PELLEPORT INV., INC. v. BUDCO QUALITY THEATRES

Decision Date12 August 1983
Docket NumberNo. 83-3728 AWT.,83-3728 AWT.
Citation569 F. Supp. 612
PartiesPELLEPORT INVESTORS, INC., a corporation, Plaintiff, v. BUDCO QUALITY THEATRES, INC., a corporation, also known as Budco, Inc., and as Budco Theatres, Does 1 through 100, Inclusive, Defendants.
CourtU.S. District Court — Central District of California

Jay R. Ziegler, Buchalter, Nemer, Fields, Chrystie & Younger, Los Angeles, Cal., for plaintiff.

Henry N. Jannol, Los Angeles, Cal., for defendants.

MEMORANDUM OPINION AND ORDER

TASHIMA, District Judge.

This is a breach of contract action for alleged failure to pay the agreed rental fees for the rental of various theatrical motion pictures. Plaintiff is the assignee of American Cinema Releasing, Inc., a California corporation, owner of the prints which are the subject of the agreements. The action was removed from state court by defendant Budco Quality Theatres, Inc. ("Budco"), the only defendant who has appeared in this action. Budco is a Pennsylvania corporation whose principal place of business is in Doylestown, Bucks County, Pennsylvania. Removal is predicated on diversity of citizenship, the existence of which is not challenged.

Before the Court now is plaintiff's motion to remand the action to state court. Although a number of grounds are set forth in support of the motion, only one need be addressed — that Budco has agreed that disputes arising out of the film rental agreements will be litigated in California state courts.1

Each of the agreements sued on contains the following forum selection clause:

Exhibitor defendant expressly agrees that any and all disputes arising out of or in connection with this Agreement shall be litigated only in the Superior Court for Los Angeles, California2 (and in no other), and Exhibitor hereby consents to the jurisdiction of said court....

Plaintiff contends that this is a valid, binding and reasonable forum selection clause of a commercial agreement. Defendant contends that it is invalid because it contravenes federal policy as embodied in the removal statute and the case law construing it and that its application here is unreasonable.

The parties rely on opposing lines of cases, both of which find their origin in the dictum in Insurance Co. v. Morse, 87 U.S. (20 Wall.) 445, 22 L.Ed. 365 (1874). That case involved the validity of a Wisconsin statute which required a foreign insurance company, as a condition to the right to transact business in that state, to agree that it would not remove any suits commenced against it in Wisconsin to federal court. The statute was held to be unconstitutional and void. However, in broad dictum, the court stated that "agreements in advance to oust the courts of jurisdiction conferred by law are illegal and void." Id. at 451, 22 L.Ed. 365. Most of these cases are collected and analyzed in Perini Corp. v. Orion Ins. Co., 331 F.Supp. 453 (E.D.Cal. 1971). See also Colonial Bank & Trust Co. v. Cahill, 424 F.Supp. 1200, 1202-03 (N.D.Ill. 1976) (contractual language insufficient to constitute express waiver).

Were matters to end there, the question might still be considered open for debate. However, the Supreme Court has since decided The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). That case involved the enforceability of a forum selection clause under an international towage contract which provided that disputes under the contract, "must be treated before the London Court of Justice." The Court there held that "a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power ... should be given full effect." Id. at 12-13, 92 S.Ct. at 1914-1915 (footnote omitted). The Bremen also expressly limited Insurance Co. to situations involving state statutory limitations on the right of removal as a prerequisite to doing business in the state. 407 U.S. at 9-10 n. 10, 92 S.Ct. at 1913 n. 10.

The Court stated that, "in the light of present-day commercial realities ... we conclude that the forum clause should control absent a strong showing that it should be set aside ... The correct approach would have been to enforce the forum clause specifically unless Zapata could clearly show that enforcement would be unreasonable and unjust...." Id. at 15, 92 S.Ct. at 1916. The "heavy burden" of the required "strong showing" is "not only that the balance of convenience is strongly in favor of trial in the U.S. District Court at Tampa ..., but also that a London trial will be so manifestly and gravely inconvenient to Zapata that it will be effectively deprived of a meaningful day in court...." Id. at 19, 92 S.Ct. at 1918. Given that standard for testing the enforceability of an international forum selection clause, the enforceability and reasonableness of a domestic forum selection clause, involving only a choice between a state and federal court, would appear to be an a fortiori case. And while it is true in this case that the forum selection clause also acts as a "removal waiver" clause, that fact is insufficient to justify disregarding...

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6 cases
  • Pelleport Investors, Inc. v. Budco Quality Theatres, Inc.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 24 Agosto 1984
    ...and SOLOMON, * Senior District Judge. BOOCHEVER, Circuit Judge: Budco Quality Theatres, Inc. (Budco) appeals the district court's order, 569 F.Supp. 612, remanding this case to the state court from which it was removed. Budco additionally petitions this court for a writ of mandamus to preve......
  • John's Insulation, Inc. v. Siska Const. Co., Inc.
    • United States
    • U.S. District Court — Southern District of New York
    • 9 Octubre 1987
    ...parallels language found in clauses that have been ruled to waive the right of removal. See, e.g., Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 569 F.Supp. 612 (C.D.Cal. 1983) (defendant waived his right to remove by agreeing that all disputes "shall be litigated only in the S......
  • Visicorp v. Software Arts, Inc.
    • United States
    • U.S. District Court — Northern District of California
    • 19 Diciembre 1983
    ...well-reasoned recent opinions hold that The Bremen should apply equally to diversity cases. See, Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 569 F.Supp. 612, 614 (C.D.Cal. 1983) (Tashima, J., "Given the Bremen standard for testing the enforceability of an international forum ......
  • Fanney v. Trigon Ins. Co.
    • United States
    • U.S. District Court — Eastern District of Virginia
    • 23 Julio 1998
    ...court. 3. The three cases relied on by plaintiff have no relevance to the issue in this case. See Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 569 F.Supp. 612 (C.D.Cal.1983), order aff'd, 741 F.2d 273 (9th Cir.1984); Himes v. Admiral Insurance Co., 575 F.Supp. 312 (E.D.Ky.1983......
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