Dealer’s New Hampshire Law Claims Dismissed, Based on Contractual Choice of Maine Forum

This posting was written by John W. Arden.

A terminated snowplow dealer’s New Hampshire Equipment Dealership Act, Consumer Protection Act, and Antitrust Act claims against its manufacturer were dismissed without prejudice, based on a contractual choice of Maine forum, according to the federal district court in Concord, New Hampshire (Summa Humma Enterprises, LLC v. Fisher Engineering, January 3, 2013, McCafferty, L.)

Summa Humma Enterprises, a New Hampshire equipment dealer, entered into a “purchase and security agreement” with Fisher Engineering, a Maine-based snowplow manufacturer. The parties also executed a “terms of sale agreement.” The purchase and security agreement included a clause providing that the agreement shall be governed by Maine law and that the dealer consented to personal jurisdiction in the State of Maine. The terms of sale agreement included a provision in which the dealer irrevocably consented to the exclusive jurisdiction of the State of Maine for the resolution of any dispute concerning any products of the terms and conditions of sale.

After representing Fisher for four years, Summa Humma began promoting and selling an additional line of snowplows and related equipment manufactured by BOSS, one of Fischer’s competitors. On May 10, 2012, Fisher sent a letter informing Summa Humma of its intention to terminate the distribution relationship, effective September 10, 2012. The primary reason for termination was the belief that Summa Humma was not fully committed to the promotion and sale of Fisher products. It also cited the dealer’s allegedly unfavorable approach to conducting business with Fisher as a reason for termination.

Summa Humma brought this action for a declaratory judgment reinstating the dealership and claiming damages under New Hampshire Equipment Dealership Act, Consumer Protection Act, and Antitrust Act. The action was filed in New Hampshire Superior Court and removed to the federal district court in Concord. Fisher moved to dismiss the claims, arguing that Summa Humma was contractually obligated to litigate them in Maine. Summa Humma contended that (1) the forum selection clause was permissive, (2) the forum selection clause was not applicable to the claims in this case, and (3) public policy disfavored enforcement of the forum selection clause.

Forum Selection Clause

The magistrate judge held that the forum selection clause of the terms of sale agreement was mandatory rather than permissive. Rather than just consenting to the jurisdiction of the federal and state courts of Maine, the dealer irrevocably consented and submitted to the exclusive jurisdiction of the state and federal courts located in the State of Maine.

The questions remaining concerned the relationship between section 14 of the purchase and security agreement (voluntarily submitting to the jurisdiction of Maine courts) and section 13 of the terms of sale agreement (irrevocably submitting to the exclusive jurisdiction of the Maine courts). Summa Humma argued that the “permissive” forum selection clause of the purchase and security agreement conflicted with—and displaced—the mandatory forum selection clause of the terms of sale agreement. Fisher characterized the clauses as complementary rather than contradictory, allowing the enforcement of the forum selection clause of the terms of sale agreement without violating the purchase and security agreement.

The judge found Fisher’s argument more compelling, holding that the purchase and security agreement and the terms of sale agreement could be harmonized to avoid rendering any provision of either document meaningless. All parties agreed that the clause in the purchase and security agreement was permissive while the clause in the terms of sale agreement was mandatory, the court observed. But there was nothing in the dealer’s submitting to the exclusive jurisdiction of the state and federal courts of Maine in the terms of sale agreement that was inconsistent with its consenting to personal jurisdiction in the courts of Maine in the purchase and security agreement.

“Because the two forum selection clauses are not in conflict, the provision establishing that the P&S Agreement controls the Terms of Sale does not come into play,” the judge held. “Accordingly, there is nothing is the P&S Agreement to preclude the court from enforcing the forum-selection clause in the Terms of Sale.”

Applicability of Clause

Contrary to Summa Humma’s contention, the claims it asserted in this case did not fall outside of the reach of the terms of sale agreement’s forum selection clause. It argued that the purchase and security agreement governed the general relationship of the parties and that the terms of sales covered merely a subset of that relationship. “That position is somewhat difficult to square with [the dealer’s] well-supported legal argument that the two documents ‘are, in the eyes of the law, one legal instrument.’”

The court concluded that the parties entered into a single agreement for Summa Humma to purchase snowplows and accessories from Fisher, subject to the terms and conditions stated in the purchase and security and the terms of sale agreements.

Equipment Dealer Law

Summa Humma’s claim for a declaratory judgment reinstating the relationship of the parties under the New Hampshire Equipment Dealership Act was unavailing. Fisher argued that the wrongful termination claim under the Act had to be adjudicated in Maine because it concerned the terms and conditions of the agreements between the parties. Summa Humma contended that the claim related to the unlawful termination of the supplier-dealer relationship rather than the products or terms and conditions of the sale of the products.

The court found that Summa Humma offered “no convincing argument that a dispute over Fisher’s termination of the P&S agreement is not a dispute concerning the P&S Agreement.” By its express terms, the forum selection clause covers “any” dispute “concerning” the terms and conditions of Fisher’s sales to Summa Humma. The language was broad enough to cover the wrongful termination claim. Thus, the claim had to be adjudicated in Maine.

Consumer Protection Act, State Antitrust Act

Fisher contended that the New Hampshire Consumer Protection Act and Antitrust Act claims must be adjudicated in Maine because they concerned the termination of the agreement under which it sold equipment to Summa Humma. The court agreed for the same reasons as stated for the Equipment Dealer Law claim.

Since all state law claims fell within the scope of the forum selection clause in the terms of sale agreement, they were all subject to dismissal. The clause itself was enforceable, since such claims are prima facie valid and Summa Humma did not demonstrate any ground for finding it invalid.

While the Equipment Dealer Law expressed a strong public policy in favor of having arbitration proceedings take place in a city or county where a dealer is located, the law said nothing about the proper venue for litigation, according to the court. The legislature consciously chose not to include an anti-forum-selection provision in the law, the court found.

The court rejected the dealer’s citation to opinions from other jurisdictions holding that other state dealer laws expressed a strong public policy disfavoring forum selection clauses that require litigation in out-of-state courts.

Thus, Fisher’s motion to dismiss the claims was granted without prejudice to Summa Humma’s right to bring the claims in another forum in accordance with the forum selection clause in the terms of sale agreement.