Hansen Trust v. Fgh Industries

• Citation: 279 Mich. App. 468,760 N.W.2d 526
• Decision Date: 01 July 2008
• Docket Number: Docket No. 276452.,Docket No. 276372.
• Parties: ROBERT A. HANSEN FAMILY TRUST v. FGH INDUSTRIES, LLC.
• Court: Court of Appeal of Michigan (US)

760 N.W.2d 526

279 Mich. App. 468

ROBERT A. HANSEN FAMILY TRUST v. FGH INDUSTRIES, LLC.

Docket No. 276372.

Docket No. 276452.

Court of Appeals of Michigan.

Submitted May 13, 2008, at Detroit.

Decided July 1, 2008, at 9:15 a.m.

Kerr, Russell and Weber, PLC, Detroit (by Joanne Geha Swanson and James E. DeLine), for the plaintiff.

Morgan Associates, PLC, Birmingham (by Kenneth B. Morgan, K. Dino Kostopoulos, and Ian M. Redmond), and Powell, Murphy & Adolf, PLLC (by Steven C. Powell), for the defendants.

Before: BANDSTRA, P.J., and FITZGERALD and MARKEY, JJ.

BANDSTRA, P.J.

In Docket No. 276372, plaintiff Robert A. Hansen Family Trust appeals the trial court's order dismissing its complaint against defendants FGH Industries, LLC (FGHI), FGH Capital, LLC, Daniel Fuhrman, and William Gruits. In Docket No. 276452, defendants appeal the trial court's denial of their request for sanctions. The appeals were consolidated. We conclude that the trial court properly enforced the parties' forum-selection agreement under MCL 600.745(3) and properly denied sanctions. We affirm.

FACTS AND PROCEEDINGS BELOW

This action arises from a dispute over an investment plaintiff made in a business venture with defendant FGH Capital¹ pursuant to an operating agreement that created FGHI. This operating agreement, executed by plaintiff and FGH Capital in September 2003, contained a Michigan choice-of-law provision² and an Arizona forum-selection clause (the September agreement).³ In December 2003, an amended operating agreement was drafted by counsel for plaintiff and defendants but, ultimately, it was not executed by plaintiff (the December agreement). The December agreement included Delaware choice-of-law and forum-selection provisions.⁴

Plaintiff filed this action in March 2006, in the Oakland Circuit Court, alleging, among other claims, that defendants breached the operating agreement, breached their fiduciary duties to plaintiff, misused FGHI's assets for the personal pecuniary benefit of Gruits and Fuhrman, and engaged in related-party transactions to plaintiff's detriment. Plaintiff indicated in its complaint that the operating agreement provided that it "shall be governed by and construed in accordance with" Delaware law, consistent with the December agreement. However, plaintiff did not attach a copy of the agreement to the complaint, instead representing that a copy of it was in defendants' possession. Defendants answered the complaint; they did not assert any affirmative defense relating to the forum-selection clause contained in the agreement. The parties engaged in discovery over the next few months.

On August 8, 2006, defendants filed amended answers to plaintiff's complaint, asserting affirmative defenses relating to the application of Delaware law, a lack of subject-matter and personal jurisdiction, and improper venue. Thereafter, defendants moved for summary disposition, under MCR 2.116(C)(1) (lack of personal jurisdiction), (4) (lack of subject-matter jurisdiction), and (8) (failure to state a claim), contending that Delaware courts were the sole and exclusive forum for the resolution of disputes arising from or relating to the operating agreement. Defendants also sought sanctions on the basis that plaintiff filed this action in Michigan, knowing that it was an inappropriate forum, solely to serve improper motives. Additionally, defendants moved to strike plaintiff's complaint because plaintiff did not attach to it the operating agreement on which its claims were based. They explained that while plaintiff's complaint clearly referenced the December agreement, plaintiff was then indicating that the September agreement was the operative agreement, creating "tremendous confusion." Ultimately, defendants' motion to strike was withdrawn, and, on September 22, 2006, plaintiff filed an amended complaint, attaching the September 2003 agreement and omitting any reference to Delaware law as governing this dispute.

Defendants renewed their motion for summary disposition, again asserting that the December 2003 agreement was the operative agreement between the parties, but arguing further that, in either case, the court of a state other than Michigan — either Arizona or Delaware — was selected by the parties as the exclusive forum for the adjudication of all claims or disputes arising out of or relating to the operating agreement, thus requiring that the trial court dismiss plaintiff's complaint. Defendants again sought sanctions. Plaintiff opposed defendants' motion, asserting that defendants waived their claim that Michigan was an improper forum for this action by failing to contest the court's personal jurisdiction over them in their first responsive pleading. Plaintiff also argued that the September operating agreement constituted the agreement between the parties and that the forum-selection clause set forth therein was unenforceable under MCL 600.745(3). Plaintiff contested defendants' request for sanctions on the basis that this action was properly filed in Michigan.

The trial court determined as an initial matter that, because an analysis of the enforceability of a forum-selection clause is "more akin" to a determination whether the court lacks personal jurisdiction, it would decide defendants' motion under MCR 2.116(C)(1).⁵ The trial court then acknowledged that there was a "threshold question" of fact regarding "which of the two ostensible agreements is operative," preventing it from deciding as a matter of law which forum-selection clause applies to this dispute. The trial court concluded, however, that because neither agreement permitted a Michigan forum, the question of which agreement is operative is not material to the issue whether the parties had an enforceable agreement to adjudicate their disputes exclusively in a forum other than Michigan so as to require dismissal of plaintiff's action. The trial court determined, relying in large part on this Court's decision in Turcheck v. Amerifund Financial, Inc., 272 Mich.App. 341, 725 N.W.2d 684 (2006), that the forum-selection clause in whichever operating agreement was deemed operative was enforceable under MCL 600.745(3) and, further that plaintiff's claims against all the defendants are subject to that clause. The court reasoned that the forum-selection clause applies to all claims arising from the operating agreement, and not just to the claims concerning the parties to that agreement, finding the decision in Elf Atochem North America, Inc. v. Jaffari, 727 A.2d 286 (Del., 1999), to be persuasive. The trial court thus granted defendants summary disposition on all of plaintiff's claims, on the basis that "they are not properly brought in Michigan." However, finding that the record before it suggested that plaintiff "believed that it had an arguable case for jurisdiction of its claims in Michigan," the trial court denied defendants' request for sanctions.

ANALYSIS

Plaintiff argues on appeal, in Docket No. 276372, that the trial court erred by granting defendants' motion for summary disposition. We disagree.

This Court reviews a trial court's decision on a motion for summary disposition de novo. Dressel v. Ameribank, 468 Mich. 557, 561, 664 N.W.2d 151 (2003). Whether a forum-selection clause is enforceable under MCL 600.745 presents a question of statutory interpretation, which we also review de novo. Turcheck, supra at 345, 725 N.W.2d 684.

MCL 600.745(3) provides:

If the parties agreed in writing that an action on a controversy shall be brought only in another state and it is brought in a court of this state, the court shall dismiss or stay the action, as appropriate, unless any of the following occur:

(a) The court is required by statute to entertain the action.

(b) The plaintiff cannot secure effective relief in the other state for reasons other than delay in bringing the action.

(c) The other state would be a substantially less convenient place for the trial of the action than this state.

(d) The agreement as to the place of the action is obtained by misrepresentation, duress, the abuse of economic power, or other unconscionable means.

(e) It would for some other reason be unfair or unreasonable to enforce the agreement.

Plaintiff first asserts that defendants waived their right to invoke the forum-selection clause to preclude Michigan courts from adjudicating this dispute by failing to assert the defense of lack of personal jurisdiction in their first motion or responsive pleading. We disagree.

In Turcheck, supra at 344, 725 N.W.2d 684, this Court, in determining the appropriate standard of review for a trial court's dismissal of an action based on a forum-selection clause, explained that,

[w]hile not identical, dismissal based on a forum-selection clause is similar to a grant of summary disposition for lack of personal jurisdiction. Although a valid forum-selection clause does not divest the Michigan courts of personal jurisdiction over the parties, it evinces the parties' intent to forgo personal jurisdiction in Michigan and consent to exclusive jurisdiction in another forum. [Emphasis in original and added.]

The Michigan Legislature has elected to honor the parties' contractual choice of forum, in the absence of certain factors, by requiring Michigan courts to dismiss, or stay, actions in which it is demonstrated that the parties have agreed that a forum other than Michigan shall be the exclusive forum for resolution of their disputes. MCL 600.745(3). Here, as in Turcheck, supra at 345, 725 N.W.2d 684:

We begin with Michigan's fundamental rules of contract interpretation, set forth by our Supreme Court in Quality Products & Concepts [Co. v. Nagel Precision, Inc., 469 Mich. 362, 666 N.W.2d 251 (2003)]:

"In interpreting a contract, our obligation is to determine the intent of the contracting parties. If the language of the contract is unambiguous, we construe and enforce the contract as written. Thus, an unambiguous contractual...