Kan. City Grill Cleaners, LLC v. BBQ Cleaner, LLC

454 P.3d 608

KANSAS CITY GRILL CLEANERS, LLC, Appellant,

v.The BBQ CLEANER, LLC, and Jeffrey Krentzman, Appellees.

No. 118,687

Court of Appeals of Kansas.

Opinion filed December 13, 2019

Steven H. Mustoe and Oliver P. Maguire, of Evans & Dixon, LLC, of Overland Park, for appellant.

John B. Gariglietti and James F.B. Daniels, of McDowell, Rice, Smith & Buchanan, of Kansas City, Missouri, for appellees.

Before Buser, P.J., Atcheson, J., and Walker, S.J.

Buser, J.:

Kansas City Grill Cleaners, LLC (KC Grill) entered into a contract with The BBQ Cleaner, LLC (BBQ Cleaner) for the purchase of outdoor grill cleaning equipment and supplies. The contract included a forum-selection clause and choice-of-law provision, which provided that the venue for any litigation arising from the contract was only proper in Bergen County, New Jersey, and that the contract shall be construed and enforced in accordance with the laws of New Jersey.

After a dispute over the contract, KC Grill filed a petition in Johnson County District Court, alleging BBQ Cleaner and its agent, Jeffrey Krentzman (collectively BBQ Cleaner), violated the Kansas Consumer Protection Act (KCPA) by engaging in a deceptive trade practice. BBQ Cleaner filed a motion to dismiss based on the forum-selection clause. The district court dismissed the case. KC Grill appeals the district court's dismissal of its petition against BBQ Cleaner.

Upon our review, we agree with KC Grill and hold that, under the facts and circumstances of this case, the forum-selection clause is unenforceable. This contractual provision contravenes the strong public policy of our state "to protect consumers from suppliers who commit deceptive and unconscionable practices" as generally provided in K.S.A. 50-623(b). In particular, the forum-selection clause runs counter to the KCPA venue statute as set forth in K.S.A. 50-638(b) and the nonwaiver or agreement "to forego rights or benefits" provision as set forth in K.S.A. 50-625(a). Accordingly, we reverse the district court and remand the case with directions to reinstate KC Grill's petition and for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

BBQ Cleaner is a New Jersey company that sells barbeque equipment and cleaning instructions for use in cleaning outdoor barbeque grills. In December 2015, KC Grill, a Kansas business, purchased more than $25,000 in outdoor grill cleaning equipment and supplies from BBQ Cleaner. The purchase agreement was subject to choice-of-law and forum-selection provisions which provided:

"This Agreement shall be construed and enforced in accordance with the laws of the State of New Jersey. Venue for any litigation arising out of this agreement shall be proper only in Bergen County, New Jersey. The parties hereby irrevocably consent to the personal jurisdiction of the state and federal courts situated in Bergen County, New Jersey."

On August 19, 2016, KC Grill filed a petition against BBQ Cleaner asserting a deceptive trade practice claim under the KCPA. The petition alleged that BBQ Cleaner induced KC Grill to enter into the purchase agreement by misrepresenting or omitting material facts regarding its negotiations to sell similar outdoor grill cleaning equipment and supplies to KC Grill's competitors in Johnson County. KC Grill requested $25,000 in damages and any applicable fees and costs. Relying on the forum-selection clause in the contract, BBQ Cleaner filed a motion to dismiss the lawsuit.

The district court granted BBQ Cleaner's motion and dismissed KC Grill's petition with prejudice. The district court ruled that based on the forum-selection clause in the contract, any litigation arising out of the parties' agreement must be filed in Bergen County, New Jersey. KC Grill appeals.

ANALYSIS

KC Grill contends the district court erred by dismissing its petition that asserted the KCPA claim against BBQ Cleaner. It argues that the forum-selection clause is unenforceable with regard to the KCPA claim and that K.S.A. 50-638(b) provides that the Johnson County District Court is the proper venue. KC Grill also asserts that K.S.A. 50-625(a) prevents a party from waiving or agreeing to forego the rights or benefits of the KCPA venue statute. We consider only the narrow issue the parties have presented—the legal efficacy of the forum-selection clause in the contract.

We begin with a summary of our standards of review.

"The interpretation and legal effect of written instruments are matters of law, and an appellate court exercises unlimited review. Regardless of the construction given a written contract by the trial court, an appellate court may construe a written contract and determine its legal effect." Aylward v. Dar Ran Furniture Industries, Inc. , 32 Kan. App. 2d 697, Syl. ¶ 1, 87 P.3d 341 (2004).

While venue decisions are ordinarily reviewed for an abuse of discretion, we exercise unlimited review over the interpretation and legal effect of a forum-selection clause. AkesoGenX Corp. v. Zavala , 55 Kan. App. 2d 22, 31, 407 P.3d 246 (2017), rev. denied 308 Kan. 1593 (2018). Similarly, this issue involves statutory interpretation which is a question of law subject to our unlimited review. Nauheim v. City of Topeka , 309 Kan. 145, 149, 432 P.3d 647 (2019).

A forum-selection clause is generally valid and enforceable. However, the clause is unenforceable if the party resisting it shows that enforcement would be unreasonable under the circumstances. AkesoGenX Corp. , 55 Kan. App. 2d at 31, 407 P.3d 246 (citing The Bremen v. Zapata Off-Shore Co. , 407 U.S. 1, 9, 92 S. Ct. 1907, 32 L. Ed. 2d 513 [1972] ). A forum-selection clause is unreasonable if: (1) it was induced by fraud or duress; (2) there is no reasonable relationship between the selected forum and the complained of transaction; (3) the contractually selected forum is so unfair and inconvenient that it, for all practical purposes, deprives the plaintiff of a remedy or of its day in court; or (4) enforcement would contravene a strong public policy of the state where the action has otherwise been properly filed. See Brenner v. Oppenheimer & Co. , 273 Kan. 525, 540-41, 44 P.3d 364 (2002) ; AkesoGenX Corp. , 55 Kan. App. 2d at 32, 407 P.3d 246 ; Dix v. ICT Group, Inc. , 160 Wash. 2d 826, 834, 161 P.3d 1016 (2007).

As the district court ruled, the forum-selection clause here is mandatory and it required that all litigation arising out of the purchase agreement be filed in Bergen County, New Jersey. See AkesoGenX Corp. , 55 Kan. App. 2d at 32, 407 P.3d 246 (noting that "[i]f there is language stating that a certain forum is the exclusive forum, then the clause is a mandatory forum selection clause"). As a result, KC Grill must show that enforcement of the mandatory clause is unreasonable under the circumstances of this case. See AkesoGenX Corp. , 55 Kan. App. 2d at 31-32, 407 P.3d 246.

The KCPA contains a venue statute, K.S.A. 50-638(b), and a nonwaiver or agreement to forego rights or benefits statute, K.S.A. 50-625. These statutes individually and jointly provide a consumer with certain prerogatives in prosecuting a consumer protection action in Kansas.

On appeal, KC Grill contends K.S.A. 50-638(b) prevents the enforcement of the forum-selection clause. The venue statute provides:

"Venue . Every action pursuant to this act shall be brought in the district court of any county in which there occurred an act or practice declared to be a violation of this act, or in which the defendant resides or the defendant's principal place of business is located. If the defendant is a nonresident and has no principal place of business within this state, then the nonresident defendant can be sued either in the district court of Shawnee county or in the district court of any county in which there occurred an act or practice declared to be a violation of this act." K.S.A. 50-638(b).

The most fundamental rule of statutory construction is that the intent of the Legislature governs if that intent can be ascertained. State ex rel. Schmidt v. City of Wichita , 303 Kan. 650, 659, 367 P.3d 282 (2016). We attempt to ascertain legislative intent through the statutory language enacted, giving common words their ordinary meanings. Nauheim , 309 Kan. at 149, 432 P.3d 647. A plain reading of this statute makes clear that the Legislature has afforded plaintiffs in KCPA actions with the rights and benefits of filing lawsuits in the district courts of Kansas. Of particular relevance to this case, the Legislature specifically provided KCPA plaintiffs with Kansas forums to sue nonresident defendants, such as BBQ Cleaner.

It is true that as a general rule, parties are free to waive venue because it is a procedural matter that relates to a litigant's convenience, rather than a jurisdictional issue. AkesoGenX Corp. , 55 Kan. App. 2d at 37, 407 P.3d 246. The KCPA's nonwaiver statute, K.S.A. 50-625(a), however, provides that, other than based on a settlement, "a consumer may not waive or agree to forego rights or benefits" under the KCPA. As our Supreme Court has explained, to the extent that a contractual provision waives a consumer's right or benefit provided by the KCPA, K.S.A. 50-625(a) prevents the operation of that contractual provision. Stechschulte v. Jennings , 297 Kan. 2, 28, 298 P.3d 1083 (2013).

The question presented in this appeal is whether the venue provision of K.S.A. 50-638(b), when considered together with the nonwaiver provision of K.S.A. 50-625, renders the forum-selection clause in the contract unenforceable. This is a question of first impression for Kansas appellate courts.

By adopting the KCPA, the Legislature clearly intended to increase and advance the interests of consumers. Ray v. Ponca/Universal Holdings, Inc. , 22 Kan. App. 2d 47, 50, 913 P.2d 209 (1995). Towards this end, the Legislature has stated that the KCPA "shall be construed liberally" to promote the policy of protecting consumers from suppliers who commit deceptive and unconscionable practices. K.S.A. 50-623(b).

One means by which ...