Duro Textiles, LLC v. Sunbelt Corp. - 12 F. Supp. 3d 221 (D. Mass. 2014)

Rule:

Under Massachusetts law, where a contractual provision is presented to a buyer in a seller's invoice, the analysis of whether that provision becomes part of the sales contract is governed by §2-207.

Facts:

Plaintiff Duro Textiles, LLC ("Duro"), a Delaware corporation, is in the business of producing and distributing textile products. According to Duro's complaint, in November 2011, Duro ordered and received a large amount of blue dye from defendant Sunbelt Corporation ("Sunbelt"). Sunbelt is a South Carolina corporation. Duro alleges that when it used Sunbelt's dye in its production process, random blue spots appeared on its product. As a result, Duro claims, it sustained losses totaling over $550,000. Duro asserts causes of action in breach of contract, breach of the implied covenant of good faith and fair dealing, and negligent misrepresentation. Sunbelt moves to dismiss. It asserts that an invoice that it sent to Duro included a forum selection clause that confers on the state or federal courts of South Carolina exclusive jurisdiction over any disputes arising under the contract between the parties. This invoice was sent to Duro along with Sunbelt's shipment of dye and also, separately, by United States mail. According to Sunbelt, the forum selection clause became part of the contract under the so-called "battle of the forms" provision of the Uniform Commercial Code, which has been enacted into law in Massachusetts as Massachusetts General Laws ch. 106, §2-207. Duro opposes the motion to dismiss, arguing that the forum selection clause is not part of the parties' contract. Duro argues, first, that the forum selection clause "materially altered" the terms of the contract and, therefore, was not incorporated into the contract under §2-207. In addition, Duro contends that the contract between the parties was perfected before Sunbelt's invoice was delivered to Duro. Duro states that it "understands" that Sunbelt's invoice was delivered several days after the shipment of dye had arrived. Finally, Duro argues that the forum selection clause is not enforceable because it was printed in an inconspicuous, "clandestine" fashion on the back of Sunbelt's invoice.

Issue:

Was Sunbelt's forum selection clause a material alteration to the contract and, therefore, was not incorporated into the contract under §2-207?

Answer:

Yes

Conclusion:

The court held that under Massachusetts law, where a contractual provision is presented to a buyer in a seller's invoice, the analysis of whether that provision becomes part of the sales contract is governed by §2-207. This section provides, in part, that if a seller's "written confirmation . . . is sent within a reasonable time," a contract is formed, and "[t]he additional or different terms are to be construed as proposals for addition to the contract." §2-207(1). Between "merchants," these additional or different terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. Duro and Sunbelt tacitly agree that they are each a "merchant," namely "a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction . . . ." Mass. Gen. Laws ch. 106, §2-104(1). Duro's primary argument is that Sunbelt's forum selection clause "materially altered" the contract and, therefore, was not incorporated into it. The parties have not cited, and the Court has not identified, any binding precedent that examines, under Massachusetts law, whether a forum selection clause materially alters a contract. In general, however, "courts have considered forum selection clauses to be material."  The conclusion that a forum selection clause materially alters a contract has also been reached by various other courts under the laws of various other jurisdictions. While a "fact specific, case-by-case analysis" is appropriate, the reasoning followed by other courts in other fact patterns is applicable to the instant case. Duro asserts, and Sunbelt does not dispute, that Duro's principal place of business is in Fall River, Massachusetts, and that Sunbelt's principal place of business is in Rock Hill, South Carolina.  The forum selection clause in question would require Duro to litigate any disputes in Sunbelt's home state, in a forum far from Duro's own principal place of business and state of incorporation. The Court, therefore, finds that Sunbelt's forum selection clause is a material alteration to the contract within the meaning of §2-207(2)(b). Consequently, this provision is not part of the contract between the parties. Sunbelt's motion to dismiss is being denied on the foregoing grounds, therefore, and it is not necessary for the Court to address Duro's assertion that the contract between the parties was perfected before Sunbelt's invoice was delivered or its assertion that the forum selection clause was printed too inconspicuously to be enforceable.