Ernest and Norman Hart Bros., Inc. v. Town Contractors, Inc.

• Decision Date: 27 June 1984
• Citation: 18 Mass.App.Ct. 60,463 N.E.2d 355
• Parties: ERNEST AND NORMAN HART BROTHERS, INC. v. TOWN CONTRACTORS, INC.
• Court: Appeals Court of Massachusetts

Page 355

463 N.E.2d 355

18 Mass.App.Ct. 60

ERNEST AND NORMAN HART BROTHERS, INC. v. TOWN CONTRACTORS, INC.

Appeals Court of Massachusetts Essex.

Argued March 13, 1984.

Decided April 26, 1984.

Further Appellate Review Denied June 27, 1984.

John C. Wyman, Boston (Anne H. Stossel, Boston, with him), for defendant.

Laurence P. Melia, Lawrence, for plaintiff.

Before ARMSTRONG, CUTTER and PERRETTA, JJ.

CUTTER, Justice.

The plaintiff is a Massachusetts corporation engaged in electrical contracting. In 1972 and thereafter, that corporation, Ernest and Norman Hart Brothers, Inc. (Hart), formed May 8, 1972, operated in Lawrence an electrical business which previously had been conducted by two brothers under the name of Hart Brothers. Under date of June 27, 1972, the new corporation, as sole subcontractor, undertook by written agreement with Town Contractors, Inc. (Town), a Connecticut corporation, to do work (not involved in the present case) on a building to be used by Sears, Roebuck & Company at a shoppers' mall (the mall) in Methuen. The mall then was being developed by Town's parent corporation, First Hartford Realty Corporation, also a Connecticut corporation. Town was the general contractor for the project.

Hart, using an abbreviated name (Hart Bros. Inc.) made a proposal to Town to do further electrical work at the mall (not in any way connected with the Sears, Roebuck subcontract). Negotiations then ensued and a joint venture ¹ consisting of Hart and Decker Electrical Corporation (Decker) was arranged to perform certain electrical work as subcontractor for Town. The subcontract considered in this opinion dated October 10, 1972, was made between (a) Town, as general contractor, and (b) Hart (signing as "Hart Bros. Co.") and Decker, as joint venturers and subcontractors. This subcontracted work was performed by them during 1973 and 1974.

The present action ² was brought in Essex County, Massachusetts, and was heard on the merits by a Superior Court judge, sitting without a jury. A motion to dismiss and a motion for partial summary judgment (discussed below in part 1 of this opinion) were denied on January 31, 1975. Town, in its brief, admits that at trial there "was disputed evidence concerning Hart['s] and Decker's performance under the subcontract and ... oral changes to add alleged extra work." Town also concedes that "[m]ost of these disputes were determined against" Town by the trial judge and also that "as findings of fact they are not the subject of this appeal."

The trial judge ordered judgment for Hart (a) for a balance due it, under the subcontract and for extras, of $61,209 and interest, and (b) dismissing Town's counterclaim on the merits. Town has appealed.

1. Choice of forum. The subcontract contained a provision reading, "18. Disputes. Connecticut law shall have jurisdiction in the event of a legal dispute between the parties to this contract, and such disputes shall be adjudicated in Hartford County." This provision (hereafter "Article 18") appeared immediately above the signatures of Town, Hart, and Decker to what appear to be the general conditions of the contract. In a paragraph numbered "1A, Definitions," subparagraph (h) reads, "Governing Law. The law of the place of building shall govern the construction of the Contract," which may be viewed by some as inconsistent with Article 18 if the first part of that article is to be regarded as a choice of law provision.

Town's motions to dismiss and for partial summary judgment, denied January 31, 1975, were based upon Article 18 as being essentially a contractual choice of forum. Town's contention, on this part of the case, is that Article 18 should be enforced strictly in accordance with what Town argues is the trend of the modern decisions on contractual choices of forum, and that Hart's action in Massachusetts should be dismissed. As Town's indebtedness, if any, based on the subcontract arose prior to the commencement of Hart's present action in 1974, a new action by Hart in Connecticut presumably would be barred by the six-year statute of limitations on contract actions in force in that State. See Conn.Gen.St. § 52-576 (1973).

The Massachusetts decisions, in general but not always, have disregarded forum selection provisions in contracts or treated them as invalid. In 1856, the Supreme Judicial Court considered a provision of an insurance company's by-laws, that an action upon a claim under an insurance contract "shall be brought at a proper court in the county of Essex." The court (opinion by Shaw, C.J.) decided that this by-law did not provide a defense to an action brought in Suffolk county. See Nute v. Hamilton Mut. Ins. Co., 6 Gray 174, 179, 182-185 (1856), generally regarded as treating forum selection provisions as to be disregarded. See also Cobb v. New England Mut. Marine Ins. Co., 6 Gray 192, 204 (1856, treating as invalid a contractual provision for arbitration); Amesbury v. Bowditch Mut. Fire Ins. Co., 6 Gray 596, 603 (1856, following the Nute case).

Early in this century two cases regarded the Nute decision as inapplicable to the particular facts then presented. In Daley v. People's Bldg. Loan and Sav. Ass'n, 178 Mass. 13, 18-20, 59 N.E. 452 (1901), the Supreme Judicial Court (per Holmes, C.J.) held that an action on a membership certificate in a New York corporation could not be brought in Massachusetts where the certificate provided that the association could be sued only in Ontario County, in the State of New York. The opinion (at 19, 59 N.E. 452) distinguished, but expressly did not overrule, the Nute case. In Mittenthal v. Mascagni, 183 Mass. 19, 21-25, 66 N.E. 425 (1903), the court dealt with a provision in a contract made in Italy, between an Italian composer and his agent, for concerts in the United States. The contract gave exclusive jurisdiction of certain disputes under the contract to an Italian court in Florence. The decision recognized (at 23, 66 N.E. 425) that, in a contract of this character, the provision was reasonable. The opinion (at 24, 66 N.E. 425) said that the case was "quite unlike" the Nute case.

Later Massachusetts cases have followed the Nute decision. See Norcross Bros. v. Vose, 199 Mass. 81, 93-94, 85 N.E. 468 (1908), holding that an arbitration clause did not prevent court action to recover liquidated damages specified in the contract, where an arbitration award had not "been made a condition precedent to a right to sue"; Nashua River Paper Co. v. Hammermill Paper Co., 223 Mass. 8, 13-19, 111 N.E. 678 (1916, where, per Rugg, C.J., the principle of the Nute case was strongly supported and applied). In Cadillac Automobile Co. v. Engeian, 339 Mass. 26, 30, 157 N.E.2d 657 (1959), the court referred to the line of decisions following the Nute case without intimating what its decision would have been if the validity of what, in a sense, was a forum selection clause had been before it. Compare Diversified Mortgage Investors v. Viking Gen. Corp., 16 Mass.App. 142, 144, 147-149, 450 N.E.2d 176 (1983), where consent to suit in Massachusetts was relied on as support for allowing an action here. The Nute principle was in earlier days consistent with the view then prevailing in the Federal courts. See, e.g., Insurance Co. v. Morse, 20 Wall. 445, 451, 22 L.Ed. 365 (1874); Wood & Selick, Inc. v. Compagnie Generale Transatlantique, 43 F.2d 941, 942 (2d Cir.1930, where L. Hand, J., recognized the then state of the law). See also 6A Corbin, Contracts, §§ 1445-1446 (1962, but compare same sections in supp.1984).

The Nute hostility to forum selection provisions has now been modified in the Federal courts, at least in cases where the contractual choice of forum was reasonable and resulted in no substantial injustice and where the provision was not found in an adhesion agreement, of a type often resulting where the bargaining strength of the contracting parties is not equal. See The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). This was an admiralty case in which the opinion, at 15, 92 S.Ct. at 1916, stated that, "in the light of present-day commercial realities ... [a] forum clause should control, absent a strong showing that it should be set aside," or that "enforcement would be unreasonable and unjust," or that the clause was invalid for such reasons as fraud or overreaching. See also Scherk v. Alberto-Culver Co., 417 U.S. 506, 518-520, 94 S.Ct. 2449, 2456-2457, 41 L.Ed.2d 270 (1974).

The United States Court of Appeals for the First Circuit, and the Federal District Courts in this circuit, in effect, have adopted essentially what is now regarded as the modern view. See Fireman's Fund American Ins. Co. v. Puerto Rican Forwarding Co., 492 F.2d 1294, 1296-1297 (1st Cir.1974). There it was said that forum clauses "should be enforced unless enforcement is shown ... to be 'unreasonable' under the circumstances," in the light of considerations of the type mentioned in the Zapata case, 407 U.S. at 15-16, 92 S.Ct. at 1916. See also St. Paul Fire & Marine Ins. Co. v. Travelers Indem. Co., 401 F.Supp. 927, 929 (D.Mass.1975); Northeast Theatre Corp. v. Edie and Ely Landau, Inc., 563 F.Supp. 833, 834-835 (D.Mass.1983, although the opinion noted [at 834] that if Massachusetts law were to control venue, the result would be different); C. Pappas Co. v. E. & J. Gallo Winery, 565 F.Supp. 1015 (D.Mass.1983).

The general attitude of courts toward contractual forum selection provisions obviously has changed in the direction of recognizing them. See Restatement (Second) of Conflict of Laws, § 80 and comment a (1971); Restatement, Foreign Relations Law of the United States (Revised), § 492(2)(f), and comment (h) and reporters' note 5 (Tent. draft No. 4 at 116-125, 1983); 15 Wright, Miller, & Cooper, Federal Practice & Procedure, § 3803 (1976 & Supp.1983); 1 Moore's, Federal Practice, § 0.140[1-3-2] (2d ed. 1983 & Supp.1983-1984); Ehrenzweig, Conflict of Laws, § 41 (1959) and...