Omne Financial, Inc. v. Shacks, Inc., Docket No. 190550

• Decision Date: 14 November 1997
• Docket Number: Docket No. 190550
• Citation: 573 N.W.2d 641,226 Mich.App. 397
• Parties: OMNE FINANCIAL, INC., Plaintiff-Appellee, v. SHACKS, INC. and Lee Shacks, Jr., Defendants-Appellants.
• Court: Court of Appeal of Michigan — District of US

Page 641

573 N.W.2d 641

226 Mich.App. 397

OMNE FINANCIAL, INC., Plaintiff-Appellee, v. SHACKS, INC. and Lee Shacks, Jr., Defendants-Appellants.

Docket No. 190550.

Court of Appeals of Michigan.

Submitted May 14, 1997, at Lansing.

Decided Nov. 14, 1997, at 9:35 a.m.

Released for Publication Feb. 10, 1998.

John D. Alli, Berkley, for plaintiff-appellee.

Henry G. Marsh, Saginaw, for defendants-appellants.

Before NEFF, P.J., and WAHLS and TAYLOR, JJ.

WAHLS, Judge.

This case presents us with the question whether a contractual agreement that seeks to establish the venue of potential causes of action that might accrue after the execution of the agreement is enforceable. We hold that it is not.

Pursuant to a lease, North American Interstate, Inc., was to provide defendant Shacks, Inc., with two jukeboxes and two pool tables in return for fixed monthly payments. The lease contained a provision dictating venue for any cause of action arising under the lease:

This lease shall not be effective until signed by the Lessor at our offices. This lease shall be construed to have been executed in the State of Michigan and shall be interpreted in accordance with the law and regulations of the State of Michigan. Lessee hereby agrees to jurisdiction in Michigan in the case of any action, suit or proceeding arising out of this lease and venue shall be in the district court for the 45A Judicial District (if the damages involved are in excess of $10,000 then the circuit court for the county of Oakland). Lessee hereby acknowledges that Lessee has transacted business in the State of Michigan by entering into the lease, and that the jurisdiction, choice of law and venue provisions of this lease are specifically negotiated terms of this lease. (Emphasis added.)

Defendant Lee Shacks, Jr., personally guaranteed the payments. The lease was subsequently assigned to plaintiff.

Plaintiff filed suit in the Oakland Circuit Court alleging that defendants breached the lease agreement and guaranty by failing to make the required payments. Defendants then filed a motion to change venue on the ground that venue was improper in Oakland County. The trial court denied defendants' motion, and defendants now appeal by leave granted.

In Michigan, venue is controlled by statute. Plaintiff's suit included claims for contract damages and for return of the leased property. ¹ The venue statute applicable to contract claims, M.C.L. § 600.1621; M.S.A. § 27A.1621, ² reads:

Except for actions provided for in sections 1605, 1611, 1615, and 1629, venue is determined as follows:

(a) The county in which a defendant resides, has a place of business, or conducts business, or in which the registered office of a defendant corporation is located, is a proper county in which to commence and try an action.

(b) If none of the defendants meet 1 or more of the criteria in subdivision (a), the county in which a plaintiff resides or has a place of business, or in which the registered office of a plaintiff corporation is located, is a proper county in which to commence and try an action.

(c) An action against a fiduciary appointed by court order shall be commenced in the county in which the fiduciary was appointed.

The venue statute applicable to the recovery of tangible personal property, M.C.L. § 600.1605; M.S.A. § 27A.1605, reads:

The county in which the subject of action, or any part thereof, is situated, is a proper county in which to commence and try the following actions:

(a) the recovery of real property, or of an estate or interests therein, or for the determination in any form of such right or interest;

(b) the partition of real property;

(c) the foreclosure of all liens or mortgages on real property; and

(d) the recovery of tangible personal property.

There is no statutory provision that specifically permits parties to agree contractually to any other venue.

No Michigan cases have directly addressed the question whether parties may contractually agree to the venue of potential causes of action that might arise after execution of the contract containing the venue provision. The few cases that touch on this issue at all suggest that, where there is an existing cause of action, parties may agree to venue. See Garavaglia v. Dep't of Revenue, 338 Mich. 467, 470, 61 N.W.2d 612 (1953); Grand Trunk Western R Co. v. Boyd, 321 Mich. 693, 699-700, 33 N.W.2d 120 (1948), rev'd on other grounds, 338 U.S. 263, 70 S.Ct. 26, 94 L.Ed. 55 (1949); Nat'l Equipment Rental v. Miller, 73 Mich.App. 421, [226 Mich.App. 402] 425, 251 N.W.2d 611; (1977). ³ These cases do not address the question whether such agreements are enforceable where they conflict with the statutes and court rules regarding venue, nor do they address the question whether such agreements could act as a waiver of a party's right to challenge venue.

In order to determine whether contracts regarding venue are enforceable, we must interpret the statutes that control venue. Statutory interpretation is a question of law, which we review de novo. Long v. Chelsea Community Hosp., 219 Mich.App. 578, 581-582, 557 N.W.2d 157, 219 Mich.App. 578, 557 N.W.2d 157 (1996). In interpreting statutes we must strive to effectuate the intent of the Legislature. Id. at 582, 557 N.W.2d 157. Because the venue statutes do not directly address the question whether parties may contractually agree to venue, we must look beyond the language of the statutes. We begin by exploring the purpose of the venue requirement.

Venue rules are not jurisdictional. M.C.L. § 600.1601; M.S.A. § 27A.1601. Jurisdiction deals with the power of a court to hear a class of cases or the authority of a court to bind the parties. Grebner v. Oakland Co. Clerk, 220 Mich.App. 513, 516, 560 N.W.2d 351 (1996); People v. Eaton, 184 Mich.App. 649, 652-653, 459 N.W.2d 86 (1990), affd. on other grounds, 439 Mich. 919, 479 N.W.2d 639 (1992); Dogan v. Michigan Basic Property Ins. Ass'n, 130 Mich.App. 313, 320, 343 N.W.2d 532 (1983). In contrast, venue rules have been described variously as (1) ensuring "that proceedings are held in the most convenient forum," Gross v. General Motors Corp., 448 Mich. 147, 155, 528 N.W.2d 707 (1995), (2) relating to "the convenience of the litigants," Grand Trunk, supra at 700, 33 N.W.2d 120 (quoting Panhandle Eastern Pipe Line Co. v. Federal Power Comm., 324 U.S. 635, 636, 65 S.Ct. 821, 823, 89 L.Ed. 1241, 1242 [1945]), and (3) "primarily a matter of convenience concerned with where the trial of an action may occur," Kerekes v. Bowlds, 179 Mich.App. 805, 810, 446 N.W.2d 357 (1989). Although the convenience of the parties is often the primary issue in venue disputes, the Michigan Supreme Court has recognized that the venue rules also address other issues:

Courts evaluate convenience primarily in terms of the interests of the parties and any relevant witnesses. However, the primary goal is to minimize the costs of litigation not only by reducing the burdens on the parties, but also by considering the strains on the system as a whole. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 256-257, 102 S.Ct. 252, 266-267, 70 L.Ed.2d 419 (1981); Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507-509, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947). [Gross, supra at 155, 528 N.W.2d 707.]

With this purpose in mind, we now turn to a review of the statutes and court rules governing venue.

The Michigan Supreme Court has recognized that the establishment of venue is within the Legislature's power. Coleman v. Gurwin, 443 Mich. 59, 62, 503 N.W.2d 435 (1993) (citing Barnard v. Hinkley, 10 Mich. 458, 459 [1862] ). The Legislature has passed several general venue statutes, including those at issue here, as well as M.C.L. § 600.1611; M.S.A. § 27A.1611, regarding actions on probate bonds; M.C.L. § 600.1615; M.S.A. § 27A.1615, regarding actions against governmental units; and M.C.L. § 600.1629; M.S.A. § 27A.1629, regarding tort and products liability actions. The Legislature has recently used its power to revise the venue statute for tort actions, with the intent to discourage venue shopping by plaintiffs. M.C.L. § 600.1629; M.S.A. § 27A.1629; Gross, supra at 157, 528 N.W.2d 707. The Legislature has also passed specific venue provisions regarding other actions. For instance, the statute governing child custody actions requires that "if the circuit court of this state does not have prior continuing jurisdiction over a child, the action shall be submitted to the circuit court of the county where the child resides or may be found." M.C.L. § 722.26(2); M.S.A. § 25.312(6)(2). This requirement serves to protect the best interests of children in child custody actions. Kubiak v. Steen, 51 Mich.App. 408, 414, 215 N.W.2d 195 (1974). Thus, it is clear that the Legislature has used its power to establish venue to serve interests beyond the convenience of the parties.

We note that venue is not governed solely by statute. The parties' choice of venue and motions for change of venue are matters of practice and procedure, which are primarily treated by court rule. See Hoffman v. Bos, 56 Mich.App. 448, 454-455, 224 N.W.2d 107 (1974). Where there is a conflict between a court rule and a statute, the court rule should prevail. Id. at 455, 224 N.W.2d 107. Pursuant to MCR 2.221, objections to venue are waived if not raised in a timely manner. ⁴ Huhn v. DMI, Inc., 207 Mich.App. 313, 319, 524 N.W.2d 254 (1994), remanded on other grounds, 450 Mich. 904, 543 N.W.2d 308 (1995). In addition, a trial court, on its own motion, may order a change of venue where the venue of a civil action is improper. MCR 2.223. ⁵

In addition to statutes and court rules, we must also consider the applicable case law regarding venue. In this regard, there are at least two rules articulated in case law that are not found in the statutes or court rules. First, venue is determined at the time a suit is filed. Kerekes, supra at 808, 446 N.W.2d 357; Brown v. Hillsdale Co. Road Comm., 126 Mich.App. 72, 76-78,...