LFC Lessors, Inc. v. Pacific Sewer Maintenance Corp., 84-1013

• Citation: 739 F.2d 4
• Decision Date: 11 July 1984
• Docket Number: No. 84-1013,84-1013
• Parties: LFC LESSORS, INC., Plaintiff, Appellant, v. PACIFIC SEWER MAINTENANCE CORP., Defendant, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

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739 F.2d 4

LFC LESSORS, INC., Plaintiff, Appellant, v. PACIFIC SEWER MAINTENANCE CORP., Defendant, Appellee.

No. 84-1013.

United States Court of Appeals, First Circuit.

Argued May 11, 1984.

Decided July 11, 1984.

James-Menzies Shannon, Lynnfield, Mass., with whom Joseph Stephen Provanzano, and Hayt, Hayt & Landau, Lynnfield, Mass., were on brief, for plaintiff, appellant.

Myer J. Cohen, Boston, Mass., for defendant, appellee.

Before COFFIN and BOWNES, Circuit Judges, and PETTINE, ^* Senior District Judge.

PETTINE, Senior District Judge.

Plaintiff/appellant LFC Lessors, Inc. appeals from the district court's allowance of defendant/appellee Pacific Sewer Maintenance Corporation's motion to dismiss. The action arose out of a contract executed by the parties in 1980 for the lease of office equipment. LFC alleges that Pacific Sewer has defaulted under the contract by failing to pay the monthly rental charges on the equipment and by failing to return certain equipment to LFC.

Pacific Sewer's motion to dismiss was pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(3) and was based upon three grounds. Pacific Sewer alleged that

1. The amount in controversy involved in this action does not exceed the requisite amount of Ten Thousand Dollars ($10,000), exclusive of interest and costs;

2. Under the provisions of the contract between the parties, drafted by the plaintiff, this Court lacks subject matter jurisdiction; and

3. Under the provisions of the contract between the parties, the venue of this action is not properly in this Court.

Appellee's Appendix at 2.

As stated above, the motion to dismiss was granted, but the district court made no findings of fact or conclusions of law; indeed, the court did not even file an opinion. Therefore, we come to this appeal without knowledge of the trial judge's reasoning.

We turn first to Pacific Sewer's argument that the district court was without jurisdiction to hear this diversity case because the amount in controversy was less than $10,000. See 28 U.S.C. Sec. 1332(a). Pacific Sewer says that the action is founded on twenty-four months of disputed rental payments, said by Pacific Sewer to total $10,289.52. However, Pacific Sewer attached to its memorandum in support of its motion to dismiss copies of four checks to LFC for a total amount of $299.77 and a copy of its "payment record." These copies, says Pacific Sewer, reflect a reduction of the amount in dispute to $9989.75, about ten dollars less than the jurisdictional amount. LFC, on the other hand, alleges damages of $12,270.42. Pacific Sewer does not allege that LFC has claimed this amount in bad faith. See St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938). And even if the copies submitted by Pacific Sewer are accepted as decreasing the amount in dispute by $299.77, it is not a " 'legal certainty that the claim is really for less than the jurisdictional amount' "; therefore, a dismissal on these grounds would not have been justified. Local Division No. 714, Amalgamated Transit Union v. Greater Portland Transit District, 589 F.2d 1, 9 (1st Cir.1978) (quoting St. Paul Mercury, 303 U.S. at 289, 58 S.Ct. at 590). Accordingly, we conclude that Pacific Sewer's allegation that the suit did not present the necessary amount in controversy is not an adequate basis for the district court's dismissal of the case, and we will assume that in fact it was not the basis.

As noted above, Pacific Sewer also argues that the suit was dismissed properly because the contract's forum selection clause deprived the district court of both subject matter jurisdiction and venue. The clause states in its entirety:

This Agreement shall be considered to be a MASSACHUSETTS contract and shall be deemed to have been made in Suffolk County, Massachusetts, regardless of the order in which the signatures of the parties shall be affixed hereto, and shall be interpreted, and the rights and liabilities of the parties hereto determined, in accordance with the law, and in the courts, of the Commonwealth of Massachusetts.

Appellant's Brief at 51.

Pacific Sewer says that the clause means that the contract is enforceable only in the Massachusetts state courts. LFC, as one might guess, argues that the clause also allows suit to be filed in a Massachusetts federal district court. The problem, then, is whether the phrase "in accordance with the law, and in the courts, of the Commonwealth of Massachusetts" is a term of sovereignty or simply a term of geography. See City of New York v. Pullman Inc., 477 F.Supp. 438, 442 (S.D.N.Y.1979), aff'd, 662 F.2d 910 (2d Cir.1981), cert. denied sub nom., Rockwell International Corp. v. City of New York, 454 U.S. 1164, 102 S.Ct. 1038, 71 L.Ed.2d 320 (1982). ¹

Whatever the correct meaning of the phrase, it is clear that both Pacific Sewer and LFC have misperceived the effect of forum selection clauses in general.

[S]uch a provision does not oust the jurisdiction of the courts; in effect it merely constitutes a stipulation in which the parties join in asking the court to give effect to their agreement by declining to exercise its jurisdiction. There will always be open to either party the opportunity to present whatever evidence will move a court in the particular circumstances not to decline to exercise its undoubted jurisdiction.

Central Contracting Co. v. Maryland Casualty Co., 367 F.2d 341, 345 (3d Cir.1966).

To argue, then, that the forum selection clause quoted above deprives the federal district court in Massachusetts of jurisdiction and venue is simply off the mark. The court's subject matter jurisdiction was properly based on diversity of citizenship, and, as we have already explained, the suit appears to present the requisite amount in controversy. Likewise, venue in the District of Massachusetts is proper under 28 U.S.C. Sec. 1391(a), since it is uncontested both that LFC, the single plaintiff, is a resident of Massachusetts and that the contract was made there.

With this analysis in mind, one recognizes the inappositeness of Pacific Sewer's motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(3). Instead, the motion should have been filed under 12(b)(6), urging dismissal for failure to state a claim upon which relief can be granted, see Central Contracting, 367 F.2d at 343, and we will treat it as such here. Again, because the district judge did not file an opinion, we do not know if he approached the motion in this same manner. This uncertainty matters not, however, since "[a]n appellate court can ... affirm a judgment on any ground that, as a matter of law, sustains the judgment, whether or not it finds that the judgment is supported by the reasoning of the court below," 2 Fed.Proc., L.Ed. Sec. 3:685 (1981) (citations omitted), assuming, of course, that affirmance is otherwise appropriate. Cf. Carr v. Learner, 547 F.2d 135, 137 (1st Cir.1976) ("While we tend to think that dismissal under ...