Summary
finding that the forum selection clause was not so one-sided in favor of defendant that it was the product of overreaching
Summary of this case from 2215 Fifth St. Assocs., LP v. U-Haul Int'l, Inc.Opinion
CIVIL ACTION NO. 00-1555 SECTION L
August 11, 2000
ORDER AND REASONS
Before the Court is the motion of defendant Drury Inns, Inc. to dismiss for improper venue pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure. For the following reasons, defendant's motion is GRANTED.
I. BACKGROUND
Plaintiff Hartash Construction, Inc. ("Hartash") filed suit on February 7, 2000, seeking to collect all amounts owed by defendants resulting from work on a construction project in New Orleans, Louisiana.
Hartash is a Florida corporation based in Palm Bay, Florida. Hartash entered into a subcontract agreement on January 18, 1999 with defendant Drury Inns, Inc. ("Drury"), acting as both owner and general contractor, for a portion of the renovation work being performed on a hotel in downtown New Orleans. The contract contained a forum selection clause which stated that any dispute arising out of the subcontract could be brought only in the St. Louis County Circuit Court in St. Louis, Missouri. Hartash asserts that various disputes with Drury arose both before and during the project. Drury terminated the subcontract on September 24, 1999.
On January 21, 2000, Hartash filed a Statement of Lien or Privilege in the Mortgage Records of Orleans Parish, Louisiana, in order to collect money allegedly owed by Drury to Hartash for work performed on the hotel project, as well as for damages incurred by Hartash. About two weeks later, Hartash filed a breach of contract suit against Drury in the Civil District Court for the Parish of Orleans in order to enforce the Statement of Lien or Privilege and to collect any amounts owed to Hartash. Drury removed this lawsuit on diversity grounds and also filed a bond with the Recorder of Mortgages for the Parish of Orleans, who subsequently cancelled the lien.
Hartash alleges that Drury currently owes it over $275,000. Drury now seeks to enforce the forum selection clause contained in the subcontract and have this suit dismissed. The plaintiff argues that the Court should deny the defendant's motion because enforcing the forum selection clause would be unreasonable.
II. ANALYSIS
Forum selection clauses "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972); see also International Software Sys. v. Amplicon, Inc., 77 F.3d 112, 115 (5th Cir. 1996) (applying Bremen to diversity cases). Enforcement of a forum selection clause is unreasonable if:
(1) the incorporation of the forum selection clause into the agreement was the product of fraud or overreaching; (2) the party seeking to escape enforcement "will for all practical purposes be deprived of his day in court" because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; or (4) enforcement of the forum selection clause will contravene a strong public policy of the forum state.Haynsworth v. The Corporation, 121 F.3d 956, 963 (5th Cir. 1997). A party seeking to avoid enforcement of a forum selection clause, however, must satisfy a heavy burden of proof to demonstrate the conditions of unreasonableness. See id. When a party fails to meet its burden of proof, a court may dismiss a suit as the appropriate method of enforcing a forum selection clause. See International Software Sys., 77 F.3d at 114.
In the present case, Drury argues that enforcement of the forum selection clause will not be unreasonable because no evidence suggests that the forum selection clause resulted from fraud or overreaching. Drury further explains that Hartash will not be deprived of its day in court if Hartash is required to pursue its claim in Missouri. In addition, Drury argues that there is nothing fundamentally unfair about enforcing the forum selection clause because Hartash has no particular connection to the Eastern District of Louisiana and that the clause does not violate Louisiana public policy.
Hartash contends that the forum selection clause is unreasonable because it satisfies the elements articulated in Bremen. First, Hartash explains that the forum selection clause is so one-sided in favor of Drury that it is the product of overreaching. Second, Hartash insists that forcing it to litigate Louisiana issues in a Missouri court will be so costly that it will be unable to have its day in court. Because all the issues relevant to this litigation took place within New Orleans, Hartash next maintains that it is fundamentally unfair to require it to prosecute its case in the hometown of the defendant. Finally, dismissal for improper venue would undermine Louisiana's public policy that favors regulating the property and actions of individuals within its borders.
Despite the defendant's protestations to the contrary, the facts do not support a finding that the forum selection clause is unreasonable. First, Hartash offers no evidence to indicate that the forum selection clause is a result of fraud or overreaching by Drury. Although Hartash alleges that the contract unduly favors Drury, it offers no evidence to indicate that the forum selection clause resulted from acts of fraud, coercion, or duress. See Haynsworth, 121 F.3d at 963 (holding that "fraud and overreaching must be specific to a forum selection clause in order to invalidate it"). The forum selection clause would be invalid had Drury concealed it or if Drury had forced Hartash to include it within the contract. See Hunter Distributing. Co., Inc. v. Pure Beverage Partners, 820 F. Supp. 284, 286-87 (N.D. Miss. 1993). Without such evidence, however, the Court cannot find the forum selection clause unreasonable because of fraud or overreaching.
"`Overreaching' is `that which results from an inequality of bargaining power or other circumstances in which there is an absence of meaningful choice on the part of one of the parties.'" Haynsworth, 121 F.3d at 965 n. 17 (quoting Black's Law Dictionary 1104 (6th ed. 1990)).
Second, the facts do not suggest that Hartash will be deprived of its day in court if the forum selection clause is enforced because Missouri is not a sufficiently inconvenient forum. Hartash asserts that prosecuting its claims in Missouri would prove unreasonably inconvenient because most of its witnesses reside in New Orleans. The inconvenience of trying a case in one state versus another, however, is insufficient to invalidate a forum selection clause. See Carnival Cruise Lines,
499 U.S. 585, 594-95 (1991) (requiring Washington plaintiff to abide by a forum selection clause naming Florida as the exclusive jurisdiction for disputes). Inconvenience typically invalidates a forum selection clause when the clause places a burden on one party to litigate in a "remote alien forum." Id. (quoting Bremen, 407 U.S. at 17). The facts of this case do not demonstrate that Missouri proves a sufficiently inconvenient forum so as to deprive Hartash of its day in court.
Similarly, the potential inconvenience associated with litigating in Missouri rather than Louisiana does not make the forum selection clause fundamentally unfair. See id (holding that forum selection clause requiring Texas corporation to litigate in California was not fundamentally unfair). The evidence fails to demonstrate that Drury designated Missouri as the forum in which disputes were to be resolved in order to discourage Hartash from filing suit. See Carnival Cruise Lines, Inc., 499 U.S. at 595 (finding forum selection clause not fundamentally unfair where nothing indicated that the forum was chosen to discourage plaintiff from filing suit). While it will no doubt be more inconvenient and expensive for Hartash to pursue its claim in Missouri, Hartash, a Florida corporation, would still incur inconvenience and expense if litigating in Louisiana. The "forum selection clause does little more than shift these burdens from one party to the other. . . ." Hunter Distributing Co., Inc. 820 F. Supp. at 287.
The final way that Hartash may demonstrate the unreasonableness of the forum selection clause is to establish that the clause violates a strong public policy of Louisiana. Hartash contends that the forum selection clause contravenes Louisiana public policy by permitting a foreign contractor to operate in Louisiana but choose to resolve its disputes in another jurisdiction. Louisiana courts, however, have enforced forum selection clauses even though "all material facts concerning the formation, performance and breach of the contract had occurred in Louisiana. . . ." See Digital Enterprises. v. Arch Telecom, 658 So.2d 20 (La.App. 5th Cir. 1995). Plaintiff offers no support to suggest that enforcing the forum selection clause in this case would violate Louisiana public policy.
The Court notes that Louisiana considers forum selection clauses in construction contracts and subcontracts involving a Louisiana company doing work in the state in violation of its public policy. See La. Rev. Stat. § 9:2779(A) (West 2000). Because neither plaintiff nor defendant are Louisiana companies, however, this statutory provision is not instructive in the present case.
III. CONCLUSION
For the foregoing reasons, defendant's motion to dismiss for improper venue pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure is GRANTED.