Opinion ID: 1667169
Heading Depth: 1
Heading Rank: 5

Heading: whether the trial court erred by denying, then refusing to reconsider, st. paul's motion to dismiss based upon the forum selection clause in the representative agreement.

Text: ¶ 26. St. Paul argues that the circuit court's ruling on the enforceability of the clause is subject to a de novo review since this Court has held that the interpretation of such clauses is a matter of law. Tel-Com Management, Inc. v. Waveland Resort Inns, Inc., 782 So.2d 149, 151 (Miss.2001). On the other hand, Hood asserts that the issue of the enforceability of the clause is a question of fact subject to the abuse of discretion standard. We did not specifically state in Tel-Com what standard of review we should use in reviewing matters concerning the interpretation and enforcement of a forum selection clause. ¶ 27. There is a split among jurisdictions as to the standard of review. Many federal circuits and several states utilize the de novo standard of review. See Lambert v. Kysar, 983 F.2d 1110, 1112 (1st Cir.1993); Instrumentation Assocs., Inc. v. Madsen Electronics (Canada) Ltd., 859 F.2d 4, 5 (3d Cir.1988); Mitsui & Co. (USA), Inc. v. Mira M/V, 111 F.3d 33, 35 (5th Cir.1997); Hugel v. Corp. of Lloyd's, 999 F.2d 206, 207 (7th Cir.1993); Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 956 (10th Cir.), cert. denied, 506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584 (1992); Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285, 1290-91 (11th Cir.1998), cert. denied, 525 U.S. 1093, 119 S.Ct. 851, 142 L.Ed.2d 704 (1999); Bennett v. Appaloosa Horse Club, 201 Ariz. 372, 35 P.3d 426, 429 (Ct.App.2001); Yamada Corp. v. Yasuda, 305 Ill.App.3d 362, 238 Ill.Dec. 822, 712 N.E.2d 926 (1999); Paradise Enterprises Ltd. v. Sapir, 356 N.J.Super. 96, 811 A.2d 516 (App.Div.2002). ¶ 28. Other jurisdictions utilize the abuse of discretion standard. See Sun World Lines, Ltd. v. March Shipping Corp., 801 F.2d 1066 (8th Cir.1986); Kukje Hwajae Ins. Co., Ltd. v. M/V Hyundai Liberty, 294 F.3d 1171 (9th Cir.2002); O'Brien Eng'g Co. v. Continental Mach., 738 So.2d 844 (Ala.1999); Hauenstein & Bermeister, Inc. v. Met-Fab Industries, 320 N.W.2d 886, 889-90 (Minn.1982); Cox v. Dine-A-Mate, Inc., 129 N.C.App. 773, 501 S.E.2d 353 (1998); Eads v. Woodmen of the World Life Ins. Soc., 785 P.2d 328, 331 (Okla.App.1989); Prows v. Pinpoint Retail Systems, Inc., 868 P.2d 809, 810 (Utah 1993). ¶ 29. California circuits are split as to whether the courts should utilize the abuse of discretion or the substantial evidence standard. Cal-State Bus. Products & Services, Inc. v. Ricoh, 12 Cal.App.4th 1666, 16 Cal.Rptr.2d 417 (1993) (applying abuse of discretion); Lu v. Dryclean-U.S.A. of California, Inc., 11 Cal.App.4th 1490, 14 Cal.Rptr.2d 906 (1992) (applying substantial evidence); Furda v. Superior Court, 161 Cal.App.3d 418, 207 Cal.Rptr. 646, (1984) (applying substantial evidence); Smith, Valentino & Smith, Inc. v. Superior Court, 17 Cal.3d 491, 131 Cal.Rptr. 374, 551 P.2d 1206 (1976) (applying substantial evidence). Wyoming courts hold that forum selection clauses are prima facie valid and enforced unless enforcement is unreasonable, fraud is present, or there are unequal parties. Durdahl v. Nat'l Safety Assoc., Inc., 988 P.2d 525 (Wyo.1999). ¶ 30. We find persuasive the reasoning set forth by the Fifth Circuit where that court compared the interpretation of a forum selection clause to the interpretation of an arbitration clause and, therefore held that a de novo review was appropriate. Mitsui & Co. (USA), Inc. v. Mira M/V, 111 F.3d 33, 35 (5th Cir.1997). In Mississippi, the grant or denial of a motion to compel arbitration is reviewed de novo. East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (Miss.2002). For this reason, we find that issues pertaining to the interpretation and enforcement of a forum selection clause should be deemed to be questions of law and subject to de novo review.
¶ 31. In determining whether a forum selection clause is enforceable, the Fifth Circuit examines the clause itself to determine whether the clause is mandatory or permissive. If the clause is mandatory, the Court then decides if it is enforceable under the standards discussed below. If it is permissive, i.e., if it does not prohibit litigation elsewhere, then the clause is not enforced. See Bentley v. Mutual Benefits Corp., 237 F.Supp.2d 699, 701-02 (S.D.Miss.2002); see also Caldas & Sons, Inc. v. Willingham, 17 F.3d 123, 127 (5th Cir.1994). Again, we find the Fifth Circuit Court's reasoning persuasive and follow that reasoning. ¶ 32. The clause at issue provides that ... the parties consent to the exclusive personal jurisdiction and venue.... This language is neither ambiguous nor unclear. We hold that the clause is a mandatory contract term. We now turn to the question of whether the clause should have been enforced.
¶ 33. There is no dispute that the Representative Agreement included a forum selection clause which provides that exclusive personal jurisdiction and venue is in Bexar County, Texas. However, appellees challenge the enforceability of that provision. ¶ 34. The United States Supreme Court has addressed forum selection clauses, and held them presumptively valid and enforceable, unless the resisting party can show: 1. Its incorporation into the contract was the result of fraud, undue influence or overweening bargaining power; 2. The selected forum is so gravely difficult and inconvenient that the resisting party will for all practical purposes be deprived of its day in court; or 3. The enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought, declared by statute or judicial decision. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12-13, 92 S.Ct. 1907, 1914, 1916-1917, 32 L.Ed.2d 513 (1972). Although Zapata is an admiralty case, its standard has been widely applied to forum selection clauses generally. Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 512 (9th Cir.1988). ¶ 35. In Tel-Com  this Court's only previous case addressing the enforceability of forum selection clauses  we cited Zapata with approval. The Tel-Com majority held that two commercial sophisticated corporations can decide what forum is to resolve any and all disputes after an arms length contract is negotiated. Tel-Com, 782 So.2d at 150. See also Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 1528, 113 L.Ed.2d 622 (1991). ¶ 36. In addressing whether a forum selection clause is enforceable, the resisting party bears the burden of showing that the enforcement of the clause is unreasonable. Zapata, 92 S.Ct. at 1917. ¶ 37. HICO argues that the clause is unreasonable, and should not be enforced, because (1) interrelated litigation involves other parties not subject to the contract or the jurisdiction of Bexar County, Texas; (2) corporate mergers and/or acquisitions render Bexar County, Texas unreasonable as a forum, especially in light of Mississippi's interest in the proceedings and the fact that Texas has no identifiable interest in the litigation; (3) the clause does not enhance contract predictability but, rather, would operate to deprive Hood and HICO of their day in court; (4) the circuit court reasonably exercised its jurisdiction; and (5) Titan waived and abandoned its rights under the clause. ¶ 38. We find the analysis set forth in Zapata, and approved in Tel-Com, to be appropriate, and we now proceed to apply the Zapata factors to the facts of this case.
¶ 39. We first look to see whether the contract was entered as a result of fraud, undue influence, or overweening bargaining power. Here, there are no allegations of fraud, undue influence, or overweening bargaining power with respect to the preparation and execution of the Representative Agreement. To the contrary, Hood testified that all was well with Titan before St. Paul's involvement. ¶ 40. HICO and Hood include an argument that the clause was not negotiated, but rather was included as part of Titan's boilerplate contract language. Even if this claim is true, we hardly accept the notion that boilerplate contract language is unenforceable. To permit a party when sued on a written contract, to admit that he signed it but to deny that it expresses the agreement he made or to allow him to admit that he signed it but did not read it or know its stipulations would absolutely destroy the value of all contracts. Busching v. Griffin, 542 So.2d 860, 865 (Miss.1989). ¶ 41. With limited exceptions, persons enjoy the freedom to contract. When they do, they are bound by the terms of their contracts. HICO, by and through Hood, freely entered into the Representative Agreement, which consisted of six typed pages. Some provisions were heavily negotiated  some were not. Few are immune from the societal demands and modern commerce considerations which require compliance with the terms of pre-written contracts every day. Indeed, it is doubtful that any of the insurance products sold by Hood, HICO, Delaney or Old South, were free of boilerplate provisions which they claim are unenforceable. We can think of no rational argument that seasoned, sophisticated business persons (such as those involved here) should not be held to the terms of their contracts. This is so, even where they claim that they did not read the entire contract before signing it. Accordingly, this Zapata factor weighs heavily in favor of enforcing the forum selection clause.
¶ 42. Secondly, we inquire whether enforcement of the forum selection clause would be so gravely difficult and inconvenient that  for all practical purposes  HICO and Hood would be deprived of their day in court. ¶ 43. The burden of proving this element is much more difficult for sophisticated businesses than for individual consumers. The Zapata Court stated that a forum selection clause should control absent a strong showing that it should be set aside. Zapata, 92 S.Ct. at 1916. Furthermore, mere reference to the expense the litigant may incur to litigate the matter in another forum does not meet the burden of proof. Id. at 1917. ¶ 44. Under this factor, Hood and HICO raise several arguments, all of which we shall address, albeit in a different order.