123 N.E.3d 689
Ind.2019Background
- O’Bryant Transport (plaintiff) and A.L.A. Trucking (defendant) entered an independent-contractor agreement containing a forum-selection clause stating the agreement was drawn under Texas law and that “suit must be brought in this state.”
- O’Bryant sued in Madison Circuit Court, Indiana, alleging breach of contract and fraudulent inducement and seeking to pierce the corporate veil to reach Indiana-resident owners Alan and Luan Adams.
- Defendants moved to dismiss under Trial Rule 12(B)(2) (lack of personal jurisdiction) based on the forum-selection clause and under 12(B)(6) to dismiss veil-piercing and fraud claims.
- Trial court held the clause mandatory and referring to Texas, dismissed the amended complaint without prejudice; O’Bryant’s motion to correct error (with an affidavit claiming Texas courts wouldn’t accept jurisdiction) was denied.
- Indiana Court of Appeals affirmed the 12(B)(2) dismissal; Indiana Supreme Court granted transfer and affirmed dismissal without prejudice but held the trial court erred in dismissing for lack of personal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of "this state" in the forum-selection clause | “This state” refers to Indiana (where agreement executed) | “This state” refers to Texas (only state named in clause) | Clause is mandatory and unambiguously refers to Texas |
| Whether clause is mandatory or permissive | Clause is ambiguous/permissive | Phrase “must be brought” is mandatory | Clause is mandatory ("must be brought" requires suit in specified forum) |
| Enforceability of the forum-selection clause | Clause is invalid because Texas courts would not provide a remedy / clause is unreasonable | Clause is freely negotiated and presumptively enforceable; parties can consent to jurisdiction | Clause is valid and enforceable; plaintiff failed to meet burden to show invalidity (affidavit evidence waived and insufficient) |
| Effect of valid forum-selection clause on Indiana court’s personal jurisdiction and proper remedy | Clause deprives Indiana court of personal jurisdiction; dismissal under 12(B)(2) was proper | A valid clause means parties consent to another forum but does not divest home-state courts of jurisdiction; 12(B)(2) is not proper vehicle | A valid forum-selection clause does not strip Indiana courts of personal jurisdiction; dismissal under 12(B)(2) was error, but dismissal without prejudice was nonetheless proper because clause is enforceable; defendants should use a motion to enforce clause rather than 12(B)(2) |
Key Cases Cited
- LinkAmerica Corp. v. Cox, 857 N.E.2d 961 (Ind. 2006) (standard of review for dismissal for lack of personal jurisdiction)
- Haegert v. Univ. of Evansville, 977 N.E.2d 924 (Ind. 2012) (presumption of freedom of contract)
- Carmeuse Lime & Stone v. Illini State Trucking, Inc., 986 N.E.2d 271 (Ind. Ct. App. 2013) (enforceability standard for forum-selection clauses)
- Dexter Axle Co. v. Baan USA, Inc., 833 N.E.2d 43 (Ind. Ct. App. 2005) (court of appeals precedent disapproved to extent it allowed 12(B)(2) dismissal based solely on forum clause)
- Grott v. Jim Barna Log Sys.-Midwest, Inc., 794 N.E.2d 1098 (Ind. Ct. App. 2003) (same)
- O’Bryant v. Adams, 108 N.E.3d 933 (Ind. Ct. App. 2018) (court of appeals opinion affirming 12(B)(2) dismissal)
- Abacan Tech. Servs. Ltd. v. Glob. Marine Int'l Servs. Corp., 994 S.W.2d 839 (Tex. Ct. App. 1999) (Texas law permitting consent to jurisdiction by contract)
- In re AIU Ins. Co., 148 S.W.3d 109 (Tex. 2004) (discussion of consent to jurisdiction and forum clauses)