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Forum Selection Clauses and Personal Jurisdiction

In Hope’s Window, Inc. v. McClain, - S.W.3d - , case no. WD75137 (Mo.App. W.D. March 19, 2013), a New York based window company entered into a contract with a Missouri customer for the sale and purchase of windows, doors, doorframes, and hardware for the customer’s Missouri residence. After the customer had made a down payment of $66,915 to Hope’s Windows, a dispute arose, and the customer refused to make further payments under the contract. The contract, executed by the customer in Missouri, contained a choice-of-law and forum-selection clause that provided, in pertinent part:  “Any dispute arising under this agreement shall be under the jurisdiction and governed by the laws of the State of New York. The venue for any litigation under this agreement, if commenced by SELLER or BUYER, shall be in a court of competent jurisdiction in Chautauqua County in the State of New York.”

The customer failed to appear in a New York action filed against him by Hope’s Windows, and when Hope’s Windows sought to register a New York default judgment for $85,244 in Missouri state court, the customer moved to vacate the petition to register the judgment, on the grounds that the New York court lacked personal jurisdiction over him. The trial court refused to register the judgment, after having “extensively evaluated” the customer’s contacts with New York, to determine whether the New York court had personal jurisdiction over him under New York’s long-arm statute and whether the New York court complied with Due Process in rendering its judgment.

The Court of Appeals reversed, observing that “[w]hile this analysis would have been proper in the face of a simple choice-of-law clause, it was wholly unnecessary in light of the forum-selection clause contained in the contract”, which required not only that any dispute be governed by New York law, but that any lawsuit be filed in Chautauqua County, New York.

Under the U.S. Supreme Court decision in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), a forum-selection clause should be enforced specifically, unless the challenging party can clearly show that enforcement would be unreasonable and unjust, or that the clause is invalid for such reasons as fraud or overreaching, or that enforcement would contravene a strong public policy of the forum in which lawsuit was brought. A forum-selection clause is prima facie valid, and here, the circuit court erred by engaging in a “minimum contacts” analysis, before determining whether the forum selection clause was in fact enforceable. 

Here, rather than arguing that the forum-selection clause was somehow invalid or unenforceable as contrary to public policy, the customer’s principal argument was that despite his signature and partial performance under the contract, he was not a party to the contract. Because he failed to meet his burden of showing that the forum selection clause was unenforceable, the Court of Appeals held that he had waived his right to challenge the New York court’s assertion of personal jurisdiction over him by agreeing to that clause, and remanded the case to the trial court, to address his other challenges to the petition to register the foreign judgment.

The Hope’s Window case should serve as a clear reminder to parties who enter into contracts that if you agree to a “forum selection” clause, you should expect to have to live with it. Absent unusual circumstances, you will be held to have consented to personal jurisdiction in the designated forum, and if you allow a default judgment to be taken against you in that forum, the judgment will likely be found enforceable against you in your home state.

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Attorneys: David Eisenberg

The Empty Chair Defense is Not Available in Missouri

Although our blog’s primary focus is on recent developments in the law, the issue of whether an “empty chair” defense is available comes up often enough that we believe a brief primer on the issue is worth posting for our readers’ general reference. As always, please consult a Missouri-licensed attorney for advice specific to your circumstances.

Where appropriate, a defendant can certainly argue that the party responsible for the plaintiff’s alleged harm is not before the jury. Will v. Gilliam, 439 S.W.2d 498 (Mo. 1969); Cook v. Cox, 478 S.W.2d 678 (Mo. 1972). However, a “sole cause” instruction is expressly prohibited by the Missouri Approved Jury Instructions (7^th ed.):

No instruction shall be given on behalf of the defendant which hypothesizes that the conduct of one other than defendant was the sole cause of the occurrence.

MAI 1.03 (1965). The committee comments to MAI 1.03 note that the “sole cause” issue is only properly raised by the proximate cause element of the appropriate verdict director. MAI 33 is a causation converse instruction applicable to the actions of another that would constitute a superseding, intervening cause of plaintiff’s alleged harm, which might be appropriate to a “sole cause” set of facts. 

The “sole cause” or intervening cause approaches are not helpful, however, in the more common circumstance of concurrent causation, where the defendant before the jury arguably contributed to cause the plaintiff’s alleged harm. In that circumstance, there is presently no avenue under Missouri law to obtain a comparative fault determination as to absent contributing tortfeasors.

A party that is not present at trial cannot be identified on the verdict form. “[F]ault is only to be apportioned among those at trial.”  Kansas City Power & Light Co. v. Bibb & Associates, Inc., 197 S.W.3d 147, 159-60 (Mo. App. W.D. 2006); see also Jensen v. ARA Servs., Inc., 736 S.W.2d 374 (Mo. banc 1987). The jury must reach a 100% determination of fault amongst the parties (including the plaintiff(s)) who are at trial. Id.

What about co-defendants who settle, can fault be apportioned to them? Section 537.060 would apply:

When an agreement by release, covenant not to sue or not to enforce a judgment is given in good faith to one of two or more persons liable in tort for the same injury or wrongful death, such agreement shall not discharge any of the other tort-feasors for the damage unless the terms of the agreement so provide; however such agreement shall reduce the claim by the stipulated amount of the agreement, or in the amount of consideration paid, whichever is greater. The agreement shall discharge the tortfeasor to whom it is given from all liability for contribution or noncontractual indemnity to any other tortfeasor.

“The proper method for calculation damages is first to deduct from the total damages the amount the plaintiff received from settling defendants and then to apportion the remaining damages between the plaintiff and non-settling defendants according to their respective percentages of fault.” Ameristar Jet Charter, Inc. v. Dodson Int’l Parts, Inc., 155 S.W.3d 50, 60 (Mo. banc 2005). 

A jury is not, however, permitted to make a finding as to the comparative fault of settling parties. The leading case is Teeter v. Missouri Highway and Transportation Comm., 891 S.W.2d 817 (Mo. banc 1995). Teeter involved a wrongful death claim involving a car accident. Prior to trial, the driver (and mother of the decedent) settled the claim against her. At trial, the jury was allowed to find the fault of the non-party mother, and apportioned 90% of fault to her, with 10% to the Missouri Highway and Transportation Commission (“MHTC”). The Supreme Court overturned the judgment. 

First, the court held that, if MHTC wanted to obtain contribution from the mother, it should have sought to have the court disapprove of the settlement. Id. at 820-21. The court then held that MHTC must be held liable for the full amount of the verdict because MHTC was the only defendant at trial and “[r]ules of joint and several liability do not apply to cases with one defendant. As the lone defendant, MHTC is solely liable.” Id. at 821 (citations omitted).

MHTC argued that the jury found it to be only 10% at fault, and therefore that it should only have to pay for 10% of the verdict. The court stated that principles of comparative fault are also inapplicable in a trial with only one defendant. Teeter, 891 S.W.2d at 821. 

Further pertinent to the court’s holding was the fact that the mother had not only been dismissed, but had paid a settlement. The court held that “[a] settling defendant is dismissed from the action for all purposes, including allocation of fault. Section 537.060 expresses the public policy of this state.” Id. (emphasis added). The Missouri Supreme Court has noted that this state has not adopted Section 6 of the Uniform Comparative Fault Act, which would, in cases of settlement, reduce the non-settling defendants’ liability by the settling tortfeasors’ “equitable share of the obligation” rather than by the bare amount of the settlement, as in Missouri. Gustafson v. Benda, 661 S.W.2d 11, 15 n. 10 (Mo. banc 1983).

A more recent case, after the 2005 tort reform legislation, is Millentree v. Tent Restaurant Operations, Inc., 618 F. Supp. 2d 1072 (W.D. Mo. 2009). In Millentree, defendant filed a motion to apportion fault to a defendant that settled and was voluntarily dismissed from the action. The remaining defendant argued that Mo. Rev. Stat. § 537.067 required the jury to determine the relative apportionment of fault between the remaining and settling defendants, and that “the most efficient means of allocating fault” to the absent defendant would be to permit the jury to find his percentage of fault without adding him as a party at trial. 

The statute relied upon by the Millentree defendant, § 537.067, was amended as part of the 2005 tort reform to provide that, in all tort actions (including medical malpractice actions), "if a defendant is found fifty-one percent or more [at] fault, then such defendant [will] be jointly and severally liable for . . . the judgment. . . . If a defendant is found to [be] less than fifty-one percent at fault, then the defendant [will] only be responsible for the percentage of the judgment for which that defendant is" found responsible. Accordingly, joint and several liability will only apply to any defendant found to be 51% or more at fault for plaintiff’s damages. Moreover, each defendant will only be liable for the percentage of punitive damages for which fault is attributed to that defendant. Mo. Rev. Stat. § 537.067. 

The defendant in Millentree argued that the post-Teeter tort reform amendments required an assessment of fault as to all potential tortfeasors, even those not present for reasons of settlement or otherwise. Defendant argued that it would not violate the principles of Section 537.060 to name the settling defendant solely for purposes of an assessment of fault.

Relying on Teeter, the Millentree court rejected the argument. While a non-settling defendant may be entitled to deduct from the verdict settlement amounts paid by settling defendants, a non-settling defendant is not entitled to an apportionment of fault as against non-parties. 

The issue of allocation of fault to non-parties post-2005 tort reform has not made it to the Missouri Supreme Court, but the lower courts have ruled consistently that it is prohibited. See, e.g., Kansas City Power & Light Co. v. Bibb & Associates, supra.  Bills allowing for the assessment of fault against non-parties are periodically introduced in the Missouri legislature (see, e.g., HB 1180 from the 2012 session, HB 364 from the 2010 session), but to date none has passed. 

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Attorneys: Angela Higgins

Missouri Supreme Court Decision on Non-Economic Damage Caps

Supreme Court of Missouri issued an opinion in Deborah Watts as Next Friend for Naython Kayne Watts v. Lester E. Cox Medical Centers d/b/a/ Family Care Center, Lester E. Cox Medical Centers, Melissa R. Hermann, M.D., Matthew P. Green, D.O., and William S. Kelly, M.D. holding that RSMo 538.210, which caps non-economic damages, is unconstitutional, as it violates the right to trial by jury.

In accepting Plaintiff’s argument that 538.210 violated his right to trial by jury, the Court overrules Adams By and Through Adams v. Children’s Mercy Hosp., 832 S.W.2d 898 (Mo. Banc 1992). After going through a brief history of English, early American and Missouri common law, the Court states that assessing damages is part of the jury’s fact-finding function and that restricting that function violates the right to trial by jury as encapsulated by Missouri Constitution.

Clearly, such a decision has significant impact on Missouri’s medical profession. Costs of medical malpractice insurance will almost certainly increase. To date, there is no legislation pending that attempts to address the Court’s reversal of the legislature. The full opinion may be found on the Missouri Supreme Court’s website here.

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Related Services: Healthcare, Medical Malpractice

Attorneys: Bryan Mouber