COMCOUNT, INC. v. COCONUT CODE, INC., (S.D.Ind. 2002)

JOHN DANIEL TINDER, United States District Judge.

Defendant, Coconut Code, Inc., moves to dismiss the complaint of Plaintiff, Comcount, Inc., claiming that a contractual agreement mandates exclusive jurisdiction over this matter in the state courts of Broward County, Florida. Having considered the motion and briefs, the court makes its ruling.

Plaintiff alleges that software programming licensed to Plaintiff by Defendant did not work as promised from the initial installation. Plaintiff alleges that as a result of the breach of contract, it suffered damages including the cost of the software and training provided by Defendant, as well as the hardware required to run the software, and added labor to input data which the software was to perform. (Compl. at ¶ 15.) Plaintiff also alleges that after the breach occurred, Defendant made oral and written promises to repair, modify or upgrade the software, and Plaintiff delayed replacing the software due to those promises. During this time, Plaintiff alleges that it hired temporary data entry personnel and utilized its own data entry personnel to perform functions that should have been performed by the software. Plaintiff further alleges that Defendant failed to provide an updated version of the software.

The damages resulting from the alleged breach of contract are alleged to include $21,094.16 for the temporary data entry personnel Plaintiff hired and $34,068.44 in costs for Plaintiff to utilize its own data entry personnel. (Compl. ¶¶ 9, 10, 15.) Plaintiff alleges that as a result of its detrimental reliance on Defendant's representations, it was damaged in the amount of $55,162.60, that is, the cost of added labor to perform functions that were supposed to be accomplished by Defendant's software. (Id. ¶ 21 (referring to ¶¶ 9 and 10.))

Defendant's motion to dismiss hinges upon the interpretation of the forum selection clause contained within the Order Agreements executed pursuant to Plaintiff's purchase of software from Defendant. While this controversy involves the execution of two separate Order Agreements, the relevant clause is identical within both. The clause at issue provides:

13. GOVERNING LAW AND VENUE. This Agreement shall be deemed to have been made and executed in Broward County, Florida regardless of order or place in which the signatures of the parties shall be affixed hereto, and shall be interpreted and the rights and liabilities of the parties hereto determined in the state courts of Broward County, Florida in accordance with the laws of the State of Florida.

(Compl., Exs. A B, ¶ 13) (emphasis added.)

The Order Agreements contain clauses regarding warranties, indemnification and limitations (the "warranty clause"). The warranty clause provides in relevant part:

5. WARRANTIES, INDEMNIFICATION LIMITATION. The Customer assumes responsibility for the selection of the CCI Software to achieve the desired results, and for the installation, use and results obtained from CCI Software. Although the CCI Software has been fully tested, software errors may arise from time-to-time. If such errors are found by the Customer or repairs, replacement or other services are required with respect to the CCI Software, the Customer may contact Seller. However, unless such errors existed at the time of delivery and substantially affect execution, the Customer assumes the entire cost of correction or replacement. Correction or replacement is the Customer's sole and exclusive remedy for errors in CCI Software. . . . Except as otherwise provided herein, SELLER MAKES NO WARRANTY WITH RESPECT TO THE CCI SOFTWARE AND DOCUMENTATION OR ANY PERFORMANCE THEREOF, EXPRESSED OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

(Compl., Exs. A B, ¶ 5.)

II. Analysis

Defendant asserts that the forum selection clause is a mandatory forum selection clause which establishes exclusive venue and jurisdiction within the state courts of Broward County, Florida. However, Plaintiff argues that the clause is permissive in construction and merely establishes Broward County, Florida as a proper forum rather than the exclusive forum. Plaintiff further claims venue is proper within this court regardless of the interpretation of the abovementioned clause, as Count II of Plaintiff's Complaint arises out of a theory of promissory estoppel, and does not lie within the scope of the Order Agreement.

A. Choice of Law

A federal court sitting in diversity must apply the forum state's choice of law rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941); Land v. Yamaha Motor Corp., 272 F.3d 514, 516 (7th Cir. 2001). Thus, this court must apply Indiana's choice of law rules. As the Indiana Supreme Court just said: "Indiana choice of law doctrine favors contractual stipulations as to governing law." Allen v. Great Am. Reserve Ins. Co., No. 29S05-0204-CV-222, ___ N.E.2d ___, 2002 WL 497333, at *3 (Ind. Apr. 2, 2002); see also Hoehn v. Hoehn, 716 N.E.2d 479, 484 (Ind.Ct.App. 1999). The court is unaware of any reason to override this preference. The court therefore finds that pursuant to the choice of law provisions in the Order Agreements, Florida law shall govern the interpretation of the rights and liabilities of the parties under those agreements.

B. Mandatory v. Permissive Language

Mandatory jurisdiction clauses establish exclusive jurisdiction in a particular forum for litigation arising out of the contract, whereas, permissive jurisdiction clauses merely consent to jurisdiction in a particular forum. Garcia Granados Quinones v. Swiss Bank Corp. (Overseas), S.A., 509 So.2d 273, 274 (Fla. 1987). In determining the intent of contracting parties, basic principles of contract construction dictate that a clause is mandatory "if it states that any litigation must, or shall, be initiated in a specified forum." Sauder v. Rayman, 800 So.2d 355, 358 (Fla. Dist Ct. App. 2001) (emphasis in original). Therefore, forum selection clauses which merely submit to jurisdiction or provide that litigation may be brought in a particular forum are permissive clauses, whereas, those which state that any litigation shall be brought in a particular forum are mandatory clauses.

The clause at issue states that "[t]his Agreement . . . shall be interpreted and the rights and liabilities of the parties hereto determined in the State Courts of Broward County, Florida. . . ." (Compl., Exs. A B, ¶ 13) (emphasis added.) It employs mandatory language in establishing the state courts of Broward County, Florida as the courts that "shall" interpret and determine disputes arising out of this contract. Even though the clause does not employ the terms "only" or "exclusively," its very construction designates the state courts in Broward County, Florida as the only proper forum. See Datamatic Servs. Corp. v. Bescos, 484 So.2d 1351, 1354 (Fla.Dist.Ct.App. 1986) (finding "jurisdiction for any litigation arising under this agreement shall lie within the appropriate court in Broward County, Florida" to be a mandatory forum selection clause dictating exclusive jurisdiction).

Furthermore, a "venerable principle of contract law" instructs against interpreting contracts in a manner that renders terms superfluous if another interpretation lends meaning to those terms. Fla. Polk County v. Prison Health Servs., Inc., 170 F.3d 1081, 1082 (11th Cir. 1999). This rule is applicable here, as reading the clause as permissive renders it superfluous. See id. at 1083-84 (concluding forum selection clause mandatory where statute allowed suit to be brought in county where causes of action arose). The disputed clause states that the "Agreement shall be deemed to have been made and executed in Broward County, Florida." (Compl., Exs. A B, ¶ 13.) As such, the state courts of Broward County would have been an appropriate venue without the forum selection clause, and construing the clause as permissive would render it redundant and meaningless. See Fla. Polk County, 170 F.3d at 1082. Therefore, the forum selection clause provides exclusive jurisdiction in the state courts of Broward County, Florida for all actions arising out of the contract. For this reason, Count I of the Complaint should be DISMISSED without prejudice to refiling within thirty days in the state courts of Broward County, Florida.

C. Promissory Estoppel Claim

Plaintiff asserts that its promissory estoppel claim against Defendant is not subject to the forum selection clause of the Order Agreements because it is based upon subsequent promises made by Defendant. As such, Plaintiff argues that venue is still proper in this court.

Although Plaintiff asserts that its promissory estoppel claim should remain within this court, the court disagrees. Both Florida and Indiana law dictate rejection of equitable remedies if adequate legal remedies exist. Williams v. Bear Stearns Co., 725 So.2d 397, 400 (Fla.Dist.Ct.App. 1998) ("upon a showing that an express contract exists . . . [an] unjust enrichment or promissory estoppel count fails"); Tri-Professional Realty, Inc. v. Hillenburg, 669 N.E.2d 1064, 1070 (Ind.Ct.App. 1996) ("where the remedy at law is adequate, equity will not assume jurisdiction").

Under these allegations, Plaintiff's remedies at law are sufficient to cover its claims. A careful reading of Plaintiff's Complaint verifies the sufficiency of the remedy at law. Under Count II, the promissory estoppel claim, Plaintiff seeks $55,162.60 in damages for expenses incurred as a result of dedicating permanent data entry personnel and hiring temporary data entry personnel to perform functions that Defendant's software was supposed to accomplish. However, these very same damages are sought under Count I, the breach of contract claim. Therefore, Plaintiff's pleadings support the conclusion that legal remedies are sufficient to cover its claims for damages, thus precluding a claim for promissory estoppel. In addition, the warranty clause of the Order Agreements expressly provides that "[c]orrection or replacement is the Customer's sole and exclusive remedy for errors in CCI Software." (Compl., Exs. A B, ¶ 5.) The alleged representations made by Defendant after the dates of the Order Agreements amount to representations to correct or replace the software provided to Plaintiff by Defendant, a remedy contemplated by the parties' contracts. Thus, Plaintiff's promissory estoppel claim is, at least in part, a restatement of its breach of contract claim.

As Judge Posner said, "[w]hen there is an express contract governing the relationship out of which the promise emerged, and no issue of consideration, there is no gap in the remedial system for promissory estoppel to fill." All-Tech Telecom, Inc. v. Amway Corp., 174 F.3d 862, 869 (7th Cir. 1999) (holding that a promissory estoppel claim should be precluded when a breach of warranty claim applies). For this reason, Count II of the Complaint should be DISMISSED without prejudice to refiling within thirty days in the state courts of Broward County, Florida.

III. Conclusion

For the foregoing reasons, Defendant's motion to dismiss will be GRANTED.

ALL OF WHICH IS ORDERED.