Ridgelawn Cemetery Ass'n v. Granite Res. Corp. - No. 2:16-CV-370 JVB, 2017 U.S. Dist. LEXIS 140740 (N.D. Ind. Aug. 31, 2017)

Rule:

American law favors forum-selection clauses. The Supreme Court held that such clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the circumstances. Forum-selection clauses are valid contractual terms. The proper method for seeking enforcement of a forum-selection clause pointing to a state forum is through the doctrine of forum non conveniens. On the other, the purpose of a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim is to test the sufficiency of the pleadings, not to decide the merits of the case. Fed. R. Civ. P. 9(b) requires a plaintiff alleging fraud to plead the who, what, when, where, and how: the first paragraph of any newspaper story, of the circumstances constituting fraud.

Facts:

Plaintiff Ridgelawn Cemetery Association, an Indiana corporation, ordered a 54,000-pound granite monument from defendant Granite Resources Corporation, a Wisconsin corporation. Defendant responded by faxing an order acknowledgment to plaintiff, and by sending an invoice to it. Defendant claimed this order acknowledgment and invoice contained terms and conditions on their backs, including a forum-selection clause compelling the parties to bring any litigation regarding this matter exclusively in the State Courts of Wisconsin. But neither the front of the order acknowledgment nor the front of the invoice mentions the existence of terms and conditions on the backs. Plaintiff admitted that it received the order acknowledgement via fax, and the invoice. But denied ever receiving the alleged terms and conditions on the backs of the documents. Defendant claimed it also mailed the order acknowledgment with the terms and conditions on the back to plaintiff via regular United States mail. But plaintiff denied ever receiving such mail. Defendant delivered the monument in April 2011, and plaintiff paid in full. However, according to plaintiff, numerous cracks in the granite monument began to appear only three years after installation. It then complained to defendant, which sent a representative to investigate the monument. The representative concluded that the cracks were natural fissures, and refused to replace the monument. Plaintiff then sued defendant claiming that after demanding satisfaction from defendant, plaintiff was provided with a copy of the terms and conditions for the first time. That the monument it bought from defendant cracked too soon. Defendant moved for dismissal on the grounds that a forum-selection clause required the parties to litigate this matter in the State Courts of Wisconsin. Alternatively, defendant moved for dismissal of the fraud claim for lack of the requisite level of pleading particularity.

Issue:

Should the defendant’s motion to dismiss on the grounds that a forum-selection clause required the parties to litigate this matter in the state courts, and the fraud claim for lack of the requisite level of pleading particularity be granted?

Answer:

No.

Conclusion:

The court held that the proper method for seeking enforcement of a forum-selection clause pointing to a state forum was through the doctrine of forum non conveniens. In ruling on such a motion, a court may consider facts outside the pleadings. Generally, a defendant seeking dismissal under the doctrine of forum non conveniens bears a heavy burden. In this case, the documents and the conduct of the parties demonstrated that the parties entered into a contract with each other. But the proposed additional forum-selection clause never became part of that contract. Accordingly, the court denied the motion to dismiss for forum non conveniens. Also, the court held that plaintiff’s complaint satisfied Rule 9(b)'s heightened pleading standards for fraud. It provides sufficient particularity to survive a motion to dismiss. The court concluded that parties will need discovery to determine further details regarding these allegations. But in this case, the allegations were sufficient to satisfy the heightened pleading standards. The allegations gave defendant a fair and adequate notice of the fraud claim against it.