Patriot Leasing Co. v. Kremer Restaurant

• Decision Date: 21 December 2006
• Citation: 915 A.2d 647
• Parties: PATRIOT COMMERCIAL LEASING COMPANY, INC., Appellee v. KREMER RESTAURANT ENTERPRISES, LLC t/a Raintree Country Club and Michael H. Kremer, Appellants (at 3290). Susquehanna Patriot Commercial Leasing Co., Inc., Appellee v. Beaver Dam Golf Management, Inc. d/b/a Beaver Dam Golf Club, Appellant (at 3445). Susquehanna Patriot Commercial Leasing Co., Inc., Appellee v. The Birdie Boys, II, Inc., t/a Boaz Golf Club and Michael C. Parrish, Appellant (at 3450).
• Court: Pennsylvania Superior Court

915 A.2d 647

PATRIOT COMMERCIAL LEASING COMPANY, INC., Appellee v. KREMER RESTAURANT ENTERPRISES, LLC t/a Raintree Country Club and Michael H. Kremer, Appellants (at 3290).

Susquehanna Patriot Commercial Leasing Co., Inc., Appellee v. Beaver Dam Golf Management, Inc. d/b/a Beaver Dam Golf Club, Appellant (at 3445).

Susquehanna Patriot Commercial Leasing Co., Inc., Appellee v. The Birdie Boys, II, Inc., t/a Boaz Golf Club and Michael C. Parrish, Appellant (at 3450).

Superior Court of Pennsylvania.

Argued August 29, 2006.

Filed December 21, 2006.

Staphanie E. Little, Norristown, for Kremer Restaurant, appellant (at 3290).

John J. O'Brien, III, Wynnewood, for Beaver Dam Golf, appellant (at 3445).

Lisa A. Barton, Philadelphia, for Birdie Boys, appellant (at 3450).

Walter H. Flamm, Jr. and Robert J. Krandel, Blue Bell, for appellees.

BEFORE: KLEIN, BOWES and KELLY, JJ.

OPINION BY BOWES, J.:

¶ 1 The issue on appeal is whether a forum selection clause conferring jurisdiction over these actions to Pennsylvania is enforceable. We conclude that the clause is enforceable and affirm.

¶ 2 This appeal concerns three breach of contract actions instituted by Susquehanna Patriot Commercial Leasing Company, Inc., successor in interest to Patriot Commercial Leasing Company, Inc., Appellee, for breach of equipment lease agreements that Appellee, as lessor, entered into with Appellants, as lessees. We have disposed of the three appeals in this single adjudication because all three cases involve the enforceability of the following forum selection clause, "Any legal action concerning this lease shall be brought in federal or state court located within or for Montgomery County, Pennsylvania. You consent to the jurisdiction and venue of federal and state courts in Pennsylvania." This language is contained on the front of each equipment lease agreement, just to the left of the signature lines for the lessees. In each case, Royal Links USA is listed as the dealer for the equipment.

¶ 3 The relevant facts follow. On January 4, 2005, Appellee, a resident of Montgomery County, instituted an action in Montgomery County against Kremer Restaurant Enterprises, LLC t/a Raintree Country Club and Michael H. Kremer, Missouri residents (collectively "Kremer"), seeking accelerated rent in the amount of $33,303.92 plus interest, late fees, and attorney's fees pursuant to a February 28, 2004 equipment lease agreement for two beverage caddy concession carts. Appellee instituted another action in Montgomery County on November 11, 2004, against Beaver Dam Golf Management, Inc., d/b/a/ Beaver Dam Golf Club ("Beaver Dam"), a Wisconsin corporation, for breach of an equipment lease for a beverage concession cart. In the second action, Appellee sought accelerated rent of $14,797.12 plus interest and attorney's fees and late fees. Finally, on November 16, 2004, Appellee filed a complaint in Montgomery County against The Birdie Boys, II, Inc. t/a Boaz Golf Club and Michael C. Parrish (collectively "Birdie Boys"), residents of Alabama, for breach of an equipment lease for two beverage concession carts. Appellee claimed that Birdie Boys owed $36,472.02 in accelerated rent plus interest, late fees, and attorney's fees. The defendants in all three actions (collectively "Appellants") are business enterprises and filed preliminary objections in the respective actions based on a lack of personal jurisdiction. Appellants averred that they lacked contacts with Pennsylvania sufficient to confer personal jurisdiction in this forum.

¶ 4 In response to the preliminary objections, Appellee countered that by executing the equipment leases containing the forum selection clause, Appellants had consented to jurisdiction in Pennsylvania. The trial court agreed with Appellee, and by order dated November 16, 2005, overruled the preliminary objections filed in each action. It concluded that the forum selection clause in the equipment lease agreements was valid under Pennsylvania precedent and, consequently, Appellees had agreed to submit to Pennsylvania jurisdiction. The court also certified this matter for appeal pursuant to Pa.R.A.P. 311(b)(2).¹ These appeals followed.

¶ 5 In this case, we are reviewing the enforceability of a contractual provision. Since the sole issue involves a question of law, we exercise plenary review over the trial court's decision. D & H Distributing Co., Inc. v. National Union Fire Ins. Co., 817 A.2d 1164 (Pa.Super.2003), appeal granted, 574 Pa. 760, 831 A.2d 599 (2003) (contract construction is a question of law and appellate court review is plenary).

¶ 6 We begin our analysis with the Supreme Court's seminal decision in Central Contracting Co. v. C.E. Youngdahl & Co., 418 Pa. 122, 209 A.2d 810 (1965). In that case, the Court ruled that forum selection clauses are presumed to be valid, noting that the "modern and correct rule" permits enforcement "when the parties have freely agreed that litigation shall be conducted in another forum and where such agreement is not unreasonable at the time of litigation." Id. at 133, 209 A.2d at 816. The Court explained that a forum selection clause will be considered unreasonable "only where its enforcement would, under all circumstances existing at the time of litigation, seriously impair [a party's] ability to pursue his cause of action." Id.

Mere inconvenience or additional expense is not the test of unreasonableness since it may be assumed that [the party] received under the contract consideration for these things. If the agreed upon forum is available to [a party] and said forum can do substantial justice to the cause of action then [that party] should be bound by his agreement.

Id. at 133-34, 209 A.2d at 816. Accord Bancorp Group, Inc. v. Pirgos, Inc., 744 A.2d 791 (Pa.Super.2000) (upholding unambiguous forum selection clause).

¶ 7 As noted in Central Contracting, the modern trend is to uphold the enforceability of forum selection clauses where those clauses are clear and unambiguous. E.g., Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972); Secure Financial Service, Inc. v. Popular Leasing USA, 391 Md. 274, 892 A.2d 571 (2006); Ex parte Leasecomm Corp., 879 So.2d 1156 (Alabama 2003); Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hospital, 66 Ohio St.3d 173, 610 N.E.2d 987 (1993); Chase Third Century Leasing Co., Inc. v. Williams, 782 S.W.2d 408 (Mo.App. 1989); Manrique v. Fabbri, 493 So.2d 437 (Fla.1986); ABC Mobile Systems, Inc. v. Harvey, 701 P.2d 137 (Colo.App.1985); Hauenstein & Bermeister, Inc. v. Met-Fab Industries, Inc., 320 N.W.2d 886 (Minn. 1982); Volkswagenwerk, A.G. v. Klippan, GmbH, 611 P.2d 498 (Alaska 1980); Societe Jean Nicholas Et Fils v. Mousseux, 123 Ariz. 59, 597 P.2d 541 (1979); Smith, Valentino & Smith, Inc. v. Superior Court, 17 Cal.3d 491, 131 Cal.Rptr. 374, 551 P.2d 1206 (1976); Reeves v. Chem Industrial Co., 262 Or. 95, 495 P.2d 729 (1972); see also Restatement (Second) of Conflict of Laws § 80 (forum selection clause will be given effect unless unfair or unreasonable).

¶ 8 In light of these controlling principles from Central Contracting and prevailing case law, a forum selection clause in a commercial contract between business entities is presumptively valid and will be deemed unenforceable only when: 1) the clause itself was induced by fraud or overreaching; 2) the forum selected in the clause is so unfair or inconvenient that a party, for all practical purposes, will be deprived of an opportunity to be heard; or 3) the clause is found to violate public policy. We now consider the specific arguments raised by Kremer and Birdie Boys, who maintain that the clause in question is unenforceable because it never was explained to them, and they were not aware of its existence.

¶ 9 The clause at issue states in plain and nonlegal language that "any legal action concerning this lease" must be brought in Pennsylvania and that Appellants consented to the jurisdiction of the state courts in Pennsylvania and specifically Montgomery County. It is settled law that a party is bound by clear and unambiguous language contained in a contract. Standard Venetian Blind Co. v. American Empire Ins. Co., 503 Pa. 300, 305, 469 A.2d 563, 566 (1983) ("Where . . . the language of the contract is clear and unambiguous, a court is required to give effect to that language"); accord De Lage Landen Financial Services, Inc. v. M.B. Management Co., 888 A.2d 895 (Pa.Super.2005). As the language at issue herein is clear and concise, we reject the contention that Appellee was required to explain the clause to Birdie Boys and Kremer.

¶ 10 Similarly, the claim by Birdie Boys and Kremer that they were unaware of the clause is unavailing because failure to read contractual language is not a defense in a contract action. Pennsylvania Manufacturers' Ass'n Insurance Co. v. Aetna Casualty & Surety Insurance Co., 426 Pa. 453, 233 A.2d 548 (1967) (failure to read a contract is neither a defense nor an excuse and will not provide grounds for avoiding the contract or any provision therein); Simeone v. Simeone, 525 Pa. 392, 400, 581 A.2d 162, 165 (1990) (a party is normally bound by an agreement regardless of whether the contractual terms were read and understood); accord De Lage Landen Financial Services, Inc., supra. Indeed, in Bancorp Group, Inc., supra, we held specifically that a forum selection clause could not be avoided based on an averment that the defendant had not read the choice-of-forum language. In this case, the clause is not obscure, and it was placed on the front of the contract in type face consistent with the other provisions. Therefore, Birdie Boys and Kremer cannot avoid its import based on a claim that they did not read the contract.

¶ 11 Citing Churchill Corp. v. Third Century, Inc., 396 Pa.Super. 314, 578 A.2d 532 (1990), and Morgan Trailer...