Ex parte Procom Services, Inc.

• Decision Date: 30 December 2003
• Citation: 884 So.2d 827
• Parties: Ex parte PROCOM SERVICES, INC., Russell Leitch, and Hal Crews. (In re Hank Smith, Jr. v. Procom Services, Inc., Russell Leitch, and Hal Crews).
• Court: Alabama Supreme Court

884 So.2d 827

Ex parte PROCOM SERVICES, INC., Russell Leitch, and Hal Crews.

(In re Hank Smith, Jr. v. Procom Services, Inc., Russell Leitch, and Hal Crews).

1021851.

Supreme Court of Alabama.

December 30, 2003.

Harlan F. Winn III and R. Frank Springfield of Burr & Forman, LLP, Birmingham, for petitioners.

S. Joshua Briskman of Baxley, Dillard, Dauphin, McKnight & Barclift, Birmingham, for respondent.

HARWOOD, Justice.

Hank Smith, Jr., sued Procom Services, Inc. ("Procom"), a Texas corporation, and Russell Leitch and Hal Crews, both residents of Dallas, Texas, in the Jefferson Circuit Court alleging breach of contract. Procom, Leitch, and Crews filed a motion to dismiss alleging, among other grounds, that venue in Jefferson County was improper and asking the trial court to enforce the outbound forum-selection clause contained in Smith's employment contract with Procom. The motion to dismiss was supported by Leitch's and Crews's affidavits. Smith amended his complaint to add a fraud claim based upon allegedly false representations made to him by Leitch and Crews. Smith also filed a response to the defendants' motion to dismiss, along with his supporting affidavit. The trial court overruled the motion to dismiss without a written explanation. Procom, Leitch, and Crews petition this Court for a writ of mandamus "directing the trial court to dismiss the claims of Smith against petitioners" based on the outbound forum-selection clause.

I. Standard of Review

"An outbound forum-selection clause — a clause by which parties specifically agree to trial outside the State of Alabama in the event of a dispute — implicates the venue of a court rather than its jurisdiction. See Ex parte CTB, Inc., 782 So.2d 188 (Ala.2000); and O'Brien Eng'g Co. v. Continental Machs., Inc., 738 So.2d 844, 845 n. 1 (Ala.1999).

"`"The proper method for obtaining review of a denial of a motion for a change of venue in a civil action is to petition for the writ of mandamus." Ex parte National Security Ins. Co., 727 So.2d 788, 789 (Ala.1998). "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 at 190. `On appeal, the review of a trial court's ruling on the question of enforcing a forum-selection clause is for an abuse of discretion.' Ex parte D.M. White Constr. Co., 806 So.2d 370, 372 (Ala.2001)."

Ex parte Rymer, 860 So.2d 339, 341 (Ala.2003).

II. Facts

In April 2002, Smith entered into an one-year employment contract with Procom, a corporation that markets telecommunications services and equipment. The employment contract provided, in relevant part:

"This Employment Agreement (`Agreement') is made between Procom Services, Inc., a Texas corporation (`Employer'), and HANK SMITH, JR. (`Representative') and is entered into as of April 15, 2002.

"....

"Annual Compensation. Representative's annual compensation shall be as follows: minimum of $1000 per week or agreed overrides whichever is greater.

"....

"Governing Law. This agreement shall be governed by and construed in accordance with the law of the State of Texas. The parties hereby irrevocably agree that the state courts sitting in Dallas, Texas shall have sole and exclusive jurisdiction for any action or proceeding relating to or arising out of this agreement and waive any objection to venue in such court. In any such action or proceeding, the prevailing party shall be reimbursed by the other party for all costs and expenses (including, without limitation, attorney's fees and costs) incurred in connection with such action or proceeding. The term `prevailing party' shall mean that party whose position is substantially upheld in a final judgment rendered in such litigation, or, if the final judgment is appealed, that party whose position is substantially upheld by the decision of the final appellate body to consider the appeal."

Smith attested in his affidavit that "[w]hen [he] negotiated [his] employment with Procom, [he] dealt with Hal Crews and Russell Leitch. The negotiations took place while [he] was in Alabama and Georgia, and while Hal Crews and Russell Leitch were in Georgia and Alabama[,] respectively."

Smith asserted in his amended complaint that Leitch and Crews "each represented to him that he would be paid at least one-thousand ($1,000.00) a week or agreed upon overrides, whichever was greater for a period of one year," but that in November 2002 he began to receive less than $1,000 a week. Smith averred that "[t]he representations were false and made with intent that [he] rely on the representations, or were recklessly made or made negligently and [Smith] did rely on them." At the time Smith entered into the employment contract with Procom, Leitch was the president of Procom; Crews stated in his affidavit that he was not "employed by [Procom]," and that his affiliation with Procom was as "an officer of a corporation which provides consulting services to [Procom]."

Concerning his employment with Procom and his contacts with the State of Texas, Smith stated in his affidavit:

"4. When I was employed by Procom, the vast majority of the time I performed my duties in the State of Alabama. Occasionally, I was called to perform work in Georgia. I never performed any work in the State of Texas and my contacts to Texas were limited to occasional emails to Russell Leitch and receiving my paycheck from there.

"5. I do not own any real property, personal property, or other assets located in Texas.

"....

"7. During my employment with Procom, I can remember both Hal Crews and Russell Leitch coming into Alabama for business associated directly with Procom matters. I remember them being in this state at least three times each. I also know that Russell Leitch owns warehousing in Alabama.

"8. Calculation of payroll of employees of Procom in Alabama, including my own[,] was done in Alabama. Those responsible for calculating payroll still reside here. They are Katherine Price, Amy Weeks, and a woman named Tracey who still works for Procom but [whose] last name I cannot recall.

"9. The original records of payroll relevant to my claim are, to the best of my knowledge, still in Alabama.

"10. I know of at least two other former employees of Procom whose employment contracts were breached in the same manner as my own. They are John Crosby and Hank Smith, Sr.[,] my father. John Crosby lives in Alabama. Hank Smith, Sr. lives in Utah. I know of three other former employees of Procom who never received the full amount of their reserve pay.

"11. Those who have personal knowledge of the day-to-day goings on at Procom while I was employed there still reside in Alabama, except for Russell Leitch and Hal Crews."

In regard to their contacts with the State of Alabama, Leitch and Crews affirmed identically, in relevant part:

"3. I do not own any real property, personal property, or other assets located in Alabama, nor does any member of my family.

"....

"5. I have not worked in the State of Alabama, never earned any income attributable to work in that state, paid any taxes there, or filed any tax returns there.

"6. I have never solicited or conducted any business in the State of Alabama, nor have I ever advertised in Alabama for any business on my behalf or on behalf of anyone else. I have also never sent any agents or employees into Alabama to solicit or conduct any business on my personal behalf.

"7. I do not have, nor have I ever had, any bank accounts, offices, or telephone listings in the State of Alabama.

"8. I own no stock in any Alabama corporations.

"9. I have not contracted to supply any goods or services in Alabama, nor have I derived any revenues from goods used or consumed or services rendered in Alabama.

"10. None of the actions attributed to me in the complaint were performed in Alabama.

"11. I have never been previously sued (or brought suit) in an Alabama court. No Alabama court has ever before exercised personal jurisdiction over me.

"12. I have never before knowingly or intentionally availed myself of the benefits and protections of the laws of Alabama.

"13. Having to defend this case in Alabama would work a substantial hardship on me and my family."

III. Enforcement of the Outbound Forum-Selection Clause

In their petition for a writ of mandamus, Procom, Leitch, and Crews contend that they have a clear legal right to have the outbound forum-selection clause enforced because, they say, Smith did not show that enforcement of the forum-selection clause would be unfair or unreasonable. This Court, in Ex parte Rymer, supra,

stated:

"Alabama has adopted the majority rule that an outbound forum-selection clause should be enforced so long as enforcement is neither unfair nor unreasonable under the circumstances of the case. Professional Ins. Corp. v. Sutherland, 700 So.2d 347, 351 (Ala.1997). The party challenging the enforcement of such a clause has the burden of clearly establishing either

"`(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.'

"Sutherland, 700 So.2d at 352."

860 So.2d at 341.

In Smith's response to the motion to dismiss, he asserted that the contract was "affected by fraud" because, he alleged, "Crews and Leitch promised [him] at least one thousand ($1,000.00) per week. When they promised [him] that wage they did not intend to abide by the agreement." Smith also stated that "[i]f permitted to proceed with discovery and trial of this issue [i.e.,...