American Business Credit, Inc. v. Tandy Electronics, Inc.

• Decision Date: 08 March 1991
• Docket Number: No. 90-35524,90-35524
• Citation: 930 F.2d 26
• Parties: Unpublished Disposition NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. AMERICAN BUSINESS CREDIT, INC., an Oregon corporation, and C.J. Trumpower, Plaintiffs-Appellants, v. TANDY ELECTRONICS, INC., dba Tandy Computer Leasing, a Texas corporation, and Tandy Corporation, dba Radio Shack, a Delaware corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 26

930 F.2d 26

Unpublished Disposition

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

AMERICAN BUSINESS CREDIT, INC., an Oregon corporation, and C.J. Trumpower, Plaintiffs-Appellants, v. TANDY ELECTRONICS, INC., dba Tandy Computer Leasing, a Texas corporation, and Tandy Corporation, dba Radio Shack, a Delaware corporation Defendants-Appellees.

No. 90-35524.

United States Court of Appeals, Ninth Circuit.

Submitted March 8, 1991. ^*

Decided April 5, 1991.

Before JAMES R. BROWNING, EUGENE A. WRIGHT, and FARRIS, Circuit Judges.

MEMORANDUM ^**

American Business Credit and C.J. Trumpower appeal the summary judgment dismissal of their action against Tandy Electronics, Inc., and Tandy Corporation for fraud and breach of express and implied warranties. We affirm.

Tandy Electronics sued ABC and Trumpower in Texas state court for breach of contract. ABC and Trumpower failed to appear or answer, and the Texas court entered a default judgment in favor of Tandy Electronics. ABC and Trumpower brought this action against Tandy Corporation and Tandy Electronics in Oregon state court, alleging fraud and breach of express and implied warranties. The defendants removed to federal district court on August 3, 1989. On May 31, 1990, the district court entered summary judgment in favor of the defendants.

ABC and Trumpower recognize that if the Texas court had personal jurisdiction over them, their claims are res judicata and summary judgment for defendants was appropriate. They argue that: (a) the forum selection clause in the computer leases was unenforceable, (b) even if the clause was enforceable it did not apply to Trumpower, and (c) in the absence of valid consent the exercise of personal jurisdiction over them by the Texas court violated due process.

We review for abuse of discretion the district court's finding that the forum selection clause was enforceable. Spradlin v. Lear Siegler Management Services, No. 89-16413, slip op. at 1878 (9th Cir. Feb. 15, 1991). Federal common law controls the enforcement and interpretation of forum selection clauses in diversity actions. Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 513 (9th Cir.1988). In the context of commercial contracts, forum selection clauses are prima facie valid and should not be set aside unless the party challenging the clause can " 'clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching.' " Spradlin, No. 89-16413, slip op. at 1878-79 (quoting The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)).

ABC and Trumpower argue that Shute v. Carnival Cruise Lines, 897 F.2d 377 (9th Cir.), cert. denied, 111 S.Ct. 39 (1990) (forum selection clause in cruise ship passenger ticket not enforced because clause was not bargained for and did not represent expressed intent of the parties) controls. We reject the argument. Nothing in the record suggests that (1) ABC was unaware that the leases contained the forum selection clause; (2) ABC was unsophisticated regarding bargaining techniques; (3) ABC was powerless to alter the contract terms, see Shute, 897 F.2d at 388 (quoting The Bremen, 407 U.S. at 12-13 (complex commercial contract between two sophisticated parties distinguishable from form contract with boilerplate language that party had no power to alter); (4) the clause was included as the result of fraud, undue influence, or overweening bargaining power such that it is not the expressed intent of the parties, see Shute, 897 F.2d at 388 (quoting Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 280 (9th Cir.1984)); see also Spradlin, No. 89-16413, slip op. at 1881 (no evidence of unreasonableness or fraud beyond conclusory allegations of fraud and inconvenience); or (5) ABC was incapable of litigating in Texas. See Shute, 897 F.2d at 389 (record contained evidence that Shutes were physically and financially incapable of litigating in Florida); see also Spradlin, No. 89-16413, slip op. at 1882 (plaintiff failed to produce evidence of inconvenience he would suffer by being forced to litigate in Saudi Arabia, such as allegations of travel costs, availability of counsel in Saudi Arabia, location of witnesses, or financial ability to bear costs). When a plain and unambiguous disclaimer clause is a part of the contract, he who would disavow it must offer evidence of its unenforceability.

We reject ABC's and Trumpower's argument that the case is analogous to Colonial Leasing Co. v. Pugh Bros. Garage, 735 F.2d...