## In the 

# United States Court of Appeals
For the Seventh Circuit

____________
No. 05-4483

C AROLYN G. K OCHERT , Plaintiff-Appellant,

v.

A DAGEN M EDICAL I NTERNATIONAL , I NCORPORATED and N ORTH AMERICAN M EDICAL C ORPORATION , 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.

____________ A RGUED S EPTEMBER 6, 2006—D ECIDED J UNE 28, 2007

____________

Before R OVNER , E VANS , and S YKES , Circuit Judges

. S YKES , Circuit Judge . This appeal presents the question whether a claim for fraudulent inducement of a contract is subject to the cont ract’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 inthe Northern District ofIndiana 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 co urt dismissed Kochert’s complaint for improper venue, citing the contract’s “Governing Law/Venue/Forum” clause, which provides (among other things) that Kochert consen ts to “jurisdiction, venue and forum in the State Court of Fulton Count y, Georgia.” The court took the view that any misrepresentation forming the basis of Kocher t’s fraudulent inducement claim “necessarily” became “p art 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 fraudulentinducement claim generally requires an election of remedies: either affirm the contra ct, retain the benefits, and seek damages, or rescind th e 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 su e for damages; that election, however, does not necessarilymake the alleged misrepresentation “part of” the contract, as the district court apparently thought was requir ed 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 cert ain 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 th e nature of the claim; that choice is valid, enforceable, and broad enough to apply to Kochert’s fraudule nt inducement claim.No. 05-4483 3

I. Background Kochert, an anesthesiologistand pain specialist practicing in Lafayette, consideredpurchasing the Accu-Spina System (the “System”) from Adagen for use in her medical practice. The System administ ers 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 su ch as Medicare and private insurers. In reliance on th ese representations, Kochert entered into a written purchase and sale agreement with Adagen. Both parties fully performed under the contract, which is to say Adagen deliv ered and installed the System and Kochert made full pa yment. Kochert began using the System to treat patients ; however, third-party payors subsequently denied her reimbursement claims.

Kochert sued Adagen for fr audulent inducement but did not (and could not) allege a separate claim for breach of contract; the contract contained no warranty or otherlanguage 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, ci ting the contract’s “Governing Law/Venue/Forum” clause . That clause provides as follows:

GOVERNING LAW/VENUE/FORUM This Agreement and the ri ghts and obligations ofBuyer 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 of4 No. 05-4483

inconvenient forum and further irrevocably waives trial by jury. Any controversy, dispute, claim or complaint of whatever na ture arising out of, in connection with, or in re lation to the interpretation, performance or brea ch 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 Fu lton, State of Georgia. . . . (Emphasis added.)

The district court granted the Rule 12(b)(3) motion, holding that Kochert’s frau dulent inducement claim “arises out of, is connected with, and relates to” a breachof 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 th is dispute.” The appropriate forum, the court held, “is the State Court in FultonCounty, Georgia.” The court later granted Kochert’s motion to reconsider “to the following extent: the essential holding of the Court’s . . . orde r was that this Court is not the proper venue for the Plaintiff’s cause of action. That essential holding shall rema in 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 questi on about what law applies. Neither the district court nor the parties has directly addressed the matter. The dist rict court applied federal law. In their appellate briefing , both sides apply the law of the forum, Indiana, andfederal law. Neither party argues that the application of Georgia law (pursuant to the contract’s choice-of-law pro vision) 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 ratherthan 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 st ate law; they dispute only whether this lawsuit falls with in the scope of the clause.

As we have noted, the forum-selection clause is located in the paragraph of the co ntract entitled “GoverningLaw/Venue/Forum,” which addresses choice of law, jurisdiction, venue, forum selection, and arbitration. The first clause of the paragraph spec ifies that “this Agreement” and the “rights and obligatio ns” of the parties “shall be governed by and construed inaccordance with the laws of the State of Georgia.” This choice-of-law provision is immediately followed by the fo rum-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 inte rpretation, performance or breach of this Agreemen t 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 contra ct. Here, the contract was fully performed in that Adag en delivered the System and Kochert paid for it, so she ha s no claim for breach. In anyevent, 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 co mpletely independent of the contract, and the forum-selection clause therefore does not apply. The flaw in this line of argume nt is that it relies on the language of the arbitration clause, but the question of arbitrability is not presently before the court. Adagen didnot move to compel arbitration pursuant to the arbitration clause; it moved to dism iss 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 present ed; the parties’ dispute about arbitrability must be left for another day.No. 05-4483 7

The district judge got off onthe wrong foot by adopting Kochert’s mode of analysis. Referring to the language of the arbitration clause, the ju dge 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 “necessar ily part of the ‘Agreement’ that defines the appropriate fo rum for this dispute.” This is both an incorrect reading of the contract and incorrect asa matter of common law. Taking the latter first, a misrepresentation that fraudulentlyinduces 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 betweentwo remedies. . . . One alternative is to affirm th e contract, retain the benefits, and seek damages. . . . The other alternative is to rescind the contract, retu rn any benefits received, and be returned to the status quo. . . . If a party elects to rescind the contract, th e 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 electi on of remedies requirement in fraudulent inducement case s is not particular to Indiana. See R ESTATEMENT (S ECOND ) OF C ONTRACTS §§ 164 cmt. a, 378 (1981); R ESTATEMENT (S ECOND ) OF T ORTS , § 896 cmt. b (1977); 48 AM

. J UR

. 3 D Proof of Facts § 329 at § 17 (2007). Here, Kochert affirmed the contract and sued for damages, but this election does not mean the alleged8 No. 05-4483

1 We express no opinion on the proper interpretation of the arbitration clause.

2 Contractual jurisdiction, ve nue, 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 sign ificance 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 referenc e 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 ph rased far more generally. In it, Kochert consents to “jurisdiction, venue and forum in the State Court of Fulton Co unty, 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 induce ment claim stems from her contractual relationship wi th Adagen. The contract’sNo. 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 FultonCounty, Georgia, for the resolution of disputes, regardl ess of the category of the claim. This broad language is most reasonably interpreted to encompass Kochert’s fraudu lent inducement claim. Theparties’ 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-sele ction clause applies here.

Our conclusion is consistent with American Patriot Insurance Agency v. MutualRisk Management, Ltd., 364 F.3d 884 (7th Cir. 2004). There, the plaintiff sued for breach of contract and fraudu lent 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 pu rely 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 su e on, of legal theories to press, and of defendants to name in the suit.” Id. at 888. That theplaintiff 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 contra ct 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 co ntractual relationship does not obliterate the contract ual setting, does not make the dispute any less one arising under or out of or concerning the contract, and does not point to a better10 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 Patriotis 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 thatthis 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 purpo ses 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 businessrelationship claim is not covered by a contractual forumselection clause). For the foregoing reasons, the district court’s orderdismissing this action on improper venue grounds pursuant to Rule 12(b)(3) is AFFIRMED

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________________________________ Clerk of the United States Court of

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USCA-02-C-0072—6-28-07