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COA: Suit can’t be filed in Indiana when contract says Texas

August 9, 2018

A contract between two Hoosier trucking companies requiring any litigation between them to be filed in Texas and not Indiana was enforceable and valid, the Indiana Court of Appeals affirmed Thursday.

Both O’Bryant Transport LLC and A.L.A. Trucking, Inc. are located in and do business in Indiana. In December 2015, Daniel O’Bryant and ALA entered into an Independent Contractor Agreement under which O’Bryant was to provide “transportation related services and the Equipment” in return for certain compensation by ALA.

O’Bryant agreed to provide drivers and equipment and was required to ensure compliance with state laws. ALA agreed to treat O’Bryant as an independent contractor rather than an employee and to compensate him with 80 percent of gross receipts and 100 percent of fuel surcharge per load after withholding 3 cents per mile.

A forum selection clause (FSC) in the agreement deemed Texas as the state in which the contract had been drawn, and that in the event of any disagreement or litigation, Texas law would apply and require any suit be brought there.

In March 2017, O’Bryant sued ALA in Madison County, Indiana. He alleged ALA had breached the agreement by failing to reimburse him and perform in good faith their promise to ensure return of equity, payment for work, fees, costs and expenses. O’Bryant also alleged ALA fraudulently induced him to sign the agreement by making “material misrepresentations” regarding the work he was to do and the outcome of his investments.

ALA filed a motion to dismiss, asserting that O’Bryant’s claim in Indiana was barred due to the forum selection clause.

The Madison Circuit Court granted ALA’s motion based on its allegations under Indiana Trial Rule 12(B)(2) pertaining to jurisdiction after finding both parties were “all either businesses or the owners thereof.” O’Bryant filed a motion to correct error, alleging the same arguments it had in previous filings, as well as a new argument that Texas would “not entertain a dispute over the Indiana contract in the courts of that State[.]”

The trial court denied his motion to correct error, asserting the trial court did not err in dismissing O’Bryant’s claim concerning the FSC, which the appellate court upheld on Thursday in Daniel T. O'Bryant, D.B.A. O'Bryant Transport LLC v. Alan P. Adams, Luan Adams, D.B.A., A.L.A. Trucking, Inc., 48A02-1711-PL-2709.

O’Bryant argues the trial court abused its discretion when it granted ALA’s motion to dismiss because the forum selection clause was permissive and because the agreement is “unenforceable as it was signed under fraudulent circumstances,” depriving O’Bryant of a remedy at law.

But the appellate court noted that in the agreement “when a general word or phrase follows a list of specifics, the general word or phrase will be interpreted to include only items of the same class as those listed.” In this case, Texas was referred to subsequently as “this state.”

“Therefore, ‘this state’ means Texas and not Indiana, regardless of where the parties signed the Agreement,” Judge Melissa May wrote for the court.

The appellate court further concluded that the clause was freely negotiated and enforceable, and “because the FSC states the laws of Texas shall apply and the parties must bring suit in Texas, Texas has exclusive jurisdiction” over the case.

 

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