1. Appeal and Error_appealability_denial of motion to dismiss_forum selection clause
The denial of a motion to dismiss based on a forum selection clause is interlocutory but
appealable because it involves a substantial right.
2. Appeal and Error_misnamed motion_content of arguments
The application of a forum selection clause was considered on appeal of the denial of a
motion to dismiss for lack of jurisdiction because the arguments to the trial court and the
arguments on appeal concerned the forum selection clause. N.C.G.S. § 1A-1, Rule 15(b).
3. Venue_forum selection clause_choice of law clause_employment contract dispute
A forum selection clause did not apply to a dispute over an employment contract where
the plain language of the contract limited the clause to disputes over orders and commissions,
which were not involved here. A provision relating to disputes regarding performance of the
contract was a choice of law provision.
Giordano, Gordon, & Burns, P.L.L.C., by William F. Burns, Jr.,
for plaintiffs-appellees.
Van Hoy, Reutlinger, Adams & Dunn, by Stephen J. Dunn, for
defendant-appellant.
CALABRIA, Judge.
On 2 April 2002, Alec D. Hickox (“Hickox”) and Hickox
Enterprises, Inc., (“plaintiffs”) filed suit in Mecklenburg County,
North Carolina, against R&G Group International (“defendant”)
alleging defendant unlawfully terminated Hickox and breached their
employment contract. Thereafter, defendant moved to dismiss thesuit pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b) (2001). The
trial court denied this motion, and defendant appealed.
[1] Although a denial of a motion to dismiss is an
interlocutory order, where the issue pertains to applying a forum
selection clause, our case law establishes that defendant may
nevertheless immediately appeal the order because to hold otherwise
would deprive him of a substantial right. Mark Grp. Int'l, Inc. v.
Still, 151 N.C. App. 565, 566 & n.1, 566 S.E.2d 160, 161 & n.1
(2002).
[2] In the case at bar, defendant raised the issue pursuant to
a motion to dismiss for lack of subject matter jurisdiction, under
Rule 12(b)(1), and personal jurisdiction, under Rule 12(b)(2).
Fundamentally, “a forum selection clause designates the venue,” and
therefore a motion to dismiss for improper venue pursuant to Rule
12(b)(3) would be most applicable. Corbin Russwin, Inc. v.
Alexander's HDWE, Inc., 147 N.C. App. 722, 726, 556 S.E.2d 592, 596
(2001). However, despite this difference in the posturing of the
issue, our Rules provide: “[w]hen issues not raised by the
pleadings are tried by the express or implied consent of the
parties, they shall be treated in all respects as if they had been
raised in the pleadings.” N.C. Gen. Stat. § 1A-1, Rule 15(b)
(2001). Accordingly, although defendant termed the motion to
dismiss for lack of jurisdiction rather than venue, it is apparent
from the trial court's order that the arguments presented to that
court, and the issue now before us, is the application of the forum
selection clause. [3] The contested issues in the case at bar relate to
provisions of the contract which sought to avoid potential
litigation by expressly designating which state's law would be
applied and which forum would determine a dispute. “[T]he choice of
law provision[] names a particular state and provides that the
substantive laws of that jurisdiction will be used to determine the
validity and construction of the contract, regardless of any
conflicts between the laws of the named state and the state in
which the case is litigated.” Johnston County v. R.N. Rouse & Co.,
331 N.C. 88, 92, 414 S.E.2d 30, 33 (1992). “A forum selection
provision designates a particular state or court as the
jurisdiction in which the parties will litigate disputes arising
out of the contract and their contractual relationship.” Id., 331
N.C. at 93, 414 S.E.2d at 33. This contract provided:
JURISDICTION
The parties acknowledge that this Agreement
has been signed and executed in the County of
Los Angeles, State of California, and is
deemed to be in accordance with California
law, which law shall be applied in the event
of any dispute which may arise in connection
with the performance of its terms.
It is agreed that any and all orders solicited
herein, shall be accepted by Employer at its
principal place of business in Paramount,
California, and that any disputes arising from
any such orders or commissions thereunder,
shall be determined in accordance with
California law, and that the appropriate
jurisdiction for the determination of any such
dispute is deemed to be in the County of Los
Angeles, State of California.
The first paragraph is a choice of law provision which sets forth
that California law will apply to “any dispute” regarding the
performance of the contractual terms. The second paragraph is botha choice of law and a forum selection provision, which provides
that California law will be the applicable law, and Los Angeles,
California will be the appropriate forum for disputes regarding
orders solicited under the contract, or commissions earned
thereunder. Accordingly, the contract provided that all disputes
be determined in accordance with California law, and those disputes
“arising from. . . orders or commissions” be litigated in
California.
The parties assert the controlling determination for
application of the forum selection clause is whether California or
North Carolina law is applied to the case at bar. Defendant
asserts that because California was chosen by the parties as the
law to be applied to “any dispute” regarding the contract,
California law must determine the validity of the forum selection
clause. Land Co. v. Byrd, 299 N.C. 260, 262, 261 S.E.2d 655, 656
(1980) (North Carolina recognizes that “where parties to a contract
have agreed that a given jurisdiction's substantive law shall
govern the interpretation of the contract, such a contractual
provision will be given effect”). Plaintiffs, on the other hand,
assert that California law may not control a forum selection clause
voided by North Carolina public policy, which prohibits forum
selection clauses limiting prosecution of cases to venues outside
North Carolina where the claim involves a contract entered into in
North Carolina. See Torres v. McClain, 140 N.C. App. 238, 241, 535
S.E.2d 623, 625 (2000) (holding the parties' choice is given effect
“'as long as they [(1)] had a reasonable basis for their choice and
[(2)] the law of the chosen State does not violate a fundamentalpublic policy of the state or otherwise applicable law.'”); N.C.
Gen. Stat. § 22B-3 (2001) (stating “any provision in a contract
entered into in North Carolina that requires the prosecution of any
action or the arbitration of any dispute that arises from the
contract to be instituted or heard in another state is against
public policy and is void and unenforceable”). However, we need
not address whether North Carolina public policy overrides the
parties' choice of law because North Carolina public policy is only
concerned with application of the forum selection clause, and the
forum selection clause itself provides that it is not applicable to
the case at bar.
Although the choice of law provisions apply California law to
any dispute arising from the contract, the plain language of the
forum selection clause limits its application to only some disputes
which arise under the contract. Specifically, the forum selection
clause is limited to disputes over orders and the commissions under
the orders and does not apply the forum selection clause to
disputes “aris[ing] in connection with the performance of [the
contract].” This case is a dispute over the performance of the
contract not a dispute over orders and commissions arising under
the contract. The complaint alleges defendant breached the
employment contract by requiring that if Hickox did not “sell a
certain number of units by February 15, 2002, Defendant would not
pay him a salary any longer.” Moreover, defendant attempted to
modify the contract by requiring that defendant's compensation
after 15 February 2002 be exclusively based on commission.
Finally, defendant “took the automobile the Plaintiff had beenprovided as part of his compensation package on the pretense of
their having to use it to return to California.” Hickox at no time
agreed to the modification of the contract. On 22 February 2002,
defendant notified Hickox that he was terminated, and no
compensation was provided following 23 February 2002. Accordingly,
this complaint sets forth a dispute which does not “aris[e] from
any [] orders [solicited under the contract] or commissions
thereunder,” but rather is a “dispute [] aris[ing] in connection
with the performance of [the contract's] terms.” Under California
law,
(See footnote 1)
if the written provisions of the contract are “clear and
explicit” they govern.
(See footnote 2)
Rosen v. State Farm General Ins. Co., 70
P.3d 351, 354 (Cal. 2003). Since the plain language of the
contract does not provide for application of the forum selection
clause to the case at bar, we affirm the order of the trial court
on this basis.
Affirmed. Judges McGEE and HUDSON concur.
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