Court Opinion

ID: 9601286
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:41:00.316395+00
Date Added: 2024-06-11T10:22:04.572573
License: Public Domain

MERRITT, Circuit Judge,
dissenting.
The forum shopping and procedural fencing litigation tactics of plaintiffs law*372yers in this case are obvious. The case was filed in an alien forum in contravention of a perfectly valid forum selection clause for the purposes of delay and obfuscation. The defendants immediately protested and cited the contract provision. In a hasty and completely erroneous opinion, the District Court decided the case for the local plaintiffs and enjoined the defendants from seeking to collect their debts elsewhere by any means. Reading my colleague’s opinion, you would never know that this is what this case is about. Based upon no stated policy, principle or purpose, my colleagues further prolong and protract the litigation by sending it back to the same alien courtroom for unnecessary motions, delay and wasted litigation costs while the mortgage market deteriorates. I would follow the admonition of Justices Kennedy and O’Connor in their concurring opinion in the Ricoh Corporation case, 487 U.S. 22, 33, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988), concerning the enforcement of contractual forum selection clauses that the parties have clearly agreed to:
The federal judicial system has a strong interest in the correct resolution of these questions [regarding the enforcement of a forum selection clause], not only to spare litigants unnecessary costs but also to relieve courts of time consuming pretrial motions. Courts should announce and encourage rules that support private parties who negotiate such clauses. (Emphasis added.)
I would “support” the forum selection clause of the parties.
We have set aside the injunction issued by the District Court, an injunction which effectively decided the case for the local plaintiffs against the New York lenders, Prudential and National City Bank. The court below dispensed with the forum selection clause and voided the contract and then enjoined the defendants from “requesting payment” or attempting to enforce the contract by drawing “upon the following irrevocable, standby letters of credit guaranteed by plaintiffs.” The injunction attempted to end the controversy by stopping the lenders from bringing a contract action in New York, as provided in the contract between the parties. In light of the potential for delay and further error, we should decide the forum selection clause issue ourselves here and now.
The enforceability of a forum selection clause is a question of contract law that we review de novo. Security Watch, Inc. v. Sentinel Sys., 176 F.3d 369, 371 n. 2 (6thCir.1999) (citing Baker v. LeBoeuf Lamb, Leiby & Macrae, 105 F.3d 1102, 1104 (6th Cir.1997)). When analyzing forum selection clauses, we have relied on the Restatement (Seoonb) of Conflict of Laws. See Security Watch, 176 F.3d at 375. Although the district court only performed a cursory analysis of the forum selection clause, the issue was decided and is ripe for review. Cf. Kroger Co. v. Malease Foods Corp., 437 F.3d 506, 510 (6th Cir.2006).
Though forum selection clauses were once disfavored, the Supreme Court stated in 1972 that such clauses are “prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.” The Bremen v. Zapata OffShore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) (citation omitted); see also Restatement (Second) of Conflict of Laws § 80 (1988 Revision) (“The parties’ agreement as to the place of action will be given effect unless it is unfair or unreasonable.”). According to the Restatement, a court should only decline to enforce a forum selection clause if: (1) it was “obtained by fraud, duress, the abuse of economic power or other unconscionable means,” (2) the designated forum “would *373be closed to the suit or would not handle it effectively or fairly,” or (3) the designated forum “would be so seriously an inconvenient forum that to require the plaintiff to bring suit there would be unjust.” Security Watch, 176 F.3d at 375 (quoting Restatement § 80 cmt. c). Because no valid claim is made, nor does the record reveal any evidence, that the forum selection clauses agreed upon by Prudential and Langley have any such flaws, they should be enforced now in this appeal. The Restatement considerations are the correct considerations to analyze, whether under § 1404(a) or otherwise.
First, nothing in the record suggests that the Rate Lock Agreements were the result of fraud, duress, or an abuse of economic power. Langley is a sophisticated investor with considerable experience making real estate development projects on the scale of those involved in the instant litigation. Second, New York is an appropriate venue, one capable of handling the lawsuit effectively and fairly. Indeed, New York occupies an important position as a center of financial markets and institutions. See, e.g., Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 394 (2d Cir.2001). Finally, the designation of New York as the venue for any litigation would not result in an injustice to either Langley or Prudential. Langley is a resident of Florida, while Prudential’s representatives were located in Chicago, Illinois. The real estate projects underlying this litigation were located in Alabama and Mississippi. As a result, there is no true epicenter of the case. And while it is true that Langley’s two corporate co-plaintiffs were located in Kentucky and that a number of the events leading to this lawsuit also occurred there, I do not believe that this fact creates a sufficiently compelling reason to disregard the contractually agreed upon venue. The parties to this lawsuit are sophisticated and capable entities; consequently, honoring the forum selection clause will not result in any injustice.
A remand for further motions and proceedings, including a potentially long, drawn-out proceeding under § 1404(a), could easily result in the case remaining in the District Court in Kentucky based on an interlocutory ruling that is not immediately appealable — after which there will presumably have to be a proceeding on the merits of the contract. Some years from now we would get the case back on appeal. In the meantime the lenders may decide to bring suit in New York, as provided in the forum selection clause, and the action may go forward there as well. Our Court’s ruling today is hardly consistent with the overriding policy “not only to spare litigants unnecessary costs but also to relieve courts of time-consuming pretrial motions.” The proper solution to this problem is to terminate this action brought in the wrong court so that the parties can either settle their dispute or litigate it in the proper forum.