Opinion
Case No. 3:02CV7105
September 30, 2002
David P. Rupp, Jr., Mark D. Hagans, Plassman Rupp Hensal Short, Archbold, OH, For Eugene D. Bernath, and Bernath Farms, Plaintiff.
Jeffrey J. Madrzykowski, Manahan, Pietrykowski, Bamman DeLaney, Toledo, OH, For Potato Services Michigan, Inc. Defendant and Third Party
Frederick J. Badger, Jr., Richardson Whitman, Large Badger, Bangor, ME, For Agway, Inc.
ORDER
This is an action in contract and tort law between the purchaser of seed potatoes, plaintiff, Eugene D. Bernath, d/b/a Bernath Farms, and the seller of the seed potatoes, defendant Potato Services of Michigan. Defendant Potato Services of Michigan has joined Agway, Inc., from whom it bought the seed potatoes, as a third party defendant.
Bernath alleges that it ordered "Superior" potato seeds. Potato Services ordered seed potatoes of the requisite grade from Agway. Agway, however, shipped "Atlantic" seed potatoes to Michigan Potato Services, which, in turn, delivered the non-conforming Atlantic seed potatoes to Bernath. Bernath first learned about the nonconformity when it harvested the potatoes. These facts are not disputed.
Pending is Bernath's motion for partial summary judgment, Potato Service's motion for summary judgment and/or transfer, and Agway's motion for partial summary judgment. For the reasons that follow, plaintiff's motion shall be denied, and Potato Services' motion shall be granted to the extent that this case shall be transferred to the District of Maine for further proceedings, which shall include, inter alia, ruling on Potato Services' and Agways' motions for summary judgment as to the merits of plaintiff's claim.
Discussion
Bernath initially brought this suit in the Fulton County, Ohio, Court of Common Pleas. In response to that suit, Potato Services filed a motion to dismiss or transfer. That motion was based on a forum selection clause in the parties' contract. That clause limited the forum for disputes to the "Seed State of Origin" (which the parties agree is Maine). In addition, the contract contained a provision excluding consequential damages.
The state court overruled Potato Services' motion to dismiss or transfer on the basis that enforcement of the forum selection clause would be "unreasonable and unjust" pursuant to the decision of the Ohio Supreme Court in Kennecorp Mortgage Brokers, Inc. v. Country Club Convalescent Hospital, Inc., 66 Ohio St.3d 173 (1993). The court also concluded that the contract's provisions were boilerplate in nature and created an "adhesive" contract, the forum selection clause was not mandatory because it did not contain the term "shall," and considerations of the location of the solicitation for the sale, sale, delivery, planting, and harvesting of the potatoes required allowing venue in Fulton County.
After the state court entered its ruling, Potato Services joined Agway as a third-party defendant. Agway then removed this case to this court. Bernath sought remand. In its motion, Bernath argued, inter alia, that the state court's ruling on the unenforceability of the forum selection clause constituted the law of the case, and was binding on Agway and Potato Services.
I overruled Bernath's motion to remand. (Doc. 16). In my order, I noted that the law of the case doctrine could not bind Agway, which had not been a party to the proceedings when the state court had entered its order.
In his motion for partial summary judgment the plaintiff asserts that the law of the case doctrine should be applied, thereby giving effect to the state court's determination that the forum selection and limitation of damages provisions are unenforceable. If so, Bernath contends, the case stays here, it is entitled to summary judgment on the issue of liability, and all that remains is to determine the extent of its losses.
In its opposition to Bernath's motion for partial summary judgment and its own motion for summary judgment, Potato Services argues that the law of the case doctrine should not be applied, and it is entitled to summary judgment, or, in the alternative, to have the case transferred to the District of Maine for further proceedings.
Agway, for its part, seeks summary judgment with regard to Potato Services' third-party complaint against it. Agway relies on a provision of its contract with Potato Services containing a limitation of damages clause.
Under the law of the case doctrine, "a decision on an issue made by a court at one stage of a case should be given effect in successive stages of the same litigation." United States v. Todd, 920 F.2d 399, 403 (6th Cir. 1990); see also Christianson v. Colt, 486 U.S. 800, 816 (1988) ("This rule of practice promotes the finality and efficiency of the judicial process by `protecting against the agitation of settled issues.'"). The doctrine applies equally to a court's own decisions and the decisions of a coordinate court in the same case, Todd, 920 F.2d at 403, including state courts from which an action has been removed to a federal court. Birgel v. Board of Comm'rs, 125 F.3d 948, 950 (6th Cir. 1997).
Applied to coordinate courts, the doctrine, however, "is a discretionary tool available to a court in order to promote judicial efficiency," and does not foreclose a court from reconsidering issues previously decided. Todd, 920 F.2d at 403. This circuit has recognized that "[i]t is within the sole discretion of a court to determine if a prior ruling should be reconsidered," and, therefore, has declined "to impose any conditions or limitations upon a court's power to review a prior ruling of another court." Id.
The Supreme Court has cautioned that "a court should be loathe to [reexamine a prior decision] in the absence of extraordinary circumstances such as where the initial decision was `clearly erroneous and would work a manifest injustice.'" Christianson, 486 U.S. at 817 (1988) (citation omitted). Nonetheless," it is not an abuse of discretion to revisit a prior ruling that is found to be erroneous." Pacific Employers Ins. Co. v. Sav-a-Lot of Winchester, 291 F.3d 392, 398 (6th Cir. 2002) (citing Gillig v. Advanced Cardiovascular Systems, Inc., 67 F.3d 586, 590 (6th Cir. 1995) (citing Moore's Federal Practice ¶ 0.404[4.-2] (2d ed. 1994))).
I conclude that the state court's ruling that the forum selection clause was not enforceable was clearly contrary to Ohio law, and thus the law of the case doctrine should not be applied. The court's syllabus in the Ohio Supreme Court's decision in Kennecorp Mortgage Brokers, supra, makes clear that the commercial nature of the contract is a crucial factor: "Absent evidence of fraud or overreaching, a forum selection clause contained in a commercial contract between business entities is valid and enforceable, unless it can be clearly shown that enforcement of the clause would be unreasonable and unjust." Moreover, the Court stated in Kennecorp Mortgage Brokers, "forum selection clauses in the commercial contract context should be upheld, so long as enforcement does not deprive litigants of their day in court." 66 Ohio St.3d 175.
There is no evidence of either fraud or overreaching; Bernath simply contends that he is unsophisticated, and that it is unconscionable to hold him to terms of a contract into which he entered. Where a party seeking to avoid the terms of a commercial contract fails to show fraud or overreaching in the formation of a forum selection clause, Ohio courts uphold the provision. Discount Bridal Serv. Inc. v. Kovacs, 127 Ohio App.3d 373, 377 (1998); Automotive Illusions, LLC v. Reflex Enterprises, LLC, 2002 WL 1821676, *2 (Ohio App. 10 Dist., Aug 06, 2002); Vintage Travel Services, Inc. v. White Heron Travel of Cincinnati, Inc., 1998 WL 257862, *2 (Ohio App. 2 Dist., May 22, 1998);
Inexperience — a synonym for being unsophisticated — has, moreover, been held not to constitute a basis for finding that a forum selection clause in a commercial contract was tainted by fraud or overreaching:
The agreement was a commercial contract, not a consumer contract, Nicholson's inexperience notwithstanding. The fact that he acted individually does not remove Nicholson from the classification of a "business entity," which he assumed by entering into a commercial agreement. . . . [N]o fraud or overreaching is demonstrated. Finally, the clause does not deprive Nicholson of his day in court, which he may have by filing an action in North Carolina. No other basis exists to find that enforcement of the forum selection clause would be unreasonable or unjust.
Nicholson v. Log Sys., Inc., 127 Ohio App.3d 597, 601 (1998).
The decision in Copelco Capital, Inc. v. St. Marks Presbyterian Church, 2001 WL 106328, *2 (Ohio App. 8 Dist., Feb 01, 2001), declining to uphold a forum selection clause against a church, is distinguishable. A church is a charitable, not-for-profit, institution, not a commercial enterprise. It is appropriate that a church pastor, unlike an experienced businessman or farmer, would be found not to be sophisticated or experienced in contractual matters.
The trial court also relied, in part, on the lack of contact between the state of Maine and the transaction, and its substantial contacts with Ohio. But, as noted in Discount Bridal Serv. Inc. supra, "the Supreme Court of Ohio has rejected this type of analysis in [Kennecorp], in favor of finding forum-selection clauses prima facie valid in a commercial context, as long as the clause has been freely bargained for."127 Ohio App.3d at 376.
A finding that enforcement would be "unreasonable or unjust" is an alternative basis for invalidating a forum selection clause. See Central Ohio Graphics, Inc. v. O'Brien Business Equipment, Inc., 1996 WL 145480, *2 (Ohio App. 10 Dist., Franklin County, Mar 28, 1996). A finding of unreasonableness or injustice must, however, be based on more than inconvenience to the party seeking to avoid the contract's requirements. Instead, it must appear that it would be "manifestly and gravely inconvenient" to the party, to the extent that "it will be effectively deprived of a meaningful day in court, . . . ." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 19 (1972).
I find no manifest or grave inconvenience if the parties are forced to litigate in Maine. It is likely that the matters in dispute will be resolved on pretrial motion: the remaining issue appears to be whether the clause excluding compensatory damages is enforceable. If it is, that ends the case; if it is not, all that would appear to remain would be for plaintiff to prove up his damages. In any event, requiring the parties to litigate disputes arising under a contract for the sale of seed in the state of origin of the seed is not, on its face, unreasonable, much less manifestly so.
To the extent that plaintiff contends that the state court's finding that this was a contract of adhesion, that finding is not binding with regard to the issue of the validity of the damage limitation provision. The court's opinion is focused solely on the forum selection clause, and it makes no mention of the damage limitation provision — even though the parties may have argued about the validity of that provision in their briefs. Absent more specific discussion and analysis, the court's summary finding that this was and "adhesive" contract is not controlling with regard to the damage limitation provision.
Plaintiff will have his day in court, as required under Kennecorp. That will not be a court in which he wishes to appear. But it is the court that he agreed to be in if a dispute arose under his contract.
Finally, the state court's concern with the boilerplate nature of the agreement is not a basis for declining to uphold its provisions. Many contracts are boilerplate to the extent that the contents of the agreement repeat those of earlier agreements. In such cases, the burden is on the party to complain before he signs the agreement, rather than afterwards.
Conclusion
For the foregoing reasons, I decline to apply the law of the case doctrine, because I am persuaded that Ohio's courts would, in light of Kennecorp Mortgage Brokers, enforce the forum selection clause at issue in this case. Accordingly, I will do likewise, and transfer this case for further proceedings to the forum selected by the Bernath and Potato Services in their commercial contract.
It is, therefore,
ORDERED THAT this cause be, and the same hereby is transferred to the District of Maine for all further proceedings.
So ordered.