Court: Oregon Supreme Court; July 5, 2018; Oregon; State Supreme Court
A mandamus proceeding is underway regarding a forum-selection clause in a personal guaranty associated with a loan from Trinity Bank to Apex, a drilling company. Lachner, a part owner of Apex and the relator, signed the guaranty, which stipulates that any litigation must occur in San Francisco and consents to jurisdiction there. After Apex defaulted on the loan and Lachner on the guaranty, Trinity filed breach of contract claims in Clackamas County Circuit Court. Apex did not respond and a default judgment was entered against it. Lachner moved to dismiss the case against him based on the forum-selection clause, but the trial court denied this motion without findings, asserting discretion in the matter.
Upon Lachner’s petition, the court issued a writ of mandamus directing the trial court to vacate its order and either grant the motion to dismiss or explain its refusal. The trial court later held a hearing, issued findings indicating Oregon as the more reasonable forum, and again denied the motion. Trinity contended that mandamus was inappropriate, as Lachner could appeal post-judgment. However, the court rejected this, emphasizing that mandamus is suitable for challenging a trial court's non-enforcement of a forum-selection clause when it falls outside permissible discretion. The enforceability of such clauses is governed by the law of the filing forum, which presumes their validity unless shown to be unfair or unreasonable. The burden rests on the party filing outside the agreed forum to prove otherwise. The court referred to a recent decision affirming the enforceability of a similar clause in Roberts v. TriQuint Semiconductor, indicating a consistent judicial stance on these matters.
The forum provision in the corporate bylaws was evaluated under the unfair or unreasonable standard from Reeves, despite not being part of a separate contract. Three scenarios may warrant disregarding a forum-selection clause: (1) if it is part of a contract of adhesion due to unequal bargaining power, which was not claimed here; (2) if it is unconscionable or violates public policy, which neither party argued; and (3) if enforcing it would be "seriously inconvenient," defined as unjustly requiring a plaintiff to litigate in a problematic forum. The trial court found that litigating in San Francisco would be inconvenient, citing that most witnesses and attorneys were in Oregon, the collateral was secured there, and trial would be cheaper and faster in Oregon. However, the court's analysis appeared to focus on which forum was more convenient rather than assessing if the forum-selection clause was "unfair or unreasonable" or "seriously inconvenient." The factual findings indicate that the parties should have anticipated these circumstances during their negotiations, and the court should not disrupt the agreed distribution of benefits and burdens without sufficient justification.
A finding of serious inconvenience is unlikely if the claimed inconvenience was foreseeable to both parties at the contract's inception. Trinity created the circumstance leading to Finding 13 by filing in Oregon, which violated the forum-selection clause it drafted. Finding 14 does not support the trial court's decision, as it improperly shifts the focus from whether the party seeking to avoid enforcement can show "serious inconvenience" to whether enforcement benefits any party. None of the invalidating grounds discussed in Roberts are applicable here. Trinity's objections reflect mere dissatisfaction with the clause; while the trial court found Oregon might be slightly more convenient than California, this does not meet the legal standard for inconvenience. Trinity's counsel acknowledged that litigating in California is not unfair or unreasonable. Consequently, the trial court lacked discretion to deny Lachner's motion to dismiss under ORCP 21 A(1) based on the forum-selection clause, resulting in a legal error that necessitates a peremptory writ of mandamus.
