Rmp Rentals v. Metroplex, Inc.

• Decision Date: 12 February 2004
• Docket Number: No. 03-569.,03-569.
• Parties: RMP RENTALS v. METROPLEX, INC.
• Court: Arkansas Supreme Court

146 S.W.3d 861

356 Ark. 76

RMP RENTALS v. METROPLEX, INC.

No. 03-569.

Supreme Court of Arkansas.

February 12, 2004.

Warner, Smith & Harris, PLC, by: Jason T. Browning, Fort Smith, for appellant.

Walters, Hamby & Verkamp, by: Michael Hamby, Greenwood, for appellee.

BETTY C. DICKEY, Chief Justice.

This case essentially presents one issue on appeal: whether our materialmen's lien statute, Ark.Code Ann. § 18-44-101(a) (Repl.2003)¹, controls over a forum-selection clause in a contract. We accepted certification from the Court of Appeals pursuant to Sup.Ct. R. (b)(1) and (4) as presenting an issue of first impression involving a substantial issue of public interest. We affirm.

Appellant RMP Rentals, LLC d/b/a RMP Developments, Inc., hereafter RMP, is a general contractor with its corporate office located in Louisiana. RMP is in the business of constructing post office buildings on property it owns, which it then leases to the United States Postal Service. The appellees are subcontractors Metroplex, Inc., and Bobby Joe Williams. Metroplex is an electrical subcontractor located in Arkansas, engaged in the business of installing electrical services, including wiring panels and fixtures. Williams is an Oklahoma subcontractor who is in the business of pouring concrete slab, curbing, and parking lots. After contracting with the Postal Service to construct a post office in Greenwood, Sebastian County, Arkansas, RMP contracted separately with the appellees to provide electrical and concrete services, respectively, to the Greenwood post office. RMP executed the contracts in Louisiana. Each contract contained identical forum-selection clauses, which read as follows:

The parties agree that the sole and exclusive forum for any civil suit arising out of obligations created by this Agreement shall be the Ninth Judicial District Court in the Parish of Rapides, State of Louisiana.

This Contract and any actions arising therefrom must be interpreted and construed solely in accordance with the laws of the state of Louisiana. (Emphasis added).

The relevant, procedural facts are as follows. In December of 2000, Metroplex filed a foreclosure complaint in the chancery court² of Sebastian County, against RMP for failure to pay on a percentage of the work completed. Based on a previously filed materialmen's lien in Sebastian County, Metroplex sought a judgment on the lien for $17,963.86, and foreclosure of RMP's Arkansas property. Metroplex named Williams as a separate defendant and a potential lienholder, and claimed priority over the Postal Service and equal priority with Williams. In response, RMP filed a motion to dismiss, challenging inter alia the court's subject-matter jurisdiction, Ark. R. Civ. P. 12(1), based on the forum-selection clause in its contracts. In addition to copies of the contracts with Metroplex and Williams, RMP attached two orders of dismissal from the county's separate circuit courts, enforcing the forum clause against Williams and another subcontractor for the same building. Williams then filed a cross-claim against RMP, asserting claims similar to those of Metroplex and seeking $18,825.06 on its lien and foreclosure. RMP filed a similar motion to dismiss Williams's foreclosure complaint.

Following the issuance of a letter opinion, the trial court entered an order denying RMP's motions to dismiss, and the parties proceeded to a bench trial on the appellees' claims. Subsequently, the trial court entered judgment on behalf of the appellees in the amounts sought on their liens, subject to the superior priority of Red River Bank on its construction-money mortgage in the sum of $1,279,028.41. Further, the court awarded each of the appellees prejudgment interest, $6,000 in attorney fees, all costs, and ordered foreclosure on the property. In granting the judgment, the trial court relied on § 18-44-127(a), which provides that "the court shall ascertain by a fair trial, in the usual way, the amount of the indebtedness for which the lien is prosecuted and may render judgment therefor in any sum not exceeding the amount claimed in the demand filed with the lien, together with interest and costs." The court found that it would be neither fair nor reasonable to require the subcontractors seeking to proceed on a materialmen's lien under Arkansas law on property located in Arkansas to first litigate the amount of the claim in Louisiana, and then come back to an Arkansas court for execution against the land. In sum, the trial court found that in the interest of substantial justice, the matter should be heard in Sebastian County.

When a party appeals an adverse ruling on a motion brought under Ark. R. Civ. P. 12, this court treats the facts alleged in the complaint as true and views them in a light most favorable to the party who filed the complaint. Newton v. Etoch, 332 Ark. 325, 965 S.W.2d 96 (1998); Van Dyke v. Glover, 326 Ark. 736, 934 S.W.2d 204 (1996). Chancery cases are tried de novo on appeal, and the appellate court is free to affirm for a different reason. Alexander v. Twin City Bank, 322 Ark. 478, 910 S.W.2d 196 (1995). Where the facts are not in dispute and the issue is one of law, we determine whether the appellant was entitled to judgment as a matter of law. Haase v. Starnes, 323 Ark. 263, 915 S.W.2d 675 (1996).

Choice-of-forum clauses in contracts have generally been held binding, unless it can be shown that the enforcement of the clause would be unreasonable and unfair. Nelms v. Morgan Portable Bldg. Corp., 305 Ark. 284, 808 S.W.2d 314 (1991); SD Leasing, Inc. v. Al Spain & Assoc., Inc., 277 Ark. 178, 640 S.W.2d 451 (1982). Nonetheless, the determination of subject-matter jurisdiction is paramount. Parties may by agreement consent to personal jurisdiction in a given court, but subject-matter jurisdiction cannot be conferred merely by agreement of the parties. See Hardy Construction Co., Inc. v. Arkansas State Highway & Transportation Dept., 324 Ark. 496, 922 S.W.2d 705 (1996) (chancery court had jurisdiction to enforce contracts pursuant to the Uniform Arbitration Act). While a forum-selection clause implies consent as to personal jurisdiction, SD Leasing, Inc., supra; St. Paul Fire & Marine Ins. Co. v. Courtney Enter., Inc., 270 F.3d 621 (8th Cir.2001), it cannot confer subject-matter jurisdiction over in rem proceedings. Publix Super Markets, Inc. v. Cheesbro Roofing, Inc., 502 So.2d 484 (Fla.App. 5th Dist. 1987).

Here, RMP argues extensively that under International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), its forum-selection clause meets the requirements for minimum contacts. But that is not the issue here, nor do we disagree with RMP's argument. It is correct that under the clause, the Louisiana court may have subject-matter jurisdiction to award the appellees an in personam judgment equal to the amount of their liens, but that is not what the trial court determined and that is not what we decide here. Only an Arkansas court has subject-matter jurisdiction to enforce the liens and to order foreclosure on real property located within its borders. Specifically, "[t]he chancery court of the county where the property is situated and on which a lien created under § 18-44-101 et seq. is attached shall have exclusive jurisdiction to enforce the lien." § 16-13-304(c) (Repl.1999, repealed 2003).

An in rem action is one in which the court is required to act directly on property or on title to property. Id. In Publix Super Markets, Inc., supra, the Florida court was faced with a similar issue. There, a roofing subcontractor had entered a contract containing a clause establishing a specific county as the forum for "any action" brought under the contract. Subsequently, the subcontractor filed to enforce its mechanic's lien and to foreclose in the county where the land was located. In affirming the denial of the land owner's motion to transfer to the county specified in the contract, the Florida court held that pursuant to statute, an agreement that has the effect of placing venue in a county, other than the one in which the land to be foreclosed is located, is ineffective because such an action requires in rem court jurisdiction, and only a court with geographic jurisdiction over the county where the land is located has in rem jurisdiction. In so holding, the court noted that foreclosure of land based on a mechanic's lien is analogous to foreclosure of a mortgage on land by seeking to judicially convert a lien interest against title to land, into a legal title to land. The result, the court found, is that the court is required to act directly on the title to the property. Id. We agree. Under our statutes, a judicial proceeding on a materialmen's lien as to land is an in rem proceeding.

RMP characterizes the cause of action against it as one for breach of contract and for damages "arising out of obligations created" by the contract. However, a review of the appellees' complaints shows that the appellees filed a "foreclosure complaint."³ While the claim had its genesis in the contract with RMP, the appellees, as materialmen, had a statutory right to seek in rem relief: that is judgment on their liens previously filed pursuant to Arkansas law, and foreclosure on RMP's real property located in Arkansas. Section 18-44-101(a) gives the appellees an absolute right to file such a lien. RMP argues that by limiting the jurisdiction to a particular "venue" (Louisiana), the forum clause does not eliminate the appellees' right to redress, but that it merely establishes the forum where redress can be sought. But RMP ignores the fact that the property is not located in Louisiana. Nor does RMP claim that the appellees have a right under Louisiana law to file a materialmen's lien in that forum, nor a right under Louisiana law to seek enforcement of their liens that are filed in Arkansas. Cf. Three Sisters Petroleum, Inc. v. Langley, 348 Ark. 167, 72 S.W.3d 95 (2002) (Louisiana court...