This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
Lyon Financial Services, Inc.,
d/b/a Secured Funding,
Phoenix Skin Dermatology Place PC,
an Arizona Corporation, et al.,
Lyon County District Court
File No. C301357
Kevin K. Stroup, Christianson, Stoneberg, Giles & Stroup, P.A., 300 O’Connell Street, Marshall, MN 56258-2638 (for respondent)
Victor E. Lund, Mahoney, Dougherty and Mahoney, P.A., 801 Park Avenue, Minneapolis, MN 55404; and
W. Gregory Shanaberger, James R. Acho, Cummings, McClorey, Davis & Acho, P.L.C., 30555 Northwestern Highway, Suite 200, Farmington Hills, MI 48334 (for appellants)
Considered and decided by Toussaint, Chief Judge, Lansing, Judge, and Poritsky, Judge.
On April 30, 1998, appellants Dr. Lee Laris, an Arizona resident, and Phoenix Skin Dermatology Place, PC, an Arizona corporation (collectively referred to as Phoenix) entered into an equipment lease with respondent Lyon Financial Services, a Minnesota corporation doing business as Secured Funding. The subject of the lease was an EpiLight hair removal system. The lease was part of an arrangement whereby Lyon provided the financing for Phoenix’s purchase of the EpiLight system. The lease provided that Lyon would own and hold title to the EpiLight system. A third party, ESC Medical Systems, supplied Lyon with the system.
The lease called for Phoenix to pay monthly installments, which were personally guaranteed by Laris. Phoenix was given the option to purchase the Epilight system at the end of the lease term. The lease specifically addressed warranty issues. Lyon expressly disclaimed warranties, and Phoenix agreed to pay Lyon regardless of any claim or complaint against the supplier. Phoenix agreed it would only look to entities other than Lyon, “such as the manufacturer, installer, or carrier,” with claims concerning the equipment. The lease contained a forum-selection clause: In paragraph 15 of the lease, Phoenix “consent[ed] to jurisdiction and venue of any state or federal court in the state of Minnesota.” In addition, in the personal guaranty, Laris “expressly consent[ed] to the jurisdiction of the court set out in paragraph 15.”
Claiming that the Epilight system never worked, Phoenix ceased making payments to Lyon. On March 5, 2001, Lyon brought this action for recovery of amounts due under the lease. In or about May 2001, Phoenix and others filed a class action against Lyon, ESC, and several other financing entities in a Texas state district court. In that action, Phoenix alleged breach of contract, breach of express and implied warranties, fraud, misrepresentations, product liability, and violation of various Texas laws, among other claims.
Phoenix moved to dismiss the Minnesota case for lack of personal jurisdiction. The district court concluded that the forum-selection clause was enforceable and denied Phoenix’s motion. Phoenix appeals, claiming that the district court erred in enforcing the lease’s forum-selection clause.
D E C I S I O N
The existence of personal jurisdiction is a question of law, which this court reviews de novo. Northwest Airlines, Inc. v. Friday, 617 N.W.2d 590, 592 (Minn. App. 2000). Whether to enforce a contract’s forum-selection clause, however, lies within the sound discretion of the trial court. Personalized Mktg. Serv., Inc. v. Stotler & Co., 447 N.W.2d 447, 450 (Minn. App. 1989), review denied (Minn. Jan. 12, 1990).
Minnesota adopted the modern rule on forum-selection clauses in Hauenstein & Bermeister, Inc. v. Met-Fab Indust., Inc., 320 N.W.2d 886 (Minn. 1982).
[W]hen the parties to a contract agree that actions arising from that contract will be brought in a particular forum, that agreement should be given effect unless it is shown by the party seeking to avoid the agreement that to do so would be unfair and unreasonable.
Id. at 890. While the court anticipated that testing for unreasonableness would be performed on a case-by-case basis, for guidance in future cases it categorized the elements of unreasonableness: (1) whether the chosen forum is a seriously inconvenient place for trial; (2) whether the choice-of-forum agreement is one of adhesion; and (3) whether the agreement is otherwise unreasonable. Id.
Lyon’s right to sue Phoenix in Minnesota rests entirely on the forum-selection clause. Phoenix challenges the forum-selection clause solely on the ground that Minnesota is a seriously inconvenient place for trial due to the existence of the Texas lawsuit; Phoenix does not challenge the clause as a contract of adhesion or otherwise unreasonable. Citing Personalized Marketing, Phoenix argues that a forum-selection clause would create serious inconvenience if it results in two lawsuits involving similar claims or issues being tried in separate courts.
We disagree with Phoenix’s argument that the mere existence of the Texas lawsuit renders the clause unenforceable. Personalized Marketing does not stand for the proposition that in all cases in which there are two lawsuits pending, the forum-selection clause is unenforceable. Hauenstein states the rule that enforcement of forum-selection clauses must be determined on a case-by-case basis. Moreover, because of the unusual facts in Personalized Marketing, enforcement of the forum-selection clause there would have “effectively deprived” the 96 appellant farmers “of a meaningful day in court.” 447 N.W.2d at 451. Not only would some or all of the farmer-clients be unable to prosecute their claims in additional separate actions against the Illinois broker in Illinois, but enforcement of the clause would have split issues between the Minnesota court and an Illinois court in order to obtain a complete resolution of the claims arising out of the parties’ relationships. Id. at 452-53.
Here, enforcement of the forum-selection clause does not deprive Phoenix of its day in court. Further, Phoenix has not made a showing that enforcement of the clause itself will create additional litigation or that the Texas lawsuit will resolve similar claims and issues. The record shows only that a class-action complaint was filed in a Texas state court on May 3, 2001. (We note that Lyon served its complaint on Phoenix in the Minnesota action over a month and one-half earlier.) The record does not show that Lyon has been served in the Texas action, nor does it show that the class has been certified. Even though that case would now be approximately one year old, there is nothing in the record of this appeal to show that any other steps, such as entry of a scheduling order or selection of a trial date, have taken place. Most importantly, the record fails to establish that the Texas state court has personal jurisdiction over Lyon. Given the uncertainties surrounding the Texas litigation, it is our conclusion that Phoenix has failed to make a showing that allowing the present action to proceed in Minnesota would result in two lawsuits involving similar claims or issues being tried in separate courts or that enforcement of the clause itself will create additional litigation. Because Phoenix does not establish serious inconvenience and makes no allegation that the lease agreement was a contract of adhesion or was otherwise unreasonable, the district court did not abuse its discretion when it held Phoenix to its bargained-for forum-selection clause.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.