*1 v FINANCIAL, SHACKS, OMNE INC INC May 14, 1997, Lansing. Docket No. 190550. Submitted Decided Novem- appeal 14, 1997, sought. ber at 9:35 A.M. Leave to Financial, Inc., brought in Omne an action the Oakland Circuit Court against Shacks, Inc., Shacks, Jr., alleging coiporate and Lee that the a lease and individual defendant had breached defendant had guaranty by failing required breached a of the lease to make the payments seeking damages under the lease and and the return of property. Shacks, Inc., the leased Defendant entered into a lease whereby Interstate, Inc., with North American North American supply equipment monthly pay- would certain in return for fixed Shacks, Jr., personally pay- guaranteed Lee ments. Defendant provision whereby agreed The lease contained a the lessee ments. any action, suit, proceeding arising that the venue of or out of the County. lease would be in the courts of Oakland The lease was assigned plaintiff, in which filed its suit the Oakland Circuit pursuant Court to the of the lease when the defendants required payments failed to make the under the lease. The defend- change County ground Saginaw ants moved to venue to on the County improper. court, in Oakland Richard D. The Kuhn, J., a denied motion for of venue on the basis that parties’ agreement concerning venue should be enforced. The appealed by granted. defendants leave Appeals The Court of held: power. Legislature’s 1. The establishment of venue is within the Legislature provided 600.1621; The MSA 27A.1621 that venue, except respect specific types actions, to certain will county resides, place lie in the in which a defendant has a of busi- ness, or, corporate involved, if a or conducts business defendant county registered corporate in the in which the office of the defendant is located. If none of the defendants meets one or more criteria, county plaintiff venue lies in the in which a those place of, corporate plaintiff, a if resides or has of business a in the county registered corporate plaintiff. Legis- office of the provided lature further in MCL MSA 27A.1605that venue personal property tangible of an action to recover lies it, subject property, part that the is situated. Although Michigan agreements 2. courts have enforced which stipulated agreement venue in an that was have arisen, inap- entered into after the cause of action had it would be prior propriate, law has continu- even if it is assumed that the case effect, binding rule to enforcement ous to extend that court-made *2 entered into of choice of venue contained Legislature estab- before a cause of action arose. The fact that the personal jurisdiction parties lished a rule that allows to consent to respect venue, by contract, provision but made no similar with to Appeals doing Legisla- that which the constrains the Court of from legislative a ture has chosen not to do. The scheme evidences clear by Legislature shopping, intent to control venue an intent that parties if would be subverted could contract dictate the venue any potential might of cause of action that arise in the future. Accordingly, provisions presuming contractual to fix the venue of any potential binding Michigan future cause of action is not on courts. any attempts agreement 3. Because that to fix venue before a cause of action has arisen will not be enforced because such an agreement Legislature, inis conflict with the clear intent of the it improper unacceptable legislatively be would to allow result to by treating agreement party’s right an occur such as a waiver of a party’s challenge change a to venue or as consent to a of venue. 4. the extent that the trial To court denied the motion for a change provision of venue on the basis that the venue the con- of enforceable, remand, tract was it erred. On the court must consider light the motion for a of venue statutes and court may relating provision rules to venue and consider the venue in the only provision agreement lease to the extent that the lease is rele- vant to the factors set forth in the statutes.
Reversed and remanded. J., dissenting, stated that because neither the statutes nor Taylor, prohibit parties contractually agreeing the court rules from to a choice of venue and because enforcement a contractual of such way power Leg- choice of venue would in no undermine the of the respect question venue, islature with to the the modem view that allows to venue choose the for the resolution of their disputes adopted, parties’ agreement concerning should be and the any litigation arising the venue of under the lease in this case properly given effect the trial court. — — op Venue Choice Venue Contracts. provision whereby parties agree A in a contract to the venue of any potential might future causes of action that arise between the enforceable, provision is not a nor such be treated as a party’s right challenge party’s waiver venue or as a consent venue; proper change of venue of an action must to a motion for a pursuant relating to the statutes and court rules be determined concerning
venue, agreement being contractual only to the extent that it is relevant to the factors set considered (MCL 27A.1621). in the venue statutes forth Alii, plaintiff. D. for the John for the defendants. Henry Marsh, G. Neff, P.J.,
Before: and Wahls JJ. Taylor, presents This case us with the question Wahls, whether a contractual that seeks to agreement estab- potential lish the venue of causes of action might accrue after the execution agreement enforceable. We hold that it is not. lease,
Pursuant to a North Interstate, American Inc., provide was to defendant Shacks, Inc., with two *3 jukeboxes pool and two tables in return for fixed monthly payments. The a provision lease contained dictating venue for cause of action arising under the lease: by signed
This lease shall not be effective until the Lessor at our offices. This lease shall be construed to have been Michigan interpreted executed in the State of and shall be regulations in accordance with the law and of the State of Michigan. hereby jurisdiction agrees Michigan Lessee in any action, proceeding arising in the case of suit or out of this lease and venue shall be in the district court for (if damages Judicial District involved are in 45A $10,000 county excess then the circuit court of for of hereby Oakland). acknowledges Lessee that Lessee has Michigan by entering transacted business in the State of lease, jurisdiction, into the and that the choice of law and specifically negotiated venue of this lease are (Emphasis added.) terms of this lease. 226 397 Shacks, Jr., personally
Defendant Lee guaranteed payments. subsequently The lease was assigned to plaintiff.
Plaintiff filed suit the Oakland Circuit Court alleging defendants breached the lease agree- ment and guaranty failing to make required payments. Defendants then filed motion to venue on the ground that venue improper in Oak- land County. The trial court denied defendants’ motion, and appeal by defendants now leave granted.
In Michigan, venue is controlled statute. Plain- tiff’s suit included claims for contract damages and for return of the property.1 leased The venue statute applicable claims, to contract 27A.1621,2reads:
Except provided 1605, for 1611, actions for in sections 1615, venue is determined as follows:
(a) county resides, place in which a defendant has a business, business, regis- or conducts inor which the corporation tered office of a located, defendant is is a proper county try in which to commence and an action.
(b) If none of the defendants meet 1 or more of the crite- (a), ria in plaintiff subdivision in which a resides place business, or has a registered or which the office plaintiff corporation of a located, proper county is a try which to commence and an action. plaintiff Apparently, property. However, has recovered this because filed,
venue is determined at the time a suit is still be pursuant governing recovery tangible personal property. to the statute Comm, App 72, 76-78; See Brown v Hillsdale Co Rd 337 NW2d *4 language quote The we is that of the statute as amended 1995 PA just However, which took effect after the suit in this case was filed. essentially grammatical the amendments were and did not substance of the statute. v fiduciary against appointed
(c) An action court order county fiduciary shall be commenced in which the appointed. applicable recovery The statute tangi- venue to the of personal property, 27A.1605, ble reads: subject action, any part in which the or
thereof, situated, proper county is a in which to com- try following mence and actions: recovery (a) property, of real or anof estate or inter- therein, any ests or for the determination form of such right interest; or
(b) partition property; of real (c) prop- mortgages the foreclosure of all liens on real erty; and recovery
(d)
tangible personal property.
statutory provision
specifically
There is no
per-
contractually
mits
to agree
other venue.
Michigan
directly
No
cases have
addressed the
question
may contractually agree
whether
potential
the venue of
causes of action that might
arise after execution of the contract containing the
provision.
The few cases that
touch on this
suggest
that,
issue at all
where there is an existing
action, parties may
cause of
to venue. See
agree
Gar
Dep’t
Revenue,
avaglia
(1953);
NW2d 612
Grand Trunk W R
v Boyd,
Co
693, 699-700;
Venue rules are not
MCL 600.1601;
power
MSA27A.1601. Jurisdiction deals with the
of a
authority
court to hear a class of cases or the
of a
parties.
court to bind Grebner v Oakland Co
App
(1996);
Clerk, 220 Mich
513, 516;
“the convenience Pipe (quoting Panhandle Eastern Line at 700 Comm, 65 S Ct Co v Federal Power “primarily [1945]), (3) L Ed 821; 89 concerned with where the trial matter of convenience occur,” Bowlds, Kerekes v of an action Although NW2d 357 805, 810; 446 primary is often the issue convenience disputes, Michigan Supreme has Court recognized venue rules also address other that the *6 issues: primarily in the evaluate convenience terms of
Courts
and
relevant witnesses. How-
interests
ever,
primary goal
litigation
is to minimize the costs of
the
only by reducing
parties,
the burdens on the
but also
not
system
Piper
considering the strains on the
as a whole. See
256-257;
Reyno,
235,
252;
Co v
102 S Ct
70 L
Aircraft
Corp Gilbert,
(1981);
330
507-
Ed 2d 419
Oil
v
US
Gulf
839;
(1947).
[Gross, supra
S
With this we now turn to a review governing and of the statutes court rules venue. Supreme Michigan recognized The Court has that Legislature’s of within the establishment power. venue is Gurwin, Coleman v 443 Mich 503 (1993) (citing Hinkley, NW2d435 Barnard v 10 Mich [1862]). Legislature passed 458, 459 has several general including statutes, venue here, those at issue regarding 600.1611; 27A.1611, as weh as MCL MSA probate bonds; 600.1615; actions on MCL MSA regarding against governmental 27A.1615, actions regarding 600.1629; MCL MSA units; 27A.1629, and products liability Legislature and actions. The has tort recently power its the venue statute for used revise App 226
Opinion Court shop- discourage actions, tort with the intent to venue by plaintiffs. ping 27A.1629; MCL MSA Legislature passed Gross, at 157. The has also specific provisions regarding other actions. For governing custody instance, the statute child actions requires “if the circuit court of this state does not prior jurisdiction continuing have a child, over action shall be submitted to the circuit court where the child resides or be found.” 722.26(2); 25.312(6)(2). requirement This protect serves to the best interests of children in custody App Steen, child actions. Kubiak v (1974). 408, 414; 215 NW2d Thus, it is clear that Legislature power has used its to establish venue beyond to serve interests the convenience parties. solely by governed
We note that venue is not
stat-
parties’
ute. The
choice of venue and motions for
practice
proce-
of venue are matters of
primarily
dure, which are
treated
court rule. See
Bos,
448, 454-455;224 NW2d
Hoffman
Where there is a conflict
between court
prevail.
rule and a statute, the court rule should
Id. at
objections
2.221,
455. Pursuant to MCR
to venue are
*7
timely
waived if not raised in a
manner.4
DMI,
Huhn v
(1994),
Inc, 207 Mich
313, 319; 524 NW2d 254
grounds
(1995).
remanded on other
MSA 27A.1651. provides, part: MCR 2.223 v
In rules, addition to statutes and court we must applicable also consider case law regarding venue. In this there are at least two rules regard, articulated in case law that are not found in the stat- First, utes court rules. venue is determined at the Kerekes, supra Brown v 808; time a suit is filed. at Comm, Hillsdale Co Rd App 72, 76-78; NW2d 318 (1983). Second, above, Michigan as noted courts have enforced parties which the stipulated a proper venue after a cause of action had Garavaglia, supra Trunk, Grand arisen. at 700. We decline to create a rule that allows contractually agree to venue. Our decision is based First, on several considerations. we believe it would improper be to create such a rule on our own accord. The Legislature par- has established a rule that allows ties to personal jurisdiction by consent contract. See MCL MSA 600.701(3); 27A.701(3), MCL 600.711(2); MSA 27A.711(2), 27A.745. The Legislature has not established such a rule with regard Supreme to venue. As the Michigan Court stated, “may has a court not do on its own accord what the Legislature has seen fit not to do.” Farrington Petroleum, Inc, Total NW2d 76 improper, If the venue of a civil action is the court (1) timely change shall order of venue on motion of a defend- ant, or may (2) order a of venue on its own initiative with notice opportunity to the for them to be heard on the venue question. changed brought If venue is because the action was where venue proper, only was not the action be transferred to a proper. which venue would have been *8 406 397 Opinion of the Court parties to avoid contract the
Second, allowing statutory to venue relating mandate of the rales power Legislature. would undermine the of the While waiver in the venue statutes6 and court provisions control venue give litigants regarding rules7 some filed, after a suit has been we find no evidence that Legislature power intended to abandon its own in parties’ contrary, to contract. To the right favor power exercise of its to Legislature’s continuing establish venue is inconsistent with suggestion an power. that it has intent to abandon that As noted above, has Legislature used the venue rales to by plaintiffs in shopping control venue tort actions protect and to the best interests of children in child custody disputes. Gross, supra 157-159; Kubiak, at Bert, Bert v App 208, 213-214; NW2d 270 We do Leg- 397 not believe that the power islature intended to allow to subvert its statutory in this area the effect of the avoiding provisions by the inclusion of venue private in contracts.8
Third, enforcing regarding contractual venue would Specifi- conflict our court rules. cally, allowing parties agree to a venue that improper applicable under the venue statute would conflict with MCR which would other- 2.223(A)(2), MSA 27A.1651. 2.221(C). MCR example, agreed in Bert For had the to venue before the cause arose, agreement clearly of action would not have been enforceable. There, just custody the child moved out of state before a child action was panel properly improper Bert filed. The held that venue was county panel finding child’s former of residence. The noted that such a “necessary safeguard having the child’s interests the action Bert, supra brought in the of the child’s residence.” at 214. permit wise trial court to order a of venue on its own motion. *9 par-
The dissent concludes that we should enforce agreements, relying ties’ venue aon freedom of con- recognize tract rationale. The dissent fails to that the power Legislature, to establish venue lies with the supra parties. regard, Coleman, at 62, not the In this right compel of freedom of contract does not recognition private any right aof to fix venue more compels recognition private right than it of a to estab- subject-matter jurisdiction.9 lish The dissent offers no Legislature give up evidence that the intends to its powers. venue As above, we note the evidence is to contrary. may We do not believe that this Court properly Legislature’s powers cede the venue to liti- gants. Legislature up give power, If the wishes to this perfectly capable doing it is so. foregoing
For
reasons,
we conclude that con-
binding Michigan
tractual venue
are not
on
courts.10For the
reasons,
same
we conclude that such
party’s
do not
a
constitute waiver of a
right
challenge
they
venue, nor do
constitute a con-
change
provision
sent to a
of venue. There is no
for
contractual waiver or consent in the statutes or only ground
finding
court
In fact,
rules.
for
pursuant
waiver
to the court rules is the failure to
object
timely
in a
manner. MCR 2.221. The court
may
stipulate subject-matter
jurisdiction. Redding
Parties
not
v Red
ding,
App 639, 643;
We believe that our conclusions can be harmonized prior suggests case law that that courts will agreements relating enforce to venue that are made Garavaglia, after a cause of action has arisen. See supra at Grand Trunk, 700. First, we note that these cases were decided before the *10 passed Revised Judicature and, Act was therefore, statutory dealt with a Second, different scheme. it is significant that these cases did not address whether parties agreed the venues that the to were under the venue statutes then in Third, effect. these Legis- cases did not address the conflict between the power parties’ lature’s right to establish venue and the Finally, expressly to contract. the cases did not always state that such contracts were enforceable. Garavaglia, argued Ing- In the defendant that the jurisdiction ham Circuit Court was without because plaintiffs did not reside there. The Court did not argument, discuss defendant’s venue but dis- jurisdiction missed both the and venue issues in a sin- gle say prior sentence: “It is that, sufficient to to the parties, suit, institution of the agreed in conference, depart- that, for the convenience of both the taxpayer, ment and the the suit should be instituted
Opinion of Court party and that neither would raise Ingham the court.” Gar- jurisdiction any question as to the of Trunk, 470. In Grand avaglia, supra the Court parties’ only concerning enforced the contracts were “fair and after it had found that contracts a reasonable,” were “made without fraud after cause accrued,” of action and “would serve the conve- [had] Trunk, supra Grand parties.” of both at 699. nience Garavaglia and Grand Trunk are We believe that standing proposition best understood as for the that a trial court consider a contract venue to regarding the extent it is relevant to the factors that the court in granting denying change must consider a of venue.11 case,
In this the trial court denied defendants’ a motion for venue without its explaining reasoning. However, it is clear from the record below provision that the trial court found the venue in the so, contract enforceable. To the extent it did the trial remand, court erred. On the trial court must consider motion in light defendants’ of the statutes and court venue. rules The trial court must decide regarding depend degree the contract will relevance of on the to which the original agreement addressed these factors and on the nature and extent any changes parties’ in the situations between the time the contract signed example may helpful. and the time the suit is filed. An be A hypothetical might parties agree mutually contract state: “The that X is a forum, Assuming convenient and that both conduct business in X.” a cause of action arose and was covered under the venue 27A.1621, essentially such contract would be con respect propriety clusive with to both the and convenience of venue X on *11 day signed. Thus, the contract was in the absence of other rele considerations, arising vant a cause of action under that contract and filed day signed proceed However, on the the contract was should in venue X. might respect the contract be of little relevance with to these issues in an years later, parties’ might action filed because the circumstances have changed. by Taylor, J. Dissent County proper pursuant whether Oakland is a to either MCL 27A.1621 MCL 600.1605; MSA27A.1605. The court consider parties’ agreement only lease to the extent that it is relevant to the factors in those If statutes. venue in County improper, Oakland the trial court shall change order a of venue to a in which venue proper. 2.223(A). would have been MCR If the court proper County, determines that venue is in Oakland may proceed the suit there.12 Reversed and remanded. We do not retain jurisdiction.
Neff, P.J., concurred. (dissenting). respectfully I dissent. The Taylor, denying trial court’s order defendants’ motion to change County Saginaw venue from Oakland County parties’ agreement on the basis of the proper. Neither the venue statutes nor the court rules prohibit giving courts from effect to the intent of the expressed regard as in the contract with particular preferable the choice of a venue. approach would be to enforce the forum selection party clause in the contract unless a could show that such enforcement would be unreasonable or that the provision product overreaching. was the of fraud or approach Such an embraces the modem view of forum selection clauses as set forth the Restate- p (1988), § ment Laws, 2d, Conflict of and parties’ achieves the balance between the only objection improper Defendants’ to venue was that it was in Oak County, they requested only pursuant land of venue to MCR Thus, any challenge 2.223. defendants have waived to venue under MCR 2.222. *12 Financial Omne by Taylor, Dissent J. disputes their resolved a mutu- having
interest ally and the state’s interest in ensur- agreeable forum plaintiff’s in the selection of a venue. ing fairness majority The reasons that because contractual particular clauses a designating forum selection by expressly permitted Legislature, venue are not the necessity prohibited. be This such clauses must order of The rule is that things. reverses the respect particular to things citizens can contract with unless the determines that contracts Legislature contrary public policy. are such matters to regarding persons The has not forbidden from Legislature specific disputes. to a venue for future The agreeing with majority’s approach cannot be reconciled the principle fundamental that individuals are free to con- they specific tract as see fit in the absence of a statu- tory prohibition.1 Although Legis- or constitutional expressly permit lature has seen fit to individuals to contractually personal jurisdiction, consent MCL MSA 600.701(3); 27A.701(3), 600.711(2); MCL MSA 27A.745, it does not 27A.711(2), express permission follow fortiori from such with jurisdiction that regard agreements contractual respect permitted. with to venue are therefore not Legislature prohibit parties Had the intended to from contractually agreeing advance, to venue in it cer- 1 See, Dep’t e.g., Navy Authority, v Federal Labor Relations App 239, 248; (1992) approval DC 962 F2d 48 with in Port Huron [cited Dist, Ed Ass’n v Port Huron Area School 550 NW2d (1996)]: policy contract, Because of the fundamental of freedom of generally agree specific they are free to to whatever rules like, beyond competence and in it is most circumstances Authority, Relations Board the National Labor courts to parties’ interfere with the choice. by Taylor, Dissent tainly as so, could have done demonstrated majority plaintiffs limiting a statutes cited the probate Leg- choice of venue in and tort actions.2 The having imposed with islature no such limitations provisions, regard to venue we should conclude there are none. majority that such would contends authority
abrogate regard a court’s to venue *13 rules; however, under the court that is not the case. question whether, The relevant in a contract case is circumstances, a court should under the exercise its authority regard give with to venue to effect to the expectations parties legitimate of the as manifested in voluntary agreement regarding particular their the brought. court in which certain actions must be See 2.222(A) 2.223(A)(2); MCR Zapata and The Bremen v Co, 1, 9, 12; 92 S Ct 32 Off-Shore supra. (1972); Restatement, L Ed 2d 513 There are why freely compelling negotiated agree- reasons respect given ment with to venue should be full effect.3 majority primary goal
As the “the notes, [of statutes establishing venue] and court rules is to minimize the only by litigation reducing costs of not the burdens parties, by considering on the but also the strains on system Corp, as a whole.” Gross v General Motors 448 NW2d Yet, 707 majority’s just opposite decision moves the law in justified parties Such limitations are in view that in of the fact such opportunity capacity generally nego cases do not have either the or the agree in tiate and advance to the most convenient venue. analysis It should be noted in advance that the would be different in a parties equal bargain an situation where the to the contract were not on subject ing negotiation, basis or the terms were not such as in a con tract of adhesion. Omne Financial v Dissent Taylor, litigation
direction. It increases the costs of and bur- parties, parties dens on the at least as the themselves saw the matter as in reflected their contract. The expressly provided jurisdic- lease this case that the provisions specif- tion, choice of law, were ically negotiated Thus, terms. it must be concluded provisions took the venue into determining account when the other terms of the plaintiff lease. The reduced burden on aas result of parties’ agreement regard pre- to venue was sumably pay- reflected in the amount of the lease majority only ments. The has not rewritten the express utterly terms of the contract issue, but has support failed to its claim that the enforcement of forum selection clauses, such as issue, the one at will judicial system. result in a strain on the On the con- trary, provisions enforcing encourage such would cer- tainty contracting litigation and reduce the cost of by enabling disputes to avoid venue employing sup- Thus, advance. the modem view that ports enforcement of such will further the goals Legislature by reducing and the courts *14 parties legal the burden on the and the strains on the system. majority correctly recognizes,
As the statutes and relating procedural court rules to venue are in nature primarily and are concerned with the convenience of litigants. 2.222(A); supra MCR Gross, at 155; App Kerekes v Bowlds, 179 Mich 805, 810; 446 NW2d pp § 77 Am Jur 2d, Venue, 357 (1989); 654-655. simply “[V]enueis the location trial, and its deter- only mination should concern the selection of a fair dispute and convenient location where the merits of a adjudicated.” can be Gross, at 156. There is 226 by
Dissent Taylor, why parties simply not be able to reason should no stipulate of trial. to the location Whatever in advance as a result of defendants would suffer inconvenience being clearly County litigate in Oakland forced to contracting; both at the time of foreseeable County voluntarily would be an decided that Oakland acceptable above, as discussed that deci- and, part integral of the contract. The sion formed an justify majority reasoning no that would offers consequences allowing to avoid the defendants majority agreement. Although the fears their informed might allowing agreements such somehow that power,” Legislature’s “undermine the it would do so jurisdiction. regard more than with to no Furthermore, there is no reason to assume that the majority permit party that a statutes cited jurisdiction contractually personal were consent permit party per- a to consent to not also intended to jurisdiction regard particular to a court sonal 600.745(2)(b); the state. MCL within expressly 27A.745(2)(b) directs courts to consider whether the forum chosen “is a reason- ably place convenient for the trial of the action.” employing courts,
Federal
the modem view of
distinguished
have
clauses,
forum selection
not
particu-
designating
contractual
a
between
particular jurisdic-
specifying a
lar court and those
supra (upholding
Bremen,
See The
a forum
tion.
disputes
stating
selection clause
were to be
High
London,
in the
Court of Justice in
resolved
England),
Lines,
Shute,
Carnival Cruise
Inc v
(1991)