JML Energy Resources, LLC v. Ryder Truck Rental, Inc.
ORDER denying #4 Motion to Dismiss and for Attorneys Fees, but pursuant 28 U.S.C. 1404(a), this case is hereby transferred to the United States District Court for the Southern District of Florida. Signed by Senior Judge Graham Mullen on 3/30/2021. (eef)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
JML ENERGY RESOURCES, LLC,
RYDER TRUCK RENTAL, INC. d/b/a
RYDER TRANSPORTATION SERVICES, )
This matter is before the Court upon Defendant’s Motion to Dismiss and for Attorney’s
Fees. The motion has been fully briefed and is ripe for disposition.
Ryder Transportation Services (“Ryder”) and JML Energy Resources, LLC (“JML”)
entered into a series of contracts for the leasing and servicing of commercial trucks and trailers.
(Compl. ¶¶ 2,4). The series of contracts included a single Truck Lease and Service Agreement
(“TLSA”) dated December 12, 2018, a series of Vehicle Operating and Service Agreements
(“VOSA”), and a series of vehicle leases. (Compl. ¶ 4). The TLSA contains a mandatory forum
selection clause1 which reads as follows:
L. Governing Law and Jurisdiction. This Agreement shall be subject to,
construed and interpreted under the laws of the State of Florida without regard to
its conflicts of laws provision. The parties agree that the exclusive venue or any
action relating to this Agreement shall be in a court of competent jurisdiction in
Miami-Dade County, Florida.
(Doc. No. 4-2, p. 5). The TSLA also provides for attorney’s fees to a prevailing party:
M. Attorneys’ Fees. If either party initiates litigation to enforce its rights under
this Agreement, the prevailing party in such litigation will also be entitled to
Plaintiff does not dispute that the forum selection clause is mandatory rather than permissive.
receive from the other party its reasonable attorneys’ fees (pre-trial, trial and
appellate) and costs (including those paid to a collection agency).
Plaintiff JML filed its Complaint herein alleging that Defendant failed to perform
under the contracts. Essentially JML alleges that Ryder failed to replace tires, perform
inspections, and perform proper maintenance on the leased vehicles as required under the
contracts. (Compl. ¶ 18). The Complaint alleges causes of action for fraud, breach of
contract, breach of express warranty, breach of implied warranty, and unfair and
deceptive trade practices. The fraud count alleges only that an employee of Ryder
“induced the Plaintiff to enter into contracts with Ryder, by falsely representing certain
material facts.” (Id. at ¶ 24). The facts allegedly misrepresented were that Ryder’s
services included normal tire replacement, preventative maintenance inspections, and
annual safety meetings. Id. Plaintiff claims that Ryder knew or should have known that
those services were not going to be performed by Ryder. (Id. at ¶ 26).
Ryder has moved to dismiss the complaint on the basis of the mandatory forum
selection clause and to receive an award of attorney’s fees pursuant to paragraph M of the
A forum selection clause is presumptively valid and should be enforced absent a
showing that to do so “would be unreasonable and unjust, or that the clause was invalid
for such reasons as fraud or overreaching.” The Bremen v. Zapata Off-Shore Co., 407
U.S. 1, 15 (1972). Moreover, the burden is on the objecting party to show that a forum
selection clause is unreasonable or unjust. Bryant Electric Co., Inc. v. City of
Fredericksburg, 762 F.2d 1192, 1197 (4th Cir. 1985). “The burden of proving
unreasonableness is a heavy one,” and is met only by a “showing that the clause results
from fraud or overreaching, that it violates a strong public policy, or that enforcement of
the clause deprives the [party] of his day in court.” Mitsui & Co. (USA), Inc. v. MIRA
M/V, 111 F.3d 33, 35 (5th Cir. 1997).
The Fourth Circuit has applied a four-prong test for determining whether a forum
selection clause is unreasonable:
(1) their formation was induced by fraud or overreaching; (2) the complaining
party “will for all practical purposes be deprived of his day in court” because
of the grave inconvenience or unfairness of the selected forum; (3) the
fundamental unfairness of the chosen law may deprive the plaintiff of a
remedy; or (4) their enforcement would contravene a strong public policy of
the forum state.
Allen v. Lloyd’s of London, 94 F.3d 923, 928 (4th Cir. 1996) (citing Carnival Cruise
Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991); M/S Bremen, 407 U.S. at 12-13, 15, 18)).
There is no evidence that prongs two or three are present in this case.
Plaintiff’s main argument is that the contract was procured by fraud. Plaintiff
argues fraudulent inducement by alleging that a Ryder employee, before execution of the
TLSA, falsely represented material facts including but not limited to: Ryder would
provide normal tire replacement; preventative maintenance inspections; and
annual safety meetings. These allegations go to whether Defendant breached the
contracts, which is the crux of this lawsuit. While not before the Court, it is doubtful that
the fraud claim could survive a Rule 12(b)(6) motion.
The Court also notes that that this agreement was entered into in an arms-length
transaction between two commercial entities. Thus, overreaching is not an issue.
Lastly, Plaintiff argues that enforcement of the forum selection clause would run
afoul of the public policy of North Carolina as set forth in N.C. Gen. Stat. § 22B-3.2
However, this Court has made it clear this is only one of the factors to be considered
when evaluating reasonableness for a forum selection clause, and does not otherwise
render a freely negotiated forum selection clause unenforceable. See Scholl v. Sagon RV
Supercenter, LLC, 249 F.R.D. 230, 241-42 (W.D.N.C. 2008); Peltier v. Mathis, 2016 WL
4386091 at *6 (W.D.N.C. June 23, 2016) (Noting that “[f]ederal Courts in North Carolina
routinely enforce forum selection clauses despite the existence of Section 22B-3.”).
Considering the Allen factors, this Court finds that Plaintiff has failed to meet its burden
of showing that the forum selection clause in this case should not be enforced.
Although Defendant has moved to dismiss this case pursuant to Rule 12(b)(3) of
the Federal Rules of Civil Procedure, the appropriate motion would have been a motion
to transfer venue pursuant to 28 U.S.C. § 1404(a). Section 1404(a) is the exclusive
mechanism to enforce a forum selection clause that points to another federal forum when
venue is otherwise proper in the district where the case was brought. Atl. Marine Const.
Co. v. U.S. Dist. Court for W. Dist. of Texas, 134 S. Ct. 568, 575, 577 (2013) (“We reject
petitioner's argument that [a forum selection] clause may be enforced by a motion to
dismiss under 28 U.S.C. § 1406(a) or Rule 12(b)(3) of the Federal Rules of Civil
Procedure.”) There is no dispute that venue is otherwise proper in this district, as this
district is alleged to be the situs of the events material to the litigation. 3 Accordingly, the
“In North Carolina, any agreement entered into in the state which purports to fix the forum for the parties' future
litigation or arbitration in a location outside of North Carolina is unenforceable.” Bassett Seamless Guttering, Inc. v.
Gutterguard, LLC, No. 1:05CV00184, 2006 WL 156874 at *6 (M.D.N.C. Jan. 20, 2006) (citing N.C. Gen. Stat. §
The question of whether venue is “wrong” or “improper” is generally governed by 28 U.S.C. § 1391. Atl. Marine
Const. Co. 134 S. Ct. at 575. That provision states that “[e]xcept as otherwise provided by law . . . this section shall
govern the venue of all civil actions brought in district courts of the United States.” § 1391(a)(1). It further provides
Court will deny Defendant’s Motion to Dismiss and for Attorney’s fees and will transfer
this case to the United States District Court for the Southern District of Florida.
IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss and for
Attorney’s Fees is hereby DENIED, but pursuant 28 U.S.C. § 1404(a), this case is hereby
transferred to the United States District Court for the Southern District of Florida.
Signed: March 30, 2021
that “[a] civil action may be brought in (1) a judicial district in which any defendant resides, if all defendants are
residents of the State in which the district is located; (2) a judicial district in which a substantial part of the events or
omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is
situated; or (3) if there is no district in which an action may otherwise be brought as provided in this section, any
judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.” §
1391(b). “Whether the parties entered into a contract containing a forum-selection clause has no bearing on whether
a case falls into one of the categories of cases listed in § 1391(b). As a result, a case filed in a district that falls
within § 1391 may not be dismissed under § 1406(a) or Rule 12(b)(3).” Atl. Marine, 134 S. Ct. at 577.
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