Reed Elsevier, Inc. v. Feder

• Decision Date: 04 December 2015
• Docket Number: No. 26680.,26680.
• Citation: 50 N.E.3d 1067
• Parties: REED ELSEVIER, INC., Plaintiff–Appellant v. Craig FEDER, Defendant–Appellee.
• Court: Ohio Court of Appeals

50 N.E.3d 1067

REED ELSEVIER, INC., Plaintiff–Appellant

v.Craig FEDER, Defendant–Appellee.

No. 26680.

Court of Appeals of Ohio, Second District, Montgomery County.

Dec. 4, 2015.

Michael W. Sandner, Jessica A. Brockman, Dayton, OH, for Plaintiff–Appellant.

Craig Feder, San Francisco, CA, Defendant–Appellee–Pro Se.

OPINION

WELBAUM, J.

{¶ 1} Plaintiff–Appellant, Reed Elsevier, Inc., dba LEXISNEXIS (“LEXIS”) appeals from a judgment granting a motion to quash service of summons for lack of personal jurisdiction, which had been filed by Defendant–Appellee, Craig Feder, dba Law Office of Craig Feder (“Feder”). LEXIS contends that the trial court erred by granting the motion to quash. For the reasons set forth below, we agree that the trial court erred in dismissing the complaint for lack of personal jurisdiction. Accordingly, the judgment of the trial court will be reversed, and this cause will be remanded for further proceedings.

I. Facts and Course of Proceedings

{¶ 2} In December 2014, LEXIS filed a complaint against Feder, alleging that Feder had breached a contract between the parties for provision of online legal services, and had failed to pay $31,295.53 that was owed for the services. Reed attached two Exhibits to the complaint: Ex. A was a Subscription Agreement dated January 11, 2012, and Ex. B was a “Promotional Bridge Addendum,” dated February 22, 2013.

{¶ 3} In March 2015, Feder filed a motion to quash the service of summons for lack of personal jurisdiction and to dismiss the Complaint pursuant to Civ.R. 12(B)(2) and (3). Feder alleged in the motion that he was a resident of California and had never been to Ohio. He admitted that the parties had entered into a subscription agreement on January 11, 2012, and that the agreement was subsequently modified. However, he also claimed that the parties had entered into an accord and satisfaction on April 7, 2014.

{¶ 4} Feder did not file an affidavit in support of the motion; instead, he submitted unauthenticated copies of a letter sent to LEXIS, and the front and back sides of a check in the amount of $223.00 addressed to LEXIS.

{¶ 5} The trial court did not hold an evidentiary hearing, nor did it notify the parties that it was converting the motion into a summary judgment motion. On April 7, 2015, the trial court issued a decision and entry granting the motion to quash and dismissing LEXIS's claims without prejudice. LEXIS timely appealed from the judgment dismissing its claims.

II. Did the Court Err in Granting the Motion to Quash?

{¶ 6} LEXIS's sole assignment of error states that:

The Trial Court Erred as a Matter of Law in Granting Craig Feder's Motion to Quash and Dismiss for Lack of Jurisdiction.

{¶ 7} Under this assignment of error, LEXIS contends that the trial court erred by considering matters outside the pleadings and by failing to notify LEXIS that it was converting a motion to dismiss into a motion for summary judgment.

{¶ 8} Feder's motion was brought pursuant to Civ.R. 12(B)(2) and (3), which pertain, respectively, to “lack of jurisdiction over the person” and “improper venue.” “It is rudimentary that in order to render a valid personal judgment, a court must have personal jurisdiction over the defendant.” Maryhew v. Yova, 11 Ohio St.3d 154, 156, 464 N.E.2d 538 (1984).

{¶ 9} “When determining whether a state court has personal jurisdiction over a foreign corporation the court is obligated to engage in a two-step analysis. First, the court must determine whether the state's ‘long-arm’ statute and applicable civil rule confer personal jurisdiction, and, if so, whether granting jurisdiction under the statute and the rule would deprive the defendant of the right to due process of law pursuant to the Fourteenth Amendment to the United States Constitution.” (Citations omitted.) U.S. Sprint Communications Co. Partnership v. Mr. K's Foods, Inc., 68 Ohio St.3d 181, 183–184, 624 N.E.2d 1048 (1994).

{¶ 10} However, the Supreme Court of Ohio has also said that “the requirement that a court have personal jurisdiction over a party is a waivable right and there are a variety of legal arrangements whereby litigants may consent to the personal jurisdiction of a particular court system.” Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc., 66 Ohio St.3d 173, 175, 610 N.E.2d 987 (1993), citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Thus, “[a]bsent evidence of fraud or overreaching, a forum selection clause contained in a commercial contract between business entities is valid and enforceable, unless it can be clearly shown that enforcement of the clause would be unreasonable and unjust.” Kennecorp at syllabus. In this situation, “a minimum-contacts analysis as set forth in Internatl. Shoe Co. v. Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, and its progeny, is not appropriate in determining the validity of forum selection clauses * * *.” Id. at 175, 610 N.E.2d 987.

{¶ 11} The contracts in the case before us were entered into by two commercial entities—a law office and a corporation selling online legal services. The original 2012 contract (called a “Subscription Agreement”) provides for arbitration of any controversy or claim arising out of the Agreement, with certain exceptions that are not relevant to this case. See Complaint, Doc. # 1, Ex. A, Section 3.1. Section 3.1 further states that the arbitration will be held in the United States headquarters city of the party that does not initiate the claim. Id.

{¶ 12} Since LEXIS initiated the claim, the dispute would have been arbitrated in San Francisco, California, where Feder's headquarters were located. However, a Promotional Bridge Addendum, attached to the Complaint as Ex. B, and dated February 22, 2013, revised the terms of the Agreement. The Addendum still provides for arbitration (this time in Section 4), and again indicates that arbitration will be held in the headquarters city of the party that does not initiate the claim. Ex. B., Section 4.1.

{¶ 13} Unlike the original Agreement, the Addendum contains the following forum selection clause:

Claims and controversies involving the following will not be subject to arbitration and the parties agree to exclusive jurisdiction in federal or state courts located in Montgomery County, Ohio: (a) a violation of any of the proprietary rights of [LEXIS], including claims in equity or law to protect the intellectual property rights of [LEXIS] or its third-party content providers; (b) failure to comply with restrictions on use of the Materials included in the Agreement and this Amendment; or (c) non-payment. [LEXIS] retains at all times the right to obtain an injunction in court to prevent misuse of the Preferred Services and/or other Online Services and Materials contained therein and all other [LEXIS] and [LEXIS] affiliates' products and services.

Ex. B., Section 4.4.

{¶ 14} Under this forum selection clause, Feder waived personal jurisdiction for claims that fell within the provisions of Section 4.4, including non-payment. The Complaint against Feder was clearly a claim for non-payment, and the trial court would have had personal jurisdiction over him. However, Feder attached documents to his motion to quash, and argued, based on the documents, that he had paid LEXIS and had obtained an accord and satisfaction. Feder, therefore, contended that the case did not involve non-payment, but, at most, involved the validity of the accord and satisfaction, which would have been subject to arbitration.

{¶ 15} As was noted, the items attached to Feder's motion included a letter to LEXIS and the front and back sides of a check. The letter, which is dated March 25, 2014, is headed as follows:

Re: Account No. 1581ZX

Termination of Agreement and Final Satisfaction

Motion to Quash, Doc. # 22.

{¶ 16} The text of the letter says that:

The enclosed check # 150 shall serve as notice of termination of the agreement between the Law Office of Craig L. Feder and LexisNexis. Acceptance of this check shall constitute full and final satisfaction for account number 1581ZX and the above mentioned agreement. Accepting this check shall serve as a binding agreement that supersedes any previous agreements and constitutes full and final satisfaction of any claims LexisNexis may have against Law Office of Craig L. Feder and Craig L. Feder.

Id.

{¶ 17} The check, which is dated March 25, 2014, was made payable to LEXIS in the amount of $223. The check contains the notation; “ACT # 1581ZX Full and Final Satisfaction.” Id. The back of the check contains a stamp which appears to indicate that it was deposited by “DLW–ReedEslev” on April 6, 2014.” Id.

{¶ 18} In opposing the motion, LEXIS argued that the forum selection clause was invoked by its claim for payment, and that the trial court could not consider the accord and satisfaction claim in a motion to dismiss; instead, the claim should be properly asserted as a defense in Feder's answer and considered on that basis.

{¶ 19} In its decision, the trial court concluded that it could consider documentary evidence in ruling on the motion to quash. The court stated that the facts posed a “close question,” but found that plaintiff had presented no evidence to counter Feder's “credible showing that an accord and satisfaction between these parties negated the very contract on which Plaintiff relies to exercise personal jurisdiction over Defendant.” Doc. # 28, p. 6. The court, therefore, concluded that LEXIS had not made a preliminary showing that the contract remained viable. In addition, the court concluded that a dispute over the validity of the accord and satisfaction was not encompassed within the limited jurisdiction conferred by the forum selection clause.

{¶ 20} We disagree with both grounds for the trial court's decision. As an initial matter, the complaint that LEXIS filed clearly falls within the forum selection clause, as it is a claim for non-payment.

{¶ 21} “Accord and satisfaction is an...