Boland v. George S. May Int'l Co.

• Decision Date: 07 June 2012
• Docket Number: No. 11–P–1300.,11–P–1300.
• Citation: 969 N.E.2d 166,81 Mass.App.Ct. 817
• Parties: Louise BOLAND v. GEORGE S. MAY INTERNATIONAL COMPANY.
• Court: Appeals Court of Massachusetts

81 Mass.App.Ct. 817

969 N.E.2d 166

Louise BOLAND ¹

v.GEORGE S. MAY INTERNATIONAL COMPANY.

No. 11–P–1300.

Appeals Court of Massachusetts,

Middlesex.

Argued March 2, 2012.

Decided June 7, 2012.

Alan H. Aaron, Framingham, for the plaintiff.

Present: KATZMANN, SIKORA, & AGNES, JJ.

AGNES, J.

The parties entered into a contract for management services that contained a forum selection clause by which they agreed “that jurisdiction shall vest in the State of Illinois.” Although Massachusetts law regards such contractual terms as presumptively valid and enforceable, see Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. 572, 574–575, 646 N.E.2d 741 (1995) (“We accept the modern view that forum selection clauses are to be enforced if it is fair and reasonable to do so”), the forum selection clause in this case was of the permissive and not the exclusive variety. It permitted, but did not require, the litigation to be brought in the State of Illinois. Accordingly, it was error to dismiss the plaintiff's complaint. ^{2, 3}

Factual background. Louise Boland, the plaintiff-appellant, owns and operates a health and fitness club in Framingham known as “Focus On Fitness.” ⁴ According to her complaint, the defendant, George S. May International Co. (May Co.), is a management consulting company organized under Delaware law with a principal place of business in Park Ridge, Illinois. On or about November 5, 2008, a representative of the May Co. contacted Boland and stated that the May Co. specialized in helping small businesses like the one owned by Boland increase their profits. The defendant's agent offered to perform an analysis of Boland's business for a one hundred dollar fee. Another agent of the May Co. contacted Boland the next day. She made representations that the May Co. had received an award in 2003 from the Better Business Bureau for ethical practices but allegedly failed to inform Boland that the defendant had lost its endorsement by the Better Business Bureau and was the subject of numerous complaints arising out of contracts like the one offered to Boland. The agent received three years of financial documents to examine. She promised to research Boland's competitors and her product. She promised to generate additional profits for Boland through the use of what she termed “profit engineering,” a term that was not defined and never explained.

As a result of these meetings, on November 7, 2008, Boland and the May Co. signed an agreement under which the defendant was obligated to develop marketing strategies to increase Boland's profit margin. The contract was prepared by the May Co. and consisted of a three-page, printed document in which the terms relating to the services to be provided, the responsibilities of the parties, and the method of payment are set forth in twelve numbered paragraphs. The contract calls for weekly payments by the plaintiff upon presentation of invoices at the rate of $250 per hour for each individual “Staff Executive and Project Director,” reasonable travel and lodging expenses incurred by said individuals, and an additional thirty-eight dollars per diem per person. The contract authorized Boland to terminate the agreement at the close of any business day subject to payment of charges due through that day. The final paragraph of the contract reads as follows:

“It is expressly agreed that this printed document embodies the entire agreement of the parties in relation to the subject matter of [m]anagement [s]ervice to be rendered by the [c]ompany, and that no understandings or agreement, verbal or otherwise, in relation thereto, exist between the parties except as herein expressly set forth. It is agreed by and between the parties that jurisdiction shall vest in the State of Illinois.”

Boland alleged, she signed the contract on a Friday, that three representatives of the defendant appeared at her business the following day, and that she terminated the contract three days later (after expending $32,000) due to the May Co.'s failure to honor its representation that it would reduce her expenses and increase her profit margin.

Discussion. 1. The enforcement of forum selection clauses. In Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. 572, 646 N.E.2d 741 (1995), a dispute between a Massachusetts franchisee and a California franchisor arose out of a contract that contained the following two provisions: “[1] Venue and Jurisdiction for all actions enforcing this agreement are agreed to be in the City of San Diego, County of San Diego, California; [2] [this agreement, as applicable to this case] is to be construed under and governed by the laws of the State of California.” Id. at 573, 646 N.E.2d 741. The Supreme Judicial Court announced in Jacobson that the time had come to further adjust Massachusetts common law, which historically viewed forum selection clauses with disfavor,⁵ as the United States Supreme Court had done in The Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972).⁶ “We accept the modern view that forum selection clauses are to be enforced if it is fair and reasonable to do so. See Restatement (Second) of Conflict of Laws § 80 (1988 revision) (‘The parties' agreement as to the place of the action will be given effect unless it is unfair or unreasonable’).” Jacobson, 419 Mass. at 574–575, 646 N.E.2d 741. A party resisting the enforcement of a forum selection clause must establish that “trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court.” The Bremen, supra at 18, 92 S.Ct. 1907.Cambridge Biotech Corp. v. Pasteur Sanofi Diagnostics, 433 Mass. 122, 130, 740 N.E.2d 195 (2000). Baby Furniture Warehouse Store, Inc. v. Muebles D & F Ltée., 75 Mass.App.Ct. 27, 32, 911 N.E.2d 800 (2009). See Huffington v. T.C. Group, LLC, 637 F.3d 18, 23 (1st Cir.2011). Underlying the result in Jacobson is the core principle in the law of contracts that courts generally should respect the intentions of the contracting parties. See Lambert v. Kysar, 983 F.2d 1110, 1118 (1st Cir.1993). Since Jacobson, appellate courts and trial judges in Massachusetts have enforced forum selection clauses in a variety of settings. In Karty v. Mid–America Energy, Inc., 74 Mass.App.Ct. 25, 903 N.E.2d 1131 (2009), this court followed Jacobson and held valid a forum selection clause contained in a subscription agreement for the purchase of an interest in a limited liability partnership organized to drill and to operate oil wells in Kentucky. Id. at 30, 903 N.E.2d 1131. The clause in Karty required disputes regarding the agreement to be resolved in Kentucky. We held that the clause was enforceable in an investor's fraud action against seller. Karty reinforces the view expressed in Jacobson that forum selection clauses enjoy presumptive validity and can be challenged in only limited circumstances. Thus, even though the plaintiff in Karty alleged fraud in the inducement, this court followed the modern trend and held that general allegations of fraud in the inducement of a contract are an insufficient basis for declining to enforce a forum selection clause. Karty, supra at 30, 903 N.E.2d 1131. Accord Lambert v. Kysar, supra at 1121.

In Cambridge Biotech, supra, the Supreme Judicial Court enforced a forum selection clause in the context of an international commercial transaction with the result that the litigation was required to be submitted to the courts of France. The court rejected the plaintiff's concerns that due to unfamiliarity with bankruptcy procedure, it was so unfair and unreasonable to refer the dispute to French courts as to constitute a “denial of justice.” See id. at 130 n. 8, 740 N.E.2d 195 (court observed that such a clause will be enforced unless a party demonstrates that it was obtained “by fraud, duress, the abuse of economic power, or any other unconscionable means”).

2. The interpretation of forum selection clauses. In each of the cases cited above, the courts were faced with the question whether to enforce mandatory and exclusive forum selection clauses, i.e., contractual terms that directly or by implication from the words used by the parties required the parties to litigate a contractual dispute in a specific jurisdiction other than the one in which the case was pending. See The Bremen, supra at 3, 92 S.Ct. 1907 (forum selection clause provided that “ [a]ny dispute arising must be treated before the London Court of Justice” [emphasis added] ); Jacobson, supra at 573, 646 N.E.2d 741 (forum selection clause provided that “Venue and Jurisdiction for all actions enforcing this agreement are agreed to be in the City of San Diego, County of San Diego, California” [emphasis added] ); Cambridge Biotech, supra at 124, 740 N.E.2d 195 (forum selection clause provided that “ [s]houldany controversy exist or arise under the present [a]greement, it is herewith agreed that the parties shall bring it before the courts in the country of the respective defendant” [emphasis added] ); Karty, supra at 28, 903 N.E.2d 1131 (forum selection clause provided that “ exclusive venue and jurisdiction for all matters in dispute shall also be in Warren County, Commonwealth of Kentucky. All disputes and breaches hereunder shall be submitted to binding arbitration pursuant to the rules of the American Arbitration Association then pertaining in Bowling Green, Kentucky” [emphasis added] ); Baby Furniture Warehouse, supra at 28–29, 911 N.E.2d 800 (forum selection clause provided that “ [a]ny dispute arising out of or concerning this [p]olicy statement shall be governed by the laws of the province of Quebec; and the [a]uthorized [d]ealer and Ragazzi agree to submit themselves to the jurisdiction of the provincial courts sitting in the province of Quebec for resolution of any disputes arising out of or related to this [p]olicy or the relationship between the [a]uthorized [d]ealer and Ragazzi Furniture” [...