Hartash Construction v. Drury Inns Inc

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 00-31120
Summary Calendar
____________________
HARTASH CONSTRUCTION, INC
Plaintiff - Appellant
v.
DRURY INNS INC
Defendant - Appellee
_________________________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 00-CV-1555
_________________________________________________________________
March 23, 2001
Before KING, Chief Judge, and JONES and STEWART, Circuit Judges.
PER CURIAM:*
Plaintiff-Appellant Hartash Construction, Inc. appeals from
the district court’s grant of Defendant-Appellee Drury Inns,
Inc.’s motion to dismiss. Because we find that the district
court properly enforced the forum-selection clause provided in
the parties’ contract, we AFFIRM.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
I. FACTUAL AND PROCEDURAL BACKGROUND
On February 7, 2000, Hartash Construction, Inc. (“Hartash”)
sued Drury Inns, Inc. (“Drury”) in a Louisiana state court to
recover damages allegedly due for breach of a construction
contract. Under the contract, Hartash, as a subcontractor,
agreed to install walls and sheetrock in a renovation project at
the Drury Inns New Orleans.
Pursuant to 28 U.S.C. § 1441, Drury removed the suit to
federal court on diversity grounds. Then, on June 15, 2000,
Drury moved to dismiss the case for improper venue, relying on a
forum-selection clause contained within the contract. The clause
provided that any litigation arising from the contract would be
maintained only in the St. Louis County Circuit Court in St.
Louis, Missouri.2 On August 15, 2000, the district court
concluded that the facts of the case “do not support a finding
that the forum selection clause is unreasonable” and dismissed
Hartash’s claims without prejudice.
Hartash timely appealed.
2
Specifically, section XXIII of the contract provided:
JURISDICTION AND VENUE. In case of any dispute between
Owner or Sub-Contractor arising out of, or relating to
this Agreement, the parties agree that any litigation
or proceeding relating thereto shall be maintained only
in the St. Louis County Circuit Court in St. Louis,
Missouri. Sub-Contractor consents to the jurisdiction
and venue of said court.
2
II. STANDARD OF REVIEW
Because it is a question of law, this court reviews de novo
the enforceability of a forum-selection clause. See Afram
Carriers, Inc. v. Moeykens, 145 F.3d 298, 301 (5th Cir. 1998),
cert. denied, 525 U.S. 1141 (1999); Haynsworth v. The Corp., 121
F.3d 956, 961 (5th Cir. 1997).
III. THE ENFORCEABILITY OF THE FORUM-SELECTION CLAUSE
“A forum selection provision in a written contract is
prima facie valid and enforceable unless the opposing party shows
that enforcement would be unreasonable.” Kevlin Servs., Inc. v.
Lexington State Bank, 46 F.3d 13, 15 (5th Cir. 1995); see also
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972); Int’l
Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112, 114 (5th Cir.
1996).3 The party opposing the forum-selection clause bears a
heavy burden and must demonstrate the following by a clear
showing:
(1) the incorporation of the forum selection clause
into the agreement was the product of fraud or
overreaching; (2) the party seeking to escape
enforcement “will for all practical purposes be
deprived of his day in court” because of the grave
inconvenience or unfairness of the selected forum; (3)
3
This circuit applies the “unreasonable” test, which was
articulated in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1(1972), to decide whether a forum-selection clause is
enforceable. See Int’l Software Sys., Inc., 77 F.3d at 114.
While Bremen was an admiralty case, this court has concluded that
its holding also applies in other legal contexts. See Haynsworth
v. The Corp., 121 F.3d 956, 962 (5th Cir. 1997); Int’l Software
Sys., Inc., 77 F.3d at 114.
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the fundamental unfairness of the chosen law will
deprive the plaintiff of a remedy; or (4) enforcement
of the forum selection clause would contravene a strong
public policy of the forum state.
Haynsworth v. The Corp., 121 F.3d 956, 963 (5th Cir. 1997)
(citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595
(1991), and The Bremen, 407 U.S. at 12-13); see also Afram
Carriers, Inc. v. Moeykens, 145 F.3d 298, 301 (5th Cir. 1998)
(stating that the clause itself must “result[] from fraud or
overreaching, . . . violate[] a strong public policy, or . . .
deprive[] the plaintiff of his day in court.”), cert. denied, 525
U.S. 1141 (1999); Mitsui & Co. v. Mira M/V, 111 F.3d 33, 35 (5th
Cir. 1997).
Hartash argues first that if this court upholds the forum-
selection clause, it would contravene “Louisiana public policy to
regulate property and actions within its borders,” and it would
allow a foreign contractor to operate in Louisiana, but choose to
resolve its disputes in another jurisdiction. Hartash fails,
however, to cite any Louisiana case law to demonstrate that this
is a “strong” public policy.4
We note, however, that Louisiana courts have adopted the
rule in Bremen, even in cases arising entirely under state law.
4
Rather, Hartash asserts that this public policy is
demonstrated by the facts that Drury was obligated to comply with
Louisiana building restrictions and codes when constructing in
Louisiana, that Louisiana law governs the payment of contractors
and materialmen in Louisiana, and that Hartash was permitted to
file a Statement of Lien and Privilege pursuant to Louisiana law.
4
See, e.g., Pitts, Inc. v. Ark-La Resources, L.P., 30867, pp.3-4
(La. App. 2 Cir. 8/19/98), 717 So. 2d 268, 270 (“With Pitts thus
presenting insufficient proof to invalidate the forum selection
clause, we find the agreement to be a voluntarily bargained-for
arrangement between two contracting parties which effectively
selects Mississippi as the dispute resolution forum.”); Digital
Enters., Inc. v. Arch Telecom, Inc., 95-30, p.2 (La. App. 5 Cir.
6/28/95), 658 So. 2d 20, 21 (enforcing forum-selection clause
providing for venue in Texas, where contract did not result from
fraud or violate fundamental fairness). Accordingly, we agree
with the district court that the facts in this case are not
sufficient to demonstrate that enforcing the forum-selection
clause would violate a strong Louisiana public policy, and
Hartash offers no jurisprudential support to suggest otherwise.
Next, Hartash contends that the forum-selection clause is
fundamentally unfair and is also a product of overreaching.
Hartash argues that the Bremen decision provides that a forum-
selection clause is fundamentally unfair if there is serious
inconvenience of the contractual forum to one or both of the
parties to resolve their essentially local disputes in a “remote
alien forum.” Hartash asserts that because the witnesses and
relevant evidence remain in Louisiana, its ability to present its
case in Missouri would be “greatly impair[ed].” Moreover,
Hartash argues in support of its argument of overreaching that
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the contract is “one-sided,” and “[v]irtually every [contract]
provision is for the benefit of Drury.”
Again, we agree with the district court that, under the
facts of this case, the inconvenience of trying a case in one
state versus another is insufficient to invalidate a forum-
selection clause. Missouri is not the “remote alien forum”
discussed in Bremen. See Carnival Cruise Lines, Inc. v. Shute,
499 U.S. 585, 594 (1991) (stating that the court of appeals “did
not place in proper context this Court’s statement in [Bremen]”
and finding that a different state is not the “remote alien
forum” contemplated in Bremen). In Bremen, the Supreme Court
considered the inconvenience of the forum in the context of two
sophisticated companies and concluded that had the agreement been
between “two Americans to resolve their essentially local
disputes in a remote alien forum,” i.e., out of the United
States, “[t]he remoteness of the forum might suggest that the
agreement was an adhesive one[.]” The Bremen, 407 U.S. at 16.
Contrary to Hartash’s assertion, the Supreme Court, since Bremen,
has found that requiring a citizen of one state to travel to
another state may cause inconvenience, but does not automatically
render a forum-selection clause fundamentally unfair. See
Carnival Cruise Lines, Inc., 499 U.S. at 595 (concluding that
forum-selection clause, which required a Washington state
resident to bring suit in Florida, was not fundamentally unfair).
Furthermore, if at the time of contracting, the parties were
6
aware of the inconvenience of the chosen forum, that
inconvenience will not render the forum-selection clause
unenforceable. See The Bremen, 407 U.S. at 16. Hartash has not
argued that it was unaware of the clause at the time it
contracted with Drury. The clause itself was not hidden within
the language of the contract. Indeed, the contract was
relatively short, and the forum-selection clause was partially in
bold print and underlined.
Moreover, Hartash has not provided this court with any
evidence to suggest that the forum-selection clause was a product
of overreaching. In the first instance, this case concerns two
sophisticated parties negotiating a $1.26 million contract at
arms length. See, e.g., Mitsui & Co., 111 F.3d at 36-37; Int’l
Software Sys., Inc., 77 F.3d at 116 (“[D]espite its size, ISSI
appears to be a fairly sophisticated business with experience in
negotiating complex governmental and private contracts.”). In
addition, when a party is asserting fraud or overreaching, that
party must demonstrate that the forum-selection provision itself,
not the entire contract, is a product of overreaching. See
Haynsworth, 121 F.3d at 963 (“Fraud and overreaching must be
specific to a forum selection clause in order to invalidate
it.”). As such, Hartash’s conclusory assertion that the contract
as a whole is one sided does not satisfy its burden.
Accordingly, we conclude that the simple fact that the chosen
forum may be less convenient for Hartash does not render the
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forum-selection clause fundamentally unfair and that there is no
evidence in the record to demonstrate that the forum-selection
clause was a product of overreaching.
Finally, Hartash asserts that litigating the case in
Missouri will be gravely difficult and inconvenient, such that
Hartash will be “deprived of its day in court.” Hartash raises
essentially the same arguments as those regarding fundamental
fairness, and we reject them on the same grounds.
In sum, Hartash has not adduced sufficient evidence to
overcome the presumption of validity that this circuit and the
Supreme Court have placed on forum-selection clauses. At best,
Hartash has demonstrated that Missouri will be a less convenient
forum than Louisiana. As we have explained, however, such
inconvenience will not render a forum-selection clause
unenforceable, especially when it is contained within a contract
negotiated by two sophisticated parties.
IV. CONCLUSION
For the foregoing reasons, the judgment of the district
court, dismissing Hartash’s claims without prejudice, is
AFFIRMED.
8