. License; 2. Restrictions; 3. Termination; 4. Passwords; 5. Export Law Assurances; 6. Limited Warranty; 7. Limitation of Remedies and Damages; 8. General. The final paragraph — General — reads as follows:
This License shall be construed and interpreted under the laws of the State of Maine and any jurisdiction and venue for litigation shall be in Portland Maine. If any provision of this License shall be held by a court of competent jurisdiction to be contrary to law, that provision will be enforced to the maximum extent permissible, and the remaining provisions of this License will remain in full force and effect.
It is the first sentence of this final paragraph in the Licensing Agreement that gives rise to the current controversy.
THE LAW OF FORUM SELECTION CLAUSES
Historically, forum selection clauses were disfavored by both federal and state courts. See, Bremen Unterweser Reederei v. Zapata Off-Shore Co., 407 U.S. 1, 9, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). Courts acted under the "presumption that enforcing such clauses would be contrary to public policy" and would be an attempt to "oust the jurisdiction" of the court. Id. However, in Bremen, supra, the court held that a forum selection clause was valid and would be enforced by courts, unless some compelling reason made enforcement of such a clause unreasonable under the circumstances. Id. at 10.
Connecticut courts adopted the Bremen rationale. In United States Trust Co. v. Bohart, 197 Conn. 34, 41-43, 495 A.2d 1034, 1039-40 (1985), the Connecticut Supreme Court rejected the argument that the due process rights of the nonresident defendants would be violated if suit in Connecticut were permitted based on a forum selection clause. The court embraced the rule of Bremen and its progeny, stating that "[a]bsent a showing of fraud or overreaching, such forum clauses will be enforced by the courts." United States Trust Co. v. Bohart, supra, at 42.
But a forum selection clause does not operate to strip the court of jurisdiction when jurisdiction is otherwise proper. See Reiner, Reiner Bendett, P.C. v. Cadle Co., 278 Conn. 92, 897 A.2d 58 (2006). Rather, such a clause presents the question of whether it is reasonable for the court to exercise its jurisdiction in the particular circumstances of the case. See Bremen, supra, 407 U.S. at 12, and Reiner, supra, at 103.
In Bremen the court held that enforcement of a forum selection clause is unreasonable if the binding contract was made through the use of fraud, undue influence, or overweening bargaining power; or if a strong public policy in the forum in which suit is brought finds forum selection clauses unenforceable, either by statute or judicial decision. Bremen, supra, at 12, 15. The forum selection clause can also be found unenforceable if the moving party can "clearly" show that enforcing the clause "would be unreasonable or unjust." Id. at 15. In determining whether it is proper to exercise its jurisdiction notwithstanding a contractual selection of a forum in a sister state, the court must determine whether the exercise of jurisdiction by the Connecticut courts would make the litigation so difficult or inconvenient that a party is at a severe disadvantage compared to its opponent. See United States Trust v. Bohart, supra, 42. Bremen teaches that the correct approach is to place the burden on the party seeking relief from the forum selection clause to "clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching." Bremen, supra, 15.
THE CIRCUMSTANCES OF THIS LAWSUIT
It is important to note that the facts of this case do not substantially implicate due process. Even if the defendant were compelled to continue to defend this matter in Connecticut, this is not a case in which it can be claimed that there is a lack of "minimum contacts" with this jurisdiction. Cf. Kulko v. California Superior Court, 436 U.S. 84, 92, 98 S.Ct. 1690, 56 L.Ed.2d 132, reh. denied, 438 U.S. 908, 98 S.Ct. 3127, 57 L.Ed.2d 1150 (1978). Rather the issue is whether the circumstances under which these parties entered into an agreement to select Portland, Maine, as the forum, and the circumstances in which the parties now find themselves, support the enforcement of the forum selection clause.
To the extent that a forum selection clause is the product of a mutual agreement of the parties, that clause is presumptively valid and will be enforced. See Bremen v. Zapata OffShore Co., supra, 407 U.S. 1, 12. But several factors were enumerated in Bremen that could result in a clause being held unenforceable, including fraud or overreaching in the contract negotiations, serious inconvenience from litigating in the selected forum, or the contravention of a strong public policy in the forum in which suit is brought if the clause is enforced. Id., 15-17; Reiner, Reiner Bendett P.C. v. Cadle Co., supra, n. 9.
Connecticut versus Maine
Although the plaintiff has presented evidence of the inconvenience of having to litigate this matter in Maine, that evidence is insufficient, by itself, to persuade the court to decline to enforce the forum selection clause. Yes, the plaintiff may suffer some disruption if the litigation becomes lengthy or complex. Yes, most of the fact witnesses are likely to be located in Connecticut, where all of the troublesome computer glitches were felt. But in the evidentiary hearing conducted by this court, the parties also stipulated that the drive time between New Britain, Connecticut, and Portland, Maine, is about four hours, not a distance that is likely to put either party at a severe disadvantage. And there is simply no evidence that the courts in the State of Maine are less amenable to fairly resolving this dispute than those of Connecticut. If these were the only set of factors in play, the plaintiff would have failed to carry its burden of resisting the forum selection clause.
The Contract Documents
It is interesting to note that in Bremen itself, one fact that persuaded the Supreme Court to enforce the disputed forum selection clause was that the choice of forum "was made in an arm's-length negotiation by experienced and sophisticated businessmen . . ." Bremen, supra, CT Page 9365 407 U.S. at 12. As part of the analysis, the Court found "strong evidence that the forum clause was a vital part of the agreement, and it would be unrealistic to think that the parties did not conduct their negotiations, including fixing the monetary terms, with the consequences of the forum clause figuring prominently in their calculations" Id., 14.
As a basis for finding that the forum selection clause in Bremen was the product of free negotiation, the Supreme Court noted that the trial court had found that the defendant "made numerous changes in the contract without altering the forum clause, which could hardly have escaped its attention." Bremen, supra, n. 14. In the instant case, the court finds that the forum selection clause was placed in the documents sent to the defendant in such a way that it undoubtedly escaped the defendant's attention.
The same cannot be said of the disputed clause at issue in this case. The forum selection clause is not contained in either of the documents that required the signature of the parties. Moreover there is no reference at all in either of those signatory documents to the licensing agreement, the forum selection clause, or indeed to any other attachments, schedules, or documents as forming a part of the parties' contract. The licensing agreement did not come with any software on disk to be uploaded and was not contained as part of any program that required a "click-thru" approval by the user. There is nothing in any document, nor even in the appearance of the licensing agreement itself, to alert a party such as the plaintiff that the licensing agreement, a type of document which is usually limited to a description of the permitted and prohibited use of software, might contain a waiver of one's dispute resolution rights.
In fact the plaintiff did not anticipate that the set of documents of which the Licensing Agreement was a part would contain any information relevant to the formation of the contract itself; the plaintiff understood, and reasonably so, that this set of documents contained only the instructions on how to download the purchased software and install it on the FileMaker Pro platform, previously purchased from another vendor and already loaded on its computers. That being so, the evidence suggests that the document package was not originally opened by any employee of the plaintiff but rather by an information technology consultant with whom the plaintiff had contracted to install the defendant's product.
This court holds it to be overreaching for this defendant to attempt to enforce a forum selection clause that is buried in a non-signatory document presented to a contracting party after the formation of the contract in the manner done so here.
CONCLUSION
Although forum selection clauses are generally enforceable, the court is authorized to use its discretion to decline enforcement when the facts warrant. Reiner, supra, at 99. In considering the contract negotiations between these parties, it is evident that the defendant inserted the forum selection clause in the papers sent to the plaintiff after the formation of the contract in such a way that the plaintiff neither assented to the clause nor was aware of the clause until the inception of this controversy. This presents the type of "compelling and countervailing reason" to decline to enforce the forum selection clause that was described in Bremen, at 12. The court finds that the forum selection clause was not the product of the plaintiff's knowing and voluntary assent, and thus the court declines to enforce it.
Accordingly, the Motion to Dismiss filed by the defendant is denied.