Opinion
No. C4-00-1978.
Filed May 15, 2001.
Appeal from the District Court, Lyon County, File No. C000354.
Kevin K. Stroup, Christianson, Stoneberg, Giles Stroup, P.A., (for respondent)
James Utley, Anderson Dove Fretland Van Valkenburg, P.L.L.P., (for appellants)
Considered and decided by Lansing, Presiding Judge, Schumacher, Judge, and Hanson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
In an appeal from summary judgment, Film Funding argues that it should not be held to a forum-selection clause requiring it to defend a lawsuit in Minnesota arising from a business-equipment lease it entered into in Nevada. Because the district court did not abuse its discretion in enforcing the forum-selection clause, we affirm.
FACTS
The facts are undisputed. Film Funding, a Nevada corporation, leased a copier from Skipco, Inc., also a Nevada corporation, on September 24, 1998. On the same day that Skipco and Film Funding signed the lease, Skipco exercised its right under the lease to sell and assign the lease for financial purposes to Lyon Financial Services, a Minnesota corporation. Under the terms of the assignment, and consistent with the provisions of the lease between Film Funding and Skipco, Lyon Financial purchased the right to receive payments from Film Funding, and Skipco retained all service and maintenance obligations.
Film Funding encountered problems with the copier, and Skipco was unable to repair the copier to Film Funding's satisfaction. Film Funding returned the copier to Skipco and stopped making payments to Lyon Financial. Lyon Financial sued Film Funding for nonpayment in Lyon County, Minnesota, and Film Funding defended, alleging lack of personal jurisdiction. Film Funding, in turn, sued Skipco and Lyon Financial in Nevada for breach of contract.
Lyon Financial and Film Funding brought cross-motions for summary judgment in the Minnesota action. The district court enforced the lease's forum-selection clause, granted Lyon Financial's motion for summary judgment, denied Film Funding's summary judgment motion, and, under the terms of the lease, awarded Lyon Financial $33,803.91 plus interest, attorneys' fees, and costs. Film Funding appeals, claiming that the district court erred in enforcing the lease's forum-selection clause.
DECISION
In an appeal from summary judgment when the facts are undisputed, appellate review is limited to determining whether the district court erred in its application of the law. Associated Builders Contractors v. Ventura, 610 N.W.2d 293, 298 (Minn. 2000). The decision to enforce a forum-selection clause is within the district court's discretion and, on review, this court will not disturb that ruling absent a clear abuse of discretion. Interfund Corp. v. O'Byrne, 462 N.W.2d 86, 88 (Minn.App. 1990). When a district court has enforced a forum-selection clause, this court will only reverse if the clause is "so unreasonable that its enforcement would be clearly erroneous and against both logic and the facts on record." Personalized Mktg. Serv., Inc. v. Stotler Co., 447 N.W.2d 447, 451 (Minn.App. 1989), review denied (Minn. Jan. 12, 1990).
The lease's forum-selection clause allows the parties to sue in the state of the lease owner's principal place of business, the customer's state of residence, or in any other state that has jurisdiction over the customer or the customer's assets. Because of the assignment, Lyon Financial, with its principal place of business located in Minnesota, is the lease's owner. Film Funding disputes the enforceability of the forum-selection clause that permits Minnesota to assert jurisdiction over this case.
When parties agree to bring contract disputes in a particular forum, courts generally enforce that agreement unless the party seeking to avoid the contractual forum shows that the agreement is unfair or unreasonable. Hauenstein Bermeister, Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886, 890 (Minn. 1982). A forum-selection clause is unfair or unreasonable if (1) the chosen forum is a "seriously inconvenient" place for trial, (2) the agreement containing the forum-selection clause is a contract of adhesion, or (3) the agreement is "otherwise unreasonable." Id.
For a chosen forum to be seriously inconvenient, "one party would have to be `effectively deprived of a meaningful day in court.'" Id. (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 19, 92 S.Ct. 1907, 1918 (1972)). Film Funding argues first that trying its case in Minnesota is seriously inconvenient because traveling to Minnesota is prohibitively expensive. But Minnesota courts have generally not recognized traveling as a serious inconvenience, instead pointing out that deposition testimony can be taken without disadvantage because witnesses are not required to appear personally at trial. See Hauenstein, 320 N.W.2d at 890 (enforcing a forum-selection clause allowing a Minnesota corporation to sue only in Florida); Interfund Corp., 462 N.W.2d at 88 (finding that a forum-selection clause forcing a Washington resident to bring suit in Minnesota was not seriously inconvenient).
Film Funding's second argument is that the forum-selection clause is seriously inconvenient because it is premised on the lease agreement's failure to identify a specific jurisdiction in which Film Funding has consented to be sued, and it allows the lease's owner to bring an action in any state in which the owner's principal place of business is located. But Film Funding has not shown that, to be enforceable, a forum-selection clause must identify a specific jurisdiction. See, e.g., A.I. Credit Corp. v. Liebman, 791 F. Supp. 427, 429-30 (S.D.N.Y. 1992) (rejecting plaintiff's assertion that forum-selection clause requiring parties bring suit in jurisdiction where partnership's principal place of business is located is too uncertain to be enforced); Interfund Corp., 462 N.W.2d at 87 (enforcing forum-selection clause that did not identify a specific jurisdiction and instead stated that any legal proceeding could be brought "in the state or federal court of the assignee").
Film Funding's final argument on serious inconvenience is that the forum-selection clause effectively deprives it of a valid remedy because it cannot pursue its breach-of-contract claim against Lyon Financial or Skipco in Minnesota. The lease specifies that, after assignment, the lease's "new owner will not be subject to any claims, defenses or set-offs" that Film Funding might have against Skipco. Thus Film Funding's lack of remedy is caused not by the forum, but the terms of the lease it signed. The lease does not, however, prohibit Film Funding from proceeding on its breach-of-contract action against Skipco in Nevada.
Under Hauenstein, the second factor that would cause a forum-selection clause to be unenforceable is its inclusion in an adhesion contract. Hauenstein, 320 N.W.2d at 890. An adhesion contract is a "take-it-or-leave-it" contract that is the product of the parties' unequal bargaining power. Id. at 891. But contrary to Film Funding's argument, the record contains scant evidence that the lease between Film Funding and Skipco is an adhesion contract. Although the lease is mainly "boilerplate" language, a contract's inclusion of boilerplate language is only one factor tending to point to an adhesion contract. Id. Other factors to consider include the parties' sophistication, bargaining power disparity, opportunity for negotiation, opportunity to readily obtain the product elsewhere, and the product's status as a public necessity. Id.; Personalized Mktg., 447 N.W.2d at 452.
As a corporation, Film Funding is presumed to approach business dealings with sophistication. See, e.g., Hauenstein, 320 N.W.2d at 891 (finding that business corporations presumably have personnel able to evaluate corporate agreements). Further, Film Funding has not presented any evidence of unequal bargaining power, lack of opportunity for negotiation, limitation in availability of leased copiers, or that copiers are "public necessities."
Finally, Film Funding asserts that under the third Hauenstein prong the forum-selection clause is otherwise unreasonable. A court may find a forum-selection clause to be unreasonable if the party seeking to avoid the forum demonstrates fraud or overreaching or if enforcement of the clause would contravene a strong public policy in the forum where the suit is being litigated. M/S Bremen, 407 U.S. at 15, 92. S.Ct. at 1916. In the interests of judicial economy or prevention of multiple actions on similar issues, a court may refuse to enforce an otherwise enforceable forum-selection clause. Personalized Mktg., 447 N.W.2d at 453.
Film Funding asserts no additional facts to support its argument that the forum-selection clause is otherwise unreasonable except to analogize its circumstances to those in Personalized Marketing. Personalized Marketing involved more than 100 parties aligned into three groups raising five cross-claims and counterclaims in addition to the original claim. Id. at 449-50. Enforcing the forum-selection clause in Personalized Marketing would have required the district court to dismiss more than 90 cross-claims mostly involving small sums. Id. at 450. Film Funding's circumstances are not analogous.
Because Film Funding has failed to show that the forum-selection clause it agreed to presents a serious inconvenience, is contained in an adhesion contract, or is otherwise unreasonable, the district court did not err in enforcing the forum-selection clause.