Opinion ID: 2494559
Heading Depth: 2
Heading Rank: 1

Heading: Textron Financial

Text: In [ Professional Ins. Corp. v. ] Sutherland, [700 So.2d 347 (Ala.1997)], this Court adopted the majority rule, by which an `outbound' forum-selection clause is upheld unless the party challenging the clause clearly establishes that it would be unfair or unreasonable under the circumstances to hold the parties to their bargain. 700 So.2d at 351. Ex parte CTB, Inc., 782 So.2d 188, 190-91 (Ala.2000). The trial court did not hold that the forum-selection clauses in the financing agreements were unfair or unreasonable. Instead, it held that Textron Financial had waived its rights under the forum-selection clauses by filing the detinue action in the Northern District and denied the Textron defendants' motion to dismiss based on that holding. Our research has not disclosed, and the parties have not cited, an Alabama case dealing with waiver in the context of a forum-selection clause. Regarding the waiver of rights under a contract generally, this Court has stated: The question of waiver, the voluntary surrender of a known right, is in the main a question of intention, and the authorities hold that, to be effectual, it must be manifested in some unequivocal manner; if not express, then by such language or conduct as to evince clearly the intention to surrender. Bennecke v. Insurance Co., 105 U.S. 355, 26 L.Ed. 990 [(1881)]; Balfour v. Parkinson (C.C.) 84 Fed. 855, 861 [ (1898) ]. Quoting Sanborn, J., in Rice v. Fidelity & Deposit Co., 103 Fed. 427, 435, 43 CCA. 270, 278 [ (1900) ]: `To constitute a waiver, there must be an intention to relinquish the right, or there must be words or acts calculated to induce the other contracting party to believe, and which deceive him into the belief, that the holder of the right has abandoned it.' `A waiver will not be implied from slight circumstances, but must be evidenced by an unequivocal and decisive act, clearly proved.' 29 Am. & Eng. Law, p. 1105. Isom v. Johnson, 205 Ala. 157, 159-60, 87 So. 543, 545 (1920). In their mandamus petition, the Textron defendants argue that, by filing the detinue action in the Northern District, Textron Financial did not waive its rights under the forum-selection clauses of the financing agreements because those agreements expressly granted Textron Financial the right to repossess the collateral made subject to the financing agreements, a right Textron Financial could assert only in Alabama. The financing agreements granted Textron Financial the right to repossess the inventory it had financed and in which it held a security interest. It is undisputed that the inventory of Alabama Boating and Logan Martin, the collateral Textron Financial sought to repossess in the detinue action, is located in Alabama. In their mandamus petition, the Textron defendants state that Textron Financial could not have filed its repossession action anywhere other than Alabama. (Petition, at 24.) We agree. Rule 64, Fed.R.Civ.P., requires the federal courts considering actions for the seizure of property to apply the law of the state where the court is located. Both Rhode Island and Alabama laws provide remedies for the recovery of property that can be found within the respective states. See, e.g., R.I. Gen. Laws § 34-21-2 (1956)(The district court may issue writs of replevin where the goods and chattels to be replevied are valued at five thousand dollars ($5,000) or less, and venue of the action may be in any division of the district court where they were taken, attached or detained.). Implicit in this language is the premise that the Rhode Island Legislature enacted the statute to govern recovery of property found within the jurisdiction of a district court in that state. Section 6-6-250, Ala.Code 1975, provides: When an action is commenced for the recovery of personal chattels in specie ... it is the duty of the clerk to endorse on the summons that the sheriff is required to take the property mentioned in the complaint into his possession unless the defendant gives bond payable to the plaintiff.... See also § 6-6-255 (If the officer fails to find and take the goods and chattels, he may summon the defendant to appear as in other cases, and the plaintiff may then declare and prosecute the action alone for the recovery of the value of the property and damages for the taking and detention of the property as if he had thus commenced his action by a complaint.). Implicit in this language is the premise that the Alabama Legislature enacted the statute to govern recovery of property that could be found within this State. Because the property Textron Financial sought to repossess was in Alabama, any action for repossession of that property lay in Alabama where the property could be found; thus, Textron Financial could have filed its repossession action only in Alabama. The forum-selection clauses in the financing agreements state, in part: Debtor consents to the exclusive jurisdiction of the Courts of the State of Rhode Island, sitting in Providence, Rhode Island and the United States District Court for the District of Rhode Island for all purposes in connection with this Agreement. The plaintiffs contend that the word exclusive in this provision prohibited Textron Financial from filing any actionincluding an action seeking repossessionin any court except the federal and state courts in Rhode Island. The plaintiffs also argue that the trial court in the St. Clair action correctly concluded that the detinue action was brought for a purpose[] in connection with th[e] [financing] Agreement[s], and, therefore, that the detinue action was governed by the forum-selection clauses, and that by filing the detinue action in the Northern District, Textron Financial waived its rights under those clauses. However, the parties could not, by contract, have empowered the federal or state courts in Rhode Island to act beyond their authority. Because those out-of-state courts lacked authority to order repossession of property in Alabama, reading the forum-selection clauses as the plaintiffs suggest would render Textron Financial's repossession of the collateral impossible. Under such a construction, those portions of the financing agreements authorizing Textron Financial to repossess the property securing its loan would be nugatory. The plaintiffs contend that Textron Financial could and should have drafted an express exception to the forum-selection clauses allowing repossession actions to proceed in an appropriate jurisdiction. However, the financing agreements expressly grant Textron Financial the right to repossess its collateral, and this Court will avoid construing the financing agreements so as to deprive the repossession provisions of a field of operation. This Court has stated: Terms of a written instrument should be construed in pari materia and a construction adopted that gives effect to all terms used. Federal Land Bank of New Orleans v. Terra Resources, Inc., 373 So.2d 314 (Ala.1979). Inconsistent parts in a contract are to be reconciled, if susceptible of reconciliation; however, if that is not possible, any doubt will be resolved in favor of the first part, considering the instrument as a whole. Scherf v. Renfroe, 266 Ala. 35, 93 So.2d 402 (1957). Sullivan, Long & Hagerty v. Southern Elec. Generating Co., 667 So.2d 722, 725 (Ala.1995). A Florida District Court of Appeal considered similar circumstances in Prestige Rent-A-Car, Inc. v. Advantage Car Rental & Sales, Inc., 656 So.2d 541 (Fla.Dist. Ct.App.1995). In that case, Advantage Car Rental & Sales, Inc. (Advantage), had leased automobiles to Prestige Rent-A-Car, Inc. (Prestige). The lease agreement included a forum-selection clause stating that actions brought based on an alleged breach of the agreement, to enforce the agreement, or to declare the parties' rights thereunder were to be brought in the state of New York. Advantage subsequently sued Prestige in a federal court in New York, stating claims of breach of contract and seeking recovery of the leased vehicles. However, the New York court concluded that it had no authority to order replevin of the automobiles since they were located outside the state of New York. 656 So.2d at 543. Advantage subsequently filed a complaint in Florida seeking repossession of the vehicles and obtained a writ of replevin from the Florida court. Prestige appealed. On appeal, Prestige argue[d] that the trial court erred in finding that paragraph 20 of the lease agreement, which allow[ed] Advantage to retake possession of the vehicles, operated to waive ... paragraph 23, which provide[d] for exclusive jurisdiction in New York for the parties' duties.... 656 So.2d at 544. The Florida District Court of Appeal analyzed the seemingly conflicting provisions, stating: Prestige is correct that forum-selection clauses are generally enforceable.... Here the parties selected New York as their forum for settling disputes under the lease, unless otherwise expressly waived by them. In paragraph 20, the parties expressly agreed that one of Advantage's remedies in the event of default is to retake possession of the vehicles and Prestige expressly authorized Advantage to enter its premises where the vehicles were located in order to take possession. The parties were aware that the vehicles were to be located in Florida and not New York. A New York court cannot order repossession of property located outside its jurisdiction.... Thus, the only logical construction of the contract is the parties intended that Advantage had the rightthrough appropriate court proceedings in Floridato retake possession of the vehicles in Florida. To require the parties to seek repossession in New York which has no authority to order seizure of the property would effectively eliminate the remedy of repossession bargained for in the contract. Furthermore, paragraph 23 could not confer jurisdiction on a New York court for replevin of property located outside the state.... Replevin is a possessory action and therefore requires in rem jurisdiction over the subject matter.... An action for replevin cannot be successfully maintained unless the property is within the state and subject to the jurisdiction of its courts.... Thus the parties could not have conferred in rem jurisdiction on the New York court to handle the replevin action of vehicles located in Florida. 656 So.2d at 544 (footnote omitted; second emphasis added). We find this reasoning persuasive. See also RMP Rentals v. Metroplex, Inc., 356 Ark. 76, 80-81, 146 S.W.3d 861, 864 (2004) (declining to apply a forum-selection clause mandating Louisiana as forum for a claim under the Arkansas materialmen's lien statute, stating: Parties may by agreement consent to personal jurisdiction in a given court, but subject-matter jurisdiction cannot be conferred merely by agreement of the parties.... While a forum-selection clause implies consent as to personal jurisdiction,... it cannot confer subject-matter jurisdiction over in rem proceedings.... Only an Arkansas court has subject-matter jurisdiction to enforce the liens and to order foreclosure on real property located within its borders.); Middletown Park Realty, LLC v. Bar BQ Junction, Inc., [Ms. CA 2009-10-258, May 17, 2010] (Ohio Ct. of App.2010)(not published in Ohio Appellate Reports or Northeastern Reporter 2d) (We find that MPR did not waive its choice of forum because the company was obligated to bring the forcible entry and detainer action in Ohio. This was not a `voluntary relinquishment' of MPR's contractual right; it was a requirement, by the state of Ohio, in order for MPR to repossess its property. MPR should not now be forced to remain in Ohio to litigate issues arising from the lease when the forum-selection clause, to which BBQ Junction agreed, clearly states that such matters are to be brought in Marion County, Indiana.). Therefore, recognizing that the state and federal courts in Rhode Island cannot act beyond their authority, and giving effect both to the forum-selections clauses and to those terms in the financing agreements granting Textron Financial a right of repossession, we conclude that the logical construction of the financing agreements is that the parties to the financing agreements intended Textron Financial to have the rightthrough appropriate court proceedings in Alabamato retake possession of its collateral in Alabama. In order to harmonize the provisions in the financing agreements, we read the term exclusive jurisdiction in the forum-selection clauses, in light of the separate provisions of the financing agreements conferring a right to a remedy for seizure, as operating to the exclusion of any other court having concurrent jurisdiction. The Rhode Island courts have no concurrent jurisdiction to seize property located in Alabama. Recognizing the availability of an action to seize property in Alabama respects the separate contractual provisions granting Textron Financial a right to recover its collateral while also affording a field of operation to the forum-selection clauses. The plaintiffs contend that, even if Textron Financial did not waive the forum-selection provisions, the detinue action encompassed the entirety of the parties' dispute and, therefore, that Textron Financial violated the forum-selection clauses and selected Alabama as the forum for resolving the full dispute arising out of the credit and security agreement[s]. (Answer, at 17, 21.) To support this contention, the plaintiffs reference 1) Textron Financial's allegations in the detinue action that Alabama Boating and Logan Martin were in default under the financing agreements and 2) Alabama Boating and Logan Martin's answer asserting defenses based in fraud. In the detinue action, however, Textron Financial sought only possession of the collateral. Although Textron Financial was required to prove its right to possession, it did not assert any claims of breach of contract, nor did it seek recovery from the guarantors. Moreover, although Alabama Boating and Logan Martin asserted defenses to the detinue action, they did not file any counterclaims against Textron Financial. Instead, on the same day they filed their answer in the detinue action, they filed a separate action in the St. Clair Circuit Courtan action related to the parties' transactions under the financing agreements but brought by additional parties and asserted against additional defendants. The detinue action, therefore, was limited to the question of possession and did not encompass the entirety of the parties' dispute as the plaintiffs contend. Because Textron Financial, in filing the detinue action to obtain repossession of the collateral, was exercising a right granted to it under the financing agreements, a right that could have been exercised only in Alabama, Textron Financial's filing of the detinue action was not conduct clearly showing an intent to surrender its rights under the forum-selection clauses. See Isom, 205 Ala. 157, 87 So. at 545. Accordingly, the trial court erred in concluding that Textron Financial waived its rights under the forum-selection clauses of the financing agreements. In the final paragraph of their answer to the mandamus petition, the plaintiffs contend that they have sought rescission of the financing agreements and, therefore, that their claims do not fall within the forum-selection clauses. Because Ryan Creek Acquisitions, Alabama Boating, and Logan Martin are the only parties to the agreements sought to be rescinded, we restrict our examination of this contention to those parties. In support of their argument they cite Vankineni v. Santa Rosa Beach Development Corp. II, 57 So.3d 760 (Ala.2010), in which the forum-selection clause expressly stated that it applied to `any action to enforce a provision' of the contract. 57 So.3d at 762. Based on that language, this Court held that an action for rescission did not fall within the scope of the forum-selection clause. The forum-selection clauses in the financing agreements, however, are much broader and expressly relate to all purposes in connection with the financing agreements. Accordingly, Vankineni is distinguishable, and the plaintiffs' claims seeking rescission do fall within the scope of the forum-selection clauses. Based on the foregoing, Textron Financial, as a party to the financing agreements, has shown that the claims asserted against it by Ryan Creek Acquisitions, its successor, Alabama Boating, and Logan Martin are subject to the forum-selection clauses of the financing agreements. Accordingly, Textron Financial has shown a clear legal right to the dismissal of the claims asserted against it by those plaintiffs. Because the forum-selection clauses concern the parties to the financing agreementsTextron Financial, Ryan Creek Acquisitions, Alabama Boating, and Logan Martinand do not expressly encompass other individuals or entities, we must separately consider whether the forum-selection clauses require dismissal of the claims asserted by and against nonparties to the financing agreements.