Will an Alabama court enforce our clause requiring suit somewhere else?
Presumptively yes, and the challenger carries a heavy burden. In Ex parte D.M. White Construction Co. the Supreme Court of Alabama stated that an outbound forum-selection clause is enforceable unless the challenging party can establish that enforcement of the clause would be unfair on the basis that the contract was affected by fraud, undue influence, or overweening bargaining power, or that enforcement would be unreasonable on the basis that the selected forum would be seriously inconvenient, and that the burden on the challenging party is difficult to meet; on appeal, review of a trial court's ruling on enforcing a forum-selection clause is for an abuse of discretion. Ex parte Rymer puts it as the majority rule that an outbound clause should be enforced so long as enforcement is neither unfair nor unreasonable under the circumstances, states the same two branches as a burden of clearly establishing either one, and describes what the first branch requires: to demonstrate that enforcement would be unfair, the challenger must show that the contract was affected by fraud, undue influence, or overweening bargaining power. On the second branch Rymer sets out, and applies, five factors drawn from an earlier decision, not as requirements but as factors that together indicate whether the chosen forum is reasonable: are the parties business entities or businesspersons; what is the subject matter of the contract; does the chosen forum have any inherent advantages; should the parties have been able to understand the agreement as written; and have extraordinary facts arisen since the agreement was entered that would make the chosen forum seriously inconvenient. Both petitions were granted: in each case the trial court had refused to enforce the clause, and in each the Supreme Court held that an abuse of discretion and directed dismissal without prejudice.
The trap
The two branches are not interchangeable, and each is about the contract or the forum rather than about convenience in the ordinary sense. Fraud must have affected the CONTRACT, and the challenger must put in evidence of it: in Ex parte Rymer the challenger asserted that the contract was affected by fraud but failed to provide any evidence that fraud of any kind was committed and failed to explain how the contract was actually affected by it, and his conclusory assertions, without more, were insufficient to meet his burden; and "seriously inconvenient" is a far higher bar than "less convenient than home". The challenger must show that a trial in that forum would be so gravely difficult and inconvenient that he would effectively be deprived of his day in court. Note the procedural posture too: these are mandamus cases and review is for an abuse of discretion, but in both of them the trial court had refused to enforce the clause and the Supreme Court held that refusal an abuse of discretion, granted the writ and directed dismissal without prejudice. And the motion to make is a motion to dismiss without prejudice for contractually improper venue under Rule 12(b)(3), not a motion for summary judgment: in Ex parte D.M. White Construction Co. the Court had to treat a summary-judgment motion as such a motion, because the movant was not seeking an adjudication on the merits. The term "outbound" is doing work: a clause selecting a forum inside Alabama is an inbound clause, and the authorities quoted here address outbound ones.
9 authorities
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An outbound forum-selection clause is enforceable unless the challenging party can establish that enforcement of the clause would be unfair on the basis that the contract "`[w]as affected by fraud, undue influence, or overweening bargaining power or . . . enforcement would be unreasonable on the basis that the [selected] forum would be seriously inconvenient.'" The burden on the challenging party is difficult to meet. Ex parte CTB , supra. See also Professional Ins. Corp. v. Sutherland , 700 So.2d 347 , 351 (Ala. 1997). On appeal, the review of a trial court's ruling on the question of enforcing a forum-selection clause is for an abuse of discretion. O'Brien Eng'g Co. v. Continental *Page 373 Machs., Inc ., 738 So.2d 844 (Ala. 1999).
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Stinnett did not present substantial evidence establishing that the outbound forum-selection clause was either unfair or unreasonable. Therefore, the trial court abused its discretion by denying D.M. White's motion to enforce the outbound forum-selection clause. The trial court is directed to dismiss this cause without prejudice, pursuant to Rule 12(b)(3), Ala.R.Civ.P. PETITION GRANTED; WRIT ISSUED.
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In Ex parte CTB , this Court established that a petition for a writ of mandamus is the proper vehicle for obtaining review of an order denying enforcement of an "outbound" forum-selection clause when it is presented in a motion to dismiss. Indeed, an 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.
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Alabama has adopted the majority rule that an outbound forum-selection clause should be enforced so long as enforcement is neither unfair nor unreasonable under the circumstances of the case. Professional Ins. Corp. v. Sutherland , 700 So.2d 347 , 351 (Ala. 1997). The party challenging the enforcement of such a clause has the burden of clearly establishing either "(1) that enforcement of the forum-selection clause would be unfair on the basis that the contract . . . [was] affected by fraud, undue influence, or overweening bargaining power or (2) that enforcement would be unreasonable on the basis that the chosen . . . forum would be seriously inconvenient for the trial of the action." Sutherland , 700 So.2d at 352 . See also Ex parte CTB, Inc. , 782 So.2d at 190-91 ; and Ex parte Northern Capital Res. Corp. , 751 So.2d 12 , 14 (Ala. 1999).
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An 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.2d 844 , 845 n. 1 (Ala. 1999).
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In order to demonstrate that enforcement of the clause would be unfair, Hughes must show that the contract was affected by fraud, undue influence, or overweening bargaining power. Sutherland , 700 So.2d at 352 . First, Rymer and BAPCO argue that Hughes failed to *Page 342 demonstrate that the contract was affected by fraud. We agree. Although Hughes strenuously asserts that "this contract was affected by fraud and would not have been entered into absent that fraud" (Hughes's answer at 4), he fails to provide any evidence indicating that Rymer and BAPCO committed fraud of any kind. Furthermore, Hughes fails to explain exactly how the contract was actually affected by the alleged fraud.
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Hughes's conclusory assertions, without more, are insufficient to meet his burden of clearly establishing that enforcement of the outbound forum-selection clause would be unfair under the circumstances.
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In order to demonstrate that the chosen forum is seriously inconvenient, the party challenging the clause must show that a trial in that forum would be so gravely difficult and inconvenient that the challenging party would effectively be deprived of his day in court. Ex parte Northern Capital Res. Corp. , 751 So.2d at 15 . "When an agreement includes a clearly stated forum-selection clause, a party claiming that clause is unreasonable and therefore invalid will be required to make a clear showing of unreasonableness. In determining whether such a *Page 343 clause is unreasonable, a court should consider these five factors: (1) Are the parties business entities or businesspersons? (2) What is the subject matter of the contract? (3) Does the chosen forum have any inherent advantages? (4) Should the parties have been able to understand the agreement as it was written? (5) Have extraordinary facts arisen since the agreement was entered that would make the chosen forum seriously inconvenient? We state these items not as requirements, but merely as factors that, considered together, should in a particular case give a clear indication whether the chosen forum is reasonable." Ex parte Northern Capital Res. Corp. , 751 So.2d at 14 . The five factors, as applied to this case, do not give a clear indication that a trial in the chosen forum would be so difficult and inconvenient that it would effectively deprive Hughes of his day in court.
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Hughes failed to clearly establish that enforcement of the forum-selection clause would be either unfair or unreasonable. Rymer and BAPCO have demonstrated a clear legal right to have the action against them dismissed on the basis that venue in the Calhoun Circuit Court is, by virtue of the outbound forum-selection clause, improper. The trial court abused its discretion in denying Rymer and BAPCO's motion to dismiss. We direct the court to dismiss this cause, without prejudice, pursuant to Rule 12(b)(3), Ala.R.Civ.P. PETITION GRANTED; WRIT ISSUED.