Info. Leasing Corp. v. Jaskot
| Citation | 151 Ohio App.3d 546,784 N.E.2d 1192,2003 Ohio 566 |
| Decision Date | 07 February 2003 |
| Docket Number | No. C-020272.,C-020272. |
| Parties | INFORMATION LEASING CORPORATION, Appellant, v. JASKOT, d.b.a. Highbridge Mobil, Appellee.<SMALL><SUP>*</SUP></SMALL> |
| Court | United States Court of Appeals (Ohio) |
William P. Coley II, Cincinnati, for appellant.
Young, Reverman & Mazzei and Stephen P. Rodenbeck, Cincinnati, for appellee.
{¶ 1} Plaintiff-appellant Information Leasing Corporation ("ILC") appeals from the trial court's dismissal of its complaint against defendant-appellee Walter Jaskot, d.b.a. Highbridge Mobil. ILC claimed in its complaint that Jaskot had defaulted under the terms of a contract between ILC, an Ohio corporation wholly owned by Provident Bank, and Jaskot for the rental of an automated teller machine ("ATM"). The trial court granted Jaskot's motion to dismiss the complaint, ruling that the agreement's forum-selection clause was the product of overreaching by ILC, that there was little interest in maintaining the litigation in Ohio under the doctrine of forum non conveniens, and that Jaskot did not have minimum contacts with Ohio sufficient to confer in personam jurisdiction on an Ohio common pleas court. See Civ.R. 12(B)(2). Holding that the trial court erred in dismissing this case, and to amplify upon this court's previous analysis of the numerous ILC cases now being litigated in the lower courts, we reverse and remand.
{¶ 2} The written agreement between ILC and Jaskot was a contract for the rental and financing of an ATM machine. Jaskot is a resident of New York. The ATM was installed at his automobile service station located in Schenectady, New York. Jaskot entered into a separate agreement with Credit Card Center ("CCC"), a third-party corporation, to provide service for the ATM.
{¶ 3} Jaskot signed the ILC contract on behalf of his business and as a guarantor. Directly above the "authorized signature" line in the ILC agreement, in capital letters, was a consent-to-jurisdiction, or forum-selection, clause. The clause read,
{¶ 4} After the signature block was a personal guaranty statement that read, Jaskot signed after both statements.
{¶ 5} Shortly after the signing, CCC filed for bankruptcy relief in the federal courts. The ATM was not serviced, and Jaskot made only eight payments on the 60-month agreement with ILC. As a result of the default, ILC brought suit in Hamilton County, Ohio, pursuant to the forum-selection clause.
{¶ 6} On January 22, 2002, Jaskot filed an amended answer in which he claimed that the court lacked personal jurisdiction over him. On February 5, 2002, he moved to dismiss the complaint on this basis. By affidavit attached to his motion, Jaskot stated that he was unfamiliar with many of the terms contained in the ILC contract. ILC responded to the motion and attached a copy of the contract and the affidavit of ILC's supervisor of collections.
{¶ 7} In its written decision dismissing ILC's complaint against Jaskot, the trial court concluded that the forum-selection clause was invalid as the result of unequal bargaining and overreaching by ILC, that enforcement of the forum-selection clause violated public policy, and that its enforcement would be burdensome and inconvenient to Jaskot.
{¶ 8} In its first and third assignments of error, ILC now contends that the trial court erred in dismissing its complaint against Jaskot for breach of contract, where both parties were commercial entities and the contract contained a valid forum-selection clause conferring personal jurisdiction on the Ohio courts. We agree.
{¶ 9} The record on appeal reflects that no evidentiary hearing was held on Jaskot's motion to dismiss the complaint for lack of personal jurisdiction. The trial court decided the issue based upon the memoranda and argument of counsel, the pleadings, and the attached affidavits. As this court noted in Info. Leasing Corp. v. Baxter, 1st Dist. No. C-020029, 2002-Ohio-3930, at ¶ 4, 2002 WL 1769453, review of such a decision to dismiss a complaint is de novo.
{¶ 10} At common law, forum-selection clauses were not favored. See Solimine, Forum Selection Clauses and the Privatization of Procedure (1992), 25 Cornell Intl. L.J. 51, 53-54. In M/S Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513, the United States Supreme Court held that, in light of the increase in multi-jurisdiction business transactions and "present-day commercial realities * * * [a] forum clause should control absent a strong showing that it should be set aside." The court held that "such clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." (Footnote omitted.) Id. at 10, 92 S.Ct. 1907, 32 L.Ed.2d 513.
{¶ 11} The Supreme Court of Ohio has adopted this view, in the syllabus paragraph of Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc. (1993), 66 Ohio St.3d 173, 610 N.E.2d 987, holding that "[a]bsent evidence of fraud or overreaching, a forum selection clause contained in a commercial contract between business entities is valid and enforceable, unless it can be clearly shown that enforcement of the clause would be unreasonable and unjust." The court noted that a valid forum-selection clause is one legal arrangement by which the parties to a contract may waive the due-process requirement for personal jurisdiction enunciated in Internatl. Shoe Co. v. Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, and its progeny, and consent to the jurisdiction of a particular court system. See Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc. (1993), 66 Ohio St.3d at 175, 610 N.E.2d 987.
{¶ 12} In determining the validity of a particular forum-selection clause, therefore, trial courts should employ a three-step analysis.
{¶ 13} First, the commercial nature of a contract is a vital factor weighing in favor of enforcement of the forum-selection clause. See id. at syllabus. Commercial forum-selection clauses between for-profit business entities are prima facie valid. See id. at 175, 610 N.E.2d 987. By contrast, in Ohio, forum-selection clauses are less readily enforceable against consumers. See Copelco Capital, Inc. v. St. Mark's Presbyterian Church (Feb. 1, 2001), 8th Dist. No. 77633, 2001 WL 106328. The federal courts, however, have held that forum-selection clauses are presumptively valid even in form contracts, or contracts of adhesion, arising between a cruise line and its noncommercial consumer passengers. See Carnival Cruise Lines, Inc. v. Shute (1991), 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622.
{¶ 14} In this case, Jaskot's agreement with ILC was not a consumer contract but a commercial one. See Nicholson v. Log Sys., Inc. (1998), 127 Ohio App.3d 597, 601, 713 N.E.2d 510. Jaskot is the owner and operator of Highbridge Mobil, a for-profit commercial enterprise. His agreement with ILC was between two business entities. It is immaterial that Jaskot is a sole proprietor. Unlike a consumer who enters into a contract with a commercial entity, Jaskot is presumed to have some experience in contractual and business matters.
{¶ 15} Next, a valid forum-selection clause must not be the product of "fraud or overreaching." Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc., syllabus. In Info. Leasing Corp. v. Murrish (Jan. 15, 2003), 1st Dist. No. C-020286, this court invalidated an identical forum-selection clause where there was unrebutted evidence that the clause was the product of fraud in the inducement. Here, there is no evidence of similar fraud.
{¶ 16} The substance of Jaskot's argument is that he is not a sophisticated businessman and did not understand certain terms of the agreement such as "venue," "jurisdiction," and "personal guaranty." Because of the gross disparity between his sophistication and that of ILC, Jaskot contends, and the trial court agreed, that the selection of Ohio as the forum for resolution of contract disputes was a product of overreaching. Thus, they declare that the forum-selection clause is invalid, and it would be unconscionable to hold Jaskot to the terms of the contract and to litigate the dispute in Ohio.
{¶ 17} Jaskot's argument fails because the lack of sophistication of one commercial party to the agreement is not a sufficient basis to invalidate a forum-selection clause in a commercial contract. See Nicholson v. Log Sys., Inc., 127 Ohio App.3d at 601, 713 N.E.2d 510; see, also, Discount Bridal Serv., Inc. v. Kovacs (1998), 127 Ohio App.3d 373, 377, 713 N.E.2d 30; Bernath v. Potato Serv. of Michigan (Sept. 30, 2002), N.D. Ohio No. 3:02CV7105, 2002 WL 31233240. Thus Jaskot's inexperience and ILC's prowess notwithstanding, Jaskot's lack of knowledge of legal terms and his unfamiliarity with ATM lease agreements cannot invalidate the forum-selection clause. See, also, Haller v. Borror Corp. (1990), 50 Ohio St.3d 10, 14, 552 N.E.2d 207.
{¶ 18} Finally, an otherwise valid forum-selection clause cannot be enforced if it is "unreasonable or unjust." Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc., syllabus. Under this step of the analysis, courts are to determine whether the chosen forum is so inconvenient as to, in...
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