Cerami-Kote, Inc. v. Energywave Corp.
| Decision Date | 08 May 1989 |
| Docket Number | No. 16983,CERAMI-KOT,INC,16983 |
| Citation | 773 P.2d 1143,116 Idaho 56 |
| Parties | , an Idaho corporation; Washington Ceramic Coatings, Inc., a foreign corporation; Thermal Coatings of Seattle, Inc., a foreign corporation; Thermal Coatings of Sacramento, Inc., a foreign corporation; Gary D. Adams and Mary E. Adams, husband and wife; Don Bunn and Jeanine Bunn, husband and wife; Marvin Flaherty; K.E. Duncan and Marjorie L. Duncan, husband and wife; Ronald C. Duncan and Cathleen C. Duncan, husband and wife; and Richard Thurber, Plaintiffs-Respondents, v. ENERGYWAVE CORPORATION, a foreign corporation; Ziebarth Corporation, a foreign corporation; Richard G. Ziebarth and Beatrice E. Ziebarth, husband and wife, Defendants-Appellants, and Permatherm Incorporated, an Idaho corporation, Defendant. |
| Court | Idaho Supreme Court |
Green, Service, Gasser & Kerl, Pocatello, for defendants-appellants. Steven V. Richert, argued.
Racine, Olson, Nye, Cooper & Budge, Pocatello, for plaintiffs-respondents. John R. Goodell, argued.
This action grows out of a business relationship between Energywave Corporation (Energywave), a manufacturer and distributor of a ceramic insulation system, and the numerous plaintiffs set out in the caption above. Energywave Corporation granted licenses to sell, market, distribute, and install the roofing sealant which it had developed. Plaintiffs filed an action in Bannock County alleging various contractual, tort, and statutory violations. Energywave filed a motion to dismiss based upon contractual language which selected the law of Florida as the law to be applied to the contract and which designated a particular county court in Florida as the venue for the enforcement, construction, or interpretation of the contract.
Energywave is the successor-in-interest to Ziebarth Corporation. Both companies are incorporated under the laws of Florida and both maintain their principal place of business in Citrus County, Florida. Energywave manufactures and distributes a roofing sealant. The plaintiffs are corporations and individuals incorporated or residing in the states of Idaho, Oregon, Washington, and California.
The contract into which the parties entered contained the following language which Energywave's motion to dismiss seeks to enforce:
13. VENUE.
ZIEBARTH and CONTRACTOR hereby specifically agree that the venue for the enforcement, construction, or interpretation of this agreement shall be the Circuit Court of Citrus County, Florida, and the parties do hereby specifically waive any venue privilege and/or diversitive citizenship privilege which they have or may have, and the parties, jointly and severally, do hereby waive any right which they have or may have against to institute any proceedings in connection with this agreement, in any other county of the state of Florida, in any other state court, other than the Circuit Court of Citrus County, Florida.
....
20. APPLICABLE LAW.
THIS agreement shall be interpreted, construed and governed by the laws of the state of Florida.
The plaintiffs have sold and applied the Ziebarth insulation system to many customers' buildings, including many in Idaho. Their complaint alleges a substantial number of failures of the defendants' product by reason of which the numerous plaintiffs have been required to do additional repairs or replacements of defective applications. On August 6, 1986, the plaintiffs filed a complaint and demand for a jury trial in Bannock County. The complaint alleged various breaches of contract, tort, and statutory violations.
Energywave appeared in the action pursuant to I.R.C.P. 12(b)(3) and on September 19, 1986, filed a motion to dismiss asserting that the Idaho court should decline jurisdiction and uphold the choice of forum based on the contractual language cited above. The district court denied this motion to dismiss. We granted permission for an appeal by Energywave from the court's interlocutory order. This appeal requires us to determine whether the district court erred in denying the motion.
Energywave's appeal presents the following two issues:
1. Did the district court err in not applying the choice of law provision in the parties' contract?
2. Assuming that the district court did not err in failing to apply the choice of law provision, did the court err, in applying Idaho law, by concluding that Idaho Code § 29-110 bars enforcement of the forum selection clause in the contract?
Idaho Code § 28-1-105(1) provides that parties to commercial transactions have the power to choose the applicable law governing their transaction:
Except as provided hereafter in this section, when a transaction bears a reasonable relation to this state and also to another state or nation, the parties may agree that the law either of this state or such other state or nation shall cover their rights and duties. Failing such agreement, this act applies to transactions bearing an appropriate relation to the state. 1
Here the parties' agreement in clause 20 quoted above, provided that their contract shall be interpreted, construed and governed by the laws of Florida. It cannot be doubted that Florida bears a reasonable relation to the transaction. Energywave and Ziebarth are corporations organized under the laws of Florida, and both maintain their principal place of business in Florida. The performance of Energywave's obligations under the contract would take place, at least in part, in Florida. Therefore, Florida bears a reasonable relation to the transaction and the district court technically should have applied Florida law expressly to determine the validity of the forum selection clause in the contract. Although the court was in error in not so doing, the result that the district court reached is the same that we reach today as discussed below.
Florida law also recognizes that contracting parties can agree on what state's law is to apply to the agreement. Maritime Limited Partnership v. Greenman Advertising Associates, Inc., 455 So.2d 1121 (Fla.App. 4th Dist.1984). The question then becomes how the Florida courts regard the enforceability of forum selection clauses. 2 Fortunately this question has been definitively resolved by the Florida Supreme Court.
In Manrique v. Fabbri, 493 So.2d 437 (Fla.1986), the Florida high court squarely addressed this issue and resolved a conflict among the circuits of that state's intermediate appellate courts. Previously one line of decisions had held that forum selection clauses were void as impermissible attempts to oust a court of jurisdiction. See, e.g., Zurich Insurance Co. v. Allen, 436 So.2d 1094 (Fla.App. 3rd Dist.1983). Another line of cases represented by Maritime, cited above, had held that parties to a contract may agree to submit to the jurisdiction of the chosen forum under certain conditions.
In Maritime, the Florida Court of Appeals relied upon and adopted the reasoning of the Supreme Court of the United States in M/S Bremen v. Zapata Off-shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). The Maritime court viewed Bremen as imposing three conditions which must exist in order for forum selection clauses to be enforceable:
1. The forum was not chosen because of overwhelming bargaining power on the part of one party which would constitute overreaching at the other's expense.
2. Enforcement would not contravene a strong policy enunciated by statute or judicial fiat, either in the forum where the suit would be brought, or the forum from which the suit has been excluded.
3. The purpose was not to transfer an essentially local dispute to a remote and alien forum in order to seriously inconvenience one or both of the parties.
Maritime, 455 So.2d 1121, 1123 (emphasis added).
In Manrique, the Florida Supreme Court expressly adopted the view enunciated in Bremen and Maritime. Manrique, 493 So.2d 437, 440, and overruled the line of cases represented by Zurich, 436 So.2d 1094. The Maritime conditions one and three are not here in dispute. What is at issue, however, is whether I.C. § 29-110 expresses a strong public policy against the enforcement of foreign selection clauses which would run afoul of Maritime's condition two. The statute provides as follows:
Limitations on rights to sue.--Every stipulation or condition in a contract by which any party thereto is restricted from enforcing his rights under the contract by the usual proceedings in the original tribunals, or which limits the time within...
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