Preferred Capital, Inc. v. Power Eng. Group, Inc.
| Decision Date | 28 September 2005 |
| Docket Number | No. 22475.,No. 22488.,No. 22497.,No. 22487.,No. 22478.,No. 22477.,No. 22499.,No. 22513.,No. 22489.,No. 22506.,No. 22485.,No. 22476.,No. 22486.,22475.,22476.,22477.,22478.,22485.,22486.,22487.,22488.,22489.,22497.,22499.,22506.,22513. |
| Citation | 2005 Ohio 5113,839 N.E.2d 416,163 Ohio App.3d 522 |
| Court | Ohio Supreme Court |
| Parties | PREFERRED CAPITAL, INC., Appellant, v. POWER ENGINEERING GROUP, INC. et al., Appellees. |
Tamara A. O'Brien and Jason E. Hickman, Akron, for appellant.
Matthew O'Connell and Victoria Barto, Cleveland, for appellees Houston Chapter Association General Contractors of America, Inc., Tiny's Tire Center, Inc., and Richard Oscar & Associates.
Julius P. Amourgis, for appellee Pro Temps, Inc.
Gary Brown, for appellee Doug & Associates, Inc.
Oldham & Dowling, Hamilton Desaussure Jr., Akron, for appellee Rick Hore.
Gregory Glick, L.L.C., Cleveland, for appellees, Power Engineering Group, Inc., Plyley Enterprises, Inc., and Custom Data Solutions, Inc.
Mark S. Shearer, Palm Springs, FL, for appellees PAC Heating, Inc., et al., Hambergs Dr. BM Tru-Site Optical Co., and Donn C. Lamon d.b.a. Lamon Associates.
Russell Wood, for appellees Location Real Estate, Inc., et al.
Roetzel & Andress, Bradley A. Wright and Jerome G. Wyss, Akron, for appellee, Home Furnishings of Clarkston, Inc.
Karlen J. Reed, Medford, MA, Scott D. Schafer, Boston, MA and Geoffrey G. Why, Massachusetts Assistant Attorneys General, amicus curiae, urging affirmance.
Howard Wayne, California Assistant Attorney General, amicus curiae, urging affirmance.
{¶ 1} Appellant, Preferred Capital, Inc., appeals from the judgments of the Summit County Court of Common Pleas that dismissed its breach-of-lease-agreement complaints for lack of personal jurisdiction. We reverse and remand.
{¶ 2} Preferred Capital is a company licensed to do business in Ohio and has its principal place of business in Brecksville, Ohio, in Cuyahoga County. NorVergence, Inc. is a New Jersey corporation engaged in the leasing of certain telecommunications equipment and services. In September 2003, Preferred Capital entered into a "master program agreement" with NorVergence, in which NorVergence agreed that it would assign to Preferred Capital NorVergence's rights, title, and interest in certain rental agreements1 and rented equipment, subject to Preferred Capital's approval of the individual rental agreements. This appeal concerns 13 such virtually identical rental agreements that NorVergence entered into with various for-profit business entities in the years 2003 and 2004, and which NorVergence subsequently assigned to Preferred Capital. In each of these agreements, the renter agreed to make monthly payments for 60 months in exchange of the receipt and delivery of the rented equipment.
{¶ 3} Additionally, each of the agreements provided that an assignee to these agreements would have the same rights as NorVergence with respect to these agreements, but would not take on NorVergence's obligations thereunder. Also, the renter agreed not to assert against the assignee any claims, defenses, or set-offs it may have against NorVergence.
{¶ 4} The rental agreement also contained a section entitled "Applicable Law," which provided the following forum-selection clause:
After execution and assignment of these agreements, Preferred Capital sent notice of the assignment to the renters and instructions to send all rental payments to Preferred Capital at its business address in Brecksville, Ohio.
{¶ 5} Thereafter, Preferred Capital filed individual complaints against the various renters for breach of the lease agreement, including defendant-appellee Power Engineering Group, Inc., asserting that it defaulted on its monthly payment obligations under the terms of the agreements. Preferred Capital filed the claims in the Summit County Court of Common Pleas pursuant to the forum-selection clause.
{¶ 6} Each of the defendants then filed a Civ.R. 12(B)(2) motion to dismiss for lack of personal jurisdiction. They opined that the clause was unenforceable because it did not specify a particular forum and that each defendant did not have the requisite minimum contacts with Ohio to satisfy the long-arm statute, R.C. 2307.382, and further argued that Preferred Capital could not establish that exercising jurisdiction in Ohio would comport with due process. Preferred Capital responded to the motions, maintaining that the forum selection clause is valid and enforceable.
{¶ 7} The various motions were granted by the trial court. In the first case, Preferred Capital v. Power Eng. Group, Inc. (Dec. 15, 2004), Summit C.P. No. CV 2004 10 5737, the judge wrote a thorough opinion that detailed the court's reasoning for dismissing the complaint. The court first determined that the clause was unreasonable and unjust because it "contained absolutely no guidance as to which forum would be appropriate to resolve disputes." The court explained that because NorVergence maintained the authority to assign the agreement to any entity it desired, the location would not be determined until after assignment. The court also reasoned that most of the potential witnesses to the underlying transaction are located in Florida or New Jersey, that Power Engineering would incur significant expense in traveling to Ohio to defend against the claim, and that Preferred Capital has not disputed the alleged fact that Power Engineering is not as sophisticated a business entity as NorVergence. The court then proceeded to conclude that Preferred Capital had not met its burden of establishing that the court had jurisdiction over Power Engineering—i.e., that Power Engineering had established sufficient minimum contacts in Ohio—and therefore ultimately dismissed the complaint for lack of personal jurisdiction.
{¶ 8} In 11 of the other 12 cases, the court entered an order dismissing the cases by simply incorporating the decision in Power Eng. Group, Inc. as part of the order.2 In the 12th case, the trial judge issued an order that dismissed the case, essentially stating verbatim the decision in Power Eng. Group, Inc.3
{¶ 9} Preferred Capital timely appealed to this court from all 13 trial court judgments. Pursuant to a motion filed by Preferred Capital, this court consolidated all of these appeals. Preferred Capital asserts two assignments of error for review.4,5
First Assignment of Error
"The trial court erred in finding that it lacked personal jurisdiction over the defendants because the applicable contracts contained a valid forum selection clause that conferred jurisdiction upon Ohio courts."
{¶ 10} In its first assignment of error, Preferred Capital contends that the trial court erred in concluding that the forum selection clause was unenforceable. We agree.
{¶ 11} Although this appeal stems from a Civ.R. 12(B)(2) dismissal, the primary issue before this court concerns a question regarding the trial court's interpretation of the agreement. If the terms of a contract are clear and unambiguous, then their interpretation is a question of law. Beckler v. Lorain City School Dist. (July 3, 1996), 9th Dist. No. 95CA006049, 1996 WL 364974, citing State ex rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377. Questions of law are reviewed by an appellate court de novo. Butler v. Joshi (May 9, 2001), 9th Dist. No. 00CA0058, 2001 WL 489962. Because we review questions of law de novo, we do not give deference to the trial court's conclusions. Akron-Canton Waste Oil, Inc. v. Safety-Kleen Oil Serv., Inc. (1992), 81 Ohio App.3d 591, 602, 611 N.E.2d 955; Tamarkin Co. v. Wheeler (1992), 81 Ohio App.3d 232, 234, 610 N.E.2d 1042.
{¶ 12} A forum-selection clause contained in a commercial contract between for-profit business entities is prima facie valid. Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc. (1993), 66 Ohio St.3d 173, 175, 610 N.E.2d 987. The clause will be deemed valid and enforceable absent fraud or overreaching, unless it can be demonstrated that enforcement of the clause would be unreasonable and unjust. Preferred Capital, Inc. v. Sturgil, 9th Dist. No. 21787, 2004-Ohio-4453, 2004 WL 1882865, at ¶ 23, citing Kennecorp, 66 Ohio St.3d 173, 610 N.E.2d 987, at syllabus. Additionally, a forum-selection clause will not be invalidated simply due to the lack of sophistication of one of the parties. Nicholson v. Log Sys., Inc. (1998), 127 Ohio App.3d 597, 601, 713 N.E.2d 510.
{¶ 13} To invalidate a forum-selection clause based on fraud, it must be established that the fraud relates directly to the negotiation or agreement as to the forum selection clause itself and not the contract in general. Four Seasons Ent. v. Tommel Financial Serv., Inc. (Nov. 9, 2000), 8th Dist. No. 77248, 2000 WL 1679456. "[U]nless there is a showing that the alleged fraud or misrepresentation induced the party opposing a forum selection clause to agree to inclusion of that clause in the contract, a general claim of fraud or misrepresentation as to the entire contract does not affect the validity of the forum selection clause." (Emphasis sic.). Id., quoting Moses v. Business Card Express (C.A.6, 1991), 929 F.2d 1131, 1138.
{¶ 14} Appellees have complained that NorVergence failed to provide sufficient services to its various customers on the underlying rental and service agreements. However, at no point...
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