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Ex parte Terex USA, LLC

Supreme Court of Alabama

March 30, 2018

Ex parte Terex USA, LLC
v.
Terex USA, LLC, et al. In re: Cowin Equipment Company, Inc.

          Jefferson Circuit Court, CV-17-902244

          PETITION FOR WRIT OF MANDAMUS

          BOLIN, Justice.

         Terex USA, LLC ("Terex"), petitions this Court for a writ of mandamus directing the Jefferson Circuit Court to enforce 1161113 an outbound forum-selection clause contained in a distributorship agreement between Terex and Cowin Equipment Company, Inc. ("Cowin"), and to dismiss Cowin's action against Terex based on improper venue pursuant to Rule 12(b)(3), Ala. R. Civ. P. We deny the petition.

         Facts and Procedural History

         Before August 2015, Cowin, a heavy-equipment dealer, had served as an authorized dealer of heavy equipment manufactured by the Liebherr Group for approximately 30 years. Cowin alleges that Terex, a heavy-equipment manufacturer, began aggressively recruiting Cowin to become a dealer of its equipment in Alabama, Georgia, and Florida. At the time, Warrior Tractor & Equipment Company, Inc. ("Warrior"), was serving as the dealer for Terex's equipment in the region. Based on assurances from Terex that Cowin would be the only Terex dealer in the territory, Cowin allowed its relationship with Liebherr Group to expire. In August 2015, Cowin entered into a distributorship agreement with Terex to sell Terex heavy equipment in Alabama, Georgia, and Florida. The agreement contained the following outbound forum-selection clause:

"The parties agree that this Agreement shall be governed by and interpreted consistent with the laws of the State of Georgia. The parties also agree that any dispute arising out of or in relation to this Agreement shall be exclusively decided by the United States District Court, Northern District of Georgia. The parties consent to the exclusive jurisdiction of the United States District Court, Northern District of Georgia or, if federal jurisdiction is lacking in such legal action, in the State Court in Atlanta, Georgia and waive any and all objections to the jurisdiction or venue of said Court."

         Subsequent to entering into the distributorship agreement with Cowin, Terex entered into a new distributorship agreement with Warrior without providing notice to Cowin that Warrior would be reentering the heavy-equipment market. Cowin alleges that Terex's failure to give it notice that Warrior would be reentering the market is contrary to common industry practices. On June 2, 2017, Cowin sued Terex and Warrior, asserting various claims arising from Terex's alleged violation of the Alabama Heavy Equipment Dealer Act, § 8-21B-1 et seq., Ala. Code 1975 ("the AHEDA").

         On July 27, 2017, Terex moved the trial court pursuant to Rule 12(b)(3), Ala. R. Civ. P., to dismiss Cowin's complaint, arguing that venue in Jefferson County was improper because of the forum-selection clause in the distributorship agreement designating either the United States District Court for the Northern District of Georgia or the Georgia state court in Atlanta as the proper forum for any dispute between the parties arising from the distributorship agreement. On August 15, 2017, Cowin responded to Terex's motion to dismiss, arguing that the enforcement of the forum-selection clause would violate a strong public policy set forth in the AHEDA. On August 17, 2017, Terex filed a response, arguing that Cowin was asking the trial court to reject the presumption under Alabama law in favor of outbound forum-selection clauses without binding precedent; that if the AHEDA is read in pari materia with the Alabama Motor Vehicle Franchise Act, § 8-20-1 et seq., Ala. Code 1975 ("the MVFA"), it is clear that the legislature knows how to prohibit forum-selection clauses in agreements and it did not do so in the AHEDA; and that the cases relied upon by Cowin from other jurisdictions address statutes, unlike the AHEDA, that specifically address outbound forum-selection clauses. On September 1, 2017, the trial court denied Terex's motion to dismiss. This petition followed.

         Standard of Review

"'Mandamus is a drastic and extraordinary writ, to be issued only where there is (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court.' Ex parte Integon Corp., 672 So.2d 497, 499 (Ala. 1995)."

Ex parte CTB, Inc., 782 So.2d 188, 190 (Ala. 2000).

"[A]n attempt to seek enforcement of the outbound forum-selection clause is properly presented in a motion to dismiss without prejudice, pursuant to Rule 12(b)(3), Ala. R. Civ. P., for contractually improper venue. Additionally, we note that a party may submit evidentiary matters to support a motion to dismiss that attacks venue. Williams v. Skysite Communications Corp., 781 So.2d 241 (Ala. Civ. App. 2000), quoting Crowe v. City of Athens, 733 So.2d 447, 449 (Ala. Civ. App. 1999)."

Ex parte D.M. White Constr. Co., 806 So.2d 370, 372 (Ala. 2001). "[T]he review of a trial court's ruling on the question of enforcing a forum-selection clause is for an abuse of discretion." Id. (citing O'Brien Eng'g Co. v. Continental Machs., Inc., 738 So.2d 844 (Ala. 1999)).

         Discussion

         At the outset, we note that "[a]n outbound forum-selection clause -- a clause by which parties specifically agree to trial outside the State of Alabama in the event of a dispute -- implicates the venue of a court rather than its jurisdiction. See Ex parte CTB, Inc., 782 So.2d 188 (Ala. 2000); and O'Brien Eng'g Co. v. Continental Machs., Inc., 738 So. 844, 845 (Ala. 1999)." Ex parte Leasecomm Corp., 879 So.2d 1156, 1158 (Ala. 2003). In F.L. Crane & Sons, Inc. v. Malouf Construction Corp., 953 So.2d 366, 373 (Ala. 2006), this Court held that "an outbound forum-selection clause raises procedural issues and is governed by the law of the forum jurisdiction -- in this case, the law of Alabama."

         In M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972), the United States Supreme Court held that, for purposes of federal law, outbound forum-selection clauses "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the circumstances." This Court in Professional Insurance Corp. v. Sutherland, 700 So.2d 347, 351 (Ala. 1997), adopted the Supreme Court's reasoning, stating that "a forum selection clause should be enforced so long as enforcing it is neither unfair nor unreasonable under the circumstances." This Court has stated that an outbound forum-selection clause is enforceable unless the party challenging the clause can clearly establish that enforcement of the clause (1) would be unfair on the basis that the contract was affected by fraud, undue influence, or overweening bargaining power or (2) would be seriously inconvenient for the trial of the action. Ex parte Leasecomm Corp., 879 So.2d 1156 (Ala. 2003). A party seeking to dismiss an action filed in Alabama based on the existence of an outbound forum-selection clause must initially establish the existence of a contract containing an outbound forum-selection clause. The burden then shifts to the party challenging the enforcement of the clause to establish that enforcement of the clause would be unfair or unreasonable under the circumstances. Ex parte PT Solutions Holdings, LLC, 225 So.3d 37 (Ala. 2016). This Court has noted that "[t]he burden on the challenging party is difficult to meet." D.M. White Constr., 806 So.2d at 372.

         The Bremen Court identified four factors that would invalidate a forum-selection clause: "'(1) its formation was induced by fraud or overreaching; (2) the plaintiff would be deprived of its day in court because of inconvenience or unfairness; (3) the chosen law would deprive the plaintiff of a remedy; or (4) enforcement of the clause would contravene public policy.' Krenke [v. Kerzner Int'l Hotels Ltd.], 579 F.3d [1279] at 1281 [(11th Cir. 2009)]." Rucker v. Oasis Legal Fin., L.L.C., 632 F.3d 1231, 1236 (11th Cir. 2011).

         Terex argues in support of its petition that it has long been established in Alabama that forum-selection clauses are not void as against the public policy of Alabama. Terex further argues that the legislature has not expressed through plain language in the AHEDA its intention to enact legislation contrary to Alabama's long-established practice of holding forum-selection clauses valid and enforceable. Cowin contends that the legislature has expressed a strong public policy favoring heavy-equipment dealers that renders the outbound forum-selection clause unenforceable in this case. This Court held in Sutherland that outbound forum-selection clauses "are not void per se as against the public policy of Alabama." 700 So.2d at 350. However, this Court also acknowledged in Sutherland that the state legislature may enact statutory language that dictates the fundamental public policy of the state on a given subject. 700 So.2d at 351 ("[I]t can hardly be doubted that the legislature has the authority to enact a statute that would prohibit the enforcement of forum-selection clauses such as those at issue in this case ....").

         Because the AHEDA contains no expressed public policy against outbound forum-selection clauses, we must construe the relevant sections of the AHEDA to determine whether the legislature intended such a public policy. In Blue Cross &Blue Shield of Alabama, Inc. v. Nielsen, 714 So.2d 293, ...


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