Court Opinion

ID: 3031844
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:46:41.94036+00
Date Added: 2024-06-11T11:48:14.309622
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 02-3840
                                   ___________

Gerald M. Dunne,                        *
                                        *
             Appellant,                 *
                                        * Appeal from the United States
      v.                                * District Court for the Eastern
                                        * District of Missouri.
Peter E. Libbra,                        *
                                        * [UNPUBLISHED]
             Appellee.                  *
                                   ___________

                                Submitted: June 02, 2003
                                Filed:     June 6, 2003
                                   ___________

Before MELLOY, FAGG, and SMITH, Circuit Judges.
                           ___________

MELLOY, Circuit Judge.

      Dunne appeals the district court's dismissal of his diversity action under a
contract's forum selection clause. We reverse.

       In the fall of 2000, Libbra and his attorney solicited Dunne in Missouri to
discuss Dunne's possible purchase of Libbra's fifty-one percent ownership interest in
Prairieland Construction, Inc., a Delaware Corporation with its headquarters in
Illinois. Communication, meetings, and due diligence reviews concerning the
possible purchase continued through the fall of 2001, at which time the parties
executed a series of documents to consummate the sale. One of the documents, a
stock purchase agreement, contained a forum selection clause that lies at the center
of the present dispute.

       Over the course of the next year, Dunne fell behind in his payments to Libbra.
Eventually, Libbra sent Dunne a default notice. Dunne responded by filing the
present diversity action alleging misrepresentation and seeking a declaratory
judgment, permanent injunction, and damages. Libbra, in turn, filed an action in
Illinois state court alleging that Dunne breached each of the separate contracts related
to the sale. Libbra, relying on the forum selection clause from the stock purchase
agreement, moved to dismiss Dunne's diversity action based on lack of personal
jurisdiction and/or improper venue.

       The forum selection clause provides, "[t]his agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Illinois, and
the parties consent to jurisdiction to [sic] the state courts of the State of Illinois." The
only issue on appeal is a legal issue of contract construction, namely, whether the
forum selection clause is mandatory such that an action on the contract may be
maintained only in Illinois state court, or whether the clause is merely permissive
such that an action on the contract may be maintained in other reasonably convenient
forums where personal jurisdiction exists. Our review on this legal issue of contract
construction is de novo. Terra Int'l, Inc. v. Mississippi Chem. Corp., 119 F.3d 688,
692 (8th Cir. 1997) .

       The district court found the forum selection clause ambiguous, neither clearly
permissive nor clearly mandatory. Applying the general principle of contract
construction that no provision of a contract should be interpreted in a manner that
would render it surplusage, the district court concluded that, because personal
jurisdiction in Illinois existed even without the forum selection clause, treatment of

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the forum selection clause as merely permissive would render the forum selection
clause wholly redundant and therefore mere surplusage. Accordingly, the district
court held the forum selection clause mandatory rather than permissive. We disagree.

      As an initial matter, we note that neither forum is inconvenient for either party.
In addition, we assume for the purpose of this decision that Missouri and Illinois
enjoy personal jurisdiction over the parties even without the forum selection clause.1
Libbra is an Illinois resident. Libbra maintained extensive contacts within the state
of Missouri related to the formation and performance of the contract. Libbra
repeatedly met with Dunne in Missouri and repeatedly directed communications to
Dunne in Missouri. Further, the contract at issue involved the sale of a fifty-one
percent ownership interest in a construction firm that was formed under Delaware
law, headquartered in Illinois, and involved with numerous ongoing construction
projects throughout the state of Missouri.

       Dunne is a Missouri resident and an attorney licensed in Illinois and Missouri.
He has substantial, general contacts with Illinois by virtue of his role as a licensed
attorney who appears regularly in the courts of Illinois. He has substantial contacts
with Illinois that are specific to the subject matter of this dispute. It appears that his
contract with Libbra is substantially connected with Illinois and concerns the transfer
of ownership of a thing of value that is present in Illinois, as required to satisfy the
requirements of Illinois' long-arm statute. See 735 Ill. Comp. Stat. 5/2-209(a)(7) and
(10) (stating that jurisdiction exists upon the making or performance of a contract
substantially connected with Illinois or involving the transfer of "ownership,
possession or control of any asset or thing of value present within [Illinois] when . .
. acquired"). Taken together, each party's contacts with its non-domiciliary forum

      1
       The district court did not reach this issue. We leave to the district court on
remand the issues of whether there is jurisdiction in Missouri and whether there are
other grounds to dismiss or transfer the case.

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appear to provide the requisite minimum contacts and satisfy the "traditional notions
of fair play and substantial justice" as set forth generally in International Shoe Co. v.
Washington, 326 U.S. 310, 319 (1945), and its progeny, and as set forth specifically
in the context of contract disputes in Burger King Corp. v. Rudzewicz, 471 U.S. 462,
472-479 (1985).

       The stock purchase agreement states that it "shall" be construed in accordance
with Illinois law. Applying Illinois law to construe the contract, it is clear that "[a]
contract's language must be given its plain and ordinary meaning if possible." In re
Marriage of Ackerley, 775 N.E.2d 1045, 1059 (Ill. App. Ct. 2002) (citing Owens v.
McDermott, Will & Emery, 736 N.E.2d 145, 150 (Ill. App. Ct. 2000)); Dowd &
Dowd, Ltd. v. Gleason, 693 N.E.2d 358, 368 (Ill. 1998) ("The terms of an agreement,
if not ambiguous, should generally be enforced as they appear . . . and those terms
will control the rights of the parties.") (citations omitted). Applying this cardinal rule
to the forum selection clause, we find no language that has an ordinary meaning that
would suggest exclusivity. Unlike the immediately preceding choice of law
provision, which unambiguously mandates the application of Illinois law for the
purpose of construing the contract, the forum selection clause does not employ the
term "shall." Similarly, the forum selection clause does not use the words
"exclusive," "only," "must," or any other terms that might suggest exclusivity. With
no plain language basis to support a finding of exclusivity, we do not view the forum
selection clause as ambiguous. With no ambiguity, it is not necessary to resort to
other principals or canons of contract interpretation as urged by Libbra. The forum
selection clause is permissive.

       Even if there were an ambiguity to justify reliance on lesser rules of contract
interpretation, we would reject Libbra's challenge. Under substantive Illinois contract
law, "any ambiguity in the terms of a contract must be resolved against the drafter of
the disputed provision." Dowd & Dowd, 693 N.E.2d at 368. It is undisputed that
Libbra's attorneys drafted the stock purchase agreement. Accordingly, we would not

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be inclined to resolve the alleged ambiguity in Libbra's favor and infer exclusivity.

       In addition, we disagree with Libbra's argument that the forum selection clause
becomes surplusage if read as permissive rather than mandatory. A permissive forum
selection clause in a negotiated contract between sophisticated actors is a risk
management tool. With such a clause, a defendant is more strongly deterred from
challenging personal jurisdiction in a suit that is filed in the consented-to-jurisdiction
than he or she would be if such a clause were absent. This is the case even if it is
later determined that jurisdiction would have been proper in the consented-to-
jurisdiction under a traditional minimum contacts analysis. The presence of the
clause avoids the need to rely solely on the traditional minimum contacts analysis by
providing a second, stronger basis for jurisdiction thereby minimizing the risk that
anything more than a frivolous challenge to jurisdiction may arise.

      The order of the district court is reversed and this matter is remanded. In light
of our decision, we deny as moot Libbra's pending motion to strike the new
arguments raised in Dunne's reply brief.

      A true copy.

             Attest.

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT

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