Johnson v. Key Equipment Finance

Citation627 S.E.2d 740
Decision Date13 March 2006
Docket NumberNo. 26124.,26124.
CourtUnited States State Supreme Court of South Carolina
PartiesMyron JOHNSON & Building Environmental Services, Inc., Appellants, v. KEY EQUIPMENT FINANCE, A Division of KCCI, CTI Business Management Systems, LLC, Paul M. Candelaria, Rick White, & Brenda Williams, of whom KEY EQUIPMENT FINANCE, A Division of KCCI, is Respondent.

Peter Brandt Shelbourne, of Summerville, for Appellants.

Robert T. Strickland and Andrea C. Pope, both of Barnes, Alford, Stork and Johnson, of Columbia, for Respondent.

Acting Justice CLYDE N. DAVIS, JR.:

This case involves the scope of a forum selection clause contained in a lease agreement between Myron Johnson and Building Environmental Services (Appellants) and Key Equipment Finance (Key). We reverse.

FACTUAL/PROCEDURAL BACKGROUND

Appellants entered into a lease agreement with Key to lease a telephone marketing system. The lease contained a provision which included a forum selection clause. The clause read in part:

This lease shall in all respects be interpreted and governed by the internal laws of the State of New York. You consent to and agree that personal jurisdiction over you and subject matter jurisdiction over the equipment shall be with courts of the State of New York or the Federal District Court for the Northern District of New York solely at our option with respect to any provision of the lease. . . .

Appellants received the equipment and began operating the equipment as directed. However, soon after implementing the marketing system, Appellants discovered that the equipment violated the Federal Telephone Consumer Protection Act of 1991. Because of the violation of the consumer protection act, Appellants were subject to fines. As a result, Appellants filed suit against Key because Appellants discovered that Key was aware that the equipment was illegal prior to executing the lease. Accordingly, Appellants sued claiming that Key induced them into entering a contract to lease equipment that Key knew to be illegal.

Appellants brought this action alleging breach of contract, breach of contract accompanied by a fraudulent act, a violation of the South Carolina Unfair Trade Practices Act, and conspiracy. The trial judge granted Key's motion to dismiss pursuant to Rule 12(b)(2), SCRCP. The trial judge found the forum selection clause to be controlling and the clause prevented Appellants from filing suit in South Carolina. Appellants filed an appeal in the court of appeals and the case was certified to this Court pursuant to Rule 204(b), SCACR. The following issues are before this Court for review:

I. Did the trial court err in dismissing Appellants' claim because the forum selection clause does not encompass causes of action that arose prior to the signing of the lease agreement?

II. Did the trial court err in failing to find that notwithstanding a forum selection clause, S.C.Code Ann. § 15-7-120 allows for personal jurisdiction of a party in South Carolina?

LAW/ANALYSIS

I. Scope of Forum Selection Clause

Appellants argue that the trial court erred in dismissing their claim because the forum selection clause does not encompass causes of action that arose prior to the signing of the lease agreement or those claims that were the product of misrepresentations prior to the lease agreement. We agree.

The issue of whether a forum selection clause applies to causes of action alleging that a plaintiff was induced to enter into a contract or lease by the misrepresentations of the defendant is a question of first impression for this Court. Generally, when wrongs arise inducing a party to execute a contract and not directly from the breach of that contract, the remedies and limitations specified by the contract do not apply. Sterling Financial Inv. Group, Inc. v. Hammer, 393 F.3d 1223, 1225 (11th Cir.2004); Maltz v. Union Carbide Chemicals & Plastics Co., Inc., 992 F.Supp. 286, 297 (S.D.N.Y.1998); Busse v. Pacific Cattle Feeding Fund # 1, Ltd., 896 S.W.2d 807, 812-13 (Tex.Ct.App. 1995). Further, the above-cited line of cases is consistent with South Carolina's general disfavoring of forum selection clauses. See Ins. Products Marketing, Inc. v. Indianapolis Life Ins. Co., 176 F.Supp.2d 544, 550 (D.S.C.2001) (analyzing South Carolina's general...

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5 cases
  • Karon v. Elliott Aviation
    • United States
    • United States State Supreme Court of Iowa
    • January 10, 2020
    ...the discretion to order an evidentiary hearing on the matter. Id. at 85–86.Similarly, in Johnson v. Key Equipment Finance , 367 S.C. 665, 627 S.E.2d 740, 742 (2006), the South Carolina Supreme Court held that a fraud claim could defeat enforcement of a contract containing a choice-of-law an......
  • Tetrev v. Pride Intern., Inc., C.A. No. 2:04-cv-23161-23.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • April 28, 2006
    ...Controlling Law Tetrev submits that the South Carolina Supreme Court decision of Myron Johnson & Building Environmental Services, Inc. v. Key Equipment Finance, et al., 367 S.C. 665, 627 S.E.2d 740 (2006), is an intervening change in controlling law such that this court should reconsider it......
  • T.R. Helicopters LLC v. Bell Helicopter Textron Inc, C/A No.: 3:10-2250-JFA
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • November 17, 2010
    ...litigation to remain in the State regardless of a forum selection clause, Plaintiff, in its brief, cited to Johnson v. Key Equipment Finance, 367 S.C. 665, 627 S.E.2d 740 (2006), and Minorplanet Systems USA Limited v. American Aire, Inc., 368 S.C. 146, 628 S.E.2d 43 (2006), both decided by ......
  • T.R. Helicopters LLC v. Bell Helicopter Textron Inc
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Northern District of Texas
    • November 17, 2010
    ...litigation to remain in the State regardless of a forum selection clause, Plaintiff, in its brief, cited to Johnson v. Key Equipment Finance, 367 S.C. 665, 627 S.E.2d 740 (2006), and Minorplanet USA Limited v. American Aire, Inc., 368 S.C. 146, 628 S.E.2d 43 (2006), both decided by the Sout......
  • Request a trial to view additional results

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