424 P.3d 436
Ariz. Ct. App.2018Background
- Dunn sold his ownership interest in Urgent Cares via a Letter of Transmittal (LOT) that incorporated a multi-party Purchase Agreement selecting Delaware law and Delaware as the exclusive forum; he received $1,000,000 and agreed to a five-year post‑closing non‑compete.
- Dunn later executed a Second Amended Employment Agreement with FastMed (included a six‑month non‑compete) and subsequently signed a Separation Agreement with FastMed upon resignation that incorporated the six‑month covenant and contained a broad integration clause stating the Separation Agreement superseded any prior agreements.
- Banner Health rescinded an employment offer to Dunn after FastMed asserted the LOT’s five‑year covenant would be breached by Dunn’s new employment; Dunn sued in Arizona seeking declaratory relief and injunctive relief, alleging the Separation Agreement superseded the LOT/Purchase Agreement.
- Appellees moved to dismiss based on the Purchase Agreement’s Delaware forum‑selection clause; the superior court dismissed without prejudice and permitted refiling in Delaware, awarding attorneys’ fees to Appellees.
- On appeal, the court reviewed (1) whether the Separation Agreement superseded the LOT/Purchase Agreement and (2) the enforceability of the forum‑selection clause; it affirmed the dismissal and awarded fees on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Purchase Agreement (incorporated by the LOT) was properly considered on a Rule 12(b)(6) motion | Dunn: Purchase Agreement was not part of the Complaint and thus should not be considered on dismissal | Appellees: LOT (attached) incorporated the Purchase Agreement; it is central to the claims and may be considered | Court: Purchase Agreement was properly considered because it was integral to and referenced by the Complaint/LOT |
| Whether the Separation Agreement’s integration clause superseded the LOT and Purchase Agreement | Dunn: Separation Agreement’s broad “entire agreement/supersedes any other agreements” clause supersedes prior forum and non‑compete terms | Appellees: Separation Agreement addressed employment separation only and did not change transaction documents; parties differ across agreements | Court: Integration clause does not supersede prior transaction agreements because the Separation Agreement and LOT/Purchase Agreement cover different scopes and involve different parties |
| Whether Dunn’s claims fall outside the Purchase Agreement’s forum‑selection clause | Dunn: Separation Agreement displaced the forum clause so Arizona forum is proper | Appellees: Forum clause applies to all actions arising under the Purchase Agreement and was assented to in the LOT; claims fall within its scope | Court: Claims fall within the forum‑selection clause; enforcement is reasonable and parties were sophisticated; dismissal for improper venue upheld |
| Whether the forum‑selection clause is unenforceable due to unfair bargaining or deprivation of day in court | Dunn did not press these arguments below (focused on supersession) | Appellees: Clause was negotiated/assented to; parties were represented and sophisticated | Court: Will not consider new arguments not raised below; forum clause is enforceable and dismissal affirmed |
Key Cases Cited
- Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 140 Ariz. 383 (1984) (Adopts Restatement approach: a completely integrated agreement supersedes only prior agreements within its scope)
- Bennett v. Appaloosa Horse Club, 201 Ariz. 372 (App. 2001) (review of forum‑selection clause enforceability is de novo and clause enforced if reasonable)
- ELM Retirement Ctr., LP v. Callaway, 226 Ariz. 287 (App. 2010) (documents central to the complaint may be considered on a Rule 12(b)(6) motion even if not appended)
- Pinnacle Peak Developers v. TRW Inv. Corp., 129 Ariz. 385 (App. 1981) (contracts between sophisticated parties may be enforced and parol evidence excluded)
- Dusold v. Porta‑John Corp., 167 Ariz. 358 (App. 1990) (dismissal based on forum‑selection/arbitration provisions can be appealable under statutory jurisdictional provisions)