In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 05-4483

CAROLYN G. KOCHERT,

Plaintiff-Appellant,

v.

ADAGEN MEDICAL INTERNATIONAL, INCORPORATED

and NORTH AMERICAN MEDICAL CORPORATION,

Defendants-Appellees.

____________

Appeal from the United States District Court for the

Northern District of Indiana, Hammond Division at Lafayette.

No. 05 C 40—Allen Sharp, Judge.

____________

ARGUED SEPTEMBER 6, 2006—DECIDED JUNE 28, 2007

____________

Before ROVNER, EVANS, and SYKES, Circuit Judges.

SYKES, Circuit Judge. This appeal presents the question whether a claim for fraudulent inducement of a

contract is subject to the contract’s forum-selection clause,

and if so, whether the district court correctly dismissed

this suit for improper venue. Carolyn Kochert, a medical

doctor based in Lafayette, Indiana, filed a single-count

complaint in federal court in the Northern District of

Indiana seeking damages against Adagen Medical International, Inc., and North American Medical Corporation

(collectively “Adagen”), each with principal places of

business in Georgia. Kochert alleged Adagen made fraudu-
2 No. 05-4483

lent written and verbal representations to induce her to

enter into a contract to purchase a piece of medical

equipment. The district court dismissed Kochert’s complaint for improper venue, citing the contract’s “Governing

Law/Venue/Forum” clause, which provides (among other

things) that Kochert consents to “jurisdiction, venue

and forum in the State Court of Fulton County, Georgia.”

The court took the view that any misrepresentation

forming the basis of Kochert’s fraudulent inducement

claim “necessarily” became “part of” the contract, making

the claim subject to the forum-selection clause.

We affirm, but on different reasoning. A misrepresentation made in the inducement of a contract is not “necessarily” incorporated into the contract. A fraudulent

inducement claim generally requires an election of remedies: either affirm the contract, retain the benefits, and

seek damages, or rescind the contract, return the benefits, and seek restitution (reimbursement for expenses

incurred as a result of the fraud). Here, Kochert elected

to affirm the contract and sue for damages; that election,

however, does not necessarily make the alleged misrepresentation “part of” the contract, as the district court

apparently thought was required for the forum-selection

clause to apply.

But dismissal for improper venue was correct in any

event. The forum-selection clause contains no language

limiting its application to certain categories of claims or

remedies. The parties agreed to the State Court of Fulton

County, Georgia, as the place of “jurisdiction, venue and

forum” for disputes about their respective rights and

obligations without regard to the nature of the claim; that

choice is valid, enforceable, and broad enough to apply

to Kochert’s fraudulent inducement claim.
No. 05-4483 3

I. Background

Kochert, an anesthesiologist and pain specialist practicing in Lafayette, considered purchasing the Accu-Spina

System (the “System”) from Adagen for use in her medical

practice. The System administers a form of noninvasive,

nonsurgical, computer-directed treatment for back pain,

and in communications leading up to the purchase, Adagen

made verbal and written representations to Kochert that

patient treatments using the System would be reimbursable by third-party payors such as Medicare and private

insurers. In reliance on these representations, Kochert

entered into a written purchase and sale agreement with

Adagen. Both parties fully performed under the contract,

which is to say Adagen delivered and installed the System and Kochert made full payment. Kochert began using

the System to treat patients; however, third-party payors

subsequently denied her reimbursement claims.

Kochert sued Adagen for fraudulent inducement but

did not (and could not) allege a separate claim for breach

of contract; the contract contained no warranty or other

language relating to third-party payors or the reimbursability of treatment claims. Adagen moved to dismiss for

improper venue pursuant to Rule 12(b)(3) of the Federal

Rules of Civil Procedure, citing the contract’s “Governing Law/Venue/Forum” clause. That clause provides as

follows:

GOVERNING LAW/VENUE/FORUM

This Agreement and the rights and obligations of

Buyer and Seller shall be governed by and construed in accordance with the laws of the State of

Georgia in the United States of America. Buyer

agrees to consent to jurisdiction, venue and forum

in the State Court of Fulton County, Georgia,

United States of America. Buyer further agrees to

and does hereby irrevocably waive the defense of
4 No. 05-4483

inconvenient forum and further irrevocably waives

trial by jury. Any controversy, dispute, claim or

complaint of whatever nature arising out of, in

connection with, or in relation to the interpretation, performance or breach of this Agreement

including any claim based on contract, tort or

statute, shall be resolved through a binding,

irrevocable and final Arbitration at JAMS/

ENDISPUTE, County of Fulton, State of Georgia. . . .

(Emphasis added.)

The district court granted the Rule 12(b)(3) motion,

holding that Kochert’s fraudulent inducement claim

“arises out of, is connected with, and relates to” a breach

of the parties’ contract because “[a]ny promise or representation that could give rise to a fraud in the inducement

claim is necessarily part of the ‘Agreement’ that defines

the appropriate forum for this dispute.” The appropriate forum, the court held, “is the State Court in Fulton

County, Georgia.” The court later granted Kochert’s motion to reconsider “to the following extent: the essential

holding of the Court’s . . . order was that this Court is not

the proper venue for the Plaintiff’s cause of action. That

essential holding shall remain unchanged. However, the

Court does not wish to opine on the proper forum for this

dispute, and any statement contained in the . . . order

that could be read as doing so should be disregarded.”

(Emphasis in original.)

II. Discussion

The district court’s order granting Adagen’s Rule 12(b)(3)

motion for improper venue based on the contractual forumselection clause is subject to de novo review. Cont’l Cas.

Co. v. Am. Nat’l Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005);
No. 05-4483 5

Cont’l Ins. Co. v. M/V Orsula, 354 F.3d 603, 607 (7th Cir.

2003).

There is a threshold question about what law applies.

Neither the district court nor the parties has directly

addressed the matter. The district court applied federal

law. In their appellate briefing, both sides apply the law of

the forum, Indiana, and federal law. Neither party argues

that the application of Georgia law (pursuant to the

contract’s choice-of-law provision) would alter the outcome of the case. Where the parties have not identified

a conflict in state law, we will generally apply the law of

the forum state. Gould v. Artisoft, Inc., 1 F.3d 544, 549 n.7

(7th Cir. 1993). But as between Indiana and federal law,

the rule is unclear. We have previously noted that it is

unsettled in this circuit “whether state or federal law

applies in a dispute over a forum selection clause when

the case is dismissed rather than transferred pursuant

to 28 U.S.C. § 1404(a).” Muzumdar v. Wellness Int’l

Network, Ltd., 438 F.3d 759, 761 n.2 (7th Cir. 2006); see

also IFC Credit Corp. v. Aliano Bros. Gen. Contractors,

Inc., 437 F.3d 606, 608-09 (7th Cir. 2006). We need not

resolve the question here, however. The parties agree

that the forum-selection clause is valid and enforceable

under either federal or state law; they dispute only

whether this lawsuit falls within the scope of the clause.

As we have noted, the forum-selection clause is located

in the paragraph of the contract entitled “Governing

Law/Venue/Forum,” which addresses choice of law, jurisdiction, venue, forum selection, and arbitration. The first

clause of the paragraph specifies that “this Agreement”

and the “rights and obligations” of the parties “shall be

governed by and construed in accordance with the laws of

the State of Georgia.” This choice-of-law provision is

immediately followed by the forum-selection clause, which

provides that Kochert “agrees to consent to jurisdiction,

venue and forum in the State Court of Fulton County,
6 No. 05-4483

Georgia.” The next sentence waives any inconvenient

forum defense and trial by jury. Finally, there is an

arbitration clause:

Any controversy, dispute, claim or complaint of whatever nature arising out of, in connection with, or

in relation to the interpretation, performance or

breach of this Agreement including any claim based

on contract, tort or statute, shall be resolved through

a binding, irrevocable and final Arbitration at

JAMS/ENDISPUTE, County of Fulton, State of Georgia.

Kochert structures her argument around the language

of the arbitration clause. She asserts that her claim for

fraudulent inducement does not “arise out of,” is not

“connected with,” and does not “relate to” the “interpretation, performance or breach” of the contract. A fraudulent

inducement claim, she argues, is separate and distinct

from a claim on the contract. Here, the contract was

fully performed in that Adagen delivered the System and

Kochert paid for it, so she has no claim for breach. In any

event, her argument continues, the contract’s integration clause and the parole evidence rule preclude her

from making a contract claim based on statements

Adagen made during contract negotiations. Her fraud

claim, she maintains, is completely independent of the

contract, and the forum-selection clause therefore does

not apply.

The flaw in this line of argument is that it relies on the

language of the arbitration clause, but the question of

arbitrability is not presently before the court. Adagen did

not move to compel arbitration pursuant to the arbitration clause; it moved to dismiss pursuant to Rule 12(b)(3)

for improper venue. True, Adagen believes that Kochert’s

claim must be submitted to arbitration, but that question

has not been properly presented; the parties’ dispute

about arbitrability must be left for another day.
No. 05-4483 7

The district judge got off on the wrong foot by adopting

Kochert’s mode of analysis. Referring to the language of

the arbitration clause, the judge concluded that Kochert’s

fraudulent inducement claim “arises out of, is connected

with, and relates to [a] breach of the agreement in question” because “[a]ny promise or representation” underlying

the fraud claim is “necessarily part of the ‘Agreement’

that defines the appropriate forum for this dispute.” This

is both an incorrect reading of the contract and incorrect as

a matter of common law. Taking the latter first, a misrepresentation that fraudulently induces the making of a

contract does not “necessarily” become “part of ” the

contract. Under Indiana law:

Generally, a party bringing an action for fraud in the

inducement must elect between two remedies. . . . One

alternative is to affirm the contract, retain the benefits, and seek damages. . . . The other alternative is

to rescind the contract, return any benefits received,

and be returned to the status quo. . . . If a party elects

to rescind the contract, the trial court must adjust

the equities and attempt to return the parties to the

status quo. . . . This usually necessitates not just a

rescission of the contract, but also a return of money

or other things received or paid under the contract,

plus reimbursement as special damages, for any

reasonable expenditures incurred as a proximate

result of the fraudulent conduct.

Am.’s Directories, Inc. v. Stellhorn One Hour Photo, Inc.,

833 N.E.2d 1059, 1068 (Ind. Ct. App. 2005) (internal

citations omitted). The election of remedies requirement

in fraudulent inducement cases is not particular to Indiana. See RESTATEMENT (SECOND) OF CONTRACTS §§ 164

cmt. a, 378 (1981); RESTATEMENT (SECOND) OF TORTS, § 896

cmt. b (1977); 48 AM. JUR. 3D Proof of Facts § 329 at § 17

(2007). Here, Kochert affirmed the contract and sued for

damages, but this election does not mean the alleged
8 No. 05-4483

1 We express no opinion on the proper interpretation of the

arbitration clause.

2 Contractual jurisdiction, venue, and forum clauses can be

mandatory (exclusive) or permissive (nonexclusive). See, e.g.,

Muzumdar v. Wellness Int’l Network, Ltd., 438 F.3d 759,761-62

(7th Cir. 2006); Frietsch v. Refco, Inc., 56 F.3d 825, 829 (7th Cir.

1995); Paper Express Ltd. v. Pfankuch Maschinen GmbH, 972

F.2d 753, 755-57 (7th Cir. 1992).

misrepresentation (if proved) is incorporated into the

contract, as the district judge apparently believed.

The district court also mistakenly imported the terms

of the arbitration clause into the forum-selection clause.

Perhaps the language of the arbitration clause does have

some limited interpretive significance here; it, like the

forum-selection clause, points to Fulton County, Georgia.

But the district court was wrong to decide the Rule

12(b)(3) motion by reference to the specific limiting

language contained in the arbitration clause when the

question of arbitrability was not before the court. The

forum-selection clause is phrased far more generally. In

it, Kochert consents to “jurisdiction, venue and forum in

the State Court of Fulton County, Georgia” without regard

to the nature of the claim. The forum-selection clause

contains no language limiting its application to claims

“arising out of, in connection with, or in relation to the

interpretation, performance or breach” of the contract, as

does the arbitration clause.1

 Kochert might have argued

that the forum-selection clause should be construed as

merely permissive or nonexclusive.2

 But she did not raise,

much less develop this argument, and undeveloped

arguments are waived. Wang v. Gonzales, 445 F. 3d 993,

999 (7th Cir. 2006); Weinstein v. Schwartz, 422 F.3d 476,

477 n.1 (7th Cir. 2005).

Kochert’s fraudulent inducement claim stems from her

contractual relationship with Adagen. The contract’s
No. 05-4483 9

forum-selection clause is not limited to claims for breach.

The language stipulates to “jurisdiction, venue and forum”

in the State Court of Fulton County, Georgia, for the

resolution of disputes, regardless of the category of the

claim. This broad language is most reasonably interpreted

to encompass Kochert’s fraudulent inducement claim. The

parties’ choice of Georgia law and arbitration (if applicable) in Fulton County, Georgia, also suggests that venue

in the Northern District of Indiana is improper. We

conclude that the forum-selection clause applies here.

Our conclusion is consistent with American Patriot

Insurance Agency v. Mutual Risk Management, Ltd., 364

F.3d 884 (7th Cir. 2004). There, the plaintiff sued for

breach of contract and fraudulent inducement. The parties’

forum-selection clause provided that “any dispute concerning this Agreement shall be resolved exclusively by the

courts of Bermuda.” Id. at 886. The plaintiff argued that

because its claims were not purely contractual, the forumselection clause should not apply. We disagreed, noting

that a plaintiff cannot defeat a forum-selection clause “by

its choice of provisions to sue on, of legal theories to press,

and of defendants to name in the suit.” Id. at 888. That the

plaintiff alleged fraud was not enough to make the contract’s forum-selection clause inapplicable:

[A] dispute over a contract does not cease to be such

merely because instead of charging breach of contract

the plaintiff charges a fraudulent breach, or fraudulent

inducement, or fraudulent performance. . . . The

reason is not that contract remedies always supersede fraud remedies in a case that arises out of a

contract; sometimes they do, sometimes they don’t. . . .

It is that the existence of multiple remedies for

wrongs arising out of a contractual relationship does

not obliterate the contractual setting, does not make

the dispute any less one arising under or out of or

concerning the contract, and does not point to a better
10 No. 05-4483

forum for adjudicating the parties’ dispute than the

one they had selected to resolve their contractual

disputes.

Id. at 889 (internal citations omitted).

It is true that the language of the forum-selection clause

in American Patriot is stronger than that in the forumselection clause here, using the words “shall” and “exclusively” whereas the language in our clause is the more

general “Buyer agrees to consent to jurisdiction, venue

and forum in the State Court of Fulton County, Georgia.”

But Kochert did not argue that this forum-selection clause

is permissive rather than mandatory, as we have noted.

And American Patriot’s primary point—that alleging a

noncontract claim or remedy does not “obliterate the

contractual setting” for purposes of the forum-selection

clause—is fully applicable here. See also Hugel v. Corp. of

Lloyd’s, 999 F.2d 206, 209 (7th Cir. 1993) (rejecting the

argument that a tortious interference with business

relationship claim is not covered by a contractual forumselection clause).

For the foregoing reasons, the district court’s order

dismissing this action on improper venue grounds pursuant to Rule 12(b)(3) is AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—6-28-07