108 N.E.3d 933
Ind. Ct. App.2018Background
- O’Bryant Transport (O’Bryant) and A.L.A. Trucking, Inc. (ALA), both Indiana businesses, entered an Independent Contractor Agreement on December 15, 2015.
- The Agreement included a forum-selection clause (FSC) stating the contract is governed by Texas law and that "suit must be brought in this state," while also permitting ALA to sue O’Bryant where O’Bryant resides or is located.
- O’Bryant sued ALA in Madison County, Indiana in March 2017 alleging breach of contract and fraudulent inducement; ALA moved to dismiss under Trial Rule 12(B)(2) (lack of jurisdiction) and 12(B)(6).
- O’Bryant argued the FSC was ambiguous/permissive ("this state" could mean Indiana), did not grant exclusive venue, and later (in a motion to correct error) asserted Texas would not exercise jurisdiction over the parties.
- The trial court found the FSC unambiguous and mandatory ("this state" interpreted as Texas), concluded the clause was freely negotiated and not unreasonable or a product of fraud/overreaching, and dismissed the Indiana suit. The court denied O’Bryant’s motion to correct error; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FSC is ambiguous or permissive | "This state" is ambiguous and, because Agreement was signed in Indiana, refers to Indiana; FSC is permissive and does not require Texas forum | "This state" refers to Texas (the only state named) and the clause uses mandatory language requiring suit in Texas | FSC is unambiguous and mandatory; "this state" construed as Texas and "suit must be brought" is exclusive |
| Whether FSC need identify a specific county or otherwise grant exclusivity | Clause fails to name a particular Texas county or explicitly grant exclusivity, so it is permissive | Naming the state is sufficient; exclusivity can be conferred by mandatory language without specifying county | A designation of Texas suffices; lack of county does not invalidate exclusivity (per Carnival reasoning) |
| Whether the FSC is unenforceable for fraud, overreaching, unconscionability, or because it deprives O’Bryant of a day in court | Enforcement would be unjust/unreasonable; Texas lacks contacts and likely will not exercise jurisdiction, so O’Bryant would be denied a remedy | Parties freely negotiated the Agreement; both businesses were on equal footing; inconvenience to litigate in Texas does not, by itself, render clause unenforceable | FSC was freely negotiated, reasonable and enforceable; mere inconvenience or lack of local contacts (absent proof) does not vitiate clause |
| Whether trial court abused discretion by denying motion to correct error based on new affidavit that Texas would not exercise jurisdiction | New (counsel’s) affidavit indicated Texas counsel said Texas would not accept jurisdiction — should alter result | Affidavit was not newly discovered, was hearsay/conclusory and could have been produced earlier; cannot raise new issue on motion to correct error | Motion to correct error properly denied; court need not consider the late affidavit and issue was waived |
Key Cases Cited
- Grott v. Jim Barna Log Sys.-Midwest, Inc., 794 N.E.2d 1098 (Ind. Ct. App. 2003) (forum-selection clauses enforceable if freely negotiated and not result of fraud/overreaching)
- Horner v. Tilton, 650 N.E.2d 759 (Ind. Ct. App. 1995) (forum-selection clauses are not per se invalid)
- Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (state-level forum-selection clause enforcing forum designation without naming a county was valid)
- Mechanics Laundry & Supply, Inc. v. Wilder Oil Co., Inc., 596 N.E.2d 248 (Ind. Ct. App. 1992) (adopting Carnival reasoning on contractual consent to jurisdiction)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (standard that enforcement may be denied only when forum-selection clause would be unreasonable or unjust)