Triple Quest, Inc. v. Cleveland Gear Co.

Decision Date24 May 2001
Docket NumberNo. 20000281.,20000281.
Citation627 N.W.2d 379,2001 ND 101
PartiesTRIPLE QUEST, INC., Plaintiff and Appellant v. CLEVELAND GEAR COMPANY, INC., Defendant and Appellee.
CourtNorth Dakota Supreme Court

Gordon Henry Hansmeier, Rajkowski Hansmeier Ltd., St. Cloud, MN, for defendant and appellee.

Sidney J. Spaeth, Vogel, Weir, Hunke & McCormick, Ltd., Fargo, for appellant.

Monte L. Rogneby (on brief), Vogel Law Firm, Bismarck, for appellant.

MARING, Justice.

[¶ 1] Fun Flight, LLC ("Fun Flight"), as the successor in interest to the claims of Triple Quest, Inc. ("Triple Quest"), appealed from an order dismissing, without prejudice, its damage action against Cleveland Gear Company, Inc. ("Cleveland Gear"). We conclude the order dismissing the action without prejudice based on a contractual forum selection clause is appealable and Fun Flight has standing to pursue the appeal. We further hold the trial court erred in ruling the forum selection clause, as a matter of law, granted exclusive jurisdiction over this action to the courts of Ohio and in ruling, as a matter of law, Cleveland Gear did not waive its right to rely on the forum selection clause. We reverse and remand for further proceedings.

I

[¶ 2] In August 1997, Triple Quest sued Cleveland Gear, an Ohio corporation, in Cass County district court seeking damages for defective gear boxes it had purchased from the company. In its answer, Cleveland Gear asserted various defenses under the parties' contract, including an alleged agreement between the parties to litigate contract claims under Ohio law and to venue the action in Cuyahoga County, Ohio. Cleveland Gear also counterclaimed for money due and owing under the contract.

[¶ 3] After conducting discovery, Cleveland Gear moved in May 1999 for partial summary judgment, arguing Ohio law governed the claims between the parties under the contract and Triple Quest's damages should be limited to the amount it paid Cleveland Gear for the gear boxes. Cleveland Gear did not argue at that time a forum selection clause located in the same paragraph as the choice-of-law clause mandated litigation of the case in Ohio. The trial court denied Cleveland Gear's request to limit damages, but ruled Ohio law would govern the dispute between the parties.

[¶ 4] In May 2000, Ralph Thomas, a creditor of Triple Quest, purchased all of Triple Quest's assets at a sheriff's sale. Thomas subsequently assigned his interest in the assets to Fun Flight. Cleveland Gear moved to compel production of documents concerning the sale of Triple Quest's assets. At the hearing on the motion, Fun Flight argued it was a successor in interest to Triple Quest's right of recovery under the suit, but could not be liable for any judgment on Cleveland Gear's counterclaim. The court granted Cleveland Gear's motion to compel production of documents, but did not rule on Fun Flight's role in the action.

[¶ 5] At the trial court's suggestion, Cleveland Gear moved to dismiss the action without prejudice so the parties' agreement "to venue this matter in [Cuyahoga] County, Ohio" could be enforced. Fun Flight argued the forum selection clause was not exclusive and, alternatively, that Cleveland Gear had waived reliance on the clause by raising affirmative claims in North Dakota court and litigating the action here for three years. The trial court dismissed the action without prejudice, ruling that, under the parties' contract "the proper venue for this case and the jurisdiction for it is in the state of Ohio," and Cleveland Gear had not waived reliance on the forum selection clause. The court did not rule on Fun Flight's motion to substitute parties and to amend the caption of the case. Fun Flight appealed.

II

[¶ 6] Cleveland Gear argues the trial court's order is not appealable because it dismisses the action without prejudice.

[¶ 7] We explained the general rule in State v. Gwyther, 1999 ND 15, ¶ 10, 589 N.W.2d 575:

In civil cases it is well-settled that an order dismissing the complaint without prejudice is not appealable. See, e.g., Kouba v. FEBCO, Inc., 1998 ND 171, ¶ 4, 583 N.W.2d 810; Community Homes of Bismarck v. Clooten, 508 N.W.2d 364, 365 (N.D.1993). Those holdings are based upon the civil appeals statute, N.D.C.C. § 28-27-02. This Court has noted that, because either side may commence another action after a civil complaint is dismissed without prejudice, the order dismissing the action neither "determines the action" nor "prevents a judgment from which an appeal might be taken," as required under N.D.C.C. § 28-27-02(1). Clooten, 508 N.W.2d at 365; Runck v. Brakke, 421 N.W.2d 487, 488 (N.D.1988).

[¶ 8] Although we have held that an order granting a motion for change of venue within the state requires a N.D.R.Civ.P. 54(b) certification to invoke our interlocutory appellate jurisdiction, see, e.g., Copenhaver v. Geier, 508 N.W.2d 877 (N.D.1993), this Court has not addressed whether an order dismissing an action without prejudice on the ground that jurisdiction or venue is proper in another state is an appealable order. Courts have held, however, that dismissal of an action to enforce a forum selection clause directing litigation be conducted in another jurisdiction is an appealable order, even though it is not on the merits and is without prejudice. See, e.g., Autoridad de Energia Electrica de Puerto Rico v. Ericsson, Inc., 201 F.3d 15, 17-18 (1st Cir.2000); Florida Polk County v. Prison Health Services, Inc., 170 F.3d 1081, 1083 (11th Cir. 1999); Milk `N' More, Inc. v. Beavert, 963 F.2d 1342, 1345 (10th Cir.1992); Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 277-78 (9th Cir.1984); Whelan Security Co., Inc. v. Allen, 26 S.W.3d 592, 595 (Mo.App.2000). Those courts reason a trial court's dismissal without prejudice has the practical effect of terminating the litigation in the plaintiff's chosen forum, and is therefore final in the sense that it terminates the controversy in either the state or federal court in which the action was brought.

[¶ 9] In Pelleport, 741 F.2d at 277, the court considered whether an order enforcing a forum selection clause, resulting in the action being transferred from federal to state court, was appealable as a "collaterally final" order under federal law. To constitute a collaterally final order under 28 U.S.C. § 1291, "`the order must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment.'" Pelleport, 741 F.2d at 278 (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978)). The court ruled the order was appealable, reasoning:

The district court's order meets all three criteria. The order conclusively determines enforceability of the clause, an issue completely separate from the merits of Pelleport's breach of contract claim. The order is otherwise unreviewable, because it puts the parties out of federal court, and the district court's decision would be res judicata in the state court.

Pelleport, 741 F.2d at 278.

[¶ 10] The same reasoning applies here. The trial court's order has the practical effect of "determin[ing] the action" under N.D.C.C. § 28-27-02(1), because it terminates the action in North Dakota by permanently putting the parties out of any North Dakota district court. See generally N.D. Const. art. VI, §§ 1 and 8 (referring to a single "district court" under the unified judicial system). Interpretation of the forum selection clause is an issue completely separate from the merits of Triple Quest's claims for breach of contract. The order dismissing the action without prejudice to be refiled only in Ohio also "prevents a judgment from which an appeal might be taken" under N.D.C.C. § 28-27-02(1), because there is no action remaining in this state, the same action could not be brought in this state, and the trial court's decision would be res judicata in an Ohio court. See generally Minex Resources, Inc. v. Morland, 518 N.W.2d 682, 687 (N.D.1994) (holding res judicata prohibits relitigation of claims raised in prior action between same parties or their privies which were resolved by final judgment in a court of competent jurisdiction).

[¶ 11] We conclude the trial court's order in this case is appealable.

III

[¶ 12] Cleveland Gear argues Fun Flight has no standing to pursue this appeal.

[¶ 13] A party is entitled to have a court decide the merits of a dispute only after demonstrating standing to litigate the issues placed before the court. North Dakota Council of School Administrators v. Sinner, 458 N.W.2d 280, 282 (N.D.1990). To be entitled to appeal a district court order to this Court, the party must be aggrieved by the order by having some legal interest that may be enlarged or diminished by the order. Bernhardt v. Rummel, 319 N.W.2d 159, 160 (N.D.1982). A contractual assignment of rights may confer standing to pursue an appeal. See Rebel v. Nodak Mutual Ins. Co., 1998 ND 194, ¶ 10, 585 N.W.2d 811. Here, Fun Flight received an assignment of Triple Quest's interests from the purchaser of Triple Quest's assets. Cleveland Gear nevertheless argues Fun Flight has no standing because Fun Flight has not been joined or substituted as a party to this action.

[¶ 14] When an interest is transferred during an action, N.D.R.Civ.P. 25(c) provides "the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party." Fun Flight moved to be substituted as a party, but the trial court dismissed the action without ruling on the motion. Even if the trial court's failure to rule constitutes a denial of the motion, the trial court did not err and Fun Flight nevertheless has standing to pursue this appeal.

[¶ 15] In North Dakota Mineral Interests, Inc. v. Berger, 509 N.W.2d 251, 254 (N....

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