Valspar Refinish, Inc., Respondent, vs. Gaylord's Inc., a California corporation, Appellant.

Valspar Refinish, Inc., Respondent, vs. Gaylord's Inc., a California corporation, Appellant. A05-1640, A05-1867, Court of Appeals Unpublished, June 6, 2006.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-1640
A05-1867

 

 

Valspar Refinish, Inc.,

Respondent,

 

vs.

 

Gaylord's Inc.,

a California corporation,

Appellant.

 

 

Filed June 6, 2006

Affirmed
Klaphake, Judge

 

Hennepin County District Court

File No. CT 05-7744

 

 

Richard T. Ostlund, Janel M. Dressen, Anthony Ostlund & Baer, P.A., 90 South Seventh Street, 3600 Wells Fargo Center, Minneapolis, MN  55402 (for respondent)

 

Jack D. Elmquist, 431 S. Seventh Street, Suite 2450, Minneapolis, MN  55415; and

 

Michael Leight, 6700 Pacific Coast Highway, Suite 237, Long Beach, CA  90803 (for appellant)

 

            Considered and decided by Hudson, Presiding Judge, Klaphake, Judge, and Peterson, Judge.

U N P U B L I S H E D   O P I N I O N

KLAPHAKE, Judge

            This is a consolidated appeal from orders denying appellant Gaylord's, Inc.'s motions to dismiss respondent Valspar Refinish, Inc.'s breach of contract action against it for forum non conveniens and lack of personal jurisdiction.  Appellant claims that the forum selection clause contained in the parties' exclusive paint supply contract is unenforceable because the clause is unreasonable and is insufficient to confer personal jurisdiction over appellant.  Appellant also argues that it lacks the contacts necessary to confer personal jurisdiction in the selected forum, Minnesota.  Because appellant agreed to personal jurisdiction when it selected Minnesota as a forum, and because the district court did not err in concluding that the forum selection clause is enforceable, we affirm.           

D E C I S I O N

I.  Personal Jurisdiction

            To satisfy due process principles, "a plaintiff must show that a defendant has ‘minimum contacts' with a forum state such that maintaining jurisdiction there does not offend ‘traditional notions of fair play and substantial justice.'"  Lorix v. Crompton Corp., 680 N.W.2d 574, 577 (Minn. App. 2004), review denied (Minn. Sept. 21, 2004) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945)).  The defendant must act to "purposefully avail[] itself of the privilege of conducting activities with the forum State, thus invoking the benefits and protections of its laws."  Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240 (1958).  The defendant must also reasonably anticipate being "haled into" the forum state's courts.  World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567 (1980). 

            "Because personal jurisdiction is a matter of individual liberty," a party may submit to the exercise of personal jurisdiction by "entering into a contract containing a valid forum selection clause."  TRWL Fin. Establishment v. Select Int'l, Inc., 527 N.W.2d 573, 578 (Minn. App. 1995).  Thus, the issue of personal jurisdiction is dependent on the validity of the parties' forum selection clause.  Because we agree with the district court's decision to give effect to the parties' forum selection clause, we conclude that appellant has submitted to the execution of personal jurisdiction by Minnesota courts.    

II.  Forum Selection Clause

            The decision whether to enforce a forum selection clause is within the discretion of the district court, and we will affirm the court's ruling unless it clearly abused its discretion.  Personalized Mktg. Serv., Inc. v. Stotler & Co., 447 N.W.2d 447, 450 (Minn. App. 1989), review denied (Minn. Jan. 12, 1990).  This court will reverse a decision upholding a forum selection clause only if the selected forum is "so unreasonable that its enforcement would be clearly erroneous and against both logic and the facts on record."  Id.at 451; Alpha Sys. Integration, Inc. v. Silicon Graphics, Inc., 646 N.W.2d 904, 909 (Minn. App. 2002) (quotation omitted), review denied (Minn. Oct. 15, 2002).

            Forum selection clauses "should be given effect unless it is shown by the party seeking to avoid the agreement that to do so would be unfair or unreasonable."  Hauenstein & Bermeister, Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886, 890 (Minn. 1982).  A party can demonstrate the unreasonableness of a forum selection clause if "(1) the chosen forum is a seriously inconvenient place for trial; (2) the choice of forum agreement is one of adhesion; and (3) the agreement is otherwise unreasonable."  Id.

            Convenience of Minnesota as a Forum

            Appellant contends that Minnesota is an inconvenient forum because (1) its witnesses reside in California; (2) its evidence is located in California; and (3) its litigation costs, which include direct costs and lost profit, make Minnesota seriously inconvenient as a forum. 

            When the parties freely enter into a contract in which they agree on a forum, it is presumed that the forum is convenient.  See id.  In order for a forum to be considered seriously inconvenient, a party must be "effectively deprived of a meaningful day in court" by the forum selection.  Id.(quotation omitted).  "Location and convenience of witnesses are generally not considered a serious inconvenience."  Alpha Sys., 646 N.W.2d at 909; see Interfund Corp. v. O'Byrne, 462 N.W.2d 86, 88 (Minn. App. 1990) (noting that if a party's witnesses cannot travel to Minnesota, the party may use deposition testimony "without disadvantage").  Further, other litigation costs, including the cost of sending evidence to Minnesota, were presumably considered when the parties negotiated the contract and do not amount to a large portion of appellant's anticipated costs. 

            Contract of Adhesion 

            Appellant does not specifically argue that the parties' exclusive supply contract was one of adhesion, nor is there factual support for this argument.  Whether a contract is one of adhesion depends on factors such as the bargaining power of the parties, whether they negotiated the contract, the business sophistication of the parties, and the need for the subject of the agreement.  Interfund Corp., 462 N.W.2d at 89.  Here, while respondent is a large corporation and appellant is a small company, both are commercial entities.  Appellant has been in business since 1953, and it has participated in commercial dealings for more than 50 years, including contracting for paints for its products both before and after the contract at issue here.  The parties negotiated from "spring of 2003" until they reached an agreement on October 8, 2003, and they discussed the terms of the agreement on a weekly basis until the contract was signed.  Further, during negotiations appellant was able to secure a $400,000 prepaid rebate to finance its purchase of equipment to use in applying respondent's products, as well as other favorable contract terms.  Under these circumstances, the exclusive supply contract was not one of adhesion.

            Otherwise Reasonableness of the Contract 

            Appellant contends that public and private interest factors weigh in favor of finding California the proper forum for this action.[1]  Generally, when a forum selection clause is at issue, the clause is unreasonable if it "contravene[s] a strong public policy," such as "[j]udicial economy and the prevention of multiple actions on similar issues," which may render a forum selection clause "patently unreasonable."  Id.; see Alpha Sys., 646 N.W.2d at 910.  Because appellant has demonstrated no public policy affecting the parties' choice of forum, this factor does not favor judicial override of the parties' forum selection. 

            Because the three factors that determine the enforceability of a forum selection clause support upholding the clause involved here, we observe no abuse of discretion in the district court's denial of appellant's motion to dismiss for forum non conveniens.

            Affirmed.    

[1] Appellant relies on Bergquist v. Medtronic, Inc., 379 N.W.2d 508 (Minn. 1986), as support for its argument that the traditional presumption upholding a plaintiff's choice of forum should not apply.  Bergquist, however, does not involve a forum selection clause, and its analysis of forum non conveniens is not pertinent to this case.  See Kennecott Holdings Corp. v. Liberty Mut. Ins. Co., 578 N.W.2d 358, 361 (Minn. 1998) (limiting Bergquist presumption regarding choice of forums to cases involving foreign nationals).