HAROLD D. HOLDER AND VEVEY HOLDINGS, INC., APPELLANTS,
v.
BURGER KING CORPORATION, TAHIR AHMED, GULFSTREAM GARDEN, INC., GULFSTREAM DODGE, INC., GULFSTREAM LIBERAL, INC., AND BANC ONE LEASING CORPORATION, APPELLEES

Fla. 2d DCA | 1991-04-05
No. 90-02082
SCHOONOVER, C.J., and CAMPBELL and THREADGILL, JJ., concur.
576 So. 2d 973 Florida District Court of Appeal, Second District (1991) Positive Treatment
Cited by 1 case

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Synopsis

Holder and Vevey Holdings appealed the dismissal of their fraud and breach of fiduciary duty claims against Burger King based on forum selection clauses in franchise and lease agreements. The court affirmed the dismissal, holding that a party must show the forum selection clause itself was procured by fraud—not merely that the underlying agreement was fraudulently induced—to void the clause.


Holding

Forum selection clauses must be enforced unless the clause itself is the product of fraud. A party cannot avoid a forum selection clause merely by alleging that the underlying agreement was fraudulently induced; rather, the party must demonstrate that the forum selection clause specifically was procured by fraud.


Headnotes

[1] A forum selection clause is enforceable even if the underlying contract is alleged to be fraudulent, provided the fraud did not specifically target the forum selection cl…

[2] When challenging a forum selection clause based on fraud, the party seeking to void the clause must demonstrate that the clause itself was the product of fraud.

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Key Quotes

“When a party seeks to void a forum selection clause on the basis of fraud, it must be demonstrated that the clause itself is the product of fraud.”

Establishes the controlling legal standard: fraud must be directed at the forum selection clause itself, not merely at the overall agreement.

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Facts & Procedural History

Holder and Vevey Holdings entered into franchise and lease agreements with Burger King for three restaurants. They subsequently filed suit alleging fr…

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Opinion of the Court
PER CURIAM.

PER CURIAM.

Harold Holder and Vevey Holdings, Inc., appeal an order of the circuit court which dismisses their complaint against Burger King and others. We affirm.

The complaint alleges fraud and breach of fiduciary duty in connection with franchise and lease agreements between the parties. Essentially it is contended that the performance of three Burger King restaurants has been far below what was represented at the time of the transactions. Shortly after this action was initiated Burger King filed its own complaint in federal court alleging trademark infringement and asserting claims for amounts due under the agreements. The order of dismissal is predicated upon forum selection clauses contained in the agreements, which specify that any controversies shall be litigated in the United States District Court, Southern District of Florida.

Appellants argue that the circuit court should not have enforced the forum selection clauses “because the agreements themselves were entered into as a result of fraud and misrepresentation,” and therefore “each and every clause in the agreements is necessarily procured by fraud.” We disagree. When a party seeks to void a forum selection clause on the basis of fraud, it must be demonstrated that the clause itself is the product of fraud. Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974); Zions First National Bank v. Allen, 688 F.Supp. 1495 (C.D.Utah 1988); Hoffman v. Burroughs Corp., 571 F.Supp. 545 (N.D.Tex.1982).

This is based on sound policy. Forum selection clauses are agreements by the parties concerning where disputes are to be resolved. A suit for fraud is just one of many disputes that might arise. Absent proof that the forum selection clause is the product of fraud the parties should litigate all claims, including fraud claims, in the agreed on forum. Zions First National Bank, 688 F.Supp. at 1499.

The case of First Pacific Corp. v. Sociedade de Empreendimentos e Construcoes, Ltda., 566 So. 2d 3 (Fla. 3d DCA 1990), cited by appellants, is distinguishable. In addition to apparent public policy arguments against enforcement of the clause (the defendant sought to avoid certain Florida statutory causes of action by litigating in the Bahamas), the court found the plaintiff had specifically alleged that “including the forum selection clause in the agreement was part of [defendant’s] scheme to defraud it.” 566 So. 2d at 4. No such considerations obtain in the present case regardless of the merits of appellants’ complaint. Notably, appellants have sued for damages without actually seeking rescission of the contracts they claim were procured by fraud. There has been no showing that appellants expressed misgivings about, were improperly induced into, or are unusually disadvantaged by, litigating controversies (contract-related or otherwise) in the forum specified in the franchise agreements.

Affirmed.

SCHOONOVER, C.J., and CAMPBELL and THREADGILL, JJ., concur.


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