972 F.2d 753 (7th Cir. 1992), 90-3589, Paper Exp., Ltd. v. Pfankuch Maschinen GmbH

Docket Nº:90-3589.
Citation:972 F.2d 753
Party Name:PAPER EXPRESS, LIMITED, an Illinois corporation, Plaintiff-Appellant, v. PFANKUCH MASCHINEN GmbH, a German corporation, Defendant-Appellee.
Case Date:August 11, 1992
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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972 F.2d 753 (7th Cir. 1992)

PAPER EXPRESS, LIMITED, an Illinois corporation, Plaintiff-Appellant,


PFANKUCH MASCHINEN GmbH, a German corporation, Defendant-Appellee.

No. 90-3589.

United States Court of Appeals, Seventh Circuit

August 11, 1992

Argued Feb. 14, 1992.

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James McConnell, Beverly L. Bailey (argued), Peter I. Mason, Thomas W. Flannigan, Freeborn & Peters, Chicago, Ill., for plaintiff-appellant.

Michael T. Brody, Jenner & Block, Chicago, Ill., Richard J. Sankovitz (argued), Bruce G. Arnold, Whyte & Hirschboeck, Milwaukee, Wis., for defendant-appellee.

Before CUDAHY, COFFEY and MANION, Circuit Judges.

CUDAHY, Circuit Judge.

Paper Express, Ltd., an Illinois company, appeals from the dismissal for want of proper venue of a breach of warranty action brought in the district court. The principal issue on appeal is whether the parties' contract included a valid forum-selection clause providing for exclusive venue in Germany. We affirm.


In late 1987, an employee of Paper Express traveled to Canada to discuss the possibility of purchasing copying equipment manufactured by Pfankuch Maschinen, a German company, with Loach Systems, Inc., a Pfankuch agent. 1 In March 1988, Paper Express negotiated to purchase a collating machine from Pfankuch for approximately $200,000. There was nothing exceptional about the negotiation process: Pfankuch prepared several price quotations and on March 21 issued its final quotation; on March 31, Paper Express responded by sending a purchase order to Pfankuch, along with a check for $75,000 which Pfankuch promptly cashed. Pfankuch later sent an acknowledgment of the order to Paper Express. In November 1988, the collating equipment was delivered and installed at Paper Express's plant in Des Plaines, Illinois. The equipment never worked as promised, and Paper Express commenced this action in the district court seeking damages in an amount in excess of $872,000.

Pfankuch filed a counterclaim for the balance of the purchase price Paper Express had refused to pay. 2 At the same time it moved to dismiss the complaint for improper venue pursuant to Fed.R.Civ.P. 12(b)(3) relying on a clause asserted to be a forum-selection clause contained in all of the relevant documents--the price quotations, the purchase order issued by Paper Express and the acknowledgment issued by Pfankuch. The clause reads: "Warranty: 6 months according to the rules of VDMA and ZVEI. The warranty includes six months parts and three months labor from the time the machine is erected in Paper Express's factory." The VDMA, or the Verband Deutscher Maschinen-und Anlagenbau e.V., is an association of German machine manufacturers that promulgates a set of standard commercial terms. According to the rules of the VDMA, the supplier's principal place of business is the forum for resolving all contractual disputes; in this case that would be Ahrensburg, the

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town in northern Germany where Pfankuch is located. 3 The district court granted the motion to dismiss, finding that the clause incorporated the VDMA venue rule.


Before examining the validity of the purported forum-selection clause, we must consider whether the clause is indeed a forum-selection clause. Paper Express contends that the clause, which on its face does not refer to venue, is nothing more than a warranty provision and that the words "according to the rules of VDMA" relate only to the length of the warranty. But surely this cannot be correct. In construing contracts, every provision should be given effect and the words should be read with their ordinary meaning. First Commodity Traders, Inc. v. Heinold Commodities, Inc., 766 F.2d 1007, 1014 (7th Cir.1985); Hanley v. James McHugh Constr. Co., 444 F.2d 1006, 1009 (7th Cir.1971). The clause in this case specifically details the length of the warranty ("Warranty: 6 months ...") so Paper Express's reading would render the additional words "according to the rules of VDMA" surplusage. Nor is "warranty" so narrow a term as to be incompatible with the concept of venue. Indeed, frequently warranty provisions do include terms that specify how and where warranty claims are to be resolved. See, e.g., Wick v. Atlantic Marine, Inc., 605 F.2d 166, 167 (5th Cir.1979); Martin Marietta Aluminum, Inc. v. General Elec. Co., 586 F.2d 143, 145 (9th Cir.1978). The words "according to the rules of VDMA" add something to this provision in addition to the length of the warranty. "According to" is commonly defined as "agreeing with, consistent with, or answering to." I Oxford English Dictionary 83 (2d ed.1989). Thus, the parties agreed that the warranty is to be read in a manner consistent with "the rules of VDMA." It is apparent from this language and the use of the plural "rules" that the parties agreed to incorporate more than just the VDMA rule...

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