Opinion ID: 1740033
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Heading Rank: 11

Heading: Application of Law to Forum Selection Clause in Thornridge Lease

Text: Under the Act, Nebraska courts are generally directed to enforce forum selection clauses unless certain statutory exceptions apply. A party seeking to avoid a contractual forum selection clause bears a heavy burden of showing that the clause should not be enforced, and, accordingly, the party seeking to avoid the forum selection clause bears the burden of proving that one of the statutory exceptions applies. See, Turcheck v. Amerifund Financial, Inc., supra (applying Michigan law similar to the Act in Nebraska). As noted above, § 25-415 provides that a forum selection clause naming another state is to be enforced and the action dismissed unless one of the listed exceptions is present. Although Pennsylvania has not enacted the Model Uniform Choice of Forum Act, Pennsylvania's analysis regarding the enforceability of forum selection clauses is similar to the analysis that would be undertaken pursuant to Nebraska law. Recently, in Patriot Leasing Co. v. Kremer Restaurant, 915 A.2d 647 (Pa.Super.2006), the Superior Court of Pennsylvania found that a forum selection clause identical to the clause in the Thornridge lease was enforceable. The Pennsylvania court stated that under Pennsylvania law, a forum selection clause in a commercial contract between business entities is presumptively valid and will be deemed unenforceable only when: 1) the clause itself was induced by fraud or overreaching; 2) the forum selected in the clause is so unfair or inconvenient that a party, for all practical purposes, will be deprived of an opportunity to be heard; or 3) the clause is found to violate public policy. Id. at 651. In sum, under both Nebraska and Pennsylvania law, forum selection clauses are to be enforced unless a specified exception is present. The golf courses argue that under Nebraska law, three exceptions listed in § 25-415 exist in the present case: (1) that the golf courses cannot secure effective relief in Pennsylvania; (2) that Pennsylvania would be a less convenient place for trial; and (3) that agreement as to the forum selection clause was induced by fraudulent misrepresentations by Royal Links as an agent of Patriot. In addition, the golf courses argue that as a matter of common law, the entire agreement, including the forum selection clause, is void and unenforceable because it was predicated on fraudulent misrepresentations. With regard to the first argument, the golf courses assert that they cannot secure effective relief in Pennsylvania due to the complex and novel nature of their claims. Brief for appellants at 36. They specifically assert that their action for declaratory judgment involves novel interpretations of Nebraska law, including the Seller-Assisted Marketing Plan Act, §§ 59-1701 to 59-1762. The golf courses argue that because such law is unique to Nebraska and has not been extensively interpreted by the courts of this state, Pennsylvania courts would have an extremely difficult time applying this law. The golf courses cite R.C.A. v. Rotman, 411 Pa. 630, 192 A.2d 655 (1963), for the proposition that Pennsylvania courts are prohibited from making `conclusive interpretations of another state's law in the absence of clear guidance from case law from that other state. Brief for appellants at 36. We reject the argument that the golf courses could not secure effective relief in Pennsylvania courts. We note again that the leases include choice-of-law provisions stating that the leases are to be governed by Pennsylvania law. Therefore, a question remains as to whether and to what extent the Nebraska laws cited by the golf courses are applicable to the leases. To the extent Nebraska law is applicable, we do not think that Pennsylvania courts are incapable of interpreting such law, nor do we read Rotman to prohibit Pennsylvania courts from so doing. The Pennsylvania Supreme Court stated in Rotman that [a]lthough we have the power, and are often required, to give our interpretation of the statute of another state, the conclusive interpretation of that statute-the one which these parties desire-must emanate from the courts of that state. 411 Pa. at 632, 192 A.2d at 657 (emphasis in original). The Pennsylvania Supreme Court therefore acknowledged that Pennsylvania courts can and do interpret the statutes of other states; however, in Rotman, the court determined that because of the specific circumstances of that case and the necessity of a conclusive interpretation of another state's law, it was wise judicial procedure to stay the proceedings in Pennsylvania until it was determined whether a conclusive interpretation could be obtained in the other state. The golf courses have not shown that the same considerations exist in the present case, and we therefore do not think that the Pennsylvania courts would be unable to interpret Nebraska law to the extent necessary in the present dispute. The golf courses next argue that Pennsylvania is a substantially less convenient place for trial. Their main argument in this regard is that the overwhelming majority of witnesses that will be called at trial are all from Nebraska. Brief for appellants at 40. The golf courses also assert various factors of public interest that argue against trial in Pennsylvania. In this regard, we note that in Patriot Leasing Co. v. Kremer Restaurant, 915 A.2d 647 (Pa.Super.2006), the Pennsylvania Superior Court rejected similar arguments that Pennsylvania was a substantially less convenient place for trial than the defendants' home states of Missouri and Alabama. The court stated that mere inconvenience or additional expense will not permit a forum selection clause to be avoided and that if the forum is available and can do substantial justice to the action, there is no serious impairment of a party's ability to litigate. Id. at 652. With regard to the golf courses' argument that most of the witnesses are from Nebraska, we note that it has been stated that a forum is seriously inconvenient only if one party would be `effectively deprived of a meaningful day in court.' See Interfund Corp. v. O'Byrne, 462 N.W.2d 86, 88 (Minn.App.1990) (quoting The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)). The court in Interfund Corp. further stated that location and convenience of witnesses [do] not necessarily make a forum seriously inconvenient because deposition testimony can be taken and used without disadvantage at trial. Id. We note further that the convenience of witnesses is a matter that should be within the contemplation of the parties when they agree to a forum selection clause and therefore generally should not be a basis for avoiding enforcement of the clause. We determine that the golf courses have not demonstrated that Pennsylvania is a substantially less convenient forum either under Pennsylvania law or under the Act. Finally, the golf courses argue that the forum selection clause should not be enforced because the agreements were induced by fraudulent misrepresentations by Royal Links as an agent of Patriot. The golf courses argue that such alleged fraud is a barrier to enforcement of the agreements and of the forum selection clauses under both common law and the Act. Because the Act governs enforceability of forum selection clauses, we analyze this argument under the Act rather than under common-law principles. We note that the Pennsylvania court rejected similar arguments in Patriot Leasing Co. v. Kremer Restaurant, supra . The court in Patriot Leasing Co. stated that a forum selection clause can be avoided for fraud only when the fraud relates to procurement of the forum selection clause itself, standing independently from the remainder of the agreement. Id. at 653. The court concluded that the fraud allegations relate to procurement of the equipment lease as a whole rather than the forum selection clause itself; therefore, the allegations will not invalidate the clause. Id. The golf courses' allegations of fraud in the present case similarly relate to the procurement of the lease as a whole rather than to the forum selection clause in particular. We therefore conclude that under both Nebraska and Pennsylvania law, such alleged fraud would not invalidate the forum selection clause. Because none of the exceptions under § 25-415 and none of the exceptions under Pennsylvania law are present, we conclude that the mandatory forum selection clause in the Thornridge lease is enforceable under either Nebraska or Pennsylvania law. Because the forum selection clause required actions concerning the Thornridge lease to be brought in Pennsylvania, the district court properly dismissed the action as to Patriot with regard to the Thornridge lease.