Morgan Bank (Delaware) v. Wilson, 2

CourtCourt of Appeals of Arizona
Citation794 P.2d 959,164 Ariz. 535
Docket NumberNo. 2,CA-CV,2
PartiesMORGAN BANK (DELAWARE) a Delaware corporation, Plaintiff/Appellant, v. James C. WILSON and Grace R. Wilson, Defendants/Appellees. 90-0034.
Decision Date03 May 1990


This appeal arises out of the execution of an installment purchase and security agreement and promissory note between the seller, Lasma Arabians, Ltd., an Arizona corporation, (Lasma) and the appellee buyers, James C. and Grace R. Wilson, Colorado residents (Wilson), which was subsequently assigned by Lasma to the appellant, Morgan Bank, a Delaware corporation (Morgan Bank). When Wilson defaulted on the note, Morgan Bank brought suit in Arizona and the trial court granted Wilson's motion to dismiss for lack of personal jurisdiction with prejudice. Morgan Bank appeals the dismissal and we reverse.


Lasma is a Florida limited partnership which owns and operates an Arabian horse farm in Oldham County, Kentucky, and whose general partner is an Arizona corporation. On October 24, 1985, Lasma and Wilson negotiated and executed an agreement and promissory note for the purchase of two Arabian horses in Kentucky.

The Installment Purchase and Security Agreement at paragraph 4 noted that the unpaid balance of the cash price was evidenced by the promissory note executed on that same date. The promissory note contains the following language: "This is the Note referred to in the Installment Purchase and Security Agreement between the same parties of even date herewith, and is secured according to the Security Agreement contained therein." The purchase price was $1,125,000. Wilson paid $225,000 upon execution. The balance of $900,000 plus interest was due in installments as evidenced by the promissory note executed contemporaneously with the purchase and security agreement. The note provided that payment was to be made to Lasma Arabians, Ltd., in Scottsdale, Arizona. Lasma subsequently assigned its interest in the purchase agreement and note to Morgan Bank. Wilson was notified of the assignment in a June 3, 1986, letter received from Morgan Bank. The letter stated:

Please forward all future payments directly to the following:

Morgan Bank (Delaware)

c/o Lasma Arabians, Ltd.,

Collection Agent

3116 E. Shea, Suite ' 215

Phoenix, Arizona 85028

The installment purchase agreement included the following provision:


This contract shall be construed and governed by the laws of the state indicated above the signature lines. At the option of Seller, jurisdiction and venue for any dispute arising under or in relation to this contract shall be only in the Seller's state and county, as set forth in paragraph 1 above. In the event lawsuit is brought with respect to this contract (or seller reposseses), the prevailing party shall be entitled to reasonable attorneys' fees.

Typed into the blanks above the signature lines designating city, county and state, was: LaGrange, Oldham, Kentucky. These were also the lines which designated the place where the agreement was executed. Paragraph 1 contained the seller's state and county: Arizona, Maricopa County.


Following the June 3, 1986, notification of assignment, Wilson sent payments to Morgan Bank's collection agent Lasma in Arizona. On May 4, 1987, Wilson filed suit in Kentucky against Lasma alleging violations of the express warranties in the agreement regarding the health, soundness and fertility of one of the horses purchased, and demanding complete or partial rescission. Wilson defaulted on the note in July 1987. Standing in the shoes of the seller/assignor, Morgan Bank filed suit against Wilson in Arizona on April 8, 1988. Wilson filed a second suit in Kentucky for a declaratory judgment regarding its obligations under the assigned agreement and note on May 13, 1988. There is no further evidence in the record regarding the Kentucky actions except that they are pending. On May 16, 1988, Wilson filed a motion to dismiss Morgan Bank's claim in Arizona for lack of personal jurisdiction. Morgan Bank responded that, pursuant to the forum selection clause, jurisdiction was proper in Arizona. Without explanation, the trial court granted the motion. Morgan Bank raises the following issues: (1) the trial court erred in granting the motion to dismiss because personal jurisdiction was proper under the forum selection clause; and (2) even if the dismissal was appropriate, the trial court erred by dismissing the claims with prejudice.


The trial court granted Wilson's motion to dismiss for lack of personal jurisdiction; there were no factual findings. The relevant facts appear to be undisputed. A "determination that personal jurisdiction can be properly exercised is a question of law, reviewable de novo when the underlying facts are undisputed." Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 784 F.2d 1392, 1396 (9th Cir.1986) . 1 See also, Tovrea Land & Cattle Co. v. Linsenmeyer, 100 Ariz. 107, 412 P.2d 47 (1966); City of Scottsdale v. Thomas, 156 Ariz. 551, 753 P.2d 1207 (App.1988).


There are three types of activities by a defendant which may allow a court to assert personal jurisdiction over that defendant: (1) consent; (2) presence in the forum; (3) causing effects in the forum. Ruggieri v. General Well Serv., Inc., 535 F.Supp. 525 (D.Colo.1982).

Personal jurisdiction is a right which may be waived. A litigant may enter into a variety of legal arrangements in which express or implied consent to the personal jurisdiction of the court is given. Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703, 102 S.Ct. 2099, 2105, 72 L.Ed.2d 492, 502 (1982). In view of present-day commercial realities, most courts recognize that parties may include contractual provisions for resolving controversies in a particular jurisdiction. National Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 84 S.Ct. 411, 11 L.Ed.2d 354 (1964); Pelleport Investors v. Budco Quality Theatres, Inc., 741 F.2d 273, 280 (9th Cir.1984); Chase Third Century Leasing Co. v. Williams, 782 S.W.2d 408 (Mo.App.1989).

The United States Supreme Court has held that enforcement of such forum selection provisions does not offend due process where they have been fully negotiated and are not unreasonable and unjust. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, n. 14, 105 S.Ct. 2174, 2182, n. 14, 85 L.Ed.2d 528, 540 n. 14 (1985). That specific test, adopted in M/S Bremen v. Zappata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), has been embraced by some state courts, Societe Jean Nicolas Et Fils v. Mousseux, 123 Ariz. 59, 597 P.2d 541 (1979), Int'l Collection Serv., Inc. v. Gibbs, 147 Vt. 105, 510 A.2d 1325 (1986); and it has been modified by some, Prudential Resources Corp. v. Plunkett, 583 S.W.2d 97 (Ky.App.1979). Where a forum selection clause is held enforceable, the necessity for a due process analysis of the type and extent of the defendant's contacts with the forum, Burger King Corp. v. Rudzewicz, supra; Batton v. Tennessee Farmers Mut. Ins. Co., 153 Ariz. 268, 736 P.2d 2 (1987); Taylor v. Fireman's Fund Ins. Co. of Canada, 161 Ariz. 432, 778 P.2d 1328 (App.1989), is obviated. National Equip. Rental, Ltd. v. Polyphasic Health Sys's, Inc., 141 Ill.App.3d 343, 95 Ill.Dec. 569, 490 N.E.2d 42 (1986) (upholding consent to jurisdiction clause does not violate due process even though no minimum contacts existed between defendants and State of New York); Int'l Collection Serv., Inc. v. Gibbs, supra, (due process analysis of minimum contacts unnecessary as long as forum selection clause is enforceable). Thus, assuming that the forum selection clause is enforceable, Wilson consented to jurisdiction in Arizona.


Morgan Bank argues that Arizona law should be applied in determining the enforceability of the forum selection clause of this agreement. Our supreme court has held that:

[A] forum selection clause that is fairly bargained for and not the result of fraud will be enforced so long as to do so is reasonable at the time of litigation and does not deprive a litigant of his day in court. The burden of so showing falls upon the party challenging the validity of the clause.

Societe Jean Nicolas Et Fils v. Mousseux, 123 Ariz. at 61, 597 P.2d at 543.

Wilson contends that Kentucky law should govern because of the choice of law provision set forth in the agreement. Prudential Resources Corp. v. Plunkett, supra, discusses the enforceability of forum selection clauses under Kentucky law. The Prudential court held that if suit in the selected forum would be unfair or unreasonable, it would not be enforced. In analyzing what would be reasonable and fair, the court looked at whether the clause was freely negotiated, whether the selected forum was a seriously inconvenient place for trial, and whether Kentucky had more than a minimal interest in the lawsuit.

The distinction between application of Arizona and Kentucky law is that Kentucky law looks to convenience and the state's interest in the lawsuit, and Arizona does not weigh such factors. However, we believe that under either Arizona or Kentucky law, the result is the same in the present case, and therefore do not decide which law applies.

Under either Arizona or Kentucky law, one factor to be analyzed is whether the agreement was freely negotiated. Wilson argues that the forum selection clause was the result of overreaching by Lasma. There is no indication...

To continue reading

Request your trial
21 cases
  • Ader v. Estate of Felger, 2 CA–CV 2015–0170
    • United States
    • Court of Appeals of Arizona
    • May 27, 2016
    ...plaintiff, defendant may be 375 P.3d 109 designated “by any name” and “amended accordingly”); see also Morgan Bank (Delaware) v. Wilson , 164 Ariz. 535, 537, 794 P.2d 959, 961 (App.1990) (personal jurisdiction may be waived). As explained above, a personal representative can still be appoin......
  • Davis Media Group, Inc. v. Best Western Intern., No. RDB-03-2712.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • February 12, 2004 251; accord Morgan Bank v. Page 468. Wilson, 164 Ariz. 535, 536-39, 794 P.2d ...) [its] formation was induced by fraud or overreaching"; (2) the complaining party "will for all practical purposes be ......
  • Bohreer v. Erie Ins. Exchange, 1 CA-CV 06-0277.
    • United States
    • Court of Appeals of Arizona
    • August 16, 2007
    ...jurisdiction based upon appointment of agent for service of process as required by statute). See also Morgan Bank (Delaware) v. Wilson, 164 Ariz. 535, 537, 794 P.2d 959, 961 (App.1990) (noting that consent, presence in the forum and causing effects in the forum are three types of activities......
  • Arizona Tile, L.L.C. v. Berger, 1 CA-CV 08-0763.
    • United States
    • Court of Appeals of Arizona
    • February 2, 2010
    ...Id. (citation omitted). We review the superior court's exercise of personal jurisdiction de novo. Morgan Bank (Delaware) v. Wilson, 164 Ariz. 535, 536-37, 794 P.2d 959, 960-61 (App.1990). ¶ 9 In their motion,4 the Bergers contended that they were California residents, had not personally gua......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT