Scott v. Tutor Time Child Care Systems, Inc.

• Decision Date: 19 December 2000
• Citation: 33 S.W.3d 679
• Parties: (Mo.App. W.D. 2000) . Bryan Scott, Joanne Scott and J&B Associates, Appellant v. Tutor Time Child Care Systems, Inc. Life Care Acquisition Corp., Respondent. Block XX, Respondent. WD57649 Missouri Court of Appeals Western District Handdown Date:
• Court: Missouri Court of Appeals

33 S.W.3d 679 (Mo.App. W.D. 2000)

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.

Bryan Scott, Joanne Scott and J&B Associates, Appellant v. Tutor Time Child Care Systems, Inc. Life Care Acquisition Corp., Respondent. Block XX, Respondent.

WD57649

Missouri Court of Appeals Western District

Handdown Date: 12/19/2000

Appeal From: Circuit Court of Jackson County, Hon. William W. Ely

Counsel for Appellant: Scott R. Manuel Shellie C. Guin

Counsel for Respondent: Nicholas L. Divita

Opinion Summary: Bryan Scott, Joanne Scott and J & B Associates, Inc., appeal the dismissal of their petition against two affiliated Florida corporations (Tutor Time Child Care Systems, Inc. and Life Care Acquisition Corp.) on the basis that venue is governed by a forum selection clause in a franchise agreement with one of the corporations. Appellants alleged the trial court erred in enforcing the forum selection clause of the franchise contract because: The franchise agreement was with only one of the corporations, not both; the contract was unenforceable as an adhesion contract; and the clause should not be enforced as a matter of public policy because Missouri has an important state interest in safeguarding its children when foreign companies establish child care facilities within the state.

REVERSED AND REMANDED.

Division holds: Because Block XX remains a party to this suit, the Florida corporations are not entirely relieved of defending claims in Missouri by the forum selection clause. Block XX will litigate cross-claims against the Florida corporations here, and the Scotts will still litigate their claims against Block XX here. To avoid duplication of effort, and avoid potential problems of collateral estoppel or res judicata or inconsistent adjudications which could result from separating the trials of related claims of this case, it makes sense to keep all the litigation here, and it is unreasonable to do otherwise. Accordingly, the judgment of the trial court is reversed and the case remanded the to the trial court for further proceedings.

Opinion Author: James M. Smart, Jr., Judge

Opinion Vote: REVERSED AND REMANDED. Holliger and Breckenridge, JJ., concur.

Opinion:

The appellants are Bryan Scott, Joanne Scott, and J&B Associates, Inc. They appeal the dismissal by the trial court of their petition against two affiliated Florida corporations on the basis that venue is governed by a forum selection clause in a franchise agreement with one of the corporations. Because we determine that policy considerations dictate that the forum selection clause should not be enforced in this case, we reverse the decision of the trial court and remand the case for further proceedings.

Background

The following factual background is drawn from the pleadings. The facts pleaded in the petition are assumed to be true for purposes of reviewing the dismissal. Evergreen National Corp. v. Killian Const. Co., 876 S.W.2d 633, 635 (Mo. App. 1994).

Joanne and Brian Scott formed J&B Associates, Inc. for the purpose of opening and operating a child care center near Missouri Highway 291 and 23rd Street in Independence. In 1995, J&B negotiated with a national child care franchisor, Tutor Time Child Care Systems, Inc. ("Tutor Time"), a Florida corporation. The parties eventually entered into a series of agreements, including a franchise agreement, and other agreements related to the development of a site and construction of a facility for a child care center. The agreements were designed to present J&B with a fully developed and constructed "ready-to-open" facility at the specified site. The agreements provided that the development of the site would be performed by Lifecare Acquisition Corporation ("Lifecare"), a corporation closely affiliated with Tutor Time.

At about the same time, Lifecare leased the undeveloped site from Block XX, a Missouri partnership, with the understanding that the lease would later be transferred to J&B. Several months later, Lifecare assigned the lease to J&B, and J&B assumed the lease obligations with the consent of Block XX. J&B notified the defendant corporations that the site did not provide adequate drainage and demanded that the site problems be corrected. Eventually, the center opened in September, 1996. However, due to continuing problems with flooding, lack of drainage and mildew, J&B closed the center in July, 1998. In November, 1998, the Scotts and J&B (all of which are hereafter collectively referred to as "the Scotts") brought an action in Jackson County against Tutor Time, Lifecare, and Block XX. Block XX (hereafter referred to as "Block") filed an answer and cross-claimed against Tutor Time and Lifecare.

In their petition, the Scotts contended that the Florida corporations (Tutor Time and Lifecare) breached the franchise agreement by wrongfully terminating the agreements, and breached the site development agreement by failing to provide a ready-to-open child care center, and breached the site coordination agreement by failing to provide a qualified site for the operation of the center. They further contended that all defendants breached the lease agreement by failing to construct a "turn-key" child care center, and by interfering with plaintiffs right to quiet enjoyment of the premises. They further contended that all defendants were guilty of: (a) negligent misrepresentation in communicating false information to the plaintiffs, (b) breach of implied covenant of good faith and fair dealing by dealing in bad faith, and (c) tortious interference with a business expectancy by including a breach of contracts with other defendants.

Block filed an answer, counterclaim and cross-claim. In its counterclaim, Block brought a claim for: (a) breach of contract for failure to make rental payments under the lease; (b) breach of contract for plaintiffs' failure to maintain the plumbing and sewage facilities within the leased premises, causing damage to the premises; (c) breach of contract for failure to maintain insurance on the leased premises, resulting in failure to repair damage to the premises; (d) conversion of property belonging to Block. For its cross-claim against Tutor Time and Lifecare, Block sought indemnity from those defendants to the extent plaintiffs were damaged, on the ground that Block had no active dealing with plaintiffs other than consenting for Lifecare to assign the lease to J&B, and that any damages sustained by plaintiffs were due to the actions of Tutor Time and Lifecare.

Tutor Time and Lifecare filed joint motions to dismiss the petition and the cross-claim based upon a provision in the franchise agreement and each of the related agreements specifying:

This agreement shall be governed by the laws of the State in which the Franchisee is domiciled at the time of execution hereof. The Franchisor and Franchisee acknowledge and agree that the U.S. District Court for the Southern District of Florida, or if such court lacks jurisdiction, the Seventeenth Judicial Circuit (or its successor) in and for Broward County, Florida, shall be the venue and exclusive forum in which to adjudicate any dispute arising either directly or indirectly, under or in connection with this Franchise Agreement . . . .

The defendant corporations contended that pursuant to the express terms of the contract of the parties any such action could be brought only in Florida. The trial court, after consideration of the motions of defendant corporations, ruled that the forum selection clause was applicable, and accordingly dismissed the claims of the Scotts against the defendant corporations. The claim of...