COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 77248 FOUR SEASONS ENTERPRISES, Plaintiff-appellant JOURNAL ENTRY vs. AND TOMMEL FINANCIAL SERVICES, INC., ET AL., OPINION Defendant-appellee DATE OF ANNOUNCEMENT OF DECISION: NOVEMBER 9, 2000 CHARACTER OF PROCEEDING: Civil appeal from Cuyahoga County Common Pleas Court, Case No. CV-387065 JUDGMENT: Reversed and Remanded. DATE OF JOURNALIZATION: APPEARANCES: For plaintiff-appellant: JAMES D. ROMER, ESQ. JAMES R. DOUGLASS, ESQ. DOUGLASS & DEFOY 630 Leader Building 526 Superior Avenue Cleveland, Ohio 44114 For defendant-appellee: GREGORY R. GLICK, ESQ. 147 Bell Street, Suite 302 Chagrin Falls, Ohio 44022 -2- KARPINSKI, J.: Plaintiff-appellant Four Seasons Enterprises appeals from the decision of the Cuyahoga County Court of Common Pleas granting the motion to dismiss filed by Tommel Financial Services and its officers and employees. Finding that the trial court erred in dismissing this case with prejudice, we reverse and remand. Four Seasons operates a tanning salon in Cleveland. In 1996, it had leased tanning beds from defendant corporation Tommel Financial Services (Tommel).1 In 1998, Four Seasons again negotiated with Tommel to lease different tanning beds. Following telephone, fax, and mail negotiations, the parties executed a contract on January 6, 1999. Four Seasons sent a check for advance rental payments for the tanning equipment in the amount of $2,996.24 to Tommel on January 19th, which check was deposited by Tommel on January 25th. On January 29, 1999, Tommel faxed a recission letter to Four Seasons and refused to return the $2,966.24. Four Seasons filed suit in Cuyahoga County alleging breach of contract, unjust enrichment, violation of a constructive trust, violation of R.C. 1310.54, fraud, and civil conspiracy. After being granted one leave to plead, Tommel filed a motion to dismiss or, in the alternative, to stay proceedings, in order to recommence 1 The remaining defendants are all officers and/or employees of defendant Tommel. -3- action in proper forum. The trial court granted its motion to dismiss with prejudice.2 Four Seasons timely appealed. For its sole assignment of error, Four Seasons states THE LOWER COURT ERRED IN FINDING THAT, AS A MATTER OF LAW, IT LACKED JURISDICTION. The standard of review on a motion to dismiss in a personal jurisdiction claim requires the court to construe the facts most favorably to the plaintiffs. Heritage Funding v. Phee (1997), 120 Ohio App.3d 422, 429. However, whether the court should consider evidence outside the pleadings is unsettled. For a Civ.R. 12(B)(6) motion to dismiss, the court is restricted to the pleadings. But [c]ourts are split as to what evidence may be considered in ruling on Civ.R. 12(B) motions, when a Civ.R. 12(B)(6) motion is not at issue. See Agosto v. Leisure World Travel (1973), 36 Ohio App.2d 213, 304 N.E.2d 910. Cf. Jurko v. Jobs Europe Agency (1975), 43 Ohio App.2d 79, N.E.2d 264 (holding that the trial court is not limited to the allegations in the complaint, when ruling on a Civ.R. 12(B)(2) motion). Central Ohio Graphics v. O'Brien Business Equipment (Mar. 28, 1996) Franklin App. No. 95APE08-1016, unreported, 1996 Ohio App. LEXIS 1315, at *11. It is clear, however, that the burden of proof is on the party challenging the clause; it is incumbent upon [the party seeking to avoid the forum selection clause] to show that trial in [that venue] `will be so gravely difficult and inconvenient that [it] will for all practical purposes be deprived of its day in court.' Interamerican Trade Corporation v. Companhia Fabricadora de Pecas 2 In their motion, appellees requested dismissal without prejudice. -4- (1992), 973 F.2d 487, 489, quoting Breman v. Zapata (1972), 407 U.S. 1 at 18. Four Seasons lists five issues under its sole assignment of error. However, appellee Tommel disputes only one of the issues, whether or not the forum selection clause was valid and should be enforced, and, if so, whether to dismiss the case or stay the proceedings pending Plaintiff's recommencing the case in the proper jurisdiction of Colorado. (Appellee's Brief at 4.) The first question raised in this appeal is whether the forum selection clause is enforceable. At common law forum selection clauses were not favored. However, the United States Supreme Court in Bremen v. Zapata (1972), 407 U.S. 1, found that because of the increase in global trade and business transactions, enforcement of forum selection clauses is fair. This view has been followed by the Supreme Court of Ohio. [F]orum selection clauses in the commercial contract context should be upheld, so long as enforcement does not deprive litigants of their day in court. Therefore, we hold that absent evidence of fraud or overreaching, a forum selection clause contained in a commercial contract between business entities is valid and enforceable, unless it can be clearly shown that enforcement of the clause would be unreasonable and unjust. Kennecorp v. Country Club Convalescent Hosp. (1993), 66 Ohio St.3d 173, 176. Thus absent any good cause to invalidate the forum selection clause, Ohio law will enforce it. The Restatement (Second) of Conflict of Laws S 80 (1988 Revision), comment c, discusses three situations in which a court might conclude that a forum-selection clause was unenforceable. The provision may be unenforceable if (1) it was `obtained by -5- fraud, duress, the absence of economic power or other unconscionable means,' (2) the designated forum `would be closed to the suit or would not handle it effectively or fairly,' or (3) the designated forum `would be so seriously an inconvenient forum that to require the plaintiff to bring the suit there would be unjust.' Security Watch v. Sentinel Systems (6th Cir. 1999) 176 F.3d 369, 375, citing the Restatement of Conflict of Laws. Four Seasons alleges fraud in the contract and claims that this fraud provides adequate grounds for invalidating the forum selection clause. However, in order to invalidate the forum selection clause, the fraud alleged must relate directly to the negotiation or acceptance of the forum selection clause itself, and not just to the contract generally. It is settled law that unless there is a showing that the alleged fraud or misrepresentation induced the party opposing a forum selection clause to agree to inclusion of that clause in the contract, a general claim of fraud or misrepresentation as to the entire contract does not affect the validity of the forum selection clause. Moses v. Business Card Express (6th Cir. 1991), 929 F.2d 1131, 1138. (Emphasis in original.) Thus even if plaintiffs were induced to enter into the agreement by fraud, deceit and misrepresentation, this would not affect the validity of the forum selection clause. Id. at 1135.3 Where there is no contract of adhesion and a party is not somehow 3 Ohio courts treat forum selection clauses in a similar manner as the federal courts. Interamerican Trade Corp. v. Companhia Fabricadora de Pecas (6th Cir. 1992), 973 F.2d 487, 489. -6- compelled to enter into a contract, the fact that the forum selection clause is so important to the defendant to be non- negotiable works against the plaintiff's position, rather than for it. Id. at 490. In its opposition to the motion to dismiss, Four Seasons further states it was not aware of the reverse side of the contract, which had been faxed to it, until after this suit was filed. It is not clear from the pleadings whether the two pages (which consist of a two-sided sheet in the original) were faxed at the same time. In its brief in opposition to the motion to dismiss, Four Seasons states, Plaintiff was not aware at the time it accepted the offer from Tommel that the Agreement comprised two pages, one page on the front of the agreement and a second page on the back side of the Agreement. Brief in Opposition to Defendant's Motion to Dismiss or in the Alternative, Motion to Separate Claims Pursuant to Rule 42(B) of the Ohio Rules of Civil Procedure at 2. However, an examination of the contract shows that in capital letters just above the lessee's signature line on the first page is written, SEE REVERSE FOR ADDITIONAL TERMS AND CONDITIONS WHICH ARE PART OF THIS LEASE. This sentence should have given Four Seasons notice that there was more to the lease than the first page; Four Seasons was, therefore, liable on all terms of the lease. Additionally,the first page of the lease contains a personal guaranty which Four Seasons' representative signed. This guaranty states -7- [t]his Guaranty shall be governed by the laws of the State of Colorado. The undersigned acknowledges that, for the purposes of enforcement of this Guaranty, he is conducting business in the State of Colorado, and agrees that, in the event of any litigation related to the Lease or this Guaranty, venue and jurisdiction shall be proper in any State or Federal Court [obliterated in original] the State of Colorado. Although there is no signature line on the page containing the forum selection clause, which is the subject of this appeal, to indicate that Four Seasons agreed to the terms on that page, its representative had notice that there were more terms to the contract than were contained on the face sheet he signed. Also appearing on the face of the contract was a forum selection clause which bound the individual guarantor. This clause should have given notice that a similar clause might exist to bind the company. Despite its claim that it was unaware of the second page of the contract, Four Seasons is responsible for the terms contained in the rest of the contract. The Restatement lists a second instance that prevents enforcement of a forum selection clause: when the designated forum `would be closed to the suit or would not handle it effectively or fairly,' Restatement of Conflicts of Laws, comment c. Four Seasons did not present any evidence that Colorado law or venue would prevent effective or fair resolution of the suit. Therefore, this exception does not apply to this suit. A third instance in the Restatement describes a situation in which the designated forum would be so seriously an inconvenient forum that to require the plaintiff to bring the suit there would be unjust. Id. Similarly, this court held in Barrett v. Picker -8- Internat'l(1990), 68 Ohio App.3d 820, 825, that it is necessary to conduct an inquiry into reasonability in the specific factual situation of applying the forum selection clause to these particular plaintiffs. To decide the reasonability issue we are persuaded by the factors set forth in Clinton, supra, as guidelines which follow: (1) which law controls the contractual dispute; (2) what residency do the parties maintain; (3) where will the contract be executed; (4) where are the witnesses and parties to the litigation located; and (5) whether the forum's designated location is inconvenient to the parties. Clinton, supra, citing Furbee v. Vantage Press, Inc. (C.A.D.C. 1972), 464 F.2d 835, 837. Four Seasons claims that enforcement of the forum selection clause would be unreasonable: ***[T]he forum selection clause is overreaching and designed to make it unreasonably difficult for Plaintiff to reclaim funds tortiously obtained by Defendants. The claim by Defendants that Colorado, a forum that neither of the parties are domiciled [sic], be the only forum Plaintiffs may redress the deceitful actions of Defendants is on the face overreaching and over burdensome given the fraudulent conduct of the Defendants and the distance of the forum jurisdiction from the party. Brief in Opposition to Defendant's Motion to Dismiss or, in the Alternative, Motion to Separate Claims Pursuant to Rule 42(B) of the Ohio Rules of Civil Procedure at 7. Mere distance, however, is not considered adequate inconvenience to invalidate a forum selection clause. As the Sixth Circuit observed in Interamerican Trade Corp., 973 F.2d at 489-490, where matters impacting upon the convenience of a particular forum were known to or foreseeable by plaintiff at the time the contract was negotiated and accepted, and where plaintiff can point to no change in circumstances which would justify relief from its contractual commitment, such matters do not justify a refusal to enforce the clause. -9- General Electric Company v. G. Siempelkamp GmbH & Co. (S.D. Ohio 1993), 809 F.Supp 1309, 1314. Just as the Centerville, Ohio plaintiff in Vintage Travel Services v. White Heron Travel of Cincinnati (May 22, 1998), Montgomery App. No. 16433, unreported, 1998 Ohio App. LEXIS 2246 at *8, has not shown that a Texas forum will be so inconvenient as to deprive it of its day in court[,] so too here Four Seasons has not shown that it will be unable to pursue its case in Colorado. As Judge Brogan stated in Vintage Travel, Even if a balance of convenience between the parties favored an Ohio forum, that would not be sufficient to overcome the presumption in favor of the one named in the agreement. We have every confidence that, whatever the relative inconvenience to Vintage, a Texas court will provide the company an adequate forum in which to plead its breach of contract claims. Id. With only bare assertions on the part of Four Seasons claiming inconvenience and no specific evidence to support those assertions, the evidence does not support overriding the forum selection clause. The owner of Four Seasons was on sufficient notice, as discussed above, that his personal guaranty was venued in Colorado and governed by the laws of Colorado. This notice, coupled with the clear notice that additional terms were contained on the second (reverse) page of the contract where the second forum selection clause was located, was sufficient to alert Four Seasons that it was agreeing to venue in Colorado. When parties sign a contract, they are responsible for the terms contained in the contract, and, absent fraud in the factum, they shall be held to the terms of the -10- contract signed. If a person can read and is not prevented from reading what he signs, he alone is responsible for his omission to read what he signs. Haller v. Borror (1990), 50 Ohio St.3d 10, 14, quoting Dice v. Akron, Canton & Youngstown RR. Co. (1951), 155 Ohio St. 185, 191; See also, McCluskey v. Budnick (1956), 165 Ohio St. 533, 535 ( A person of ordinary mind cannot say that he was misled into signing a paper which was different from what he intended to sign when he could have known the truth merely by looking when he signed. ) The next question is how the trial court should respond to a valid forum selection clause. It is clear that when a forum selection clause is found to be valid, the case shall be stayed pending refiling in Colorado. Civ.R. 3(D) states When a court, upon motion of any party or upon its own motion, determines: (1) that the county in which the action is brought is not a proper forum; (2) that there is no other proper forum for trial within this state; and (3) that there exists a proper forum for trial in another jurisdiction outside this state, the court shall stay the action upon the condition that all defendants consent to the jurisdiction, waive venue, and agree that the date of commencement of the action in Ohio shall be the date of commencement for the application of the statute of limitations to the action in another jurisdiction which the court deems to be the proper forum. If all defendants agree to the conditions, the court shall not dismiss the action, but the action shall be stayed until the court receives notice by affidavit that plaintiff has recommenced the action in the out-of-state forum within sixty days after the effective date of the order staying the original action. *** If all defendants do not agree to or comply with the conditions, the court shall hear the action. [Emphasis added.] In its brief Tommel agreed that the case should have been stayed for sixty days per Civ.R. 3(D), pending a refiling in Colorado. Ohio courts are consistent in agreeing with this -11- position. Since venue was improper in the state of Ohio, the trial court should have stayed the proceedings to allow appellants to recommence the action in the proper forum. Civ.R. 3(D). Dismissal is warranted only if appellants fail to recommence the action within sixty days of the entry of the stay. Id. Alpert v. Kodee Technologies (1997), 117 Ohio App.3d 796, 803. See also Barrett v. Picker Internat'l (1990), 68 Ohio App.3d 820, 827-828. Even if, assuming arguendo, the court lacked personal juris- diction, the trial court erred in dismissing the case with prejudice. As this court discussed in Alpert, dismissal for lack of personal jurisdiction operates as a failure otherwise than on the merits. See Civ.R. 41(B)(4). If dismissal for lack of personal jurisdiction was appropriate in this case, the action would be remanded to the trial court for the purpose of issuing a journal entry that reflects a dismissal without prejudice due to lack of personal jurisdiction. Id. at 803-804. Whether for lack of personal jurisdiction or because of a valid forum selection clause, the trial court erred in dismissing the case rather than staying it for sixty days as required by Civ.R. 3(D). The trial court is, therefore, instructed to stay the case for sixty days pending refiling in the proper forum. If appellant fails to file its affidavit verifying refiling within that sixty days, the trial court is instructed to dismiss the case without prejudice. Accordingly, this cause is reversed and remanded to the trial court for proceedings consistent with this opinion. -12- -13- It is, therefore, ordered that appellant recover of appellees its costs herein taxed. It is ordered that a special mandate be sent to said court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. JAMES M. PORTER, J., CONCURS; TERRENCE O'DONNELL, P.J., CONCURS IN JUDGMENT ONLY. DIANE KARPINSKI JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 22. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the clerk per App.R. 22(E). See, also, S.Ct.Prac.R. II, Section 2(A)(1). .