77 F.3d 112 (5th Cir. 1996), 95-50286, International Software Systems, Inc. v. Amplicon, Inc.

Docket Nº:95-50286.
Citation:77 F.3d 112
Party Name:INTERNATIONAL SOFTWARE SYSTEMS, INC., Plaintiff-Appellant, v. AMPLICON, INC., doing business as Amplicon Financial, Defendant-Appellee.
Case Date:March 07, 1996
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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77 F.3d 112 (5th Cir. 1996)

INTERNATIONAL SOFTWARE SYSTEMS, INC., Plaintiff-Appellant,

v.

AMPLICON, INC., doing business as Amplicon Financial,

Defendant-Appellee.

No. 95-50286.

United States Court of Appeals, Fifth Circuit

March 7, 1996

Rehearing Denied April 29, 1996.

Page 113

Stephen A. Roberts, Robert L. Kaminski, Griggs & Harrison, Austin, TX, for plaintiff-appellant.

Rex H. White, Jr., Cynthia J. Lambert, Hutcheson & Grundy, Austin, TX, and Dallas, TX, for defendant-appellee.

Appeal from the United States District Court for the Western District of Texas.

Before REAVLEY, HIGGINBOTHAM and BARKSDALE, Circuit Judges.

REAVLEY, Circuit Judge:

By what criteria should a federal court, acting under diversity jurisdiction, decide a motion to dismiss on grounds of a forum selection clause? The district court employed the Bremen 1 analysis, and we affirm.

International Software Systems, Inc. (ISSI) originally sued Amplicon, Inc. in Texas state court, claiming that certain lease agreements with Amplicon had been fraudulently induced, and seeking damages or in the alternative rescission of the leases. The case was removed to federal court based on diversity jurisdiction. Amplicon filed a motion to dismiss the case on grounds of improper venue, relying on a forum selection clause found in the lease agreements. The clause states that "[t]he lessee agrees that all litigation arising out of this lease or any breach thereof shall be filed and conducted in the California Superior Court for the County

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of Orange, unless the Lessor or its assignee selects an alternative venue of litigation."

The district court dismissed the case based on this forum selection clause alone, noting that the claims arose out of the written contract and that the forum selection clause is "reasonable and unfortunately necessary in a commercial world where litigation is the norm."

DISCUSSION

Amplicon made no claim of lack of personal jurisdiction. Its only objection to venue in the Texas federal court was based on the forum selection clause. 2 Furthermore, Amplicon did not move, even in the alternative, to transfer the case to another district court. In light of this posture of the case, our analysis centers on two questions. The first is whether a district court may dismiss (as opposed to transfer) a case based solely on a forum selection clause, where personal jurisdiction exists and venue is otherwise proper. Second, if dismissal is allowed in such a case, what test or standards should the court employ in deciding the motion to dismiss?

A. May the Court Dismiss?

In M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), the Court held that in admiralty cases forum selection clauses "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the circumstances," and that courts should enforce such clauses unless the resisting party "could clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching." Id. at 9-11, 15, 92 S.Ct. at 1913, 1916. We have applied Bremen to transfer motions in nonadmiralty cases. E.g., Seattle-First Nat'l Bank v. Manges, 900 F.2d 795, 799...

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