Motors v. Snap-on Equip. Inc
| Decision Date | 06 December 2010 |
| Docket Number | CIVIL ACTION No. 10-4086-KHV-DJW |
| Court | U.S. District Court — District of Kansas |
| Parties | STEVE STREIT D/B/A/ S & S MOTORS, Plaintiff, v. SNAP-ON EQUIPMENT, INC., Defendant. |
In the District Court of Saline County, Kansas, Steve Streit d/b/a S & S Motors brought this action for breach of contract and breach of warranties, and violation of the Kansas Consumer Protection Act ("KCPA" or "Act"), against Snap-on Equipment, Inc. See Petition attached to Notice Of Removal (Doc. #1) (hereinafter "Petition"). Snap-on removed the case to federal court based diversity jurisdiction. Doc. #1. This matter comes before the Court on Defendant Snap-on Equipment, Inc.'s Motion To Dismiss For Improper Venue (Doc. #8) filed July 30, 2010. For the reasons stated below, the Court sustains defendant's motion to dismiss.
The Court considers a motion to dismiss for improper venue under Rule 12(b)(3), Fed. R. Civ. P. See Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 956 (10th Cir. 1992). Plaintiff bears the burden of establishing that venue is proper and all factual disputes are resolved in plaintiff's favor. Black & Veatch Constr., Inc. v. ABB Power Generation, Inc., 123 F. Supp. 2d 569, 572 (D. Kan. 2000). In ruling on the motion, the Court may consider matters outside the pleadings without converting it to a motion for summary judgment. Black & Veatch, 123 F. Supp. 2d. at 572; Topliff v. Atlas Air, Inc. 60 F. Supp. 2d 1175, 1176 (D. Kan. 1999).
Steve Streit is a sole proprietor who runs a business in Salina, Kansas under the trade name S & S Motors. Snap-on Equipment, Inc. is a Delaware corporation with its principal place of business in Wisconsin.1 On January 17, 2008, Streit entered into a contract with Snap-on Equipment to purchase vehicle alignment equipment including a vehicle lift and wheel balancer. The contract is memorialized in a two-page "Sale Agreement." The first page of the agreement, directly above plaintiff's signature, states as follows:
BUYER ACKNOWLEDGES THAT IT HAS READ THIS SALE AGREEMENT, UNDERSTANDS IT AND AGREES TO BE BOUND BY THE TERMS AND CONDITIONS SET FORTH ON PAGES 1 AND 2 SIDES HERE OF, INCLUDING WARRANTY, DISCLAIMER, AND LIMITATION OF LIABILITY.
Snap-on Equipment, Inc.'s Brief In Support Of Its Motion To Dismiss For Improper Venue (Doc. #9) at 2 (); Sale Agreement, Ex. 1 attached to Doc. #1 (hereinafter "Sale Agreement"). The second page of the agreement, which plaintiff alleges he never received, contains many of the terms and conditions that govern the parties' agreement. It states, in part, as follows:
BUYER FURTHER AGREES THAT ANY ACTION TAKEN BY BUYER AGAINST SELLER RELATING TO THIS AGREEMENT OR ANY PROVISIONS, RIGHTS OR REMEDIES HEREOF SHALL BE TAKEN ONLY IN THE COURTS OF THE STATE OF WISCONSIN AND SHALL NOT BE TAKEN IN ANY OTHER JURISDICTION.
Doc. #9 at 2 (); Sale Agreement.
Streit sued Snap-on Equipment for breach of contract and breach of warranties, and for violating the Kansas Consumer Protection Act, in the District Court of Saline County, Kansas. Petition at 1, 3-6. Snap-on Equipment removed the case to federal court and now asks this Court to dismiss the action for improper venue based on the forum selection clause on the second page of the parties' agreement. Doc. #8. Defendant asserts that a Wisconsin court is the only proper forum for this action. Doc. #8 ¶ 3.
For purposes of this motion, the Court must accept as true plaintiff's assertion that he did not receive the second page of the Sale Agreement, which contained the forum selection clause, when he signed the form. See Black & Veatch, 123 F. Supp. 2d at 577 (). The Court, therefore, faces two questions: (1) whether the forum selection clause is part of the parties' agreement and, if so, (2) whether the clause is valid and requires dismissal.
A federal court exercising diversity jurisdiction must apply state law to determine whether a forum selection clause is part of the parties' agreement. Black & Veatch, 123 F. Supp. 2d at 577; M.K.C. Equip. Co. v. M.A.I.L. Code, Inc., 843 F. Supp. 679 (D. Kan. 1994). To determine which state's law to apply, the Court looks to the choice of law rules of the state in which it is sitting. Shearson Lehman Bros., Inc. v. M & L Invs., 10 F.3d 1510, 1514 (10th Cir. 1993). Under Kansas law, the law of the state where a contract is formed governs the contract, unless the parties properly agree to apply the law of a different state. Black & Veatch, 123 F. Supp. 2d at 577; Heatron, Inc. v. Shackelford, 898 F. Supp. 1491, 1499 (D. Kan. 1995). Here, plaintiff indicates (but does not expressly state) that the contract was formed in Kansas. See Petition ¶ 14. Defendant does not state where the contract was formed, but asserts that Wisconsin law should govern because the Sale Agreement states that the contract is "deemed to have been made in Kenosha, Wisconsin." Doc. #9 at 2-3. This provision appears on page two of the agreement, however, and its enforceability is therefore at issue. This dilemma is easily avoided because Wisconsin and Kansas law each allow contract terms to be incorporated by reference. See Sw. Nat'l Bank v. Simpson & Son, Inc., 14 Kan. App. 2d 763, 770, 799 P.2d 512, 518-19 (1991); Martinson v. Brooks Equip. Leasing, Inc., 36 Wis. 2d 209, 217, 152 N.W.2d 849, 853 (1967).2
Under both Kansas and Wisconsin law, a document that is not present when parties enter a contract may nevertheless be incorporated by reference so long as the contract clearly identifies the document to be incorporated and the parties intend to incorporate it. See Sw. Nat'l Bank, 14 Kan. App. 2d at 770, 799 P.2d at 518-19 (); Martinson, 36 Wis. 2d at 217, 152 N.W.2d at 853 (). Here, page one of the Sale Agreement clearly, in all capital letters directly above plaintiff's signature, incorporated page two of the agreement. See Sale Agreement ( ). Plaintiff argues that page two is not incorporated because he did not intend to assent to its terms and conditions. Plaintiffs subjective intent, however, cannot trump his objective assent to both pages of the contract when he signed page one. See Sw. Nat'l Bank, 14 Kan. App. 2d at 770, 799 P.2d at 518-19; Martinson, 36 Wis. 2d at 217, 152 N.W.2d at 853. Therefore, page two of the agreement is incorporated into the parties' contract.
Because the forum selection clause is incorporated by reference into the parties' contract, the next question is whether the clause is valid and enforceable. A federal court exercising diversity jurisdiction determines the application of a forum selection clause under federal law. Black & Veatch, 123 F. Supp. 2d at 577. Forum selection clauses are prima facie valid and should be enforced unless a party can show that enforcement would be unreasonable or unjust. Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). Plaintiff therefore bears a heavy burden to overcome the forum selection clause. Id. at 14. Freely negotiated forum selection clauses that are "unaffected by fraud, undue influence, or overweeneing bargaining power" are enforceable. Id. at 12. An enforceable forum selection clause must "clearly confine litigation to specific tribunals at the exclusion of all others." SBKC Serv. Corp. v. 1111 Prospect Partners, L.P., 105 F.3d 578, 582 (10th Cir. 1997).3
Plaintiff argues that enforcement of the forum selection clause would be unjust and unreasonable because (1) the parties have unequal bargaining power, (2) he is a sole proprietor in Kansas and cannot afford to maintain out-of-state litigation in Wisconsin, (3) the forum selection clause does not apply to his Kansas Consumer Protection Act claims and (4) Wisconsin has no reasonable relation to the lawsuit. Doc. #2-5.
Plaintiff asserts that the parties' inability to agree on whether page two of the Sale Agreement is incorporated by reference is proof of unequal bargaining power. Doc. #10 at 2. Adverse and irreconcilable litigation positions, however, are not proof of unequal bargaining power. Plaintiff also argues that if the contract includes both pages of the agreement, it is an adhesion contract. Doc. #10 at 2-3. An adhesion contract is a standardized contract offered to consumers on a take-it-or-leave-it basis without giving the consumer a realistic opportunity to bargain, and under such conditions that the consumer cannot get the desired product or service except by acquiescing to the seller's terms. Time Warner Enter. Co. v. Atriums Partners, 232 F. Supp. 2d 1257, 1264 (D. Kan. 2002); Associated Bank Nat'l Ass'n v. Byrne, No. 09-CV-511, 2010 WL 1507177, at *2 (E.D. Wis. April 12, 2010). Plaintiff does not allege facts which suggest that this transaction involved an overbearing seller and a powerless buyer, as opposed to an arm's-length commercial transaction between two businesses. Moreover, plaintiff does not assert that he could not obtain the equipment he needed unless he acquiesced to defendant's terms. Regardless, a forum selection clause in an adhesion contract is not necessarily unenforceable. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 587-88 (1991) ().
Plaintiff argues that enforcing the forum selection clause would "work a substantial hardship and...
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