112 F. Supp. 3d 1174
D. Kan.2015Background
- Herr Industrial (PA) contracted with CTI Systems (Luxembourg) to supply/install components for a Kansas construction project; contract included mandatory forum-selection clauses designating Luxembourg courts as exclusive forum.
- Herr alleges CTI owes $372,050.66 for work; CTI filed suit in Luxembourg in 2014 asserting overpayment and obtained a judgment against Herr after Herr failed to appear.
- Herr filed suit in Kansas seeking breach of contract, unjust enrichment, recovery on CTI’s bond (Old Republic Surety), KFPCCA penalties/fees, and a declaratory judgment that the Luxembourg judgment is not enforceable in Kansas.
- CTI moved to dismiss based on the forum-selection clause (invoking forum non conveniens) and to dismiss the declaratory judgment claim on the merits (Hilton comity analysis).
- The Kansas court concluded all of Herr’s monetary/substantive claims fall within the contractual forum clause and dismissed them for forum non conveniens; it retained jurisdiction only over Herr’s declaratory-judgment claim but dismissed that claim on the merits for failure to plausibly plead a basis for non-recognition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of forum-selection clause | Clause violates Kansas public policy (KFPCCA) and is unenforceable | Clause is prima facie valid; federal law governs venue and favors enforcement | Enforce clause; dismiss monetary claims under forum non conveniens |
| Scope of clause | Clause should not cover declaratory claim attacking foreign judgment | Clause covers "any and all claims arising out of or in connection with" purchase orders | Monetary claims fall within clause; declaratory-judgment claim does not |
| Whether clause is unreasonable/one-sided | Clause is unfairly one-sided (limits Herr but gives CTI extra venues) | Clause was freely bargained and reasonably reciprocal | Not unreasonable; one-sided features insufficient to avoid enforcement |
| Recognition of Luxembourg judgment (declaratory relief) | Luxembourg judgment violates Kansas public policy/was entered without jurisdiction | Judgment should be recognized under Hilton comity test; Luxembourg had jurisdiction via the clause | Herr failed to plead a Hilton ground; judgment is presumptively enforceable; declaratory claim dismissed |
Key Cases Cited
- Atlantic Marine Constr. Co. v. United States Dist. Court for W. Dist. of Tex., 134 S. Ct. 568 (U.S. 2013) (forum-selection clauses normally enforced; transfer or dismissal governed by §1404(a)/forum non conveniens principles)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (U.S. 1972) (forum-selection provisions prima facie valid; unenforceable only for fraud, overreaching, or strong public-policy reasons)
- Excell, Inc. v. Sterling Boiler & Mechanical, Inc., 106 F.3d 318 (10th Cir. 1997) (discussing choice-of-law and forum-selection clause issues in diversity cases)
- Yavuz v. 61 MM, Ltd., 465 F.3d 418 (10th Cir. 2006) (contract choice-of-law can govern interpretation of forum clauses; distinguishes enforceability questions)
- Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953 (10th Cir. 1992) (party resisting forum clause bears heavy burden to show invalidity or unreasonableness)
- American Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d 921 (10th Cir. 2005) (applied federal Bremen standards to enforce forum-selection clause)
- Albemarle Corp. v. AstraZeneca UK Ltd., 628 F.3d 643 (4th Cir. 2010) (state statutes disfavouring mandatory forum clauses do not necessarily express a "strong public policy" sufficient to avoid enforcement)
- Hilton v. Guyot, 159 U.S. 113 (U.S. 1895) (federal courts apply comity factors when deciding recognition of foreign judgments)
- Phillips USA, Inc. v. Allflex USA, Inc., 77 F.3d 354 (10th Cir. 1996) (endorsing Hilton factors for recognition of foreign judgments)