Opinion
No. CV 04 0085820
November 18, 2004
MEMORANDUM OF DECISION
The plaintiff, Post Road Furniture Group, Inc. (Post Road), commenced an action against the defendant, Landmark Merchant Solutions, LLC (Landmark), on June 25, 2004, seeking temporary and permanent injunctive relief to enjoin Landmark from withholding funds belonging to Post Road. Post Road, a Connecticut corporation, operates a retail furniture outlet in Milford, Connecticut. Landmark, which is based in Schaumburg, Illinois, is a service provider for the National Bank of Commerce (the Bank), which is located in Berkeley, Illinois. It acts on the Bank's behalf by processing and funding credit transactions between merchants and their customers. It is undisputed that on January 7, 2003, the parties executed a Bankcard Agreement (the Agreement) whereby Landmark agreed to provide credit card processing services, on behalf of the Bank, to Post Road.
On June 16, 2004, Post Road filed an application for a temporary and permanent injunction and order to show cause. In count one of its two-count verified complaint, Post Road alleges that Landmark caused Webster, a banking institution at which Post Road maintains a commercial checking account, to pay Landmark approximately $40,000 from Post Road's account. Post Road also alleges that Landmark is withholding payment of approximately $30,000 due to Post Road from customer credit transactions. Post Road further alleges that by these actions, Landmark breached its contractual duty of good faith and fair dealing. In count two, Post Road alleges that Landmark's breach of contract also violates the Connecticut Unfair Trade Practices Act (CUTPA).
On July 8, 2004, Landmark timely filed a motion to dismiss the application along with a supporting memorandum of law. In its memorandum, Landmark argues that Post Road's application is not properly before the court because the Agreement contains a forum selection clause that establishes Cook County, Illinois as the exclusive forum for resolution of Post Road's claims. Additionally, Landmark argues, the Agreement allows it to establish a chargeback reserve account from Post Road's funds in an effort to protect itself from risk of loss. Post Road filed a memorandum of law in opposition on July 12, 2004. It argues that a motion to dismiss is not the proper motion by which to challenge a contract clause and, therefore, subject matter jurisdiction is not implicated. Additionally, Post Road argues that the Agreement is one of adhesion based on the inequality between the parties' bargaining power. Post Road also argues that it should not be bound by the forum selection clause because it is ambiguous, oppressive and unreasonable.
Paragraph 31 of the Agreement provides in relevant part: "This Agreement shall be solely and exclusively governed by and construed in accordance with the laws of the State of Illinois. Except as noted below, personal jurisdiction over, subject matter jurisdiction over, forum for and venue of any and all disputes arising directly or indirectly out of this Agreement shall lie solely and exclusively in the federal or state courts of Cook County, Illinois . . ."
Paragraph 17 of the Agreement provides in relevant part: "Bank reserves the right to establish (without notice to Merchant) and Merchant agrees to fund a non-interest bearing Chargeback Reserve Account . . . at any time for any reason, including upon Bank's reasonable determination that it is subject to possible loss or chargeback risk . . ."
In its reply memorandum, filed July 23, 2004, Landmark counters that a motion to dismiss is the proper motion by which to challenge jurisdiction based on a contractual forum selection clause. Landmark also argues that the Agreement is neither unconscionable nor unreasonable because Post Road had notice and freely agreed to the terms. Furthermore, it argues, even if the Agreement is one of adhesion, its forum selection clause is valid because the terms contained therein are unambiguous. The matter was heard on July 26, 2004, at which time testimony was received from Paul Epstein, Post Road's president. On August 9, 2004, Landmark filed a supplemental reply addressing Epstein's testimony that Post Road never received certain terms and conditions of the Agreement.
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Internal quotation marks omitted.) Blumenthal v. Barnes, 261 Corp. 434, 442, 804 A.2d 152 (2002). Such a motion merely tests "whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Id. "In ruling upon whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Neiman v. Yale University, 270 Conn. 244, 250, 851 A.2d 1165 (2004). "[I]n determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Rayhall v. Akim Co., 263 Conn. 328, 339, 819 A.2d 803 (2003). "The plaintiff [however] bears the burden of proving subject matter jurisdiction, whenever and however raised." Fink v. Golenbock, 238 Conn. 183, 199 n. 13, 680 A.2d 1243 (1996).
As a threshold matter, the court addresses Post Road's contention that Landmark's motion to dismiss is not the proper motion by which to challenge the forum selection clause. In support of this contention, Post Road relies on IDV North America, Inc. v. Saronno, Superior Court, judicial district of Hartford, Docket No. CV 99 058059 (September 9, 1999, Teller, J.). It specifically relies on the court's observation in that case that "[t]he existence of a forum selection clause raises the issue, not of subject matter jurisdiction, but of whether a contract provision should be enforced . . . Under this more modern view, the courts treat the [forum selection] contractual provision not as one which seeks to oust the court of jurisdiction, but rather as a provision which will allow the court to decline jurisdiction if it is reasonable to do so." (Citation omitted; internal quotation marks omitted.) Id.
The general rule is that a clause conferring jurisdiction in one forum will only be interpreted as excluding jurisdiction elsewhere when it contains specific language to that effect. See Boutari and Son, Wines and Spirits, S.A. v. Attiki Importers and Distributors, Inc., 22 F.3d 51, 52 (2d Cir. 1994). Several Connecticut courts have required that a forum selection clause specify that the chosen forum is the sole forum for litigation between the parties. See Dan Perkins Chevrolet v. Auto Tell Services, Inc., Superior Court, judicial district of Ansonia-Milford at Milford, Docket No. 36508 (March 17, 1992, Flynn, J.) ( 6 Conn. L. Rptr. 690); Copelco Leasing Corp. v. Fox, Superior Court, judicial district of New Haven, Docket No. 324266 (February 7, 1992, DeMayo, J.) ( 5 Conn. L. Rptr. 8).
In IDV North America, the forum clause did not contain express language indicating the parties' intent to confer exclusive jurisdiction on the selected forum. In the present matter, however, the forum clause invokes exclusivity based on the specific and mandatory language identifying Cook County, Illinois as the sole forum for resolving all disputes arising under the Agreement. Post Road's reliance on IDV North America, therefore, is misplaced and the present motion to dismiss is properly before the court.
Landmark moves to dismiss Post Road's application on the ground that Post Road freely agreed to bring all disputes arising under the Agreement in either the federal or state courts of Cook County, Illinois. Landmark argues that Connecticut courts have upheld forum selection clauses as long as they are unambiguous and reasonable. It claims that the forum clause in the subject Agreement is clear in its identification of Cook County, Illinois as the exclusive forum for litigation between the parties. Landmark also claims that Cook County is a reasonably appropriate forum since Landmark's principal place of business is located therein.
In its memorandum in opposition to the motion to dismiss, Post Road argues that the forum selection clause is ambiguous inasmuch as the agreement does not qualify the meaning of "indirect disputes." It also contends that the Agreement is an adhesion contract and, therefore, invalid. Finally, Post Road counters that the entire Agreement is unreasonable because all the terms favor Landmark and the Bank and, specifically, that the forum selection clause is unreasonable inasmuch as Post Road was not afforded an opportunity to negotiate it.
"Connecticut case law is clear that the courts will uphold an agreement of the parties to submit to the jurisdiction of a particular tribunal." Phoenix Leasing, Inc. v. Kosinski, 47 Conn.App. 650, 653, 707 A.2d 314 (1998). The court recognizes that "in commercial transactions, parties often consent to resolve disputes in a particular jurisdiction by incorporating forum selection clauses into their contracts." Id. Furthermore, "[w]hen the court selected is reasonably appropriate, and where there is no indication that the parties had such greatly disproportionate bargaining power that the agreement could be, regarded as unconscionable, the tendency is to give effect to such agreements." (Internal quotation marks omitted.) Fairfield Lease Corp. v. Romano's Auto Service, 4 Conn.App. 495, 498, 495 A.2d 286 (1985). Our Supreme Court has held that "[a]bsent a showing of fraud or overreaching, such forum clauses will be enforced by the courts." United States Trust Co. v. Bohart, 197 Conn. 34, 42, 495 A.2d 1034 (1985).
Post Road's contention that the forum selection clause is ambiguous is unavailing. As previously discussed, the clause's language is clear and specific in its identification of Cook County, Illinois as the exclusive forum for resolution of "disputes arising directly or indirectly out of this Agreement." Post Road contends that the ambiguity lies in the parties' possible disparate interpretations of what constitutes an "indirect dispute." Specifically, it argues that one party may define an indirect dispute as a matter that is not addressed in the contract, but still affects it. Another party, Post Road further contends, may define an indirect dispute as a matter that is addressed in the agreement, yet does not affect it.
"A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity. Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms." (Internal quotation marks omitted) Alstom Power, Inc. v. Balcke-Durr, Inc., 269 Conn, 599, 610-11, 849 A.2d 804 (2004). "Moreover, the mere fact that the parties [may] advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous." (Internal quotation marks omitted.) United Illuminating Co. v. Wisvest-Connecticut, LLC, 259 Conn. 665, 670, 791 A.2d 546 (2002).
Post Road's contention that the meaning of the term "indirect dispute" as used in the subject Agreement may be interpreted differently by the parties and, therefore, is ambiguous, tortures the term's plain meaning to reach an illogical conclusion. Whether a party considers an indirect dispute to be addressed in the contract itself is irrelevant if the matter somehow affects the agreement. In addition, any alleged ambiguity in the term does not emanate from the language itself, but is merely Post Road's subjective perception of it. The forum selection clause, therefore, is unambiguous and the present matter either arises directly or indirectly out of the Agreement.
Post Road's argument that the Agreement is one of adhesion, inasmuch as Landmark presented it on a take-it-or-leave-it basis, is equally unavailing. "The general rule is that where a person [who is] of mature years and who can read and write, signs or accepts a formal written contract affecting his pecuniary interests, it is [that person's] duty to read it and notice of its contents will be imputed to [that person] if [that person] negligently fails to do so . . . This rule is qualified by the intervention of fraud, artifice or mistake not due to negligence." (Citation omitted; internal quotation marks omitted.) Phoenix Leasing Inc. v. Kosinski, supra, 47 Conn.App. 654. "[C]laims [of procedural unconscionability] are judged by whether the party seeking to enforce the contract has used high pressure tactics or deceptive language in the contract and whether there is inequality of bargaining power between the parties." (Internal quotation marks omitted.) Hottle v. BDO Seidman, LLP, 268 Conn. 694, 720, 846 A.2d 862 (2004).
Nothing in this case overcomes these rules. There is neither a showing of fraud or deception by Landmark, nor evidence of mistake not due to negligence by Post Road. Even if Post Road did not receive a facsimile containing all the terms and conditions, as argued by Epstein during his testimony, his own negligence prevented Post Road's receipt of any missing pages as the pages of the faxed Agreement are clearly numbered. Furthermore, despite Post Road's claim that it did not have any freedom to bargain with Landmark, a salient feature of an adhesion contract, it had the ability to select another credit card service provider. Epstein testified that he was a high school graduate with some college education and that he had been in the furniture retail business for approximately fifteen years. He further testified that he was aware of several other credit card service providers when he entered into the Agreement with Landmark. Consequently, the Agreement, including the forum selection clause, is neither one of adhesion, nor unconscionable.
Next, the court turns to Landmark's claim that Cook County, Illinois is a reasonably appropriate forum. The United States Supreme Court rejected the traditional view that "agreements in advance of controversy whose object is to oust the jurisdiction of the courts are contrary to public policy and will not be enforced." (Internal quotation marks omitted). The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 6, 92 S.Ct 1907, 32 L.Ed.2d 513 (1972). Instead, it has adopted the view that "such clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." Id., 10. The Bremen involved a freely negotiated international commercial transaction. In that case, the Supreme Court found the forum selection clause to be enforceable because whatever "`inconvenience' [the party seeking to escape the clause] would suffer by being forced to litigate in the contractual forum . . . was clearly foreseeable at the time of contracting." Id., 17-18. The Court held that "[i]n such circumstances it should be incumbent on the party seeking to escape his contract to show that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court. Absent that there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold that party to his bargain." Id., 18.
At the hearing on the motion, Post Road argued that the cost of litigating the present matter in Illinois is financially prohibitive given Landmark's control over much of Post Road's funds. It concludes, therefore, that it is unreasonable to expect it to litigate in Illinois. Landmark counters that it is reasonable on its part to select one jurisdiction in which to litigate all disputes with merchants arising from its Bankcard Agreements to achieve uniformity of decision. Landmark also contends that because it is headquartered in Cook County, Illinois, it is reasonable for Cook County to be the forum selected for resolution of disputes between the parties.
Although the Connecticut appellate courts have not defined the degree of inconvenience necessary to persuade a court to decline to enforce a forum selection clause, courts have held that the additional time and expense required to travel to the selected forum are not, standing alone, adequate reasons to disregard the clause. See Bense v. Interstate Battery System of America, Inc., 683 F.2d 718, 722 (2nd Cir. 1982); Total Telecommunications, Inc. v. Target Telecom, Inc., judicial district of Ansonia-Milford at Milford, Docket No. CV 96053516 (March 11, 1997, Corradino, J.). Post Road bases its claim of inconvenience, however, not only on the added expense it would necessarily incur by requiring its representatives to travel to Illinois, but on its belief that it is unreasonable to expect Post Road to do so given the fact that it does not have access to a substantial amount of its funds because of Landmark's actions. Any claim of inconvenience and expense is minimal. Further, such claims of inconvenience and/or expense will not deprive Post Road of its day in court.
Accordingly, under the circumstances, enforcement of the forum selection clause in the Agreement is reasonable. Thus, Landmark's motion to dismiss is granted.
MORAN, J.