Grott v. Jim Barna Log Systems-Midwest

• Decision Date: 28 August 2003
• Docket Number: No. 46A03-0301-CV-4.,46A03-0301-CV-4.
• Citation: 794 N.E.2d 1098
• Parties: Mark GROTT and Barbara Grott, Appellants-Plaintiffs, v. JIM BARNA LOG SYSTEMS-MIDWEST, INC., Barna and Company, Jerry Myers and Peter Rosi, Appellees-Defendants.
• Court: Indiana Appellate Court

794 N.E.2d 1098

Mark GROTT and Barbara Grott, Appellants-Plaintiffs, v. JIM BARNA LOG SYSTEMS-MIDWEST, INC., Barna and Company, Jerry Myers and Peter Rosi, Appellees-Defendants.

No. 46A03-0301-CV-4.

Court of Appeals of Indiana.

August 28, 2003.

David P. Jones, Matthew J. Hagenow, Newby, Lewis, Kaminski & Jones, LaPorte, IN, Attorneys for Appellants.

Jerome L. Withered, Sean M. Persin, Withered & Corrigan, Lafayette, IN, Attorneys for Appellees.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Mark and Barbara Grott ("the Grotts"), bring this interlocutory appeal from the trial court's decision to grant Jim Barna Log Systems-Midwest, Inc., ("Jim Barna Midwest"), and Peter Rosi's motion to dismiss. The Grotts present a single issue for our review, namely, whether the trial court erred when it gave effect to a forum-selection clause in the parties' purchase agreement.

We affirm.

FACTS AND PROCEDURAL HISTORY

On July 23, 2000, the Grotts, residents of LaPorte County, executed a written purchase agreement for a log home package from Jim Barna Midwest, an Indiana corporation located in White County. Rosi signed the agreement as "owner" of Jim Barna Midwest. Appellants' App. at 18. Barna and Company, located in Oneida, Tennessee, manufactures the log home packages sold by Jim Barna Midwest.

Paragraph 29 of the parties' purchase agreement contains a forum-selection clause, which reads as follows:

Customer agrees that any disputes (other than mechanics or materialman's lien claims or similar lien claims) which may arise between it and the seller shall be determined according to Tennessee law and may be heard only in a court of competent jurisdiction in the State of Tennessee. Any mechanics or materialman's lien claims (or similar claims) shall be heard in any state where materials sold pursuant to this purchase agreement are erected or stored by customer. Such lien claims, or like claims, shall be determined according to the law of the state where the action is filed. With respect to any such lien claims, any causes of action asserted in the same action, but based on theories other than mechanics and materialman's lien liability, shall be determined according to the law of the State of Tennessee.

Appellants' App. at 17. Mark initialed all thirty paragraphs of the "Terms and Conditions" section, and he signed the final page indicating that he "read and understood and agreed to the terms and conditions" of the agreement. Id. at 18. Jerry Myers, an independent contractor, constructed the log home for the Grotts on their property.

On March 1, 2002, the Grotts filed a complaint in the LaPorte Circuit Court against Jim Barna Midwest, Rosi, Barna and Company, and Myers, alleging negligence, breach of contract, conversion, fraud, and misrepresentation. On April 25, Jim Barna Midwest and Rosi filed an answer to the Grotts' complaint. And on July 2, Jim Barna Midwest and Rosi filed an Indiana Trial Rule 12(B)(2) motion to dismiss or, in the alternative, to transfer to a court of competent jurisdiction in Tennessee. In support of that motion, Jim Barna Midwest and Rosi submitted a memorandum urging the trial court to give effect to the forum-selection clause contained in the parties' purchase agreement. On September 18, the trial court granted the motion and dismissed the Grotts' claims against Jim Barna Midwest and Rosi.¹ This appeal ensued.

DISCUSSION AND DECISION

The Grotts maintain that the trial court has personal jurisdiction over Jim Barna Midwest and Rosi. Thus, they contend that the trial court erred when it granted Jim Barna Midwest and Rosi's motion to dismiss. In essence, the Grotts assert that the forum-selection clause in the purchase agreement was not freely negotiated and is unjust and unreasonable. They also assert that the clause does not apply to Rosi. We cannot agree.

Standard of Review

A motion to dismiss pursuant to T.R. 12(B)(2) is a proper method of challenging the personal jurisdiction of a trial court. Lee v. Goshen Rubber Co., Inc., 635 N.E.2d 214, 215 (Ind.Ct.App.1994),trans. denied. When reviewing a motion to dismiss for lack of personal jurisdiction, this court applies a de novo standard. See Anthem Ins. Cos. v. Tenet Healthcare, 730 N.E.2d 1227, 1238 (Ind.2000)

. Personal jurisdiction is a question of law, and, as such, it either exists or does not. Id. The question of its existence is not entrusted to a trial court's discretion. Id. When a defendant attacks the jurisdiction over his person, he bears the burden of proof upon that issue by a preponderance of the evidence, unless the lack of jurisdiction is apparent from the face of the complaint. Lee, 635 N.E.2d at 215.

This court has held that forum-selection provisions are not per se invalid. Horner v. Tilton, 650 N.E.2d 759, 763 (Ind.Ct.App.1995), trans. denied. Contractual provisions, even those occurring in form contracts, that seek to limit the litigation of future actions to particular courts or places are enforceable if they are reasonable and just under the circumstances, and there is no evidence of fraud or overreaching such that the agreeing party, for all practical purposes, would be deprived of a day in court. Mechanics Laundry & Supply, Inc. v. Wilder Oil Co., Inc., 596 N.E.2d 248, 252 (Ind.Ct.App.1992), trans. denied. Courts also evaluate whether the provision was freely negotiated. See Horner, 650 N.E.2d at 763

. Even where the forum-selection clause establishes a remote forum for resolution of conflicts, "the party claiming [unfairness] should bear a heavy burden of proof." Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 592, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) (quoting The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)).

Freely Negotiated Agreement

To determine whether a forum-selection provision was freely negotiated, courts apply a fact-sensitive test. See Horner, 650 N.E.2d at 763

. The consideration of whether a contract is freely negotiated involves a comparison of the bargaining position of the parties to the contract. Id. A contract is unconscionable if there exists a great disparity in bargaining power between the parties, which leads the weaker party to sign the contract unwillingly or without awareness of its terms. See id. Indiana courts recognize the principle that parties are free to enter into contracts and, indeed, presume that contracts represent the freely bargained agreement of the parties. Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126, 1129 (Ind.1995). A standardized contract is not unenforceable merely because of the unequal bargaining power of the parties. Rumple v. Bloomington Hosp., 422 N.E.2d 1309, 1313 (Ind.Ct. App.1981),

trans. denied. There must also be a showing that the contract is unconscionable, i.e., one which contains unreasonable or unknown terms and is the product of inequality of bargaining power. Id.

Here, to validate the purchase agreement, the customer was required to initial each paragraph of the agreement and sign the last page. Because we presume that contracts represent the freely bargained agreement of the parties, we conclude that this agreement represents the freely negotiated wishes of both parties. See Fresh Cut, 650 N.E.2d at 1129

. The Grotts have not shown otherwise.

Still, the Grotts maintain that the "clear language of the contract indicates that [they] had essentially no choice but to accept the `Terms and Conditions' by initialing next to each." Appellants' Brief at 13. They claim that because the agreement was a "standardized form contract" drafted by a "superior party," the forum-selection provision should not be enforced.²Id. at 10. This claim is tenuous at best. See Carnival Cruise Lines, Inc.,499 U.S. 585 at 593,111 S.Ct. 1522 (rejecting appellate court's determination that non-negotiated forum-selection clause in form ticket contract is never enforceable simply because it is not subject of bargaining). Indeed, the Grotts do not contend that they expressed any objection to the forum-selection clause or attempted to omit it from the agreement. And there is no indication that Mark initialed each paragraph and signed the contract unwillingly or was unaware of the forum-selection clause. See Horner, 650 N.E.2d at 763

. In sum, the Grotts have not demonstrated that they were unable to negotiate for the clause to be stricken from the agreement, or alternatively, that they were somehow prevented from doing business with a different log home dealer.

Moreover, the Grotts' contention that the forum-selection clause is not readily visible is without merit. The paragraph explaining the forum-selection clause is not hidden or inconspicuous. In fact, except for the section headings in the agreement, the forum-selection clause is typed in the same size and font style as the rest of the agreement. The Grotts do not deny that they had an opportunity to read and understand the purchase agreement before it was executed.

Next, the forum-selection clause is enforceable because the parties agreed to, and incorporated it into their agreement. It is in the best interest of the public that persons should not be unnecessarily restricted in their freedom of contract. Ransburg v. Richards, 770 N.E.2d 393, 395 (Ind.Ct.App.2002), trans. denied. We have long recognized and respected this freedom. See id. As a general rule, the law allows competent adults the utmost liberty in entering into contracts that, when entered into freely and voluntarily, will be enforced by the courts. Zollman v. Geneva Leasing Assocs., Inc., 780 N.E.2d 387, 392 (Ind.Ct.App.2002).

Here, the forum-selection clause clearly states that disputes between the seller and the customer must be litigated in Tennessee. As an indication of the Grotts' assent to that provision, Mark initialed the forum-selection clause and signed the final page of the agreement. The Grotts have not carried their burden to rebut the presumption that the purchase agreement, including, the...