Insurance Products Marketing v. Indianapolis Life
| Citation | 176 F.Supp.2d 544 |
| Decision Date | 17 December 2001 |
| Docket Number | No. 9-01-0707-23.,9-01-0707-23. |
| Parties | INSURANCE PRODUCTS MARKETING, INC. and Donald Feldman, Plaintiffs, v. INDIANAPOLIS LIFE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of South Carolina |
William C. Wood, Jr., James C. Gray, Jr., Columbia, SC, for plaintiffs.
T. Eugene Allen, III, Nexsen Pruet Jacobs & Pollard, LLC, Columbia, SC, for defendant.
In the present action, plaintiffs allege that defendant wrongfully terminated a contract. Plaintiffs are seeking rescission of the contract and a declaratory judgment stating that, due to defendant's conduct, plaintiffs are relieved of their obligations under the contract. Alternatively, plaintiffs are seeking damages for breach of contract.
This matter is before the court on defendant's motion to dismiss for improper venue and lack of subject matter jurisdiction, with supporting brief, and plaintiffs' response to defendant's motion to dismiss.
Plaintiff Donald Feldman is a principal of Insurance Products Marketing, Inc. and is a resident of South Carolina.
Plaintiff Insurance Products Marketing, Inc. ("IPM") is a South Carolina corporation with its principal place of business here. Plaintiff is an independent marketing organization in the business of recruiting general agents for life insurance companies.
Defendant Indianapolis Life Insurance Company is an Indiana company with its principal place of business in Indiana. Defendant is also licensed to conduct business in South Carolina. Plaintiff IPM and defendant entered into a contractual agreement whereby IPM would solicit general agents to write business with defendant. The agreement was called a "Master General Agent Contract."
A forum selection clause was part of the contract. It stated:
This Contract is an Indiana contract and shall be interpreted in accordance with the laws of the State of Indiana. The Master General Agent agrees to subject itself to the jurisdiction of courts in Marion County, Indiana for any legal proceeding arising under this Contract. Master General Agent further agrees that any legal proceeding that it may bring against the Company in connection with this Contract, shall be in Marion County, Indiana.
Following the execution of the contract, plaintiffs recruited over one hundred general agents who were appointed as general agents by defendant. Plaintiffs allege that the recruitment of these agents resulted in a premium volume in excess of $250,000.
Plaintiffs allege that defendant then terminated the agreement for the failure of IPM to hit volume targets of $500,000. Plaintiffs claim defendant's termination eliminated the ability of the appointed general agents to produce additional business for defendant, which undermined those general agents' ability to meet their obligations to defendant for commission advances or expense advances made by defendant.
Defendant allegedly failed to support its own program by mishandling applications and processing the business developed through the general agents, thereby impeding the agents' abilities to meet the target obligations identified by defendant. Plaintiffs claim that all of this operated to their detriment. Such failure and misconduct on the part of the defendant allegedly resulted in defendant prematurely terminating the Agreement.
Plaintiffs originally filed this action with the Circuit Court for Beaufort County, South Carolina, and defendant then removed the case to the United States District Court for the District of South Carolina.
Until relatively recently forum selection clauses were disfavored by the courts, which regarded such clauses as impugning the jurisdiction of the forum court.
Since a decision of the Supreme Court of the United States in 1972, this view has been radically altered. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). Since that time forum selection clauses have been viewed as "prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." Id. 407 U.S. at 10, 92 S.Ct. 1907. Forum selection clauses may be unreasonable if:
(1) their formation was induced by fraud or overreaching; (2) the complaining party `will for all practical purposes be deprived of his day in court' because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law may deprive the plaintiff of a remedy; or (4) their enforcement would contravene a strong public policy of the forum state.
Jewel Seafoods Ltd. v. M/V Peace River, 39 F.Supp.2d 628, 633 (D.S.C.1999) (citing M/S Bremen, 407 U.S. at 10, 92 S.Ct. 1907).
In some forum selection clause cases, a motion to transfer under 28 U.S.C. § 1404(a) is made either alone or as an alternative to a motion to dismiss. In such cases, a separate analysis is required for each motion.2
Here, only a motion to dismiss was filed.
As noted above, the motion to dismiss was filed pursuant to FED. R. CIV. P. 12(b)(3), on the basis of improper venue. The motion also states "because of the parties' choice of forum clause ... this court lacks subject matter jurisdiction over this action." Some courts have considered motions to dismiss on the basis of forum selection clauses as motions going to the subject matter jurisdiction of the court, while others have considered a complaint alleging a contract containing such a clause as not stating a claim for relief.3 Many have used the device employed by the defendant here and consider the motion to dismiss as one raising improper venue.4
It seems clear to this court that the subject matter jurisdiction of the court is established if proper under the applicable statutes, here the diversity statute. Further, a claim for relief is stated if the required allegations supporting the substantive claim are made, although the forum where the case is to be heard may be in question. Venue is also proper if the requirements of the federal venue statutes have been met. Here, for example, the propriety of venue under 28 U.S.C. §§ 1391 and 1441, et seq. is not challenged.
This court, therefore, concludes that the proper approach is to regard a motion raising a forum selection clause, however labeled, as one to specifically enforce the clause. See M/S Bremen, 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972); Shell v. R.W. Sturge Ltd., 55 F.3d 1227, 1229 (6th Cir.1995); Licensed Practical Nurses v. Ulysses Cruises, Inc., 131 F.Supp.2d 393, 407-09 (S.D.N.Y.2000) (extensive discussion).
This approach gives the federal jurisdictional and venue statutes their due effect. See discussion in Licensed Practical Nurses, 131 F.Supp.2d at 404. The issue of the forum selection clause may be raised, however, by a motion to dismiss, for want of a better device, on the ground that an affirmative defense to the forum court's hearing the matter appears on the face of the complaint.
If, however, the issue is whether specifically to enforce a clause of a contract, should not state law apply, including its public policy regarding the forum selection clause? At least two courts have so held. Farmland Industries, Inc. v. Frazier-Parrott Commodities, 806 F.2d 848, 852 (8th Cir.1986), rev'd on other grounds, Lauro Lines S.R.L. v. Chasser, 490 U.S. 495, 109 S.Ct. 1976, 104 L.Ed.2d 548 (1989), and General Engineering Corp. v. Martin Marietta Alumina, Inc., 783 F.2d 352, 356-57 (3d Cir.1986).5
Nevertheless, the vast majority of circuits have held that federal law applies to all questions regarding the propriety of the forum for an action, including application of a forum selection clause.6 In strong dicta, the Fourth Circuit has indicated it favors the majority view.7
A formal Erie analysis bears out the validity of this view. Although Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) concerned a motion to transfer under § 1404(a), its teachings are also instructive in dealing with the motion to dismiss.
In Stewart, the Supreme Court, applying principles announced in Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817 82 L.Ed. 1188 (1938), held that enforcement of a forum selection clause to a § 1404(a)8 motion to transfer in a diversity case is a matter of federal procedural law. The Court reasoned that 28 U.S.C. § 1404(a), governing transfers to another district due to an inconvenient forum, was a federal statute covering the situation. Thus, the Court continued, § 1404(a) controlled despite the fact that forum selection clauses were against the public policy of the forum state.9
State law re-entered the picture, however, when a § 1404(a) analysis was performed. For, said the Stewart Court, that statute provided that no one factor was controlling in deciding whether the case should be transferred. Rather, the usual factors of convenience of the parties, location of witnesses, and the interest of justice applied, but the forum selection clause was an additional factor to be considered in reaching a § 1404(a) determination. The Court observed:
The premise of the dispute between the parties is that Alabama law may refuse to enforce forum-selection clauses ... as a matter of state public policy. If that is so, the District Court will have either to integrate the factor of the forum-selection clause into its weighing of considerations as prescribed by Congress, or else to apply, as it did in this case, Alabama's categorical policy disfavoring forum-selection clauses. Our cases make clear that, as between these two choices... the instructions of Congress are supreme.
* * * * * *
Section 1404(a) directs a district court to take account of factors other than those that bear solely on the parties' private ordering of their affairs. The district court also must weigh in the balance the convenience of the...
To continue reading
Request your trial
-
Kerobo v. Southwestern Clean Fuels, Corp.
...Cir.1990). 3. See e.g., Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509 (9th Cir.1988); Insurance Products Marketing, Inc. v. Indianapolis Life Ins., 176 F.Supp.2d 544 (D.S.C.2001). 4. See Jones v. GNC Franchising, Inc., 211 F.3d 495 (9th Cir.2000); International Software Systems ......
-
Lesavoy v. Lane
...92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), South Carolina views forum selection clauses as "prima facie valid." Ins. Prods. Mktg., Inc. v. Indianapolis, 176 F.Supp.2d 544, 546 (D.S.C.2001) (quoting Bremen, 407 U.S. at 10, 92 S.Ct. 1907). South Carolina enforces forum selection clauses unless the......
-
Outek Caribbean Distributors, Inc. v. Echo, Inc., No. CIV.01-1684(HL).
...one of the many factors to be considered in a determination to transfer under section 1404(a). See Ins. Products Mktg. v. Indianapolis Life, 176 F.Supp.2d 544, 550 n. 19 (D.S.C.2001). To sum up, in the present case the convenience of the witnesses and of the parties are factors which do not......
-
Albemarle Corp. v. AstraZeneca UK Ltd.
...Atl. Floor Servs., Inc. v. Wal-Mart Stores, Inc., 334 F.Supp.2d 875, 877 (D.S.C.2004). But see Ins. Prod. Mktg., Inc. v. Indianapolis Life Ins. Co., 176 F.Supp.2d 544, 550 (D.S.C.2001); accord Consol. Insured Benefits, Inc. v. Conseco Med. Ins. Co., 370 F.Supp.2d 397, 401 (D.S.C.2004). Four......