Title: Keelean v. Central Bank of the South

State: alabama

Issuer: Alabama Supreme Court

Document:

544 So. 2d 153 (1989)
Robert G. KEELEAN and Albert J. Geiger, Jr.
v.
CENTRAL BANK OF THE SOUTH.
Thomas V. SLAUGHTER
v.
CENTRAL BANK OF THE SOUTH.
87-689, 87-690.

Supreme Court of Alabama.
April 7, 1989.
*154 Sydney Lavender, Gilbert E. Johnston, Jr. and Robert S. Vance, Jr. of Johnston, Barton, Proctor, Swedlaw & Naff, Birmingham, for appellant Robert G. Keelean.
Lee R. Benton of Schoel, Ogle, Benton, Gentle & Centeno, Birmingham, for appellant Albert J. Geiger, Jr.
Michael J. Evans of Longshore, Evans & Longshore, Birmingham, for appellant Thomas V. Slaughter.
Michael L. Edwards and Martha F. Petrey of Balch & Bingham, Birmingham, for appellee.
ADAMS, Justice.
This is an interlocutory appeal pursuant to Rule 5(a), A.R.App.P., from an order of the Circuit Court for Jefferson County denying defendants' motions to dismiss for lack of personal jurisdiction. We affirm.
In November 1984, Holdco of Pinellas County, Inc. ("Holdco"), a Florida corporation, executed and delivered to Central Bank of the South ("Central Bank"), an Alabama banking corporation, a promissory note with a principal amount of $4,000,000. All negotiations regarding the promissory note took place either via telephone between representatives of Holdco and Central Bank, or in Florida between representatives of Holdco and Central Bank. The promissory note was guaranteed by several individuals, including appellants/guarantors, Robert G. Keelean, Albert Geiger, Jr., and Thomas V. Slaughter, who all delivered their continuing unlimited guarantees to Central Bank for the debts, obligations, and liabilities of Holdco. No evidence was presented that any of the individual guarantors participated in the promissory note negotiations.
Holdco defaulted on the promissory note. Central Bank filed suit in Jefferson County Circuit Court on the debt on August 11, 1987.[1] Central Bank named Holdco, Keelean, Geiger, and Slaughter as defendants in this action. The guaranty signed by Keelean, Geiger, and Slaughter contained a forum *155 selection clauses, which stated in pertinent part:
Central Bank uses this language to assert that the court has personal jurisdiction in Jefferson County, Alabama, over the guarantors to Holdco's obligation to Central Bank.
Three issues are presented by this appeal:
I. Whether forum selection clauses are void as against public policy in this State.
II. Whether signing a guaranty out of state that will have economic effects in this State will satisfy Alabama's long-arm requirement that a defendant have contacts with Alabama sufficient for an Alabama court to properly exercise jurisdiction over that party.
III. Whether the interests of justice warrant the application of the doctrine of forum non conveniens.
The general rule regarding forum selection clauses in this State was articulated in Redwing Carriers, Inc. v. Foster, 382 So. 2d 554 (Ala.1980), where we wrote:
"`... contractual agreements by which it is sought to limit particular causes of action which may arise in the future to a specified place, are held invalid.'"
382 So. 2d  at 556. We addressed this issue again in Conticommodity Services, Inc. v. Transamerica Leasing, Inc., 473 So. 2d 1053 (Ala.1985), in which we affirmed the rule in Redwing Carriers.
Appellants rely on our holdings in Redwing Carriers and Conticommodity Services, to invalidate the forum selection clause in the guaranty contracts. Central Bank, on the other hand, attempts to distinguish and/or redefine our holding in Redwing Carriers by arguing 1) that Redwing Carriers stands for the proposition that a forum selection clause is valid as long as it does not divest an Alabama court of jurisdiction; and 2) that Redwing Carriers applies only to subject matter jurisdiction, not personal jurisdiction. We must disagree with Central Bank on both counts. Our *156 holding in Redwing Carriers, supra, specifically stated:
382 So. 2d  at 556.
Thus, we treat forum selection clauses as invalid, and we cannot consider this one valid simply because it does not divest an Alabama court of jurisdiction. We expressly hold, also, that Redwing Carriers, supra, includes personal jurisdiction as well as subject matter jurisdiction.
We next determine whether in this case in personam jurisdiction exists in an Alabama court via Alabama's long-arm rule. Rule 4.2(a)(2), A.R.Civ.P., sets out the bases for personal jurisdiction over nonresident defendants. It provides:
Hanson v. Denckla, 357 U.S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958), requires that a nonresident defendant have certain minimum contacts with a state in order for that state's courts to acquire personal jurisdiction over that defendant. A twofold analysis is used in this state in determining whether personal jurisdiction exists over a nonresident defendant:
*157 2) the determination of the degree of contact that the nonresident defendant has with this state.
See Alabama Waterproofing Co. v. Hanby, 431 So. 2d 141 (Ala.1983); Duke v. Young, 496 So. 2d 37 (Ala.1986); and Shrout v. Thorsen, 470 So. 2d 1222 (Ala. 1985). Appellants/guarantors argue first that although the Central Bank loan to Holdco and Holdco's subsequent default on that loan had a substantial impact on the economy of the State of Alabama, their mere signing of guarantees for the payment of that loan did not make their being haled into an Alabama court foreseeable. They contend that their relationship to Holdco as guarantors of the loan could not satisfy the requirement of contact with the forum. They buttress their argument with the rule stated in Hanson v. Denckla, 357 U.S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958), in which the Supreme Court stated:
357 U.S.  at 253, 78 S. Ct.  at 1239-40, 2 L. Ed. 2d  at 1298. It is easily conceivable that the primary obligor (Holdco) could reasonably anticipate being called to defend itself in this state, from which it utilized its economic resources. But, can those who guaranteed the loan and received no direct benefits from the loan made by Central to Holdco conceivably have foreseen being haled into an Alabama court on this debt? Or, does the mere signing of a guaranty, out of state, for performance in state, present the sufficient contact with the State of Alabama necessary for in personam jurisdiction? In Alabama Waterproofing Co. v. Hanby, 431 So. 2d 141 (Ala.1983), we upheld the trial court's holding that due process requirements were met by a guaranty signed by nonresident spouses of buyers, even though the guaranty was signed in Mississippi and the spouses were and had been at all times during the negotiations residents of the State of Mississippi. We noted that the transactions would have consequences in this State and that those consequences would make it foreseeable that the spouses would be sued in this State. 431 So. 2d  at 144-46. We are of the opinion that the rationale of Alabama Waterproofing is applicable to this case. In determining whether the nonresident guarantors possessed sufficient contact with the State of Alabama for a trial court to obtain in personam jurisdiction, it is necessary for us to examine all the relevant facts of the case, Alabama Waterproofing, supra. It appears from the record that all guarantors were aware that they were guaranteeing payment of the debts and liabilities of a Florida corporation that was borrowing $4,000,000 from an Alabama corporation. It is quite foreseeable that upon the default of that loan, they would be held accountable on their contracts of guaranty in the State of Alabama. Applying the "effects test" mandated by Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984); Alabama Waterproofing Co. v. Hanby, 431 So. 2d 141 (Ala.1983); Duke v. Young, 496 So. 2d 37 (Ala.1986), we determine that clearly the appellants/guarantors should have foreseen the effects of their contracts of guaranty in the State of Alabama in the event of a default on the promissory note. A clear and firm connection exists between the execution of the promissory note, the subsequent default, the contracts of guaranty, and this litigation. Furthermore, it is clear that the signing of the contracts of guaranty for this loan gave appellants/guarantors the requisite "fair warning" required by Burger King Co. v. Rudzewicz, 471 U.S. 462, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985), which states:
471 U.S.  at 472, 105 S. Ct.  at 2182.
We, therefore, hold that the signing of the guarantees was sufficient to create the sufficient contact required by the 14th Amendment to the U.S. Constitution, see Rule 4.2(a)(2)(I), so that the Alabama court has in personam jurisdiction.
We next turn to the final issue raised on appeal, which is whether the doctrine of forum nonconveniens should be applied in this case.
The defendants argue that in the interest of justice and to avoid any undue inconvenience to them and to other nonparty witnesses, this case should be heard in the State of Florida. They further contend that all documents regarding this matter are being held by the Federal Deposit Insurance Corporation in St. Petersburg, Florida, and that based on those facts, we should decline to exercise jurisdiction in this case. We must reject the defendants' contention as based on an insufficient showing of hardship. It has not been shown how the parties and witnesses will be inconvenienced in coming to Alabama to litigate this matter, any more than the plaintiffs would be inconvenienced in having to go to Florida. It is also not apparent how the documentation located at the Federal Deposit Insurance Corporation office in St. Petersburg, Florida, creates inconvenience to the defendants, given our ample selection of discovery devices.
*159 For the foregoing reasons, the order of the trial court is due to be affirmed.
AFFIRMED.
HORNSBY, C.J., and ALMON, J., concur.
MADDOX, JONES and STEAGALL, JJ., concur specially.
MADDOX, Justice (concurring specially).
I concur in the holding of the majority. I am of the opinion, however, that contractual provisions providing for personal jurisdiction are valid and enforceable and do not violate any principles of due process. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 2182, 85 L. Ed. 2d 528 (1985); National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 316, 84 S. Ct. 411, 11 L. Ed. 2d 354, 358 (1964). The Supreme Court said in the Burger King case:
471 U.S.  at 472 n. 14, 105 S. Ct.  at 2182 n. 14.
I recognize that this Court's case of Redwing Carriers, Inc. v. Foster, 382 So. 2d 554 (Ala.1980), did hold that an Alabama court's jurisdiction over subject matter cannot be waived by consent of the parties, but this Court, in that case, also opined:
382 So. 2d  at 556 (emphasis added).
The Eleventh Circuit Court of Appeals, discussing the Redwing Carrier case, said:
"`We consider contract provisions which attempt to limit the jurisdiction of the courts of this state to be invalid and unenforceable as being contrary to public policy.'"
Stewart Organization, Inc. v. Ricoh Corp., 810 F.2d 1066, 1069 (11th Cir.1987) (emphasis added in Stewart Organization).
It is my opinion that a contract provision such as the one agreed to by each appellant, which upholds and protects the jurisdiction of this State's courts, is not inconsistent with Redwing Carriers or with Conticommodity Services, Inc. v. TransAmerica Leasing, Inc., 473 So. 2d 1053 (Ala.1985), relied upon by appellants.
I also agree that, under traditional principles of law that apply to the doing of business in this State, the judgment of the trial court is due to be affirmed, even if the contract is ineffective.
STEAGALL, Justice (concurring specially).
The majority, while affirming the lower court's denial of appellants' motions to dismiss for lack of personal jurisdiction, expressly extends our holding in Redwing Carriers, Inc. v. Foster, 382 So. 2d 554 (Ala.1980), to hold all forum selection clauses void as against the public policy of this *160 state. As the appellee states in its brief, correctly I believe, Redwing Carriers is clearly distinguishable and should not apply in this case. Here, the forum selection clause was not divesting the Alabama courts of subject matter jurisdiction, as prohibited by Redwing Carriers, but was vesting jurisdiction in Alabama courts. Where, as here, the forum selection clause entrusts jurisdiction upon a court of this state, I do not believe that the public policy concerns expressed in Redwing Carriers have been violated. I would, therefore, concur with the majority opinion except for that part that extends this Court's holding in Redwing Carriers to hold all forum selection clauses void as against public policy.
JONES, J., concurs.
[1]  On August 11, 1987, the principal amount due was $627,500. Interest due was calculated to be 029,820.95, with interest accruing at a rate of $152.52 per day.