Turcheck v. Amerifund Financial, Inc., Docket No. 269248.

• Decision Date: 03 October 2006
• Docket Number: Docket No. 269248.
• Citation: 725 N.W.2d 684,272 Mich. App. 341
• Parties: Nicole TURCHECK, Plaintiff-Appellant, v. AMERIFUND FINANCIAL, INC., d/b/a All-Fund Mortgage, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

725 N.W.2d 684

272 Mich. App. 341

Nicole TURCHECK, Plaintiff-Appellant, v. AMERIFUND FINANCIAL, INC., d/b/a All-Fund Mortgage, Defendant-Appellee.

Docket No. 269248.

Court of Appeals of Michigan.

Submitted August 29, 2006, at Detroit.

Decided October 3, 2006, at 9:05 a.m.

Released for Publication January 5, 2007.

COPYRIGHT MATERIAL OMITTED

Saleh & Associates, P.L.C. (by Alex Saleh and Philip H. Kotsis), Dearborn, for the plaintiff.

Kirk & Huth, P.C. (by Glenn R. Matecun, of counsel, and Michael S. Thomas), Clinton Township, for the defendant.

Before: BORRELLO, P.J., and JANSEN and COOPER, JJ.

PER CURIAM.

Plaintiff appeals as of right the circuit court order dismissing her complaint without prejudice on the basis of a forum-selection clause in the parties' contract. We affirm. This appeal is being decided without oral argument. MCR 7.214(E).

I. Facts

Plaintiff was employed as a branch manager by defendant, a Washington corporation, pursuant to an employment contract. The contract contained both a choice-of-law provision and a forum-selection provision:

This agreement shall be subject to and governed by the laws of Washington, irrespective of the fact that a party is or may become a resident of a different state.

* * *

Both parties hereby agree that the Circuit Court of Pierce County, State of Washington, shall have the exclusive jurisdiction to hear and determine any and all disputes, controversies, or claims arising out of, or relating to this Agreement, or concerning the respective rights of the parties hereunder and, for such purposes, do hereby submit themselves to the sole personal jurisdiction of that Court.

Plaintiff brought this action in the Wayne Circuit Court, alleging that defendant failed to pay commissions that she was owed under the contract. Defendant argued that, in light of the forum-selection clause, plaintiff should have brought this action in the state of Washington.

Plaintiff asserted that the forum-selection clause was unenforceable pursuant to MCL 600.745(3), which provides in pertinent part:

If the parties agreed in writing that an action on a controversy shall be brought only in another state and it is brought in a court of this state, the court shall dismiss or stay the action, as appropriate, unless any of the following occur:

* * *

(c) The other state would be a substantially less convenient place for the trial of the action than this state.

(d) The agreement as to the place of the action is obtained by misrepresentation duress, the abuse of economic power, or other unconscionable means.

(e) It would for some other reason be unfair or unreasonable to enforce the agreement.

Defendant suggested that the forum-selection clause was enforceable under MCL 600.745(3), and that, in the alternative, Washington law should apply to determine the enforceability of the contract's forum-selection clause.

The trial court observed that "[p]eople are free to bargain for the [forum] where any dispute will be litigated and [plaintiff] did so. . . ." Having found that plaintiff freely consented to the forum-selection provision, and that the provision did not fall within any of the MCL 600.745(3) exceptions, the trial court enforced the forum-selection clause and dismissed the action without prejudice.¹

II. Forum-Selection Clause

Plaintiff argues that the trial court erred in dismissing this action pursuant to the forum-selection clause in the parties' contract. We disagree.

A. Standard of Review

Michigan courts have not precisely identified the proper standard for reviewing a trial court's dismissal based on a forum-selection clause. Both parties contend on appeal that a trial court's dismissal of an action pursuant to a contractual forum-selection clause should be reviewed de novo.

While not identical, dismissal based on a forum-selection clause is similar to a grant of summary disposition for lack of personal jurisdiction. Although a valid forum-selection clause does not divest the Michigan courts of personal jurisdiction over the parties, it evinces the parties' intent to forgo personal jurisdiction in Michigan and consent to exclusive jurisdiction in another forum. See James v. Midland Co. Agricultural & Horticultural Society, 107 Mich.App. 1, 5, 308 N.W.2d 688 (1981). Indeed, forum-selection clauses are inherently bound up with notions of personal jurisdiction. See id. Of note, the Michigan forum-selection statute, MCL 600.745(3), is itself contained among the jurisdictional provisions of the Revised Judicature Act. This Court reviews de novo a trial court's grant of summary disposition, as well as a trial court's jurisdictional rulings. Electrolines, Inc. v. Prudential Assurance Co., Ltd., 260 Mich.App. 144, 152, 677 N.W.2d 874 (2003).

Moreover, a dismissal based on a forum-selection clause necessarily requires interpretation and application of contractual language. The legal effect of a contractual clause is a question of law that we review de novo. Quality Products & Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362, 369, 666 N.W.2d 251 (2003).

In light of the above authority and the contractual nature of forum-selection provisions, we are convinced that a trial court's dismissal of an action pursuant to a contractual forum-selection clause is properly reviewed on appeal under a de novo standard.

B. Analysis

We begin with Michigan's fundamental rules of contract interpretation, set forth by our Supreme Court in Quality Products & Concepts, supra:

In interpreting a contract, our obligation is to determine the intent of the contracting parties. If the language of the contract is unambiguous, we construe and enforce the contract as written. Thus, an unambiguous contractual provision is reflective of the parties' intent as a matter of law. Once discerned, the intent of the parties will be enforced unless it is contrary to public policy. [Id. at 375, 666 N.W.2d 251 (internal citations omitted).]

It is undisputed that Michigan's public policy favors the enforcement of contractual forum-selection clauses and choice-of-law provisions. See Offerdahl v. Silverstein, 224 Mich.App. 417, 419, 569 N.W.2d 834 (1997) (recognizing the enforceability of forum-selection clauses and choice-of-law provisions). Thus, assuming that certain exceptions do not apply, Michigan courts will enforce an express forum-selection clause as written. MCL 600.745(3). Similarly, the Michigan courts will enforce contractual choice-of-law provisions if certain conditions are met. Chrysler Corp. v. Skyline Industrial Services, Inc., 448 Mich. 113, 126-127, 528 N.W.2d 698 (1995); Martino v. Cottman Transmission Systems, Inc., 218 Mich.App. 54, 60-61, 554 N.W.2d 17 (1996).

The analysis grows more complicated, however, when a single agreement contains both a forum-selection clause and a choice-of-law provision. When a party to such an agreement sues in a state that is not designated by either the forum-selection clause or the choice-of-law provision, it becomes necessary to determine which state's law will govern the enforceability of the forum-selection clause itself. In other words, the trial court where the action is filed must decide whether to determine the enforceability of the forum-selection clause by applying its own law, or by applying the law designated in the choice-of-law provision.²

In the case at bar, the parties designated the state of Washington in the forum-selection clause and Washington state law in the choice-of-law provision. Notwithstanding these provisions, plaintiff filed suit in Michigan. Therefore, in order to decide whether to exercise or decline jurisdiction, it was essential for the trial court to determine whether the forum-selection clause was valid and enforceable. Accordingly, under ordinary circumstances, the trial court would have been required to first determine whether Michigan or Washington law governed the forum-selection clause's enforceability.³

However, because we determine that the forum-selection clause in the parties' contract would have been equally enforceable under either Michigan law or Washington law, we need not decide which state's law would otherwise have governed the clause's applicability.⁴

As noted earlier, Michigan courts generally enforce contractual forum-selection clauses. MCL 600.745(3); Offerdahl, supra at 419, 569 N.W.2d 834. The exceptions to this rule are stated in MCL 600.745(3)(a)-(e), and unless one of the statutory exceptions applies, Michigan courts will enforce a forum-selection clause as written. The statutory exceptions that are relevant in this case provide that a forum-selection clause should be enforced unless "[t]he other state would be a substantially less convenient place for the trial[,]" "[t]he agreement as to the place of the action is obtained by misrepresentation, duress, the abuse of economic power, or other unconscionable means[,]" or "[i]t would for some other reason be unfair or unreasonable to enforce the agreement." MCL 600.745(3)(c)-(e). A party seeking to avoid a contractual forum-selection clause bears a heavy burden of showing that the clause should not be enforced. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17-18, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). Accordingly, the party seeking to avoid the forum-selection clause bears the burden of proving that one of the statutory exceptions of MCL 600.745(3) applies.

Our research has revealed that the standards for enforcing contractual forum-selection provisions under Washington law are substantially similar. In general, Washington state courts will enforce a forum-selection clause unless it is unreasonable, unjust, or unfair. Voicelink Data Services, Inc. v. Datapulse, Inc., 86 Wash App. 613, 617-618, 937 P.2d 1158 (1997). "[T]he party arguing that the forum selection clause is unfair or unreasonable bears a heavy burden of showing that trial in the chosen forum would be so seriously inconvenient as to deprive the party of a meaningful day in court." ...