Outbound Forum-Selection Clause & Fraud in the Inducement - Ex Parte Jewels by Park Lane, Inc.


Ex parte Jewels by Park Lane, Inc., [Ms. 1160333, June 23, 2017] __ So. 3d __ (Ala. 2017). The Court grants a petition for writ of mandamus and directs the Tallapoosa Circuit Court to vacate an order denying a Rule 12(b)(3), Ala. R. Civ. P., motion to dismiss on the ground of improper venue because of application of an outbound forum-selection clause.

The Court first notes that an outbound forum-selection clause may be enforced through a Rule 12(b)(3) motion to dismiss without prejudice, and that the moving party may submit evidentiary matters to support a motion to dismiss that attacks the venue. Ms. *7 (citing Ex parte D.M. White Constr. Co., 806 So. 2d 370 (Ala. 2001)). Such a clause implicates the venue of a court rather than its jurisdiction. Ms. *8 (citing inter alia Ex parte CTB, Inc., 782 So. 2d 188 (Ala. 2000)). Further, such a clause raises procedural issues and is therefore governed by the law of the forum jurisdiction addressing the issue. Ms. *8 (citing F.L. Crane & Sons, Inc. v. Malouf Construction Corp., 953 So. 2d 366 (Ala. 2006)). Outbound forum-selection clauses should be enforced so long as enforcement is neither unfair nor unreasonable. Ms. *8-9 (citing Professional Ins. Co. v. Sutherland, 700 So. 2d 347 (Ala. 1997). Unfairness may be shown through establishing the contract was affected by fraud, undue influence, overweening bargaining power, or that enforcement would be unreasonable because the chosen forum would be seriously inconvenient for the trial of the action. Ms. *9 (citing Ex parte Leasecomm Corp., 879 So. 2d 1156, 1159 (Ala. 2003)). To prove inconvenience, a party opposing such a clause must address five factors:

" ' "When an agreement includes a clearly stated forum-selection clause, a party claiming that clause is unreasonable and therefore invalid will be required to make a clear showing of unreasonableness. In determining whether such a clause is unreasonable, a court should consider these five factors: (1) Are the parties business entities or businesspersons? (2) What is the subject matter of the contract? (3) Does the chosen forum have any inherent advantages? (4) Should the parties have been able to understand the agreement as it was written? (5) Have extraordinary facts arisen since the agreement was entered that would make the chosen forum seriously inconvenient? We state these items not as requirements, but merely as factors that, considered together, should in a particular case give a clear indication whether the chosen forum is reasonable." ' "

Ms. *9 (quoting Ex parte Nawas Int'l Travel Serv., Inc., 68 So. 3d 823, 827 (Ala. 2011)). To prove unfairness based on fraudulent inducement, the inquiry is whether the forum-selection clause is the result of fraud in the inducement in the negotiation or inclusion in the agreement of the forum-selection clause itself, not whether the claim of fraud in the inducement is directed toward the entire contract. Ms. *11 (citing Ex parte Leasecomm, supra, 879 So. 2d at 1159)). Fraud alleged as to the entire contract will not avoid enforcement of the forum-selection clause itself. Ms. *12 (citing Ex parte Soprema, Inc., 949 So. 2d 907 (Ala. 2006); Ex parte Procom Servs., Inc., 884 So. 2d 827 (Ala. 2003)).+

Because the movants presented an enforceable outbound forum-selection clause which required litigation to be conducted in Illinois, venue was improper in Tallapoosa Circuit Court and their motion to dismiss without prejudice pursuant to Rule 12(b)(3) was due to be granted.

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