Ex Parte Leasecomm Corp.

Citations: 879 So. 2d 1156; 2003 WL 22272912Docket: 1021212

Court: Supreme Court of Alabama; October 3, 2003; Alabama; State Supreme Court

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Leasecomm Corporation, a Massachusetts entity operating in Alabama, sought a writ of mandamus from the Alabama Supreme Court to compel the Etowah Circuit Court to grant its motion for dismissal or alternatively, to enforce a forum-selection clause and transfer the case to Massachusetts. The underlying dispute arose after Jeffery R. Sisk, owner of Southern Belle Quick Stop, filed a lawsuit alleging fraud and breach of contract following issues with leased credit-card processing equipment. The lease agreement prominently stated that it would be governed by Massachusetts law and that any legal proceedings would take place in Massachusetts, with Sisk explicitly consenting to these terms.

After Sisk's lawsuit was initiated in Alabama, Leasecomm moved to dismiss the case based on the forum-selection clause, but the trial court denied this motion without any factual findings. The court explained that a forum-selection clause affects venue rather than jurisdiction and that a mandamus petition is the appropriate means to challenge a denial of a venue change. The court also noted that for mandamus relief to be granted, the petitioner must demonstrate a clear legal right, an obligation for the trial court to act, a refusal to do so, and the absence of another remedy. The review of trial court decisions on enforcing forum-selection clauses is subject to an abuse of discretion standard. In this case, the Supreme Court granted Leasecomm's petition.

Leasecomm asserts its legal right to enforce the outbound forum-selection clause, arguing that Sisk failed to demonstrate he was fraudulently induced to enter the agreement containing the clause. The Court agrees, referencing the precedent set in *Professional Insurance Corp. v. Sutherland*, which mandates enforcement of outbound forum-selection clauses unless proven to be unfair or unreasonable. To challenge such enforcement, a party must show either that the clause was affected by fraud, undue influence, or overwhelming bargaining power, or that the selected forum is seriously inconvenient. The U.S. Supreme Court case *Scherk v. Alberto-Culver Co.* upholds the enforceability of forum-selection clauses in cases involving fraud, indicating that such clauses should be enforced unless they were included in the contract due to fraud or coercion. The Eleventh Circuit's ruling in *Lipcon v. Underwriters at Lloyd's* further clarifies that a plaintiff must specifically allege that the choice clause itself resulted from fraud to invalidate it, ensuring general fraud claims are litigated in the chosen forum.

The inquiry focuses on whether the forum-selection clause was induced by fraud. If the clause itself is tainted by fraudulent inducement, the fraud exception applies; if the entire contract is claimed to be fraudulent, then the clause remains enforceable. Sisk alleged that Leasecomm's agent made false representations regarding the repair of malfunctioning equipment and that he was not allowed to read the contract's fine print before signing. He claimed that the enforcement of the outbound forum-selection clause would be unfair due to these fraud allegations, maintaining he was induced to sign the agreement based on misrepresentations made by Leasecomm's agent, Tim Kelleher.

Sisk alleged that Kelleher informed him post-signature of an agreement that Kelleher would complete it, have Leasecomm sign it, and then return it to Sisk for review. Sisk claimed Kelleher assured him he could object to provisions by marking them, initialing changes, and sending the modified agreement back for Leasecomm's approval or further negotiation. Kelleher indicated that if they could not resolve differences, no lease agreement would exist. However, Sisk did not prove that the forum-selection clause was induced by fraud. It was noted that signing a contract implies awareness of its terms, regardless of whether the signer has read it. Evidence suggested any fraudulent actions occurred post-contract formation, indicating a breach of contract rather than fraud in the inducement. Sisk failed to demonstrate that enforcing the forum-selection clause would be unfair or unreasonable, nor did he show undue influence or that the chosen forum was inconvenient. Consequently, Leasecomm had a legal right to dismiss the action based on improper venue due to the forum-selection clause. The trial court's denial of Leasecomm's motion to dismiss was deemed an abuse of discretion, leading to a directive for dismissal without prejudice under Rule 12(b)(3), Ala. R. Civ. P. The petition was granted, and a writ issued with the concurrence of several justices.