Keelean v. Central Bank of the South

• Decision Date: 07 April 1989
• Citation: 544 So.2d 153
• Parties: Robert G. KEELEAN and Albert J. Geiger, Jr. v. CENTRAL BANK OF THE SOUTH. Thomas V. SLAUGHTER v. CENTRAL BANK OF THE SOUTH. 87-689, 87-690.
• Court: Alabama Supreme Court

Page 153

544 So.2d 153

Robert G. KEELEAN and Albert J. Geiger, Jr. v. CENTRAL BANK OF THE SOUTH.

Thomas V. SLAUGHTER v. CENTRAL BANK OF THE SOUTH.

87-689, 87-690.

Supreme Court of Alabama.

April 7, 1989.

Sydney Lavender, Gilbert E. Johnston, Jr. and Robert S. Vance, Jr. of Johnston, Barton, Proctor, Swedlaw & Naff, Birmingham, for appellant Robert G. Keelean.

Lee R. Benton of Schoel, Ogle, Benton, Gentle & Centeno, Birmingham, for appellant Albert J. Geiger, Jr.

Michael J. Evans of Longshore, Evans & Longshore, Birmingham, for appellant Thomas V. Slaughter.

Michael L. Edwards and Martha F. Petrey of Balch & Bingham, Birmingham, for appellee.

ADAMS, Justice.

This is an interlocutory appeal pursuant to Rule 5(a), A.R.App.P., from an order of the Circuit Court for Jefferson County denying defendants' motions to dismiss for lack of personal jurisdiction. We affirm.

In November 1984, Holdco of Pinellas County, Inc. ("Holdco"), a Florida corporation, executed and delivered to Central Bank of the South ("Central Bank"), an Alabama banking corporation, a promissory note with a principal amount of $4,000,000. All negotiations regarding the promissory note took place either via telephone between representatives of Holdco and Central Bank, or in Florida between representatives of Holdco and Central Bank. The promissory note was guaranteed by several individuals, including appellants/guarantors, Robert G. Keelean, Albert Geiger, Jr., and Thomas V. Slaughter, who all delivered their continuing unlimited guarantees to Central Bank for the debts, obligations, and liabilities of Holdco. No evidence was presented that any of the individual guarantors participated in the promissory note negotiations.

Holdco defaulted on the promissory note. Central Bank filed suit in Jefferson County Circuit Court on the debt on August 11, 1987. ¹ Central Bank named Holdco, Keelean, Geiger, and Slaughter as defendants in this action. The guaranty signed by Keelean, Geiger, and Slaughter contained a forum selection clauses, which stated in pertinent part:

"(13) This Guaranty and the rights and obligations of the Guarantor and the Bank hereunder shall be governed by and be construed in accordance with the laws of the State of Alabama. Guarantor acknowledges that the negotiation of the provision of this Guaranty took place in the State of Alabama, that this Guaranty was executed in Jefferson County, Alabama, or if executed elsewhere, shall become effective upon Bank's receipt and acceptance of the executed original hereof in said county and state; provided, however, that Bank shall have no obligation to give, nor shall Guarantor be entitled to receive, any notice of such receipt and acceptance for this Guaranty to become a binding obligation of Guarantor. Guarantor acknowledges further that the negotiation, execution and delivery of this Guaranty constitutes the transaction of business within the State of Alabama and that any cause of action arising under this Guaranty will be a cause of action arising from such transaction of business. Guarantor hereby submits himself to jurisdiction in the State of Alabama for any cause of action or action arising out of or in connection with this Guaranty and agrees that venue for any such action shall be in Jefferson County, Alabama. Guarantor hereby waives any and all rights under the laws of any state or jurisdiction to object to venue or jurisdiction within Jefferson County, Alabama."

Central Bank uses this language to assert that the court has personal jurisdiction in Jefferson County, Alabama, over the guarantors to Holdco's obligation to Central Bank.

Three issues are presented by this appeal:

I. Whether forum selection clauses are void as against public policy in this State.

II. Whether signing a guaranty out of state that will have economic effects in this State will satisfy Alabama's long-arm requirement that a defendant have contacts with Alabama sufficient for an Alabama court to properly exercise jurisdiction over that party.

III. Whether the interests of justice warrant the application of the doctrine of forum non conveniens.

I.

The general rule regarding forum selection clauses in this State was articulated in Redwing Carriers, Inc. v. Foster, 382 So.2d 554 (Ala.1980), where we wrote:

"We must determine whether parties may contractually divest a court of its jurisdiction. In Alabama, parties cannot confer jurisdiction by consent. Koppers Company v. Gulf Welding and Construction, Inc., 285 Ala. 331, 231 So.2d 896 (1970). We have not been cited to a case in this jurisdiction, nor has our research revealed one which is exactly in point. The Court of Civil Appeals dealt with a similar situation in Hester v. Clinic Masters, Inc., 371 So.2d 915 (Ala.Civ.App.1979). There, however, the foreign court had already assumed jurisdiction of the cause. We adopt the majority rule stated in 56 A.L.R.2d § 4, p. 306, to the effect that:

" '... contractual agreements by which it is sought to limit particular causes of action which may arise in the future to a specified place, are held invalid.' "

382 So.2d at 556. We addressed this issue again in Conticommodity Services, Inc. v. Transamerica Leasing, Inc., 473 So.2d 1053 (Ala.1985), in which we affirmed the rule in Redwing Carriers.

Appellants rely on our holdings in Redwing Carriers and Conticommodity Services, to invalidate the forum selection clause in the guaranty contracts. Central Bank, on the other hand, attempts to distinguish and/or redefine our holding in Redwing Carriers by arguing 1) that Redwing Carriers stands for the proposition that a forum selection clause is valid as long as it does not divest an Alabama court of jurisdiction; and 2) that Redwing Carriers applies only to subject matter jurisdiction, not personal jurisdiction. We must disagree with Central Bank on both counts. Our holding in Redwing Carriers, supra, specifically stated:

"We consider contract provisions which attempt to limit the jurisdiction of the courts of this state to be invalid and unenforceable as being contrary to public policy. Parties may not confer jurisdiction by consent, nor may they limit the jurisdiction of a court by consent."

382 So.2d at 556.

Thus, we treat forum selection clauses as invalid, and we cannot consider this one valid simply because it does not divest an Alabama court of jurisdiction. We expressly hold, also, that Redwing Carriers, supra, includes personal jurisdiction as well as subject matter jurisdiction.

II.

We next determine whether in this case in personam jurisdiction exists in an Alabama court via Alabama's long-arm rule. Rule 4.2(a)(2), A.R.Civ.P., sets out the bases for personal jurisdiction over nonresident defendants. It provides:

"(2) Sufficient Contacts. A person has sufficient contacts with the state when that person, acting directly or by agent, is or may be legally responsible as a consequence of that person's

"(A) transacting any business in this state;

"(B) contracting to supply services or goods in this state;

"(C) causing tortious injury or damage by an act or omission in this state including but not limited to actions arising out of the ownership, operation or use of a motor vehicle, aircraft, boat or watercraft in this state;

"(D) causing tortious injury or damage in this state by an act or omission outside this state if the person regularly does or solicits business, or engages in any other persistent course of conduct or derives substantial revenue from goods used or consumed or services rendered in this state;

"(E) causing injury or damage in this state to any person by breach of warranty expressly or impliedly made in the sale of goods outside this state when the person might reasonably have expected such other person to use, consume, or be affected by the goods in this state, provided that the person also regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;

"(F) having an interest in, using, or possessing real property in this state;

"(G) contracting to insure any person, property, or risk located within this state at the time of contracting;

"(H) living in the marital relationship within this state notwithstanding subsequent departure from this state, as to all obligations arising from alimony, custody, child support, or property settlement, if the other party to the marital relationship continues to reside in this state; or

"(I) otherwise having some minimum contacts with this state and, under the circumstances, it is fair and reasonable to require the person to come to this state to defend an action. The minimum contacts referred to in this subdivision (I) shall be deemed sufficient, notwithstanding a failure to satisfy the requirement of subdivisions (A)-(H) of this subsection (2), so long as the prosecution of the action against a person in this state is not inconsistent with the constitution of this state or the Constitution of the United States."

Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), requires that a nonresident defendant have certain minimum contacts with a state in order for that state's courts to acquire personal jurisdiction over that defendant. A twofold analysis is used in this state in determining whether personal jurisdiction exists over a nonresident defendant:

1) the determination of whether it is foreseeable to that nonresident defendant that he will be sued in this state; and 2) the determination of the degree of contact that the nonresident defendant has with this state.

See Alabama Waterproofing Co. v. Hanby, 431 So.2d 141 (Ala.1983); Duke v. Young, 496 So.2d 37 (Ala.1986); and Shrout v. Thorsen, 470 So.2d 1222 (Ala.1985). Appellants/guarantors argue first that although the Central Bank loan to Holdco and Holdco's subsequent default on that loan had a substantial impact on the economy of the State of...