Opinion
No. 1050266.
Decided August 25, 2006.
Petition for Writ of Mandamus.
Appeal from the Randolph Circuit Court, CV-04-162.
Certain defendants in an action pending in the Randolph Circuit Court petition this Court for a writ of mandamus directing the circuit court to enforce a forum-selection clause and grant their motion to dismiss. We deny the petition.
Cintas Corporation No. 2 ("Cintas") rents and sells uniforms throughout the United States. Terry Manufacturing Company, Inc. ("Terry Mfg."), was a minority-owned business in Randolph County that manufactured uniforms. In 2000, Cintas and Terry Mfg. formed a joint venture to provide uniforms nationwide through a new company, Terry Uniform Company, LLC ("Terry Uniform"), organized under the laws of the State of Delaware. The Cintas-Terry Mfg. joint venture was established by a series of transactional documents (hereinafter referred to collectively as "the contract").
The contract contained what is commonly referred to as an "outbound" forum-selection clause; that clause is at the center of this dispute. The forum-selection clause provided:
"[Terry Mfg., Terry Uniform,] and Cintas hereby designate all courts of record sitting in Wilmington, Delaware, both state and federal, as forums where any action, suit or proceeding in respect of or arising out of the [contract] or the transactions contemplated thereby shall be prosecuted as to all parties, their successors and assigns, and by the foregoing designations [Terry Mfg.], Cintas and [Terry Uniform] consent to the jurisdiction and venue of such courts. [TERRY MFG.], CINTAS AND [TERRY UNIFORM] WAIVE ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY OTHER STATE TO OBJECT TO JURISDICTION WITHIN THE STATE OF DELAWARE FOR THE PURPOSES OF LITIGATION TO ENFORCE SUCH OBLIGATIONS. In the event such litigation is commenced, [Terry Mfg.], Cintas and [Terry Uniform] agree that service of process may be made and personal jurisdiction over [Terry Mfg.], Cintas and [Terry Uniform] obtained by service of a copy of the summons, complaint and other pleadings required to commence such litigation in any manner allowable under applicable laws."
(Capitalization in original.)
According to the parties, the "parent" entity of Cintas is Cintas Corporation ("Cintas parent"). Scott Farmer and David Jeanmougin, officers of both Cintas and Cintas parent, and Paul Carmichael, an employee of Cintas parent, as well as Roy Terry, Rudolph Terry, and Cotina Terry, officers of Terry Mfg., served on the management committee of Terry Uniform. Farmer, Jeanmougin, and Roger Reed, an officer of Cintas parent, as well as Roy Terry and Rudolph Terry, served on the management committee of SCT Sourcing Company, LLC, another company formed as part of the Cintas-Terry Mfg. joint venture. Sidney Johnson was the bookkeeper for Terry Mfg.
In 2003, Terry Mfg. and Terry Uniform filed for bankruptcy protection. J. Lester Alexander III was appointed bankruptcy trustee for both companies. On October 25, 2004, Alexander, as bankruptcy trustee of both companies, sued Cintas, Cintas parent, Farmer, Jeanmougin, Carmichael, Reed, Roy Terry, Rudolph Terry, Cotina Terry, and Johnson in the Randolph Circuit Court. The lengthy complaint included claims alleging breach of contract, breach of fiduciary duty, and misrepresentation.
Cintas, a party to the contract, and Cintas parent, Farmer, Jeanmougin, Reed, and Carmichael, all nonsignatories to the contract, jointly moved to dismiss the bankruptcy trustee's action on the basis that venue in the Randolph Circuit Court was improper, citing the forum-selection clause in the contract. On October 12, 2005, the trial court denied the motion. On November 23, 2005, Cintas, Cintas parent, Farmer, Jeanmougin, Reed, and Carmichael petitioned this Court for a writ of mandamus directing the trial court to dismiss the case without prejudice so that it can be refiled in Delaware.
"An outbound forum-selection clause — a clause by which parties specifically agree to trial outside the State of Alabama in the event of a dispute — implicates the venue of a court rather than its jurisdiction. See Ex parte CTB, Inc., 782 So. 2d 188 (Ala. 2000); and O'Brien Eng'g Co. v. Continental Machs., Inc., 738 So. 2d 844, 845 n. 1 (Ala. 1999).
"`"The proper method for obtaining review of a denial of a motion for a change of venue in a civil action is to petition for the writ of mandamus." Ex parte National Security Ins. Co., 727 So. 2d 788, 789 (Ala. 1998). "Mandamus is a drastic and extraordinary writ, to be issued only where there is (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court." Ex parte Integon Corp., 672 So. 2d 497, 499 (Ala. 1995).'
"Ex parte CTB, Inc., 782 So. 2d at 190."
Ex parte Rymer, 860 So. 2d 339, 341 (Ala. 2003).
Because the motion to dismiss was filed jointly by a party to the contract and five nonsignatories to the contract, and because the petition filed by those movants seeks a writ of mandamus directing the trial court to dismiss the entire case without prejudice to its refiling in Delaware, we first address the issue whether the nonsignatories are entitled to enforce the forum-selection clause. If they are not entitled to enforce the clause, the petitioners are not entitled to the relief they seek, and this Court need not address any other issue.
The nonsignatories argue that they are entitled to enforce the forum-selection clause under the doctrine of "equitable estoppel" or "intertwining." This doctrine has been well developed in this Court's arbitration cases. We have held that "[a]rbitration may be compelled `under the doctrine of "intertwining," where arbitrable and nonarbitrable claims are so closely related that the party to a controversy subject to arbitration is equitably estopped to deny the arbitrability of the related claim.'Conseco Fin. Corp. v. Sharman, 828 So. 2d 890, 893-94 (Ala. 2001)." Fountain v. Ingram, 926 So. 2d 333, 335 (Ala. 2005). However, "[a]t a minimum, estoppel requires that the `description of the parties subject to the arbitration agreement not be so restrictive as to preclude arbitration by the party seeking it.'"ECS, Inc. v. Goff Group, Inc., 880 So. 2d 1140, 1146 (Ala. 2003) (quoting Ex parte Stamey, 776 So. 2d 85, 89 (Ala. 2000)).
In this case, the nonsignatories admit "that nonsignatories have not been allowed to enforce an arbitration clause under the doctrine of equitable estoppel where the arbitration clause states it applies only to `the parties.'" Petition, at 5. Also, they do not deny that the description of the parties subject to the forum-selection clause here is limited to the "parties [to the contract], their successors and assigns," and that they do not fit within this description. Instead, they argue that this Court, in Ex parte Procom Services, Inc., 884 So. 2d 827 (Ala. 2003), elected to treat forum-selection clauses differently than arbitration clauses and "allowed nonsignatories to enforce a forum-selection clause under the doctrine of equitable estoppel and the distinct law of agency, even though the clause was limited to `the parties.'" Petition, at 5. However, the nonsignatories misstate the facts of Procom and consequently misconstrue its holding.
In Procom, this Court held that two nonsignatories were entitled to enforce an outbound forum-selection clause. The clause stated: "`The parties hereby irrevocably agree that the state courts sitting in Dallas, Texas shall have sole and exclusive jurisdiction for any action or proceeding relating to or arising out of this agreement and waive any objection to venue in such court.'" Procom, 884 So. 2d at 830. Obviously, contrary to the contention of the nonsignatories in this case, "the nonsignatories [in Procom were] not excluded from the operation of the [forum-selection] clause by its text." Procom, 884 So. 2d at 835 (Johnstone, J., concurring in part and concurring in the result). Also, in Procom, there is no indication that this Court decided to treat issues of equitable estoppel/intertwining in relation to the enforcement of a forum-selection clause differently than the treatment of such issues in relation to the enforcement of an arbitration clause. Indeed, we "note[d] an analogy between this Court's enforcement of arbitration clauses as to nonsignatories to a contract and the enforcement of the forum-selection clause in this instance." Procom, 884 So. 2d at 834.
As this Court stated in ECS, "[a]t a minimum, estoppel requires that the `description of the parties subject to the [forum-selection clause] not be so restrictive as to preclude [enforcement] by the party seeking it.'" 880 So. 2d at 1146. The limitation of the scope of the forum-selection clause to litigation between the parties to the contract and their successors and assigns precludes the enforcement of that clause by the nonsignatories. Consequently, the petitioners are not entitled to the relief they seek, and their petition is denied.
PETITION DENIED.
Nabers, C.J., and See, Lyons, Harwood, Stuart, Smith, Bolin, and Parker, JJ., concur.