Opinion ID: 198767
Heading Depth: 1
Heading Rank: 2

Heading: The Forum Clause

Text: Having confirmed our jurisdiction to hear this appeal, we turn to the forum clause, the basis for the district court's remand order. The forum clause, Article 28 of the contract between the parties, provides: This contract will be governed and interpreted pursuant to the Laws of the Commonwealth of Puerto Rico and the parties agree to submit to the jurisdiction of the courts of the Commonwealth of Puerto Rico. The district court summarily allowed the remand motion, saying only that Article 28 demonstrates the parties' clear intention to litigate matters related to the contract in the Commonwealth courts.Ericsson urges error on two bases: first, the language is plain that the clause is nothing more than a consent to personal jurisdiction in the courts of the Commonwealth; and, second, if there were any obscurity in the language, the clause must, under Puerto Rico law, see P.R. Laws Ann. tit. 31, 3478, be construed against the originator of the language. Ericsson is incorporated and has its principal place of business outside of Puerto Rico, facts that support Ericsson's reading.PREPA counters with two arguments: the clause is not ambiguous and Puerto Rico law requires, even if the language were unclear, that the evident intention of the parties shall prevail. See P.R. Laws Ann. tit. 31, 3471. If the language were ambiguous, PREPA says, the usual rule under Puerto Rico law -- that any obscurity should be read against the drafter -- should not apply. The clause should not be construed against PREPA because, while PREPA drafted the clause, it says it considers itself the underdogfighting against a big international corporation. The parties agree that Puerto Rico law governs the contract interpretation question. Our review of the contract interpretation question is de novo. See Lambert v. Kysar, 983 F.2d 1110, 1112 (1st Cir. 1993). The outcome of this question is determined by our 1993 decision in Redondo Construction Corp. v. Banco Exterior de Espaa S.A., 11 F.3d 3 (1st Cir. 1993). There, plaintiff sued in federal court in Puerto Rico and defendant defended on the basis that a forum clause required the action to be brought in Florida. See id. at 5. This court disagreed. The contract clause in Redondo stated: Borrower and the Guarantors each hereby expressly submits to the jurisdiction of all Federal and State Courts located in the State of Florida. Id. We read the clause to be an affirmative conferral of personal jurisdiction by consent, and not a negative exclusion of jurisdiction in other courts. See id. at 6. We do so here as well. Several circuits have interpreted such forum clause language similarly. See John Boutari & Son, Wines & Spirits, S.A. v. Attiki Importers & Distribs., Inc., 22 F.3d 51, 53 (2d Cir. 1994); Caldas & Sons, Inc. v. Willingham, 17 F.3d 123, 127-28 (5th Cir. 1994); Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 77 (9th Cir. 1987). Of some weight is PREPA's argument that this clause would be rendered mere surplusage by such a reading given that Ericsson had qualified to do business in Puerto Rico at the time of the contract and so there was no need for a consent to personal jurisdiction in the courts of Puerto Rico. See, e.g., Florida Polk, 170 F.3d at 1083-84. But the argument is not persuasive. PREPA, a frequent litigant in the federal courts, could easily have drafted the contract to provide for exclusive jurisdiction in the Commonwealth courts if that were its intent. And that Ericsson had qualified to do business at the time of the contract did not mean that it would continue to do so at all times within the statute of limitations on the contract. Finally, PREPA had an obvious interest in cutting off any possible litigation on personal jurisdiction grounds, even if the issue was unlikely to be raised. See McDermott Int'l, 944 F.2d at 1206 n.10 (explaining the value of consent to personal jurisdiction by foreign corporations). Because we decide this as a matter of the language of the contract, we do not discuss Ericsson's alternative argument that a waiver of a statutory right of removal must be clear and unequivocal. See, e.g., In re Delta Am. Re Ins. Co., 900 F.2d 890, 892 (6th Cir. 1990). Accordingly, the order remanding the case to the Commonwealth courts was error.