Salehpour v. Just A Buck Licensing, Inc. , 2013 Ohio 4436 ( 2013 )

[Cite as Salehpour v. Just A Buck Licensing, Inc., 2013-Ohio-4436.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
WARREN COUNTY
AMIR SALEHPOUR, :
Plaintiff-Appellant, : CASE NO. CA2013-03-028
: OPINION
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:
JUST A BUCK LICENSING, INC., :
Defendant-Appellee. :
CIVIL APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
Case No. 12CV83157
Reminger Co., L.P.A., Neil Fairweather, Danielle Lorenz, 525 Vine Street, Suite 1700,
Cincinnati, Ohio 45202, for plaintiff-appellant
Thomas & Thomas, Randy D. Trammell, 16 West Fourth Street, Newport, KY 41071, for
defendant-appellee
RINGLAND, J.
{¶ 1} Plaintiff-appellant, Amir Salehpour, appeals the decision of the Warren County
Court of Common Pleas granting a motion to dismiss his complaint for lack of personal
jurisdiction.
{¶ 2} On September 26, 2002, Salehpour and defendant-appellee, Just a Buck
Licensing, Inc. ("JAB"), entered into a franchise agreement for the operation of a franchised
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store in West Chester, Ohio. That agreement contained a forum-selection clause that
required that any action at law or equity instituted against either party must be brought in
Orange County, New York.
{¶ 3} On October 18, 2010, JAB filed an action for breach of the franchise agreement
in Orange County, New York, against Salehpour and AKA Dollar Store. On July 12, 2002,
the Orange County Superior Court in New York entered a judgment against Salehpour and
AKA Dollar Store in the amount of $196,401.03. On October 1, 2012, that judgment was
domesticated against Salehpour and AKA Dollar Store in Warren County, Ohio.
{¶ 4} On November 9, 2012, Salehpour filed a complaint for declaratory judgment
and money damages against JAB in Warren County, Ohio. JAB moved to dismiss based
upon the forum-selection clause. On February 23, 2013, the trial court granted the motion to
dismiss for lack of jurisdiction based upon the forum-selection clause of the franchise
agreement.
{¶ 5} Salehpour now appeals that decision, raising two assignments of error for our
review.
{¶ 6} Assignment of Error No. 1:
{¶ 7} THE COURT OF COMMON PLEAS ERRED WHEN IT ENFORCED THE
FORUM-SELECTION CLAUSE AND DISMISSED MR. SALEHPOUR'S COMPLAINT.
{¶ 8} Within this assignment of error, Salehpour argues that "JAB induced
[Salehpour] to consent to the forum-selection clause through fraud and overreaching," and
that, "enforcement of the forum-selection clause would be unreasonable and unjust."
{¶ 9} We review the trial court's ruling granting a motion to dismiss for lack of
personal jurisdiction pursuant to a de novo standard of review. McIntyre v. Rice, 8th Dist.
Cuyahoga No. 81339, 2003-Ohio-3490.
{¶ 10} Parties to a contract may agree to submit to the jurisdiction of a particular court
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through the use of a forum-selection clause. Natl. City Commercial Capital Corp. v. All About
Limousines Corp., 12th Dist. Butler No. CA2005-08-226, 2009-Ohio-1159, ¶ 7. The franchise
agreement in the present case contains the following choice of law and forum-selection
clause:
12.2 Choice of Law and Selection of Venue. Except as
provided in paragraph 12.13 of this Agreement, this Agreement
is governed by the laws of the State of New York. The parties
further agree that any action at law or equity instituted against
either party to this Agreement which is not subject to arbitration
must be commenced only in the state court located in Orange
County, New York or the United States District Court for the
Southern District of New York. You acknowledge that this
Agreement has been entered into in the State of New York, and
that You are to receive valuable and continuing services
emanating from JAB's headquarters in Goshen, New York,
including but not limited to assistance, support and the
development of the System. In recognition of such services and
their origin, You hereby irrevocably consent to the personal
jurisdiction of the state and federal courts of New York as set
forth above.
{¶ 11} The Ohio Supreme Court has set forth a three-part test to determine the validity
of a forum-selection clause: (1) Are both parties to the contract commercial entities? (2) Is
there evidence of fraud or overreaching? (3) Would enforcement of the clause be
unreasonable or unjust? Kennecorp Mtg. Brokers, Inc. v. Country Club Convalescent Hosp.,
Inc., 66 Ohio St.3d 173, 1993-Ohio-203.
{¶ 12} Salehpour concedes that this is a commercial contract between two for-profit
entities in satisfaction of the first prong of the Kennecorp test. However, he argues that JAB
engaged in fraud and overreaching to induce him to enter into the franchise agreement. In
addition, he argues that under the circumstances, enforcement of the forum-selection clause
would be unjust.
Fraud or Overreaching
{¶ 13} Specifically, Salehpour argues that JAB had superior knowledge of his future
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ability to pursue litigation in New York. It is Salehpour's contention that JAB did not provide
full financial disclosure. He alleges that JAB knew he would be operating the business at a
loss, and would therefor lack the means to litigate any issues in New York.
{¶ 14} As the trial court noted, in order to invalidate a forum-selection clause, the
alleged wrongdoing "must relate directly to the negotiation or acceptance of the forum
selection clause itself, and not just to the contract generally." Bohl v. Hauke, 180 Ohio
App.3d 526, 2009-Ohio-150, ¶ 9 (4th Dist.), quoting Four Seasons Ents. v. Tommel Fin.
Servs., Inc., 8th Dist. Cuyahoga No. 77248, 2000 WL 1679456, at *2 (Nov. 9, 2000). While
Salehpour attempts to portray his argument as one specifically related to the forum-selection
clause, it is clear that his argument pertains to the franchise agreement in general.
Furthermore, while Salehpour alleges that JAB failed to provide full financial disclosure, he
has put forward no evidence that JAB overstated the likely success of his business.
Accordingly, we cannot find that there is evidence of fraud or overreaching specifically in the
negotiation and acceptance of the forum-selection clause.
{¶ 15} We also note that Salehpour's reliance on Preferred Capital, Inc. v. Power
Engineering Group, Inc., 112 Ohio St.3d 429, 2007-Ohio-257, is misplaced. In the Preferred
Capital case, the forum-selection clause was held to be unenforceable because no careful
reading of the contract could allow the second party to anticipate the appropriate forum for
litigating issues. Id. at ¶ 12. That is distinctly distinguishable from the present case, wherein
Salehpour could clearly determine from a plain reading of the franchise agreement that all
issues were to be litigated in New York.
Unreasonable or Unjust
{¶ 16} The third prong of the Kennecorp test requires a court to determine whether
enforcement of the forum-selection clause would be unreasonable or unjust.
{¶ 17} Ohio courts have held that an otherwise valid forum-selection clause cannot be
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enforced if it is "unreasonable or unjust." Under this third prong of the analysis, courts are to
determine whether the chosen forum is so inconvenient as to, in effect, afford no remedy at
all, thus "depriv[ing] litigants of their day in court." Info. Leasing Corp v. Jaskot, 151 Ohio
App. 3d 546, 2003-Ohio-566, ¶ 18 (1st Dist.), citing Kennecorp, 66 Ohio St.3d 173, 176; see,
also, Info. Leasing Corp. v. Baxter, 1st Dist. Hamilton No. C-020029, 2002-Ohio-3930, at ¶
12.
{¶ 18} Salehpour argues that the forum-selection clause would deprive him of the
opportunity to pursue his claims against JAB because he cannot afford to bring the litigation
in New York. However, "[m]ere distance, mere expense, or mere hardship to an individual
litigant is insufficient to invalidate a forum selection clause." IntraSee, Inc. v. Ludwig, 9th
Dist. Lorain Nos. 10CA009916 and 11CA010024, 2012-Ohio-2684, ¶ 20, citing Buckeye
Check Cashing of Arizona, Inc. v. Lang, S.D. Ohio No. 2:06-CV-792, 2007 WL 641824 at *7
(Feb. 23, 2007). Because Salehpour makes no argument beyond the mere expense of
litigating the issue in New York, we cannot find that the forum-selection clause is
unreasonable or unjust.
{¶ 19} In light of the foregoing, having found that Salehpour was not induced to
consent to the forum-selection clause of the franchise agreement through fraud and
overreaching, nor would the enforcement of the forum-selection clause be unreasonable and
unjust, Salehpour's first assignment of error is overruled.
{¶ 20} Assignment of Error No. 2:
{¶ 21} THE COURT OF COMMON PLEAS ERRED WHEN IT FAILED TO ADDRESS
WHETHER THE ARBITRATION CLAUSE WAS VALID AND ENFORCEABLE.
{¶ 22} The trial court's opinion stated that, "without jurisdiction over these claims, it is
not appropriate for this court to address any arguments related to the enforceability of the
arbitration clause or the effect, if any, of [JAB's] previous lawsuit in New York as a waiver of
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the arbitration clause." Having found that the trial court lacked jurisdiction, we agree that it
would have been inappropriate for that court to address any issues pertaining to the
arbitration clause.
{¶ 23} Accordingly, Salehpour's second assignment of error is overruled.
{¶ 24} Judgment affirmed.
HENDRICKSON, P.J., and S. POWELL, J., concur.
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