Preferred Capital v. Ferris Bros.

• Decision Date: 23 November 2005
• Docket Number: No. 22607.,No. 22614.,No. 22615.,No. 22618.,No. 22605.,No. 22613.,No. 22608.,No. 22617.,No. 22611.,No. 22612.,No. 22606.,No. 22610.,No. 22604.,No. 22619.,No. 22609.,No. 22616.,No. 22581.,22581.,22604.,22605.,22606.,22607.,22608.,22609.,22610.,22611.,22612.,22613.,22614.,22615.,22616.,22617.,22618.,22619.
• Citation: 167 Ohio App.3d 653,2005 Ohio 6221,856 N.E.2d 984
• Parties: PREFERRED CAPITAL, INC., Appellant, v. FERRIS BROTHERS, INC. et al.,
• Court: Ohio Court of Appeals

856 N.E.2d 984

167 Ohio App.3d 653

2005-Ohio-6221

PREFERRED CAPITAL, INC., Appellant, v. FERRIS BROTHERS, INC. et al.,

No. 22581.

No. 22604.

No. 22605.

No. 22606.

No. 22607.

No. 22608.

No. 22609.

No. 22610.

No. 22611.

No. 22612.

No. 22613.

No. 22614.

No. 22615.

No. 22616.

No. 22617.

No. 22618.

No. 22619.

Court of Appeals of Ohio, Ninth District, Summit County.

Decided November 23, 2005.

Tamara A. O'Brien and Jason E. Hickman, Akron, for appellant.

Matthew O'Connell, Victoria D. Barto, and Douglas R. Simek, Cleveland, for appellees Ferris Bros., Inc., Carolon Company, Inc., and Ducci Kitchens, Inc.

Richard P. Martin, Stow and David C. Perduk, for appellee Tri County Air Conditioning-Heating, Inc.

Julius P. Amourgis, for appellee Shaw Management Corp.

Mark S. Shearer, Broadview Heights, for appellees Richardson Engineering Group, Inc., Senderx Cargo, Inc., Steger, Gowie & Co., Inc., Su-Ray Insurance Agency, Inc. et al.

Gregory Glick, Cleveland, for appellee Plyley Enterprises, Inc.

James R. Russell Jr., for appellees Scan Tool & Mold, Inc. et al.

Jack B. Cooper and John S. Kaminski, Canton, for appellees Turner's Consumer Appliance Service, Inc. et al.

Bradley A. Wright and Jerome G. Wyss, Akron, for appellees Composition One, Inc., Integrated Employment and Community Enterprises, Pacific Fasterners, Inc., Sailing Associates, Inc., Summerlin, Inc. d.b.a. Summerlin Fence & Feed et al.

PER CURIAM.

{¶ 1} Appellant, Preferred Capital, Inc., appeals from multiple judgments in the Summit County Court of Common Pleas that dismissed its breach-of-lease complaints for lack of personal jurisdiction. This court reverses.

{¶ 2} The substantive facts of this appeal were discussed at length by this court in Preferred Capital, Inc. v. Power Eng. Group, Inc., 163 Ohio App.3d 522, 2005-Ohio-5113, 839 N.E.2d 416, at ¶ 2-9, and they will not be reiterated here. However, we do note that in the instant appeal appellees contest whether the leases that are the subject of this action are negotiable instruments, but that factor is not pertinent to our analysis. The instant appeals¹ involve the same questions of law presented previously, i.e., whether the "floating forum selection" clause presented below is enforceable.

This agreement shall be governed by, construed and enforced in accordance with the laws of the State in which Renter's principal offices are located or, if this Lease is assigned by Renter, the State in which the assignee's principal offices are located, without regard to such State's choice of law considerations and all legal actions relating to this Lease shall be venued exclusively in a state or federal court located within that State, such court to be chosen at Renter or Renter's assignee's sole option. You hereby waive right to a trial by jury in any lawsuit in any way relating to this rental.

In each of these 17 cases, the trial court found that the clause was unenforceable and that Ohio lacked personal jurisdiction over appellees. As a result, the trial court dismissed each of the complaints filed by appellant. Appellant timely appealed the trial court's judgments, raising two assignments of error for our review.

ASSIGNMENT OF ERROR I

The trial court erred in finding that it lacked personal jurisdiction over [appellees] because the applicable contracts contained a valid forum selection clause that conferred jurisdiction upon Ohio courts.

{¶ 3} In its first assignment of error, appellant asserts that the trial court erred in concluding that the forum-selection clause was unenforceable. We agree.

{¶ 4} Although this appeal stems from a Civ.R. 12(B)(2) dismissal, the primary issue before this court concerns a question regarding the trial court's interpretation of the agreement. If the terms of a contract are clear and unambiguous, then their interpretation is a question of law. Beckler v. Lorain City School Dist. (July 3, 1996), 9th Dist. No. 95CA006049, 1996 WL 364974, at *2, citing State ex rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377. Questions of law are reviewed by an appellate court de novo. Butler v. Joshi (May 9, 2001), 9th Dist. No. 00CA0058, 2001 WL 489962, at *2. Because we review questions of law de novo, we do not give deference to the trial court's conclusions. Akron-Canton Waste Oil, Inc. v. Safety-Kleen Oil Serv., Inc. (1992), 81 Ohio App.3d 591, 602, 611 N.E.2d 955; Tamarkin Co. v. Wheeler (1992), 81 Ohio App.3d 232, 234, 610 N.E.2d 1042.

{¶ 5} A forum-selection clause contained in a commercial contract between for-profit business entities is prima facie valid. Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc. (1993), 66 Ohio St.3d 173, 175, 610 N.E.2d 987. The clause will be deemed valid and enforceable absent fraud or overreaching, unless it can be demonstrated that enforcement of the clause would be unreasonable and unjust. Preferred Capital, Inc. v. Sturgil, 9th Dist. No. 21787, 2004-Ohio-4453, 2004 WL 1882865, at ¶ 23, citing Kennecorp, 66 Ohio St.3d 173, 610 N.E.2d 987, syllabus. Additionally, a forum-selection clause will not be invalidated simply due to the lack of sophistication of one of the parties. Nicholson v. Log Sys., Inc. (1998), 127 Ohio App.3d 597, 601, 713 N.E.2d 510.

{¶ 6} To invalidate a forum-selection clause based on fraud, it must be established that the fraud relates directly to the negotiation or agreement as to the forum-selection clause itself, and not the contract in general. Four Seasons Ents. v. Tommel Fin. Servs., Inc. (Nov. 9, 2000), 8th Dist. No. 77248, 2000 WL 1679456, at *2. "[U]nless there is a showing that the alleged fraud or misrepresentation induced the party opposing a forum selection clause to agree to inclusion [of] that clause in the contract, a general claim of fraud or misrepresentation as to the entire contract does not affect the validity of the forum selection clause." (Emphasis sic.) Id., citing Moses v. Business Card Express (C.A.6, 1991), 929 F.2d 1131, 1138.

{¶ 7} In contrast to the appellees in Power Eng. Group, 163 Ohio App.3d 522, 2005-Ohio-5113, 839 N.E.2d 416, appellees herein assert that the forum-selection clause itself (in addition to the entire lease) resulted from fraud by NorVergence, the lessor. Thus, appellees argue that the clause is per se invalid. See Four Seasons Ents., supra, at *2. However, in support of their assertions, appellees merely claim that NorVergence knew of the pending assignment of the lease to appellant before entering into the agreement with appellees. Such a claim does not support a finding of fraud.

{¶ 8} The elements of fraud are as follows:

(a) a representation or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury proximately caused by the reliance.

Russ v. TRW, Inc. (1991), 59 Ohio St.3d 42, 49, 570 N.E.2d 1076.

{¶ 9} In the instant matter, appellees cite no false statement made by NorVergence. In addition, appellees do not assert that NorVergence concealed a material fact. The agreements between the parties clearly and unambiguously permit NorVergence to assign the lease without limitation. Appellees, therefore, cannot prevail on a claim that they were fraudulently induced into agreeing to the forum-selection clause.

{¶ 10} It is one of the most basic tenets of contract law that a document should be read before being signed and that a party to a contract is presumed to have read what he or she signed and cannot defeat a contract by claiming not to have read it. See, e.g., Hadden Co., L.P.A. v. Del Spina, 10th Dist. No. 03AP-37, 2003-Ohio-4507, 2003 WL 22006842, at ¶ 15. See, also, McAdams v. McAdams (1909), 80 Ohio St. 232, 241, 88 N.E. 542 ("If this were permitted, contracts would not be worth the paper on which they are written; but such is not the law"). Appellees have not denied the existence of the "floating" forum-selection clause in the contract, and did not contest that the clause was part of the bargained-for terms of the agreement.

{¶ 11} Additionally, appellees had the burden of establishing that it would be unreasonable or unjust to enforce the forum-selection clause. Discount Bridal Servs., Inc. v. Kovacs (1998), 127 Ohio App.3d 373, 376-77, 713 N.E.2d 30. "A finding of unreasonableness or injustice must be based on more than inconvenience to the party seeking to avoid the forum-selection clause's requirements." Information Leasing Corp. v. King, 155 Ohio App.3d 201, 2003-Ohio-5672, 800 N.E.2d 73, at ¶ 24. See, also, Sec. Watch, Inc. v. Sentinel Sys. (C.A.6, 1999), 176 F.3d 369, 374, citing Restatement 2d, Conflict of Laws (1988), Section 80. Mere distance, expense, or hardship to an individual litigant is insufficient to invalidate a forum-selection clause. Four Seasons Ents., supra, at *4; Nicholson, 127 Ohio App.3d at 602, 713 N.E.2d 510. So long as the enforcement of the forum-selection clause ultimately does not deprive the litigants of a meaningful day in court, the clause will be upheld. Information Leasing Corp. at ¶ 23, citing Kennecorp, 66 Ohio St.3d at 176, 610 N.E.2d 987; Barrett v. Picker Internatl., Inc. (1990), 68 Ohio App.3d 820, 824, 589 N.E.2d 1372, citing The M/S Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 19, 92 S.Ct. 1907, 32 L.Ed.2d 513, superseded by federal statute (a party must show that the trial in the selected jurisdiction would be "so manifestly and gravely inconvenient * * * that it will be effectively deprived of a meaningful day in court").

{¶ 12} Appellees argue that the forum-selection clause offered no guidance regarding the jurisdiction into which they could be subjected to litigation. Appellant counters...