163 Ohio App. 3d 522 | Ohio Ct. App. | 2005
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *524
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *525 {¶ 1} Appellant, Preferred Capital, Inc., appeals from the judgments of the Summit County Court of Common Pleas that dismissed its breach-of-lease-agreement complaints for lack of personal jurisdiction. We reverse and remand.
{¶ 3} Additionally, each of the agreements provided that an assignee to these agreements would have the same rights as NorVergence with respect to these agreements, but would not take on NorVergence's obligations thereunder. Also, the renter agreed not to assert against the assignee any claims, defenses, or set-offs it may have against NorVergence.
{¶ 4} The rental agreement also contained a section entitled "Applicable Law," which provided the following forum-selection clause:
"This agreement shall be governed by, construed and enforced in accordance with the laws of the State in which Rentor's principal offices are located or, if *527 this Lease is assigned by Rentor, the State in which the assignee's principal offices are located, without regard to such State's choice of law considerations and all legal actions relating to this Lease shall be venued exclusively in a state or federal court located within that State, such court to be chosen at Rentor or Rentor's assignee's sole option. You hereby waive right to a trial by jury in any lawsuit in any way relating to this rental."
After execution and assignment of these agreements, Preferred Capital sent notice of the assignment to the renters and instructions to send all rental payments to Preferred Capital at its business address in Brecksville, Ohio.
{¶ 5} Thereafter, Preferred Capital filed individual complaints against the various renters for breach of the lease agreement, including defendant-appellee Power Engineering Group, Inc., asserting that it defaulted on its monthly payment obligations under the terms of the agreements. Preferred Capital filed the claims in the Summit County Court of Common Pleas pursuant to the forum-selection clause.
{¶ 6} Each of the defendants then filed a Civ.R. 12(B)(2) motion to dismiss for lack of personal jurisdiction. They opined that the clause was unenforceable because it did not specify a particular forum and that each defendant did not have the requisite minimum contacts with Ohio to satisfy the long-arm statute, R.C.
{¶ 7} The various motions were granted by the trial court. In the first case, Preferred Capital v. Power Eng. Group, Inc. (Dec. 15, 2004), Summit C.P. No. CV 2004 10, 5737, the judge wrote a thorough opinion that detailed the court's reasoning for dismissing the complaint. The court first determined that the clause was unreasonable and unjust because it "contained absolutely no guidance as to which forum would be appropriate to resolve disputes." The court explained that because NorVergence maintained the authority to assign the agreement to any entity it desired, the location would not be determined until after assignment. The court also reasoned that most of the potential witnesses to the underlying transaction are located in Florida or New Jersey, that Power Engineering would incur significant expense in traveling to Ohio to defend against the claim, and that Preferred Capital has not disputed the alleged fact that Power Engineering is not as sophisticated a business entity as NorVergence. The court then proceeded to conclude that Preferred Capital had not met its burden of establishing that the court had jurisdiction over Power Engineering — i.e., that Power Engineering had established sufficient minimum contacts in *528 Ohio — and therefore ultimately dismissed the complaint for lack of personal jurisdiction.
{¶ 8} In 11 of the other 12 cases, the court entered an order dismissing the cases by simply incorporating the decision inPower Eng. Group, Inc. as part of the order.2 In the 12th case, the trial judge issued an order that dismissed the case, essentially stating verbatim the decision in Power Eng.Group, Inc.3
{¶ 9} Preferred Capital timely appealed to this court from all 13 trial court judgments. Pursuant to a motion filed by Preferred Capital, this court consolidated all of these appeals. Preferred Capital asserts two assignments of error for review.4, 5
"The trial court erred in finding that it lacked personal jurisdiction over the defendants because the applicable contracts contained a valid forum selection clause that conferred jurisdiction upon Ohio courts."
{¶ 10} In its first assignment of error, Preferred Capital contends that the trial court erred in concluding that the forum selection clause was unenforceable. We agree.
{¶ 11} Although this appeal stems from a Civ.R. 12(B)(2) dismissal, the primary issue before this court concerns a question regarding the trial court's interpretation of the agreement. If the terms of a contract are clear and *529
unambiguous, then their interpretation is a question of law.Beckler v. Lorain City School Dist. (July 3, 1996), 9th Dist. No. 95CA006049,
{¶ 12} A forum-selection clause contained in a commercial contract between for-profit business entities is prima facie valid. Kennecorp Mtge. Brokers, Inc. v. Country ClubConvalescent Hosp., Inc. (1993),
{¶ 13} To invalidate a forum-selection clause based on fraud, it must be established that the fraud relates directly to the negotiation or agreement as to the forum selection clause itself and not the contract in general. Four Seasons Ent. v. TommelFinancial Serv., Inc. (Nov. 9, 2000), 8th Dist. No. 77248,
{¶ 14} Appellees have complained that NorVergence failed to provide sufficient services to its various customers on the underlying rental and service agreements. However, at no point during the litigation have appellees made an allegation that the forum-selection clause itself was a product of fraud or overreaching. In fact, appellees concede that on the face of the transaction involving Preferred Capital, Preferred Capital, as assignee to NorVergence's contracts, is a holder in due course of the transferred agreements. See, generally, Buckeye CheckCashing, Inc. v. Camp,
{¶ 15} It is one of the most basic tenets of contract law that a document should be read before being signed, and further that a party to a contract is presumed to have read what he or she signed and thus cannot defeat a contract by asserting he or she did not read it. See, e.g., Hadden Co., L.P.A. v. Del Spina,
10th Dist. No. 03AP-37, 2003-Ohio-4507,
{¶ 16} Additionally, appellees had the burden of establishing that it would be unreasonable or unjust to enforce the forum-selection clause. Discount Bridal Serv., Inc. v. Kovacs
(1998),
{¶ 17} The trial court in this case reasoned that the agreement did not designate a specific forum and did not provide any guidance as to where the defendants could be hailed into court. Appellant argues that there exists no requirement in Ohio law, by which these agreements are governed, that requires jurisdiction to be stated with particularity. In fact, a number of Ohio courts have *531
upheld forum-selection clauses in commercial contracts in which the jurisdiction is not stated with particularity. See Gen.Elec. Co. v. G. Siempelkamp GmbH Co. (C.A.6, 1994),
{¶ 18} Furthermore, several cases relied upon by the trial court to support its reasoning are distinguishable from the instant case. In Copelco Capital, Inc. v. Shapiro (2003),
{¶ 19} The second case relied upon by the trial court, CopelcoCapital, Inc. v. St. Mark's Presbyterian Church (Feb. 1, 2001), 8th Dist. No. 77633,
{¶ 20} Additionally, the trial court found that enforcement of the clause would result in an injustice to Power Engineering, as it would not only "force the Defendant to enter unknown waters and territory, but it would [also] effectively deprive the Defendant of its day in Court[,] * * * [because] most if not all, of the potential witnesses to the transaction are either Florida or New Jersey residents [and] * * * Defendant would incur significant expense in having to travel to Ohio to represent itself." Preferred Capital argues that it is disingenuous of appellees to maintain that they would incur significantly greater financial expenses in litigating in Ohio as compared to New Jersey, the jurisdiction to which they have admittedly validly consented in the event that the agreements were not assigned to Preferred Capital. It is hard to imagine that it would be much simpler, *532
financially and physically, to litigate a matter in New Jersey when appellees reside in Florida, Georgia, Michigan, New Jersey, New York, Pennsylvania, Texas, and Washington. Ultimately, however, mere inconvenience and expense are not sufficient, and we cannot find that the level of inconvenience pleaded here by appellees and reiterated by the trial court amounts a "manifest" and "grave" difficulty as contemplated by the highest court. SeeBremen,
{¶ 21} Finally, we consider the objectives advanced by the Commercial Code, which governs this contract:
"A negotiable instrument is an instrument capable of transfer by endorsement or delivery. Negotiability provides a means of passing on to the transferee the rights of the holder, including the right to sue in his or her own name, and the right to take free of equities as against the assignor/payee. * * * The purpose of the Commercial Code is to enhance the marketability of negotiable instruments and to allow bankers, brokers, and the general public to trade in confidence. * * * As a matter of sound economic policy, the Commercial Code encourages the free transfer and negotiability of commercial paper to stimulate financial interdependence." Manor Bldg. Corp. v. Manor Complex Assoc. (1994),
435 Pa.Super. 246 ,252-253 ,645 A.2d 843 .
Thus, it is imperative that courts be cognizant of not discouraging the sale and transfer of commercial paper in the market. In accord with this end, we must remain aware that the more flexible the terms are in a commercial contract, the more acceptable a business transaction the contract becomes to a prospective buyer of the commercial paper. The attractiveness of the paper to the buyer, in turn, creates more sales opportunities for the commercial-paper issuer or maker. Thus, we must reach a determination in this case bearing these principles in mind.
{¶ 22} Based upon the foregoing, we find that the trial court erred when it concluded that the forum-selection clause was unenforceable in Power Eng. Therefore, it follows that the judgments in all remaining cases consolidated in this appeal were made in error. Preferred Capital's first assignment of error is sustained. We remand the case to the trial court to enter judgment in accordance with this decision and to hold further appropriate proceedings on the matter.
"The trial court erred in finding that it lacked personal jurisdiction over the defendants because the defendants have minimum contacts to the state of Ohio."*533
{¶ 23} In its second assignment of error, Preferred Capital contends that the trial court erred when if found that it lacked personal jurisdiction over appellees due to the absence of minimum contacts with Ohio.
{¶ 24} When a commercial agreement contains a valid forum-selection clause, a minimum-contacts analysis is not appropriate because the parties have waived the due-process/minimum-contacts requirement for personal jurisdiction by way of the forum-selection clause and have consented to the jurisdiction of the court system specified in the clause. Kennecorp,
Judgment reversed and cause remanded.
WHITMORE, P.J., concurs.
MOORE, J., dissents.
Dissenting Opinion
{¶ 26} Under the facts presented, I would find that it is unjust and unreasonable to enforce the forum-selection clause in the manner suggested by appellant. I, therefore, respectfully dissent from the majority's decision.
{¶ 27} The majority notes that appellees have waived any due process requirement regarding personal jurisdiction because the forum-selection clause is valid. See Kennecorp Mtge. Brokers,Inc. v. Country Club Convalescent Hosp., Inc. (1993),
{¶ 28} In Kennecorp, the forum-selection clause limited jurisdiction to Ohio. Id. Accordingly, the court had no reason to determine whether a non-specific forum selection clause could waive personal-jurisdiction requirements in every state. I would find that it cannot.
{¶ 29} Waiver entails the voluntary relinquishment of a known right or intentionally doing an act inconsistent with claiming that right. Mondl v. Mondl (Dec. 5, 2001), 9th Dist. No. 20570,
{¶ 30} Accordingly, I would proceed to determine whether appellees had minimum contacts with Ohio to justify invoking personal jurisdiction over them.
When deciding whether a defendant falls within the reach of the long-arm statute, a court should consider three factors:
"`First, the defendant must purposely avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.'" Cincinnati Art Galleries v. Fatzie (1990),
70 Ohio App.3d 696 ,699 ,591 N.E.2d 1336 ,1338 , quoting S. Machine Co. v. Mohasco Industries, Inc. (C.A.6, 1968),401 F.2d 374 ,381 .
Krutowsky v. Simonson (1996),
{¶ 31} As a result, I find that it would be unreasonable and unjust to force appellees to be subjected to litigation in Ohio. I would hold the forum-selection *535 clause unenforceable, as it attempts to waive personal jurisdiction at a national level without any reference to a specific jurisdiction. As Ohio's long-arm statute cannot be utilized to exercise jurisdiction over appellees, I would affirm the trial court's decision dismissing the cases.