Opinion ID: 1115807
Heading Depth: 3
Heading Rank: 2

Heading: Are Those Forum Selection Clauses Which Do Encompass This Lawsuit Enforceable In Light Of The Allegations Of Bribery?

Text: In Volkswagenwerk v. Klippan, 611 P.2d 498, 503 (Alaska 1980), this court rejected the common law rule that forum selection clauses are per se invalid and adopted in its place the reasonableness approach set out in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). In that case the United States Supreme Court stated that such clauses are enforceable absent a clear showing that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching. 407 U.S. at 15, 92 S.Ct. at 1916, 32 L.Ed.2d at 523. In a latter case, the Court specifically noted that it did not intend to imply in Bremen that any time a dispute arising out of a transaction is based upon an allegation of fraud, the clause is unenforceable. Rather, the clause is enforceable unless the inclusion of that clause in the contract was the product of fraud or coercion. Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 n. 14, 94 S.Ct. 2449, 2457 n. 14, 41 L.Ed.2d 270, 281 (1974) (emphasis in original). This rule necessarily follows from the premise that the intent of the parties is to be respected. It would be illogical for a court to say that the parties, bargaining with each other at arm's length, negotiated for a forum selection clause which specifically encompasses all possible actions relating to the contract, including suits to rescind on the ground of fraud in the inducement of the contract, and then hold that the clause is invalid because of fraud in the inducement of the contract. Sealaska argues, nevertheless, that it should only be required to present evidence indicating that Crowson did in fact bribe the top executive officers of Pacific Western. It should not, it contends, be saddled with the almost impossible burden of proving that some portion of the bribe payments are specifically allocable to the forum selection clauses. We agree with Sealaska on this point. If the allegations of bribery are correct, then there was no freely negotiated agreement between the parties. This is not a typical intentional misrepresentation case in which the negotiators are aggressively pursuing the best interests of the side they purport to represent. Here it appears that only one interest was represented at the bargaining table. Sealaska was allegedly misled by its own employees, individuals it thought, and had good reason to think, it could trust. Strong evidence indicates that Marshall, who signed the charters and equipment lease in Pacific Western's behalf, was really a covert agent of Crowson. Thus, everything in the contracts that works to Crowson's advantage was presumably done in return for the bribe payments. Crowson has the burden of establishing otherwise, a burden he clearly has not carried. [11] The petitioners also argue that the triable issue of fact burden of proof placed on Sealaska was too low. They cite Bremen, supra, which requires that a party  clearly show that... the clause was invalid for reasons such as fraud. 407 U.S. at 15, 92 S.Ct. at 1916, 32 L.Ed.2d at 523 (emphasis added). [12] We agree that this higher standard should have been used, but, given the great and uncontradicted evidence of fraud in this case, conclude that the error was harmless and no remand on this point is necessary. [13] The forum selection clause in the equipment lease is not enforceable. Therefore, Sealaska may litigate the validity of the equipment lease in Alaska.
Seattle-First contends that the forum selection clauses in the consents are enforceable since there has been no showing that it engaged in any fraudulent activity. [14] The superior court never addressed this specific issue and apparently assumed that Seattle-First's rights with regard to the contracts could not be any greater than those of Crowson. The bank claims that the consents are direct contracts between Pacific Western and Seattle-First. Thus, the bank is not merely an assignee of Crowson's interest. Seattle-First further argues that Sealaska must bear the burden of fraud perpetrated by its own agents and that Sealaska is estopped from now denying the validity of any of the forum selection clauses since the consents contain implicit affirmations that the underlying contracts being assigned are enforceable. Sealaska has a number of responses. First, it argues that Seattle-First is merely an assignee and thus subject to all defenses available against Crowson, the assignor. Second, it argues that the consents, with their waiver of defense clause, are negotiable instruments and Seattle-First has not proved that it is a holder in due course. Third, it argues that Marshall was not authorized to execute the consents. [15] Fourth, it argues that Marshall's knowledge of the bribes cannot be imputed to Sealaska. [16] Fifth, Sealaska claims that four of the charters are not covered by the consents since the accompanying assignment refers to a $6.0 million obligation of Crowson, a loan which Sealaska says Crowson paid off. Finally, Sealaska argues that enforcement of the forum selection clause in the consents would fragment the litigation since Marshall did not purport to bind Sealaska to the consent agreements, but signed only on behalf of Pacific Western. The various arguments made on both sides plainly illustrate some of the perils surrounding litigation over forum selection provisions. Both parties apparently believe that this court should, at this early stage in the proceedings and without the benefit of a trial, determine the relative culpability of the parties and whether or not the consents, in their entirety, are valid. This we decline to do. We focus instead only on the very narrow question of whether the forum selection clauses in the consents are valid. The consents are direct contracts between Seattle-First and Sealaska. The consents purport to cover all the charters and the equipment lease. Whether they in fact do will be decided at trial. The consents purport to give Seattle-First the right to receive payment under the contracts irrespective of Crowson's conduct. The validity of the waiver clause will also be decided at trial. However, there is absolutely no evidence in the record indicating that Seattle-First was involved in, or had knowledge of, the alleged fraud. Therefore, we conclude that the forum selection clauses in the consents are valid and enforceable by Seattle-First.