Caterpillar Fin. Servs. Corp. v. JRD Contracting, Inc. (Ex parte Int'l Paper Co.)

• Decision Date: 01 March 2019
• Docket Number: 1180144
• Citation: 285 So.3d 753
• Parties: EX PARTE INTERNATIONAL PAPER COMPANY, Janet Pridgeon, Joni Harris, and Shawn Blenis (In re: Caterpillar Financial Services Corporation v. JRD Contracting, Inc., et al.)
• Court: Alabama Supreme Court

285 So.3d 753

EX PARTE INTERNATIONAL PAPER COMPANY, Janet Pridgeon, Joni Harris, and Shawn Blenis(In re: Caterpillar Financial Services Corporation

v.JRD Contracting, Inc., et al.)

1180144

Supreme Court of Alabama.

March 1, 2019

J. Gorman Houston, Jr., John M. Johnson, and Bridget E. Harris of Lightfoot, Franklin & White, LLC, Birmingham; and William J. Gamble and Woodruff R. Jones of Gamble, Gamble, Calame & Jones, LLC, Selma, for petitioners.

Joseph C. McCorquodale III of McCorquodale Law Firm, Jackson, for respondents.

SHAW, Justice.

International Paper Company ("International Paper") and three of its employees--Janet Pridgeon, Joni Harris, and Shawn Blenis (hereinafter referred to collectively as "IPC")--the defendants in a third-party action pending below, petition this Court for a writ of mandamus directing the Wilcox Circuit Court to vacate its order denying IPC's motion to dismiss the action against it without prejudice based on improper venue. We grant the petition and issue the writ.

Facts and Procedural History

In 2015, Caterpillar Financial Services Corporation ("Caterpillar") entered into various loan and guaranty agreements with JRD Contracting, Inc. ("JRD"), and its president, John R. Dailey, Jr. ("Dailey"), for the purchase of certain equipment. That equipment was to serve as collateral for the loans between Caterpillar and JRD. According to Caterpillar, JRD and Dailey failed to pay the amounts due under the loan agreements, and, in September 2015 and again in December 2015, Caterpillar notified JRD and Dailey of its intention to accelerate the loans and to make demand for the return of the equipment.

In the summer of 2016, Dailey, on behalf of JRD Land Contracting and Land Clearing, Inc. ("JRD C & L"),¹ signed an agreement with International Paper called the "International Paper Company Pine Hill Mill Waste Services Agreement" ("the waste-services agreement"), in which JRD C & L agreed to dispose of International Paper's waste at its Pine Hill Mill for a period of five years.

Later in 2016, Caterpillar sued JRD and Dailey in the Wilcox Circuit Court alleging a claim of detinue and seeking damages for breach of contract and breach of the guarantees. Caterpillar alleged that the defendants failed to pay amounts owed on their loans, and it sought to recover possession of the equipment held as collateral.

After performing work for International Paper under the waste-services agreement for eight months, JRD C & L received a letter from International Paper on April 6, 2017, providing 30 days' written notice of International Paper's intent to terminate the waste-services agreement.

In May 2017, JRD and Dailey filed in the pending Wilcox Circuit Court action a third-party complaint against IPC and fictitiously named defendants. In their complaint, JRD and Dailey sought a declaratory judgment and damages on claims of breach of contract, promissory estoppel, fraud, work and labor done, and indemnity. According to JRD and Dailey, in an effort to perform the obligations under the waste-services agreement, they hired additional labor and also leased, purchased, and financed various items of equipment from third parties, including Caterpillar. They alleged that they acquired that equipment and entered into those loan agreements only in reliance on International Paper's alleged assurance that they would be compensated for their work over a five-year period. When International Paper terminated that agreement, JRD and Dailey alleged, they could no longer afford to pay the loans from their lenders, including Caterpillar, although they had already defaulted on some of those loans.

Later that same month, JRD and Dailey moved the trial court to add JRD C & L as a defendant to the action involving Caterpillar. According to JRD and Dailey, adding JRD C & L as a defendant was proper because JRD C & L had possession of the equipment that Caterpillar was seeking to recover. JRD C & L was also, as noted above, the signatory to the waste-services agreement with International Paper, which was at issue in the third-party action. The trial court granted that motion. Thereafter, JRD, Dailey, and JRD C & L filed an amended third-party complaint adding JRD C & L as a third-party plaintiff (JRD, Dailey, and JRD C & L are hereinafter referred to collectively as "the third-party plaintiffs").

In June 2017, IPC moved, pursuant to Rule 12(b)(3), Ala. R. Civ. P., to dismiss the third-party complaint based on improper venue. According to IPC, the waste-services agreement contained an outbound forum-selection clause that provided that the courts of Tennessee would have jurisdiction over any disputes arising out of or relating to that agreement. IPC also challenged whether JRD or Dailey had a right to bring the third-party action because, it argued, the third-party action had nothing to do with the transactions underlying Caterpillar's lawsuit.

The trial court did not rule on IPC's motion to dismiss, and IPC petitioned this Court for a writ of mandamus directing the trial court to rule on the motion. On April 27, 2018, this Court granted IPC's petition and directed the trial court to address the merits of IPC's motion. See Ex parte International Paper Co., 263 So. 3d 1035 (Ala. 2018). On November 7, 2018, the trial court denied the motion, and IPC filed the present petition.

Standard of Review

" ‘ "Mandamus is a drastic and extraordinary writ, to be issued only where there is (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court." Ex parte Integon Corp., 672 So.2d 497, 499 (Ala. 1995).’

" Ex parte CTB, Inc., 782 So.2d 188, 190 (Ala. 2000). In Ex parte CTB, this Court established that a petition for a writ of mandamus is the proper vehicle for obtaining review of an order denying enforcement of an ‘outbound’ forum-selection clause when it is presented in a motion to dismiss. Indeed, an attempt to seek enforcement of the outbound forum-selection clause is properly presented in a motion to dismiss without prejudice, pursuant to Rule 12(b)(3), Ala. R. Civ. P., for contractually improper venue. Additionally, we note that a party may submit evidentiary matters to support a motion to dismiss that attacks venue. Williams v. Skysite Communications Corp., 781 So.2d 241 (Ala. Civ. App. 2000), quoting Crowe v. City of Athens, 733 So.2d 447, 449 (Ala. Civ. App. 1999)."

Ex parte D.M. White Constr. Co., 806 So.2d 370, 372 (Ala. 2001). Further, "a trial court's ruling on the question of enforcing a forum-selection clause" will be vacated if the court exceeded its discretion. Id.

Discussion

I.

IPC argues that, generally, outbound forum-selection clauses are enforceable in Alabama and that the third-party plaintiffs did not establish that the enforcement of the clause would be unfair or unreasonable. According to IPC, because the third-party plaintiffs failed to meet their burden, the outbound forum-selection clause should be enforced. For the reasons discussed below, we agree.²

It is well established that an outbound forum-selection clause

" ‘will be "upheld unless the party challenging the clause clearly establishes that it would be unfair or unreasonable under the circumstances to hold the parties to their bargain." Ex parte CTB, Inc., 782 So.2d [188,] 190–91 [ (Ala. 2000) ]. The showing is sufficient where it is clearly established " ‘(1) that enforcement of the forum selection clause[ ] would be unfair on the basis that the contract[ ] [was] affected by fraud, undue influence, or overweening bargaining power or (2) that enforcement would be unreasonable on the basis that the chosen ... forum would be seriously inconvenient for the trial of the action.’ " Id. at 191 ....’

" Ex parte Leasecomm Corp., 886 So.2d [58,] 62–63 [ (Ala. 2003) ] (emphasis omitted). The Court has noted that ‘[t]he burden on the challenging party is difficult to meet.’ Ex parte D.M. White Constr. Co., 806 So.2d [370,] 372 [ (Ala. 2001) ]."

Ex parte PT Solutions Holdings, LLC, 225 So.3d 37, 42 (Ala. 2016).

The waste-services agreement includes an unambiguous outbound forum-selection clause that states: "The Courts of Tennessee shall have ... exclusive jurisdiction over any disputes arising out of or relating to this agreement."

As demonstrated by the caselaw quoted above, the burden was on the third-party plaintiffs to demonstrate that enforcement of the outbound forum-selection clause would be unfair or unreasonable under the circumstances of this case. In its petition, IPC contends that the third-party plaintiffs failed to establish that enforcement of the clause would be unfair on the basis that the waste-services agreement was affected by fraud, undue influence, or overweening bargaining power.

The third-party plaintiffs argue to this Court that the enforcement of the outbound forum-selection clause would be unfair because, they say, it was affected by International Paper's "overweening bargaining power" given their allegation that International Paper is a large, multinational corporation and they are individual and small, local companies.³ According to the third-party plaintiffs, International Paper "held all the cards" during the negotiations of the waste-services agreement and the third-party plaintiffs were given "zero opportunity to negotiate [the waste-services agreement]" because, they say, it was a " ‘take it or leave it’ deal."

This Court has previously held that, even when a party to a forum-selection clause is a large company, there are allegations that one of the parties was not allowed to negotiate any of the terms of the contract, and the contract had to be accepted as written, those factors alone do not establish "overweening bargaining power." See Ex parte D.M. White Constr., 806 So.2d at 373. Additionally, the third-party plaintiffs' assertions appear to be nothing more than...