932 F.2d 973
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.
SAFECO INSURANCE COMPANY OF AMERICA, Plaintiff-Appellee,
Ronald L. MABRA, Jane Doe Mabra, Defendants-Appellants.
United States Court of Appeals, Ninth Circuit.
Submitted May 7, 1991.*
Decided May 9, 1991.
Before EUGENE A. WRIGHT and O'SCANNLAIN, Circuit Judges, and MACBRIDE,** Senior District Judge.
This appeal centers on a forum-selection clause in an indemnification agreement. We affirm the clause's validity and hold that the district court properly took jurisdiction. We affirm the denial of a motion to change venue.
* Pecan Crossing Partners, a Texas general partnership, obtained a loan from RepublicBank in Dallas to purchase an apartment building. In connection therewith, Safeco Insurance Company issued to RepublicBank a bond which guaranteed payment.
The partnership defaulted and Safeco paid the bank $6,052,008.91 on its bond. Safeco sued Pecan Crossing and 16 married couples to enforce the Security and Indemnification Agreement they had signed before issuance of the bond. The complaint was filed in the federal district court for the Western District of Washington. Subject matter jurisdiction was premised on diversity of citizenship. See 28 U.S.C. Sec. 1332(a)(1) (1988).
Ronald and Willie Mabra, husband and wife, were among the 16 defendant couples. Mr. Mabra had signed the agreement as a general partner. They live in Dallas. When Safeco brought suit, he was working in Saudia Arabia.
The Mabras answered the complaint and moved to dismiss for lack of personal jurisdiction. Alternatively, they moved to change venue to the Northern District of Texas. The district court denied both motions based on the agreement's forum-selection clause. It provided that Safeco could bring any suit arising out of the agreement in any state or federal court in the state of Washington.
Safeco later moved for summary judgment. By this time, Mabras' Seattle counsel had withdrawn from the representation and they filed no opposition to the summary judgment motion.1 The district court granted it.
The action proceeded as to other parties. Finding no just reason for delay, the district court entered a final judgment against the Mabras under Federal Rule of Civil Procedure 54(b). The judgment for $247,800 plus interest, costs and attorney's fees, was based upon their four percent participation in the partnership.
Under 28 U.S.C. Sec. 1291 (1988), we have jurisdiction over this timely appeal. On a grant of summary judgment we review de novo, reading the record in the light most favorable to the nonmoving party. We affirm only absent genuine issues of material fact, when the moving party is entitled to judgment as a matter of law. Lew v. Kona Hosp., 754 F.2d 1420, 1423 (9th Cir.1985).
ENFORCEMENT OF THE FORUM-SELECTION CLAUSE
The Mabras argue that the court abused its discretion in enforcing the forum-selection clause. They characterize the agreement as an adhesion contract, "used without variation all over the country." It consists of eight pages of small, mostly single-spaced type with blanks for facts such as the parties' names and the dollar amounts involved. The Mabras note that it "contains some provisions that are clearly not applicable to this transaction." They contend that the provision was not negotiated and does not represent the intent of the parties.
The forum-selection clause provides:
[a]ny action or proceeding of any kind against the Partners or the Partnership arising out of or by reason of this Agreement may be brought in any state or federal court of competent jurisdiction in the State [of Washington], in addition to any other court in which such action might properly be brought, and the Partners, and the Partnership hereby submit to the jurisdiction of any such court.
We review for abuse of discretion a finding that a forum-selection clause is enforceable. Spradlin v. Lear Siegler Management Serv., 926 F.2d 865, 867 (9th Cir.1991). Federal law governs the enforcement and interpretation of such clauses. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir.1988).
In The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972), the Supreme Court held that forum-selection clauses in commercial contexts are prima facie valid. They should not be set aside unless the challenging party can show clearly that enforcement would be unreasonable and unjust or that the clause was invalid for such reasons as fraud or overreaching. Id. at 15.
In Carnival Cruise Lines, Inc. v. Shute, 59 U.S.L.W. 4323 (U.S. Apr. 17, 1991), the Court reversed a Ninth Circuit opinion refusing to enforce a forum-selection clause. The Court found the clause enforceable even though it appeared in the eighth of 25 numbered paragraphs of a routine and standardized contract for passage. Id. at 4323 (majority), 4326 (Stevens, J., dissenting).
The Mabras relied on this court's opinion in Shute for their argument that the adhesive nature of the forum-selection clause rendered it unenforceable. In view of the Supreme Court's reversal of Shute, this argument does not suffice. We inquire next into the reasonableness and the fundamental fairness of the clause. See id. at 4325.
The presence of fraud or overreaching remains a relevant factor. Id. The Mabras argue that Dale Dodson, a Safeco agent, induced them to sign the agreement. An unrefuted Safeco affidavit shows that Dodson is a general partner in Pecan Crossing and is not associated with Safeco. The Mabras assert no other theories of fraud by Safeco.2
A party's notice of the forum-selection clause is also relevant. Id. The Mabras knew from the start that they were dealing with a Washington corporation. Unlike the Shutes, the Mabras had the opportunity to learn of the forum-selection clause before the contract became binding. See id. at 4323 (majority), 4326 (Stevens, J., dissenting).
The Court in Shute also considered whether a bad-faith motive underlay the forum clause's inclusion. Id. at 4325. As in Shute, the clause here operates to provide Safeco with a forum in its principal place of business, which suggests a motive other than bad faith.
The district court did not abuse its discretion in enforcing the forum-selection clause.
CONSTITUTIONALITY OF EXERCISING PERSONAL JURISDICTION
The Mabras argue that the district court's assertion of personal jurisdiction over them offended the federal constitution, because the indemnity agreement was their only contact with the state of Washington and because all relevant property, partners and potential witnesses were in Texas. They represent that all of the partnership's activities were in that state.
Our affirmance of the enforceability of the forum-selection clause moots this argument. The Mabras consented to jurisdiction by signing the agreement.
DENIAL OF TRANSFER OF VENUE
The Mabras also contend that the district court erred in refusing to transfer venue pursuant to 28 U.S.C. Sec. 1404(a).3 We review for abuse of discretion. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 842 (9th Cir.1986).
In Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988), the Supreme Court stated that a forum-selection clause is a significant factor the district court must consider in deciding venue transfer motions. It indicated that additional factors must be weighed, such as the convenience of the requested forum and the fairness of transferring in light of the forum-selection clause and the parties' relative bargaining power. Id.
In denying a change of venue, the district court gave some deference to Safeco's choice of forum and the forum-selection clause expressing it. It considered also that none of the other defendants joined in the motion. All other litigation about the agreement would be in Washington.
The court weighed the appropriate factors. It did not abuse its discretion in denying venue transfer.
Safeco requests an award of its attorney's fees for this appeal, relying upon the agreement. Paragraph 1. (a) provides:
The Partnership or the Partners shall pay to Surety upon demand (i) any amount paid by the Surety under the Bond, together with interest thereon from the date of payment by Surety ... (ii) all costs and expenses (including attorney's fees and legal expenses) incurred by Surety in connection with any such payment under the bond; and (iii) all costs and expenses (including attorney's fees and legal expenses) incurred by Surety in connection with the exercise or enforcement of any of the rights of Surety hereunder or the failure by the Partnership or the Partners to perform any of the obligations hereunder.
We may enforce a valid agreement to pay legal expenses. Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 257 (1975). Because Safeco prevailed and the Mabras contracted to pay attorneys' fees, we grant the request.
The district court did not err in granting judgment for Safeco. As the forum-selection clause was enforceable, the court properly took personal jurisdiction over the Mabras. Their motion to transfer venue was properly denied. Pursuant to the contract, we award Safeco its reasonable attorney's fees.
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a) and Ninth Circuit Rule 34-4
Honorable Thomas J. MacBride, Senior United States District Judge of the Eastern District of California, sitting by designation
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3
While acknowledging that they still had Dallas counsel as a matter of record, the Mabras say that after Seattle counsel's withdrawal, they had no attorney actively defending them against the summary judgment motion or at any time before judgment
This case is not analogous to Colonial Leasing Co. v. Pugh Bros. Garage, 735 F.2d 380, 382 (9th Cir.1984), where the defendants thought that they were dealing only with a New York firm and were unaware of an Oregon corporation's involvement. Nor is it analogous to Yoder v. Heinold Commodities, Inc., 630 F.Supp. 756, 760 (E.D.Va.1986), where elements of fraud, or at least overreaching, were found. Id. Yoder was told not to worry about the content of the contract's clauses and essentially to ignore the boiler-plate language. Id
Section 1404(a) provides, "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. Sec. 1404(a) (1988)