Safeco Ins. Co. of America v. Mabra
| Citation | 932 F.2d 973 |
| Decision Date | 07 May 1991 |
| Docket Number | No. 90-35506,90-35506 |
| Parties | Unpublished Disposition NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. SAFECO INSURANCE COMPANY OF AMERICA, Plaintiff-Appellee, v. Ronald L. MABRA, Jane Doe Mabra, Defendants-Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Before EUGENE A. WRIGHT and O'SCANNLAIN, Circuit Judges, and MACBRIDE, ** Senior District Judge.
This appeal centers on a forum-selection clause in an indemnification agreement. We affirm the clause's validity and hold that the district court properly took jurisdiction. We affirm the denial of a motion to change venue.
Pecan Crossing Partners, a Texas general partnership, obtained a loan from RepublicBank in Dallas to purchase an apartment building. In connection therewith, Safeco Insurance Company issued to RepublicBank a bond which guaranteed payment.
The partnership defaulted and Safeco paid the bank $6,052,008.91 on its bond. Safeco sued Pecan Crossing and 16 married couples to enforce the Security and Indemnification Agreement they had signed before issuance of the bond. The complaint was filed in the federal district court for the Western District of Washington. Subject matter jurisdiction was premised on diversity of citizenship. See 28 U.S.C. Sec. 1332(a)(1) (1988).
Ronald and Willie Mabra, husband and wife, were among the 16 defendant couples. Mr. Mabra had signed the agreement as a general partner. They live in Dallas. When Safeco brought suit, he was working in Saudia Arabia.
The Mabras answered the complaint and moved to dismiss for lack of personal jurisdiction. Alternatively, they moved to change venue to the Northern District of Texas. The district court denied both motions based on the agreement's forum-selection clause. It provided that Safeco could bring any suit arising out of the agreement in any state or federal court in the state of Washington.
Safeco later moved for summary judgment. By this time, Mabras' Seattle counsel had withdrawn from the representation and they filed no opposition to the summary judgment motion. 1 The district court granted it.
The action proceeded as to other parties. Finding no just reason for delay, the district court entered a final judgment against the Mabras under Federal Rule of Civil Procedure 54(b). The judgment for $247,800 plus interest, costs and attorney's fees, was based upon their four percent participation in the partnership.
Under 28 U.S.C. Sec. 1291 (1988), we have jurisdiction over this timely appeal. On a grant of summary judgment we review de novo, reading the record in the light most favorable to the nonmoving party. We affirm only absent genuine issues of material fact, when the moving party is entitled to judgment as a matter of law. Lew v. Kona Hosp., 754 F.2d 1420, 1423 (9th Cir.1985).
The Mabras argue that the court abused its discretion in enforcing the forum-selection clause. They characterize the agreement as an adhesion contract, "used without variation all over the country." It consists of eight pages of small, mostly single-spaced type with blanks for facts such as the parties' names and the dollar amounts involved. The Mabras note that it "contains some provisions that are clearly not applicable to this transaction." They contend that the provision was not negotiated and does not represent the intent of the parties.
The forum-selection clause provides:
[a]ny action or proceeding of any kind against the Partners or the Partnership arising out of or by reason of this Agreement may be brought in any state or federal court of competent jurisdiction in the State [of Washington], in addition to any other court in which such action might properly be brought, and the Partners, and the Partnership hereby submit to the jurisdiction of any such court.
We review for abuse of discretion a finding that a forum-selection clause is enforceable. Spradlin v. Lear Siegler Management Serv., 926 F.2d 865, 867 (9th Cir.1991). Federal law governs the enforcement and interpretation of such clauses. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir.1988).
In The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972), the Supreme Court held that forum-selection clauses in commercial contexts are prima facie valid. They should not be set aside unless the challenging party can show clearly that enforcement would be unreasonable and unjust or that the clause was invalid for such reasons as fraud or overreaching. Id. at 15.
In Carnival Cruise Lines, Inc. v. Shute, 59 U.S.L.W. 4323 (U.S. Apr. 17, 1991), the Court reversed a Ninth Circuit opinion refusing to enforce a forum-selection clause. The Court found the clause enforceable even though it appeared in the eighth of 25 numbered paragraphs of a routine and standardized contract for passage. Id. at 4323 (majority), 4326 (Stevens, J., dissenting).
The Mabras relied on this court's opinion in Shute for their argument that the adhesive nature of the forum-selection clause rendered it unenforceable. In view of the Supreme Court's reversal of Shute, this argument does not suffice. We inquire next into the reasonableness and the fundamental fairness of the clause. See id. at 4325.
The presence of fraud or overreaching remains a relevant factor. Id. The Mabras argue that Dale Dodson, a Safeco agent, induced them to sign the agreement. An unrefuted Safeco affidavit shows that Dodson is a general partner in Pecan Crossing and is not associated with Safeco. The Mabras assert no other theories of fraud by Safeco. 2
A party's notice of the forum-selection clause is also relevant. Id. The Mabras knew from the start that they were dealing with a Washington corporation. Unlike the Shutes, the Mabras had the opportunity to learn of The Court in Shute also considered whether a bad-faith motive underlay the forum clause's inclusion. Id. at 4325. As in Shute, the clause here operates to provide Safeco with a forum in its principal place of business, which suggests a motive other than bad faith.
the forum-selection clause before the contract became binding. See id. at 4323 (majority), 4326 (Stevens, J., dissenting).
The district court did not abuse its discretion in enforcing the forum-selection clause.
The Mabras argue that the district court's assertion of personal jurisdiction over them offended the federal constitution, because the indemnity agreement was their only contact with the state of Washington and because all relevant property, partners and potential witnesses were in Texas. They represent that all of the partnership's activities were in that state.
Our affirmance of the enforceability of the forum-selection clause moots this argument. The Mabras consented to jurisdiction by signing the agreement.
The Mabras also contend that the district court erred in refusing to transfer venue pursuant to 28 U.S.C. Sec. 1404(a). 3 We review for abuse of discretion. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 842 (9th Cir.1986).
In Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988), the Supreme Court stated that a forum-selection clause is a significant factor the district court must consider in deciding venue transfer motions. It indicated that additional factors must be weighed, such as the convenience of the requested forum and the fairness of transferring in light of the forum-selection clause and the parties' relative bargaining power. Id.
In denying a change of venue, the district court gave some deference to Safeco's choice of forum and the forum-selection clause expressing it. It considered also that none of the other defendants joined in the motion. All other litigation about the agreement would be in Washington.
The court weighed...
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Generale Bank, New York Branch v. Choudhury, 91-CIV-1769 (LJF).
...should proceed in Pennsylvania, Choudhury relies on an unreported decision of the Ninth Circuit, Safeco Ins. Co. v. Mabra, 932 F.2d 973 (table), 1991 WL 73713, 1991 U.S.App.Lexis 10280. As Generale notes, however, the Safeco decision does not support Choudhury's claims. In Safeco, the Ninth......