Case Title: Durdahl v. National Safety Associates, Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1999-10-15T00:00:00Z

Document:
Durdahl v. National Safety Associates, Inc.1999 WY 135988 P.2d 525Case Number: 99-8Decided: 10/15/1999Supreme Court of Wyoming
 
RICKY EARL DURDAHL and TODD ALLEN DURDAHL, Appellants 
(Plaintiffs),

v.

NATIONAL SAFETY 
ASSOCIATES, INC., d/b/a NSA, Appellee (Defendant).

 

Appeal from the District 
Court of Natrona County, Honorable W. Thomas Sullins, 
Judge.

James Richard 
McCarty, Casper, WY., representing Appellants.

John I. Henley 
of Vlastos, Brooks, Henley & Drell, P.C., Casper, WY., representing 
Appellant.

Before 
LEHMAN, C.J., and THOMAS, MACY, GOLDEN, and HILL, JJ.

HILL, 
Justice.

[¶1]      Ricky Earl 
Durdahl and Todd Allen Durdahl appeal the dismissal of their action for breach 
of contract, promissory estoppel, and fraudulent misrepresentation against 
National Safety Associates, Inc., d/b/a NSA. The district court dismissed the 
action based on a forum selection clause in the annual distributorship 
agreements signed by the Appellants which specified that all claims involving 
the agreement between the parties were to be brought solely in the courts of 
Shelby County, Tennessee.

[¶2]      We 
affirm.

ISSUES

[¶3]      Appellants 
present three issues on appeal:

1. Whether 
Paragraph 8 of a 1994 "Annual Renewal Notice and Agreement" precluded the 
Appellants from bringing suit in Wyoming based upon breaches of contract 
relating to agreements between the parties prior to 1994.

2. Whether 
Paragraph 8 of a 1994 "Annual Renewal Notice and Agreement" precluded the 
Appellants from bringing suit in Wyoming based upon tort theories of promissory 
estoppel and detrimental reliance.

3. Whether the 
trial court erred in dismissing the Complaint in this matter based upon 
Paragraph 8 of the 1994 "Annual Renewal Notice and 
Agreement."

NSA reduces the 
issues on appeal to a single statement:

The contractual 
terms of private parties defining the choice of law and forum in the event of a 
dispute should be upheld.

FACTS

[¶4]      Appellants' 
relationship with NSA began in 1990 when they completed an "Independent 
Dealer/Distributor Application." Pursuant to their agreement, Appellants became 
"dealer sales representatives" or distributors for NSA products conditioned upon 
the filing of an annual renewal application and payment of the requisite fees. 
Commencing in 1994, the annual renewal agreements contained the following 
provision:

I understand 
that this agreement is to be governed by the laws of the State of Tennessee and 
that the parties hereto agree that any and all claims involving this agreement 
shall be brought solely in the courts of Shelby County[,] Tennessee. The parties 
hereto consent to venue and jurisdiction as proper in the courts of Shelby 
County[,] Tennessee.

NSA is located 
in Memphis, Shelby County, Tennessee. Appellants, without reading them, 
dutifully signed annual renewal agreements containing the forum selection 
provision in 1994, 1995, 1996, and 1997.

[¶5]      On May 26, 1998, 
Appellants filed a complaint against NSA alleging breach of contract, promissory 
estoppel, and fraudulent misrepresentation. NSA responded with a motion to 
dismiss based on the forum selection provision. The motion to dismiss was 
supported by copies of the annual renewal agreements signed by Appellants for 
the years 1994 through 1997 and the affidavit of the Assistant Secretary of NSA. 
Appellants filed a motion in opposition supported by their own affidavits. After 
a hearing on November 17, 1998, the district court granted the motion to dismiss 
enforcing the forum selection provision on the grounds that it was not unjust or 
unreasonable. Appellants have now appealed that ruling to this 
Court.

STANDARD OF 
REVIEW

[¶6]      This is a case of 
first impression in Wyoming. The sole issue is whether the forum selection 
clause of the annual renewal contracts should be enforced. Historically, forum 
selection clauses were viewed with disfavor because they purported "to confer 
jurisdiction on specifically named courts for adjudication of future 
controversies," and, accordingly, "were viewed as unenforceable as `contrary to 
public policy' and as an effort to `oust the jurisdiction' of the forum court." 
Paul Business Systems v. Cannon U.S.A., 397 S.E.2d 804, 807 (Va. 1990); see 
also, The Bremen v. Zapata Off-Shore Company, 407 U.S. 1, 9, 92 S. Ct. 1907, 
1913, 32 L. Ed. 2d 513 (1972). Today, however, most courts hold that forum 
selection clauses are prima facie valid and enforceable unless the opposing 
party demonstrates that enforcement would be unreasonable under the 
circumstances of the case or that it was the result of fraud or unequal 
bargaining power. Paul Business Systems, 397 S.E.2d  at 807; Professional 
Insurance Corporation v. Sutherland, 700 So. 2d 347, 349-50 (Ala. 1997); 
Voicelink Data Services v. Datapulse, 937 P.2d 1158, 1160-61 (Wash. App. Div. 1 
1997); Eads v. Woodmen of the World Life Insurance, 785 P.2d 328, 330-31 
(Okla.App. 1989); Volkswagenwerk, A. G. v. Klippan, GmbH, 611 P.2d 498, 503-04 
(Alaska 1980). In order for a forum selection clause to be unreasonable, 
enforcement must contravene a strong public policy, or the chosen forum must be 
seriously inconvenient for trial of the action. Mellon First United Leasing v. 
Hansen, 705 N.E.2d 121, 125 (Ill.App. 2 Dist. 1998) (quoting The Bremen, 407 U.S.  at 15-16, 92 S.Ct. at 1916-17)).

[¶7]      The rationale 
behind the modern approach to enforcing forum selection clauses is that it 
"serves the salutary purpose of enhancing contractual predictability," Voicelink 
Data Services, 937 P.2d  at 1160, and "comports with traditional concepts of 
freedom of contract and recognizes the present nationwide and worldwide scope of 
business relations which generate multi-jurisdictional litigation." Paul 
Business Systems, 397 S.E.2d  at 807 (citing The Bremen, 407 U.S.  at 11, 92 S.Ct. 
at 1913). "Thus, even where a forum selection clause establishes a remote forum 
for resolution of conflicts, `the party claiming [unreasonableness] should bear 
a heavy burden of proof.'" Voicelink Data Services, 937 P.2d  at 1161 (alteration 
in original) (quoting The Bremen, 407 U.S.  at 17, 92 S.Ct. at 1917). Therefore, 
when reviewing a motion to dismiss based on a forum selection clause, the court 
does not accept the pleadings as true; rather, the party challenging enforcement 
of the clause must present evidence justifying its nonenforcement. Voicelink 
Data Services, 937 P.2d  at 1161.

[¶8]      We adopt the 
modern approach and hold forum selection clauses are prima facie valid and will 
be enforced absent a demonstration by the party opposing enforcement that the 
clause is unreasonable or based upon fraud or unequal bargaining positions. This 
is consistent with our rule whereby we will enforce provisions of a contract 
between the parties declaring that any disputes will be settled with reference 
to the law of a foreign jurisdiction so long as that law is not contrary to 
Wyoming law, public policy, or the general interests of Wyoming's citizens. 
Resource Technology Corporation v. Fisher Scientific Company, 924 P.2d 972, 975 
(Wyo. 1996).

[¶9]      Initially, we 
must address Appellants' contention that the district court erred in granting 
the motion to dismiss because NSA was subject to Wyoming jurisdiction. 
Appellants argue NSA had the requisite minimum contacts with this state, and 
venue in the district court was proper under our statutes. This argument misses 
the point. The issue before us is not whether Wyoming has jurisdiction over this 
matter, but whether Wyoming should exercise its discretion to decline 
jurisdiction over the matter by giving effect to the parties' intent as 
expressed in their contract.1 This concept was succinctly set 
forth by the Oklahoma Court of Appeals:

Although it is 
true "that the parties may not deprive courts of their jurisdiction over causes 
by private agreement . . . courts possess discretion to decline to exercise 
jurisdiction in recognition of the parties' free and voluntary choice of a 
different forum." Smith, Valentino & Smith, Inc. v. Superior Court, 17 Cal. 3d 491, 495, 551 P.2d 1206, 1209, 131 Cal. Rptr. 374, 377 (1976) (in bank). 
Thus, a court in its discretion may refuse to exercise jurisdiction by 
necessarily respecting the intent of contracting parties. Crowson v. Sealaska 
Corp., 705 P.2d 905, 911 (Alaska 1985).

Eads, 785 P.2d  
at 330-31. On appeal, therefore, we will confine our review to a determination 
of whether the district court has abused its discretion by electing to enforce a 
forum selection clause in light of the factors enunciated 
above.

DISCUSSION

[¶10]   Appellants challenge enforcement of 
the forum selection clause in three ways. First, they claim that the original 
1990 distributorship contract constituted "the entire agreement between the 
[Appellants] and NSA" and, consequently, the forum selection clause was added to 
the 1994 annual renewal agreement without any consideration. Appellants also 
argue that the cause of action accrued, at least in part, prior to inclusion of 
the clause in the 1994 annual renewal agreement. The flaw in this argument is 
that it fails to recognize that pursuant to the original 1990 distributorship 
agreement, Appellants' continued relationship with NSA was specifically 
conditioned upon their signing annual renewal agreements. Appellants signed the 
1994 annual renewal agreement and all subsequent ones which contained the choice 
of forum clause, the consideration for which was Appellants' right to continue 
to distribute NSA's products. Appellants' argument is similar to the one made in 
SIMM Associates, Inc. v. PNC National Bank, 1998 WL 961764 (Del.Super. Oct. 8, 
1998). In that case, SIMM had an agreement with BancOne which was subsequently 
purchased by PNC. Thereafter, PNC and SIMM executed a "renewal" of the prior 
agreement between SIMM and BancOne. The "renewal" agreement contained a forum 
selection clause which was not part of the original agreement between SIMM and 
BancOne.

[SIMM] also 
contends that there was no mutuality of obligation because the forum selection 
clause was not supported by independent consideration. A valid contract is one 
that has mutuality of obligation and a remedy between the parties to it. A 
mutuality of obligation defense cannot be interposed where, as here, the 
contract is supported by adequate consideration. The fact that there was no 
consideration given specifically for the forum selection clause does not render 
the clause invalid where consideration is given for the contract. [SIMM] 
obviously wanted the advantage of the business.

SIMM, 1998 WL 
961764 at *5 (citations omitted). Likewise, Appellants wanted the advantage of 
their business relationship with NSA, demonstrated by their signing of the 
annual renewal agreements containing the disputed clause. They cannot now 
complain about the terms and conditions of the contracts they entered into 
simply because the nature of their relationship with NSA has 
changed.

[¶11]   In addition, it is irrelevant 
whether part of Appellants' cause of action accrued prior to the addition of the 
forum selection clause. In some circumstances, parties may, by agreement, limit 
the place or court in which an action may be brought after a cause of action has 
arisen. See Francis M. Dougherty, Validity of contractual provision limiting 
place or court in which action may be brought, 31 A.L.R.4th 404 § 6 (1984), and 
cases cited therein.

[¶12]   Second, Appellants claim that the 
clause is relevant only to claims directly based on the contract and, therefore, 
is inapplicable to their claims for detrimental reliance and fraudulent 
misrepresentation. A similar argument was ably refuted by the Texas Court of 
Appeals:

Pleading 
alternative noncontractual theories of recovery will not alone avoid a forum 
selection clause if those alternative claims arise out of the contractual 
relations and implicate the contract's terms. * * * Here, [the appellant's] 
petition asserts causes of action for breach of contract, negligent 
misrepresentation, violations of [the Texas Deceptive Trade Practice-Consumer 
Protection Act], fraud, and gross negligence. Nevertheless, all of the claims 
arise out of the parties' contractual relations and necessarily implicate the 
contracts' terms.

Accelerated 
Christian Education, Inc. v. Oracle Corporation, 925 S.W.2d 66, 72 (Texas 
App.Ct. 1996) (citations and footnotes omitted). The forum selection clause in 
this case states that "any and all claims involving this agreement" are to be 
brought in the courts of Shelby County, Tennessee. From the face of Appellants' 
complaint, it is clear that their claims for promissory estoppel and fraudulent 
misrepresentation necessarily implicate the terms of the contract. "Artful 
pleading" of noncontract claims to avoid a forum selection clause will not be 
tolerated. Lambert v. Kysar, 983 F.2d 1110, 1121 (1st Cir. 
1993).

[¶13]   Finally, Appellants argue that the 
original distributorship agreement and the subsequent annual renewal agreements 
were contracts of adhesion and, as such, the clause should not be enforced. A 
contract of adhesion is one in which one party to the agreement has little or no 
bargaining power to vary the terms thereof. Doctors' Company v. Insurance 
Corporation of America, 864 P.2d 1018, 1024 (Wyo. 1993). Appellants have 
provided no evidence that the contracts at issue in this matter were ones of 
adhesion. The Appellants even admit in their affidavits that they never read the 
annual renewal contracts before signing them. From the record it is impossible 
for us to determine the relative bargaining power of the parties or that there 
was no opportunity for negotiation. The burden of proof is on the party opposing 
enforcement of the forum selection clause, and we will not indulge in the 
speculation necessary to make a finding that the contract was one of adhesion. 
See Hauenstein & Bermeister, Inc. v. Met-Fab Industries, Inc., 320 N.W.2d 886, 891 (Minn. 1982).

CONCLUSION

[¶14]   Appellants have failed to present 
any evidence that the forum selection clause is unreasonable, against any public 
policy of this state, or that the forum of choice in Tennessee is seriously 
inconvenient. Because Appellants have failed to provide any evidence in 
opposition to the motion to dismiss, they have failed to satisfy their heavy 
burden of proof as the party opposing enforcement of a forum selection clause. 
Therefore, the district court's decision to decline to exercise jurisdiction in 
this matter and to enforce the forum selection clause did not constitute an 
abuse of discretion and is hereby affirmed.

Footnotes

1 The concept 
that a court can decline to exercise jurisdiction which it otherwise could 
legitimately exercise has been recognized previously by this Court in the 
doctrine of forum non conveniens. West Texas Utilities Company v. Exxon Coal 
USA, Inc., 807 P.2d 932, 935 (Wyo. 1991); Booth v. Magee Carpet Company, 548 P.2d 1252 (Wyo. 1976).