Black v. Arizala

48 P.3d 843, 182 Or. App. 16, 2002 Ore. App. LEXIS 870
CourtCourt of Appeals of Oregon
DecidedJune 5, 2002
Docket9611-09017, 9708-06851; A104791
StatusPublished
Cited by10 cases

This text of 48 P.3d 843 (Black v. Arizala) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Black v. Arizala, 48 P.3d 843, 182 Or. App. 16, 2002 Ore. App. LEXIS 870 (Or. Ct. App. 2002).

Opinions

[22]*22EDMONDS, J.

Plaintiffs John J. Lenahan, Marilyn S. Lenahan, and Willowrun, L.P. (plaintiffs), appeal from a judgment dismissing their claims for security law violations and related torts on the ground that a forum selection clause in a limited partnership agreement required them to bring the case in Puerto Rico.1 We reverse.

The consolidated cases involve investments in one or more of several related enterprises whose purpose is to seek the award of radio communication frequencies from the Federal Communications Commission for use in data transfer and other communications businesses. Plaintiffs, who are Oregon residents, are parties to only one of the cases, Black v. Arizala. That case involves their investment in PCS 2000, L.P. (PCS), a Delaware limited partnership whose headquarters are in San Juan, Puerto Rico.2 In their first amended complaint, plaintiffs allege that, in the process of selling limited partnership interests in PCS, defendants violated the federal securities laws and the securities laws of Oregon and several other jurisdictions; committed common-law fraud; and violated the Oregon Racketeer Influenced and Corrupt Organization Act (ORICO), ORS 166.715 to ORS 166.735.

Plaintiffs invested in PCS by purchasing limited partnership interests. As part of the purchase, they became parties to the PCS Agreement of Limited Partnership (the Agreement). All of their claims in this case are based on events that occurred before they purchased those interests and became parties to the Agreement. Among other things, plaintiffs allege that defendants represented that PCS could buy licenses from the FCC at a certain price when defendants in fact did not know what the price would be; did not disclose the cost of engineering, acquiring, and installing the necessary equipment; did not disclose the risk of losing the licenses [23]*23if PCS failed to raise sufficient capital or to build the infrastructure within the required times; did not disclose that two principal promoters had been involved in previous unsuccessful transactions in the telecommunications industry and had defaulted on guarantees to equipment suppliers, creating a risk that it would be more difficult for PCS to raise capital; and did not disclose the increased costs and disadvantages of the technology that PCS would use in comparison to conventional cellular telephones.

The trial court dismissed the case based on the choice of law, forum selection, and arbitration clause of the Agreement. That clause provides:

“This Agreement shall be construed and enforced in accordance with and governed by the law of the State of Delaware, excluding that body of law relating to conflicts of law. Any dispute under this Agreement shall be submitted to binding arbitration in San Juan, Puerto Rico under the rules of the American Arbitration Association concerning commercial disputes, and the parties agree to be bound by any decision reached under such rules. Any arbitrator shall be specifically bound by the provisions respecting limitation of liability set forth in this Agreement. Venue for any legal action arising from this Agreement, including enforcement of any arbitration award, shall be in San Juan, Puerto Rico.”

Although this clause appears to provide for arbitration as the primary method of resolving disputes under the Agreement, defendants did not ask the court to order plaintiffs to arbitrate their claims. Rather, they relied on the final sentence, which establishes venue “for any legal action arising from this Agreement” in Puerto Rico. They argued that that sentence required plaintiffs to bring this action in Puerto Rico, not in Oregon. The trial court agreed and dismissed the case.

The threshold issue concerns our standard of review, that standard depends on the nature of defendants’ motion, about which the parties disagree. On appeal, plaintiffs argue,

“Defendant [s] called [their] motion a Rifle 21 motion, but it is not. ORCP 21 does not contain a motion to dismiss based on an arbitration/venue clause in a contract between the [24]*24parties. Because defendants submitted, and the trial court relied on, facts that do not appear on the face of the [complaints], the motion to dismiss was really a motion for summary judgment.”

Defendants counter,

“ORCP 21A authorizes the trial court to determine facts relating to personal jurisdiction on a motion to dismiss. This court has applied that rule to review of a dismissal that turned on interpretation for a forum selection clause. Where the trial court has granted such a motion to dismiss, this Court assumes that the trial court made the necessary findings of fact to reach that conclusion. This Court reviews the trial court’s assumed factual findings for ‘any competent evidence’ and its legal conclusions for errors of law.” (Footnotes omitted.)

Defendants rely on Industrial Leasing Corp. v. Miami Ice Machine Co., 126 Or App 80, 867 P2d 548 (1994), in support of their argument about our standard of review. In that case, the plaintiff appealed from a judgment dismissing its complaint for lack of personal jurisdiction under ORCP 21 A(2). The plaintiff was in the business of leasing equipment and purchasing lessors’ interests in equipment leases. It entered into an agreement that contained a forum selection clause to obtain the assignment of the defendant’s lessor’s interest in an equipment lease. When the lessee failed to make the payments under the lease, the plaintiff made a demand that the defendant repurchase the lease in accordance with the terms of the assignment. The defendant moved to dismiss under ORCP 21 A(2), arguing that it had never done business in Oregon and lacked the requisite minimum contacts with the state necessary to confer personal jurisdiction. The trial court granted the defendant’s motion without making any findings. On appeal, the plaintiff argued that the trial court had erred in granting the motion because the trial court should have treated the motion as a motion for summary judgment and there was at least prima facie evidence of personal jurisdiction in the record. The defendant countered that its motion should not be treated as a motion for summary judgment because ORCP 21 A(2) expressly authorizes courts to determine the facts relating to personal [25]*25jurisdiction and, because the trial court granted the motion, it must be assumed that it made the necessary findings to reaeh that conclusion. We held that under ORCP 21 A(2) the court may determine the jurisdictional facts at the time of the motion to dismiss but that, for purposes of the motion, the trial court erred in concluding that the facts were insufficient to establish personal jurisdiction.

We fail to perceive how our holding in Industrial Leasing Corp. controls in this case where there is not an issue regarding jurisdiction. In our view, the issue concerning the enforceability of a forum selection clause in a contract is a matter of contract law and not a matter that would implicate subject matter jurisdiction under ORCP 21 A(l). That rule provides that “lack of jurisdiction over subject matter” may be challenged by a motion to dismiss.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Rivera v. Perlo Construction, LLC
336 Or. App. 307 (Court of Appeals of Oregon, 2024)
Espinoza v. Evergreen Helicopters, Inc.
337 P.3d 169 (Court of Appeals of Oregon, 2014)
Livingston v. METROPOLITAN PEDIATRICS, LLC
227 P.3d 796 (Court of Appeals of Oregon, 2010)
Black v. Arizala
95 P.3d 1109 (Oregon Supreme Court, 2004)
STATE EX REL. JUV. DEPT. v. Nicholls
87 P.3d 680 (Court of Appeals of Oregon, 2004)
State ex rel. Juvenile Department v. Nicholls
87 P.3d 680 (Court of Appeals of Oregon, 2004)
Butler v. State Farm Mutual Auto Insurance
48 F. App'x 695 (Ninth Circuit, 2002)
Miller v. State
770 N.E.2d 763 (Indiana Supreme Court, 2002)

Cite This Page — Counsel Stack

Bluebook (online)
48 P.3d 843, 182 Or. App. 16, 2002 Ore. App. LEXIS 870, Counsel Stack Legal Research, https://law.counselstack.com/opinion/black-v-arizala-orctapp-2002.