Court Opinion

ID: 6789932
Source: CourtListenerOpinion
Date Created: 2022-07-21 01:09:14.364044+00
Date Added: 2024-06-11T16:03:01.833526
License: Public Domain

Lundberg Stratton, J.,
dissenting.
{¶ 17} Because the majority fails to cite any sound public policy disfavoring the floating forum-selection clause at issue in this case, I respectfully dissent. The majority concluded that there was no fraud or overreaching by NorVergence. The majority held that there was no evidence that enforcing the floating forum-selection clause would deprive any appellant of its day in court. Yet the majority goes on to hold that the forum-selection clause is unreasonable and against public policy simply because at the time they entered the contract, appellants did not know exactly where they might have to litigate their contract. Nonetheless, that is exactly the agreement the parties made. I see no sound public-policy reason to void the forum-selection clause agreed to by these commercial entities, when there was no fraud or overreaching and the parties were on notice that the contract contained a floating forum-selection clause.
{¶ 18} The contract provision in contention in this case provides: “This agreement shall be governed by * * * the laws of the State in which Renter’s principal offices are located or, if this Lease is assigned by Renter, the State in which the assignees’ principal offices are located * * * and all legal action relating to this Lease shall be venued exclusively in a state or federal court located within that State * * The majority notes that this language was clear and was legibly printed on the second page of the two-page contract. There was no effort to conceal the clause. In fact, the majority notes that printed in large type and in all capital letters directly above the signature line of the guaranty on the front page of each contract is the sentence ‘You agree to jurisdiction and *435venue as stated in the paragraph titled Applicable Law of the rental [agreement].”
{¶ 19} In Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc. (1993), 66 Ohio St.3d 173, 610 N.E.2d 987, syllabus, this court held, “Absent evidence of fraud or overreaching, a forum selection clause contained in a commercial contract between business entities is valid and enforceable, unless it can be clearly shown that enforcement of the clause would be unreasonable and unjust.”
{¶ 20} The majority concedes that appellants were aware of the possibility that their contract could be assigned and that, due to the floating forum-selection clause, an assignment could change the forum for litigation. Yet the majority concludes that NorVergence withheld from appellants that it likely would assign its interests in appellants’ leases to Preferred Capital or some other entity. There is absolutely no evidence of this, and even if there were, it is wholly irrelevant whether NorVergence intended to assign its interest in appellants’ leases to another entity, because they were explicitly permitted to do so in the contract.
{¶ 21} When the leases were signed, NorVergence’s principal office was in New Jersey. Later, NorVergence assigned its interest in these lease agreements to Preferred Capital, whose principal offices are in Ohio. Whether NorVergence assigned these documents one day later or ten weeks later should make no difference; the appellants clearly knew they were assignable.
{¶ 22} There is no evidence that when they signed the contract, appellants were concerned about where the contract could be litigated. They assented to the terms of the agreement, which specify that in the event of an assignment, the exclusive forum for litigation could be in any state in which a future assignee’s principal offices are located. There is no evidence that appellants made any inquiry into or objection to the forum-selection clause. Appellants knew that under the terms of the contract, if NorVergence did not assign its interest, the proper place to litigate disputes would be New Jersey. As the majority concedes, it is no more unjust or unreasonable for appellants to defend themselves in Ohio than in New Jersey, as none has offices in either state.
{¶ 23} I would adopt the reasoning of the United States Court of Appeals for the Seventh Circuit in IFC Credit Corp. v. Aliano Bros. Gen. Contrs., Inc. (C.A.7, 2006), 437 F.3d 606, which, in considering an identical forum-selection clause, held that there should not have been a forum-selection dispute in that case because “the forum selection clause designates the state of suit unequivocally: it is the headquarters state of either NorVergence or, if the contact has been assigned, of the assignee.” Id. at 612.
*436{¶ 24} Even though the contract unequivocally permitted the action taken by NorVergence, the majority concludes that it is against public policy to enforce this forum-selection clause. I disagree. The majority acknowledges that there is a valid business reason for including a floating forum-selection provision. Such a clause is a reflection of the realities of the modern-day leasing industry, where negotiable paper involving equipment leasing is bought and sold with regularity. This reality favors a clause that permits an assignee to bring suit in its home forum, thereby enhancing the marketability of the lease. “Parties to contracts are not benefited by rules that make assignment burdensome. If assignors have to compensate their assignees for having to litigate in an inconvenient forum, they will have to charge a higher price to their customers * * Aliano, 437 F.3d at 612-613.
{¶ 25} The majority also rejects the argument that the parties were unequal bargainers. Both parties to each contract were commercial entities negotiating a commercial contract. As in Kennecorp, we are dealing with sophisticated commercial parties, and “in the light of present-day commercial realities, it has been stated that a forum selection clause in a commercial contract should control, absent a strong showing that it should be set aside.” Kennecorp, 66 Ohio St.3d at 175, 610 N.E.2d 987, citing The Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513.
{¶ 26} The majority’s sole basis for setting this floating forum-selection clause aside is that appellants could not have known exactly where they might have to litigate the contract. Such a holding invalidates all floating forum-selection clauses, for that is their very essence; the forum may change. That is part of the bargain agreed to by the parties.
{¶ 27} The majority states that public policy is against “haling individuals into foreign jurisdictions without their knowing waiver.” This is true; however, there was clearly a knowing waiver by appellants in this case. The majority found that (1) the parties to this contact were commercial entities, (2) there was no fraud or overreaching, (3) the contract language was plain, and (4) there are legitimate business reasons for including a floating forum-selection clause in agreements of this sort. In my view, it is against public policy to hold a forum-selection clause invalid when the parties have knowingly agreed to it.
{¶ 28} The majority opinion seems to hold that a floating forum-selection clause is unreasonable if the final assignee is not declared up front. But whether commercial paper will be sold and to whom is often not known at the time of the initial transaction. The marketability of commercial paper is dependent on financial institutions being able to sell commercial paper freely. The majority’s decision makes no sense in the modern market and will seriously undermine countless contracts with floating forum-selection clauses that have been entered *437into in Ohio and will reduce the value of commercial paper with such clauses that have been purchased by Ohio institutions.
Roderick Linton, L.L.P., Tamara A. O’Brien, T. Anthony Mazzola, and Jason E. Hickman, for appellee.
Mark S. Shearer, for appellants PAC Heating, Inc., Hambergs Dr. BM TruSite Optical Co., and Donn C. Lamon, d.b.a. Lamon Associates.
Sutter, O’Connell & Farchione, Matthew C. O’Connell, and Victoria Barto, for appellants Houston Chapter Association General Contractors of America, Inc., and Tiny’s Tire Center, Inc.
Julius P. Amourgis for appellant Pro Temps, Inc.
Gary Brown, for appellant Doug Johnson & Associates, Inc.
Oldham & Dowling and Hamilton DeSaussure Jr., for appellants Rick Hore and Location Real Estate.
Gregory Glick, L.L.C., and Gregory Glick, for appellants Plyley Enterprises, Inc., and Custom Data Solutions, Inc.
Roetzel & Andress, Bradley A. Wright, and Jerome G. Wyss, for appellant Home Furnishings of Clarkston, Inc.
Dykema Gossett, P.L.L.C., Edward A. Groobert, and Jill M. Wheaton, for amicus curiae Equipment Leasing Association of America, Inc., in support of appellee.
Coley & Associates Co., L.P.A., and William P. Coley II, for amicus curiae National City Commercial Capital Corporation, in support of appellee.
Tom Reilly, Attorney General of Massachusetts, and Scott D. Schafer and Geoffrey G. Why, Assistant Attorneys General, for amici curiae Attorneys General for the states of Arizona, California, Connecticut, Illinois, Iowa, Maryland, New York, Ohio, Pennsylvania, Rhode Island, and Massachusetts, in support of appellants.
Fiehrer & Lane, L.P.A., and Stephen C. Lane, for amici curiae A & B Express USA, Inc., et al., in support of appellants.
{¶ 29} Because I believe that the public-policy reason given by the majority is not supported by either the facts of this case or by the reality of modern commercial business practices and because I see no reason for setting this forum-selection clause aside, I respectfully dissent.
Lanzinger, J., concurs in the foregoing opinion.