Court Opinion

ID: 9687302
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:22:38.878615+00
Date Added: 2024-06-11T18:18:25.527083
License: Public Domain

AMUNDSON, Justice
(concurring in result).
[¶ 37.] I agree with the majority that Dunes failed to show fraud or economic duress on the part of CKI. I, however, must part company due to the majority’s failure to apply Minnesota law, rather than South Dakota’s. As the majority points out, Dunes failed to show that one of the public policy exceptions to the validity of a choice of law provision, i.e. fraud or economic duress, exists. The majority recognizes that the settlement agreement provides that it “shall be construed in accordance with the laws of the State of Minnesota,” but curiously fails to express why that state’s law should not apply.
[¶ 38.] There is a presumption of validity for choice of law clauses. Elgar v. Elgar, 238 Conn. 839, 679 A.2d 937 (1996); Milanovich v. Costa Crociere, S.p.A., 954 F.2d 763 (D.C.Cir.1992); Delhomme Indust. Inc. v. Houston Beechcraft Inc., 669 F.2d 1049 (5th Cir.1982). Unless the challenger to the clause clearly shows it to be against public policy, the clause will be enforced. S. Leo Harmonay Inc. v. Binks Mfg. Co., 597 F.Supp. 1014 (S.D.N.Y.1984), judgment aff'd, 762 F.2d 990 (2nd Cir. 1985).
Courts favor, and tend to uphold, choice of law provisions in contracts, particularly when such provisions are used in interstate transactions. Finally, a court will be more likely to uphold the provisions of a contract made in a business transaction than the terms impressed by adhesion on an unknowledgeable consumer. The more commercial the context of the transaction ... the greater the need for validation and stronger the presumption of validity.... The burden of showing illegality is upon the party asserting it and it is not sufficient merely to create suspicion and suggest doubts as to its illegality.
Delhomme, 669 F.2d at 1058-59 (internal citations omitted). The mere allegations of fraud and economic duress do not overcome this heightened burden. At a minimum, the trial court should have made a preliminary ruling as to whether the contract containing the choice of law clause was invalid under South Dakota law before it applied such law. See Restatement (Second) of Conflicts of Laws § 187 cmt. b, illus. 3; see also Unarce v. Staff Builders, Inc., 61 F.3d 912 (9th Cir.1995) (unpublished opinion).
[¶ 39.] I submit Dunes did not overcome its burden of proving the clause invalid by merely alleging fraud and economic duress. In fact, the jury found against Dunes on the issue of fraud, and the issue was not appealed. If we allowed the mere allegations of one party to overcome contractual obligations, then what is to stop every plaintiff subject to an apparently unfavorable choice of law provision from making frivolous allegations of fraud or economic duress. Contract law should not depend on the legal tactics of the allegedly aggrieved party. While the end result is the same under Minnesota law, as economic duress is not recognized in that jurisdiction, the majority should explain why the bargained for, at arms length agreement of the parties does not control. The majority provides no authority for its non-observance of the parties’ agreement.
[¶ 40.] Therefore, I concur in result only.