Empire Loan of Stoughton, Inc. v. Stanley Convergent Security Solutions, Inc.

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17-P-1115 Appeals Court
EMPIRE LOAN OF STOUGHTON, INC. vs. STANLEY CONVERGENT SECURITY
SOLUTIONS, INC.
No. 17-P-1115.
Norfolk. November 8, 2018. - January 24, 2019.
Present: Sullivan, Kinder, & Shin, JJ.
Appeals Court, Jurisdiction. Practice, Civil, Notice of appeal,
Motion to dismiss, Choice of forum. Contract, Choice of
forum clause, Choice of law clause.
Civil action commenced in the Superior Court Department on
July 24, 2015.
A motion to dismiss was heard by Beverly J. Cannone, J.,
and a motion for reconsideration was considered by her.
A motion to dismiss the appeal was heard in the Appeals
Court by Rubin, J.
Dana E. Casher for the plaintiff.
Christopher A. Duggan (Nicole B. Cordeiro also present) for
the defendant.
KINDER, J. Pawn shop operator Empire Loan of Stoughton,
Inc. (Empire), filed a complaint in Superior Court against
Stanley Convergent Security Solutions, Inc. (Stanley), a
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supplier and servicer of security systems, alleging, among other
things, that Stanley breached a contract with Empire by failing
to properly monitor and maintain a security system it sold to
Empire. A Superior Court judge allowed Stanley's motion to
dismiss because the contract contained a forum selection clause
that provided that any action against Stanley must be brought in
Hartford, Connecticut. On appeal, Empire claims error in the
order of dismissal, arguing that the forum selection clause is
unenforceable. In a consolidated appeal, Stanley argues that
its motion to dismiss Empire's appeal for lack of jurisdiction
should have been allowed by the single justice. We affirm the
order of the single justice and the judgment dismissing Empire's
claims.
Background. Stanley filed its motion to dismiss the
complaint under Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754
(1974), which, in the normal course, "is the correct vehicle to
employ when the ground for dismissal is alleged to be that the
court lacks jurisdiction as a result of an enforceable forum
selection clause." Boland v. George S. May Int'l Co., 81 Mass.
App. Ct. 817, 818 n.2 (2012). However, when "matters outside
the pleading are presented to and not excluded by the court, the
motion shall be treated as one for summary judgment and disposed
of as provided in [Mass. R. Civ. P. 56, 365 Mass. 824 (1974)]."
Mass. R. Civ. P. 12 (b). Because both parties submitted
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affidavits in connection with the motion to dismiss and the
record does not show that the judge excluded them, we treat the
motion as one for summary judgment.1 See Baby Furniture
Warehouse Store, Inc. v. Meubles D&F Ltée, 75 Mass. App. Ct. 27,
29 n.3 (2009). Our review of the record in the light most
favorable to Empire, the nonmoving party, id., reveals the
following material facts.
Empire is a Massachusetts company that operates five
Massachusetts pawn shops, including one in Stoughton.2 Stanley
is a Delaware corporation doing business in Massachusetts with
an office in Woburn. Beginning in 2011, Empire and Stanley
entered into eight contracts in which Stanley agreed to install
and monitor security systems in Empire's pawn shops in exchange
for monthly payments. As relevant here, the contracts stated
that they were entered into in Connecticut, that they "shall be
interpreted, enforced and governed under the laws of the State
of Connecticut without regard to application of conflicts of
laws principals [sic] that would require the application of any
1 Neither the memorandum of decision on the motion to
dismiss nor the judgment indicates under which rule it entered,
and there is no transcript before us of the hearing on the
motion.
2 We simplify here for convenience, but it does not affect
our analysis. Empire is actually one of five corporations run
by the same principals, with the other companies operating
affiliated pawn shops at four other Massachusetts locations.
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other law," and that "[a]ny action regarding this agreement or
otherwise brought against [Stanley] by or on behalf of any party
to this agreement . . . shall be maintained in a court in
Hartford, Connecticut."
Stanley's Massachusetts salesperson Robert Corrieri
negotiated the contracts with Empire's general manager, Steven
Duva, and its president, Michael Goldstein. Viewing the
evidence in the light most favorable to Empire, the negotiations
actually occurred in Massachusetts. The parties negotiated
prices, and Duva inserted handwritten terms into the agreement
relating to Empire's pawn shop in Lynn. Each page of every
contract bears the signature or initials of Duva or Goldstein,
neither of whom objected to the forum selection clause. In
executing each contract, Duva and Goldstein agreed that they had
"read th[e] entire [a]greement" and would "be bound by all its
terms and conditions."
Business between Empire and Stanley proceeded without
incident until December 25, 2014, when two unidentified burglars
disabled the telephone wire to the Stoughton pawn shop, tore
wiring from the security system, broke in, and damaged or stole
property. Neither Stanley nor the security system alerted
Empire or the police. As a result of the burglary, Empire
sustained losses that were not covered by insurance.
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Discussion. 1. Motion to dismiss the appeal. We first
address Stanley's claim that the Appeals Court lacks
jurisdiction over this appeal because Empire did not file "a
valid, timely notice of appeal." More specifically, Stanley
argues that the single justice should have dismissed the appeal
on its motion because Empire did not file a new notice of appeal
after the denial of Empire's motion to reconsider. We disagree.
The procedural history follows, with all dates referring to
the year 2016. On June 28, the Superior Court judge's order
entered allowing the motion to dismiss Empire's complaint. On
July 29, Empire served Stanley with a motion for
reconsideration. Empire filed a notice of appeal from the order
of dismissal on August 2; however, the judgment dismissing the
complaint did not enter until August 5. On August 26, Empire
filed a notice of appeal from the judgment of dismissal.
Empire's motion for reconsideration was denied on August 31, and
Empire did not notice an appeal after that decision.
We begin our analysis by assuming, without deciding, that
if the August 26 notice of appeal is not effective, we would not
have jurisdiction to hear the appeal from the judgment. See
DeLucia v. Kfoury, 93 Mass. App. Ct. 166, 170 (2018) ("A timely
notice of appeal is a jurisdictional prerequisite to our
authority to consider any matter on appeal"). But see Roch v.
Mollica, 481 Mass. 164, 165 n.2 (2019) (deciding merits of
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appeal where sole notice of appeal was of no effect due to
timely filed motion for reconsideration). To be effective, a
notice of appeal must be filed "within thirty days of the date
of the entry of the judgment appealed from." Mass. R. A. P.
4 (a), as amended, 464 Mass. 1601 (2013). The thirty-day appeal
period may be tolled by the filing of a "timely motion," among
other things, "to alter or amend a judgment under Rule 59 or for
relief from judgment under Rule 60, however titled," Mass.
R. A. P. 4 (a), which may include a motion to reconsider the
judgment. See 2013 Reporter's Notes to Mass. R. A. P. 4, 2
Mass. Ann. Laws Court Rules, Rules of Appellate Procedure, at 11
(LexisNexis 2018). Such motions to alter or amend a judgment or
for relief from the judgment are timely only "if either motion
is served within ten days after entry of judgment" (emphasis
added). Mass. R. A. P. 4 (a). The parties then have thirty
days after entry of the order disposing of the motion to file a
new notice of appeal. "A notice of appeal filed before the
disposition of any of the above motions shall have no effect."
Id.
In denying Stanley's motion to dismiss for lack of
appellate jurisdiction, the single justice concluded that
Empire's motion for reconsideration was not a "timely" one under
rule 4 (a). We discern no error in that conclusion because it
is undisputed that the motion was served before judgment
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entered. Moreover, Empire's motion for reconsideration, which
only sought reconsideration of the allowance of the motion to
dismiss, was not a motion for reconsideration that tolls the
time period for filing a notice of appeal. Only motions seeking
reconsideration of a judgment have that effect under rule 4 (a).
Accordingly, Empire's motion to reconsider did not toll the
running of the thirty-day appeal period and a new notice of
appeal was not required when the motion was denied. Empire's
August 26 notice of appeal, filed within thirty days of entry of
the judgment of dismissal, conferred jurisdiction on this court,
and we therefore reach the merits.3
2. Enforceability of the forum selection clause. The
Superior Court judge allowed Stanley's motion to dismiss,
reasoning that "the forum selection language is clear and
unambiguous, is presented fairly and conspicuously and . . . the
contract was entered into by sophisticated parties who have
agreed to litigate in Connecticut." She further concluded that
(1) "[t]he forum selection clause is fair and reasonable because
there is no evidence of fraud, duress, or substantial imbalance
3 Our holding is limited to the particular procedural
situation before us. We do not decide whether a premature
motion for reconsideration might toll the time period for filing
a notice of appeal in other circumstances. However, it should
serve as a reminder that a party who relies on a prejudgment
motion for reconsideration in delaying its notice of appeal does
so at its peril.
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of bargaining power between the two parties," (2) the forum
selection clause is not in contravention of public policy, and
(3) "a trial in Connecticut, as agreed to by the parties, would
not be so gravely difficult that the plaintiff would be deprived
of its day in court." We review the judge's decision de novo to
determine whether Stanley has established that, viewing the
evidence in the light most favorable to Empire, there is no
genuine issue as to any material fact and that Stanley is
entitled to a judgment as a matter of law. See Scarlett v.
Boston, 93 Mass. App. Ct. 593, 596-597 (2018), citing Mass. R.
Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002).
a. Choice of law. We first determine which State's
substantive law should be used to analyze the enforceability of
the contract's forum selection clause. "Where, as here, 'the
parties have expressed a specific intent as to the governing
law, Massachusetts courts will uphold the parties' choice as
long as the result is not contrary to public policy.'" Oxford
Global Resources, LLC v. Hernandez, 480 Mass. 462, 468 (2018),
quoting Hodas v. Morin, 442 Mass. 544, 549-550 (2004). A
choice-of-law provision is not contrary to public policy unless
"'(a) the chosen state has no substantial relationship to the
parties or the transaction and there is no other reasonable
basis for the parties' choice, or (b) [where] application of the
law of the chosen state would be contrary to a fundamental
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policy of a state which has a materially greater interest than
the chosen state [in the determination of the particular issue]'
and is the State whose law would apply . . . 'in the absence of
an effective choice of law by the parties.'" Id. at 469,
quoting Hodas, supra at 550.
The record in this case shows little connection between the
parties and Connecticut. According to the contract, Stanley is
located in Naperville, Illinois. Although Stanley's memorandum
in support of its motion to dismiss suggests that it has a
national branch office in Trumbull, Connecticut, there is no
record evidence to support that claim. The contract states that
it was entered into in the State of Connecticut, but that fact
is disputed. Marc Gundersheim, an officer and director of
Empire, states in an affidavit that the contract was entered
into in Massachusetts.4 Other than these unsupported or disputed
claims, there is nothing in the record establishing any
relationship between the parties and the State of Connecticut,
4 Gundersheim fails to state the basis for his personal
knowledge of these facts as required by Mass. R. Civ. P. 56 (e)
("affidavits shall be made on personal knowledge, shall set
forth such facts as would be admissible in evidence, and shall
show affirmatively that the affiant is competent to testify to
the matters stated therein"). See Madsen v. Erwin, 395 Mass.
715, 721 (1985). However, because Stanley did not move to
strike the affidavit and the record is open to our independent
consideration, we consider the location of the execution of the
contract to be disputed. See Matthews v. Ocean Spray
Cranberries, Inc., 426 Mass. 122, 123 n.1 (1997).
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much less a substantial relationship. It is undisputed,
however, that Empire is located in Massachusetts, where (1) both
parties do business, (2) the contract was negotiated, (3) the
conduct at issue occurred, and (4) Empire sustained losses. On
this record, we conclude that Connecticut does not have a
substantial relationship to the parties or the transaction and
there is no other reasonable basis for the parties' choice of
law. See Oxford Global Resources, LLC, supra at 467 (setting
forth factors to be considered in identifying State with most
significant relationship). The choice-of-law provision in the
contract is therefore unenforceable, and we apply the
substantive law of Massachusetts to determine the enforceability
of the forum selection clause.
b. Forum selection. Forum selection clauses are
presumptively enforceable in Massachusetts "so long as they are
fair and reasonable." Melia v. Zenhire, Inc., 462 Mass. 164,
182 (2012). See Jacobson v. Mailboxes Etc. U.S.A., 419 Mass.
572, 575 (1995). The proponent of a forum selection clause
bears the burden of showing that the clause was reasonably
communicated and accepted. Ajemian v. Yahoo!, Inc., 83 Mass.
App. Ct. 565, 574 (2013), S.C., 478 Mass. 169 (2017), cert.
denied sub nom. Oath Holdings, Inc. v. Ajemian, 138 S. Ct. 1327
(2018). By contrast, "[t]he opponent of a forum selection
clause bears the 'substantial burden' of showing that
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enforcement of a forum selection clause would be unfair and
unreasonable." Melia v. Zenhire, Inc., supra, quoting Cambridge
Biotech Corp. v. Pasteur Sanofi Diagnostics, 433 Mass. 122, 133
(2000).
Stanley has met its burden of showing that the forum
selection clause was reasonably communicated and accepted by
Empire. Stanley negotiated eight separate contracts with
Empire's president and general manager, each of which contained
an identical forum selection clause. Neither the president nor
the general manager objected to the forum selection clause, and
nothing in the record supports an inference that they did not
see or understand that clause. Rather, by executing the
contracts, they agreed that they "read th[e] entire
[a]greement." The president or the general manager signed or
initialed each page of every contract, and in the case of the
contract relating to the Lynn shop, the general manager inserted
additional contract terms directly under the forum selection
clause. In these circumstances, Empire's assertion that it
signed the contracts with little or no knowledge of their terms
rings hollow.
Empire claims the forum selection clause is unfair and
unreasonable because (1) the contract is one of adhesion, (2)
its witnesses would be unavailable for a trial in Connecticut,
and (3) forcing Empire to litigate in Connecticut would deprive
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Empire of its contract-based G. L. c. 93A claim, in violation of
Massachusetts public policy. We address each argument in turn.
A contract of adhesion is one that is "drafted unilaterally
by the dominant party and then presented on a 'take-it-or-leave-
it' basis to the weaker party who has no real opportunity to
bargain about its terms." Restatement (Second) of Conflict of
Laws § 187 comment b (1971). While there is no dispute that
Stanley drafted the contracts at issue here, they were subject
to negotiation. Empire concedes that the parties negotiated
"what components would be installed, the level of service and
maintenance plans, and the pricing," and it is undisputed that
handwritten terms were inserted into the agreement relating to
Empire's pawn shop in Lynn. Thus, we agree with the motion
judge that this was not a contract of adhesion. Moreover, even
adhesion contracts are enforceable "unless they are
unconscionable, offend public policy, or are shown to be unfair
in the particular circumstances." Chase Commercial Corp. v.
Owen, 32 Mass. App. Ct. 248, 253 (1992). We see nothing
unconscionable or unfair in this case where the principals were
sophisticated business people and there is no claim of fraud in
the contract's execution. See Miller v. Cotter, 448 Mass. 671,
680 (2007). Accordingly, on this point, Empire has failed to
meet its substantial burden of showing that enforcement of the
forum selection clause would be unfair and unreasonable.
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Second, we find no merit in Empire's claim that it would be
unfair and unreasonable to enforce the forum selection clause
because it cannot present the testimony of Massachusetts
witnesses in a Connecticut proceeding. Even assuming that the
subpoena power of a Hartford forum would not extend to
Massachusetts witnesses, which is not clear from this record,
nothing would prevent depositions taken in Massachusetts from
being presented in the courts of Connecticut. See Connecticut
Practice Book §§ 13-27(f), 13-29(d), 13-31 (2018).
Finally, we are not persuaded by Empire's claim that
enforcing the forum selection clause in this case would deprive
Empire of its contract-based G. L. c. 93A claim in violation of
Massachusetts public policy. Assuming, without deciding, that
Empire has a viable G. L. c. 93A claim against Stanley, Empire
has not shown that a Connecticut forum could not apply
Massachusetts law to its unfair or deceptive business practice
claim. In Connecticut, "[a] principled search for the local law
of the state with the most significant relationship to the
occurrence and the parties will often cause foreign law to be
recognized as the law that should govern the controversy."
O'Connor v. O'Connor, 201 Conn. 632, 648 (1986). Thus, we see
no reason why a Connecticut court could not properly apply our
statute, where (1) the injury and the conduct alleged to have
caused the injury occurred in Massachusetts, (2) Empire is a
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Massachusetts company, (3) Stanley maintains an office in
Massachusetts, and (4) the parties' relationship is centered in
Massachusetts. See id. at 652, quoting Restatement (Second) of
Conflict of Laws § 145(2) (1971).
For all of these reasons we discern no error in the judge's
conclusion that the forum selection clause is valid and
enforceable. The judgment dismissing Empire's complaint is
affirmed, as is the order of the single justice denying
Stanley's motion to dismiss Empire's appeal.
So ordered.