Court Opinion

ID: 9585970
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:05:46.368786+00
Date Added: 2024-06-11T17:24:17.964481
License: Public Domain

SEARS, Chief Justice,
dissenting.
Because I conclude that the parties labored under a mutual mistake when they chose Delaware law to control their settlement agreement, I dissent to the majority opinion.
CS-Lakeview contends that the parties made a mutual mistake in choosing Delaware law to govern their contract, as it rendered CS-Lakeview’s right of first refusal invalid,1 and that, if the parties had considered the issue, they would have chosen Georgia law to apply to the right of first refusal. CS-Lakeview relies on several cases to support its position. For example, in Kipin Indus, v. Van Deilen Inti.,2 the parties had an agreement for certain work to be performed in Kentucky, and a provision in their contract prohibited the filing of liens. The parties also chose Michigan to govern their contract. Under Michigan law, lien-waiver provisions were invalid, but, under Kentucky law, they were valid. A dispute arose between the parties, and a lien was filed. On appeal, the court held that Kentucky law should govern the validity of the lien-waiver provision on the ground that it should be assumed that the parties made a mistake in choosing a law — Michigan — that would invalidate that portion of their contract.3 *431In so ruling, the court relied on Comment e of § 187 of the Restatement, Second, Conflict of Laws. That comment states, in relevant part, as follows:
On occasion, the parties may choose a law that would declare the contract invalid. In such situations, the chosen law will not be applied by reason of the parties’ choice. To do so would defeat the expectations of the parties which it is the purpose of the present rule to protect. The parties can be assumed to have intended that the provisions of the contract would be binding upon them (cf. § 188, Comment b). If the parties have chosen a law that would invalidate the contract, it can be assumed that they did so by mistake.4
The rationale of Kipin has been followed by other courts.5 Moreover, the rule established in Kipin has been cited with approval by Russell J. Weintraub, a leading commentator on conflict of laws.6 Weintraub notes that choice-of-law clauses are “becoming ubiquitous boilerplate in commercial contracts” and that parties may inadvertently choose a law that invalidates “the contract in whole or in part.”7 Weintraub concludes that
[t]his problem of the inadvertent stipulation of invalidating law is easily resolved. A court should disregard a stipulation of invalidating law as an obvious mistake and choose the proper law by some other means. . . . Commercial convenience and upholding of expectations are served whenever the validating rule is applied and disserved whenever invalidating law is invoked.8
On the other hand, as the majority correctly notes, the ruling in the Kipin case has been criticized for applying the doctrine from Comment e of § 187 of the Restatement, Second, Conflict of Laws, to *432a single provision of a contract.9 Even that criticism, however, leaves open the possibility of disregarding an invalidating law even when only a part of a contract is at issue if “special circumstances” are present.10
I find the rationale of cases such as Kipin and the commentary expressed in Weintraub persuasive and conclude that, under that rationale, the parties made a mutual mistake in choosing Delaware law to govern their contract. Moreover, even under the more restrictive rule espoused by Scoles,* 11 I would find the presence of special circumstances in this case. In this regard, Simon’s attorney conducted the negotiations for Simon, and he testified that there were five or six terms of the settlement agreement that were material and that, without them, the agreement “wouldn’t have been done.” He added that the right of first refusal was one of those material terms. In addition, there is no evidence in the record that the parties gave any special consideration to the choice-of-law provision, much less the same consideration that they attached to the right of first refusal. As noted by Weintraub, the choice-of-law provision in this case seems to have been “boilerplate.” Given that the parties clearly intended to create a valid right of first refusal for CS-Lakeview and that the parties’ complex dispute would not have been settled without that right, it is reasonable to conclude that the parties assumed that the choice of Delaware law would not invalidate that critical provision of the contract. Because of the critical nature of the right of first refusal compared to the “boilerplate” choice-of-law provision, I conclude that this is a special circumstance in which the choice-of-law should not be applied to invalidate the right of first refusal.
In addition, this conclusion is consistent with Georgia law on mutual mistake. The parties made an “honest mistake of law as to the effect” of the written contract they entered12 when they chose Delaware law to govern their agreement. Stated differently, the parties “ ‘labored under the same misconception’ ” as to the terms of the settlement agreement, “ ‘intending at the time of the execution of the instrument’ ” to make the right of first refusal valid and enforceable, but “ ‘by mistake’ ” rendering it invalid, so that the settlement agreement did not express the intent of the parties to give CS-Lakeview a valid right of first refusal.13 Finally, given the testimony of Simon’s counsel that the right of first refusal would either make or *433break the parties’ agreement, I conclude that the evidence shows unequivocally and decisively that the parties made a mistake in choosing a law that would invalidate that provision.14
Decided March 28, 2008
Reconsideration denied April ll, 2008.
Duane Morris, William S. Mayfield, Dorsey & Whitney, Roger Magnuson, David Y Trevor, for appellant.
Morris, Manning & Martin, John F. Manning, Donald A. Loft, Ross A. Albert, for appellees.
For the foregoing reasons, I conclude that, even though the parties’ chosen law invalidates only a part of the parties’ contract, the choice of an invalidating law should be considered a mutual mistake. Accordingly, I dissent to the majority opinion.
I am authorized to state that Justice Melton joins in this dissent.

 Under Delaware law, CS-Lakeview’s right of first refusal violates the rule against perpetuities and is considered void ab initio. Stuart Kingston, Inc. u. Robinson, 596 A2d 1378, 1383-1384 (Del. 1991).

 182 F3d 490 (6th Cir. 1999).

 Id. at 494-496.

 The majority criticizes CS-Lakeview’s reliance on Kipin on the ground that this Court has not adopted § 187 of the Restatement, Second, Conflict of Laws. Kipin, however, simply adopted the principle of mistake of law noted in Comment e of § 187. We need not adopt § 187 in order to rely on that principle.

 Infomax Office Systems v. MBO Binder & Co. of America, 976 FSupp. 1247, 1254 (S.D. Iowa 1997); Bense v. Interstate Battery System, 683 F2d 718, 722 (2nd Cir. 1982); State ex rel. St. Joseph Light & Power Co. v. Donelson, 631 SW2d 887, 891 (Mo. Ct. App. 1982).

 Russell Weintraub, Commentary on the Conflict of Laws § 7.3C, pp. 494-495 (5th ed. 2006).

 Id. at 494. Contrary to the majority’s statement, Weintraub does address the situation where the parties choose a law that invalidates the contract in part.

 Id. at 495.

 Scoles, Hay, Borchers & Symeonid.es, Conflict of Laws § 18.11, p. 983 (4th ed. 2000).

 Id.

 Id.

 OCGA§ 23-2-22.

 Fox v. Washburn, 264 Ga. 617, 618 (449 SE2d 513) (1994), quoting Lawton v. Byck, 217 Ga. 676, 682 (124 SE2d 369) (1962).

 OCGA§ 23-2-21; Fulghum v. Kelly, 255 Ga. 652, 654 (340 SE2d 589) (1986).