Hartash Construction v. Drury Inns Inc

• Court: Court of Appeals for the Fifth Circuit
• Decided: March 23, 2001
• Docket: 00-31120
• Status: Unpublished

Opinion

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 R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.

3 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

5 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

7 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.