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CALIFORNIA CORPORATE & SECURITIES LAW

Court Finds Tort Claims To Be Covered By Forum Selection Agreement

Contractual forum selection provisions are often broadly written so as to encompass not just claims involving enforcement of the contract but claims arising out of or related to the contract.  But how far do these clauses reach?  In the case of Laboratory Specialists International, Inc. v. Shimadzu Scientific Instruments, Inc., 2017 Cal. App. LEXIS 1036, the answer is pretty far.

The plaintiff alleged a number of causes of action against the defendant, including intentional interference with prospective economic advantage and intentional interference with an economic relationship.  The trial court dismissed the complaint for improper forum and the plaintiff appealed.

On appeal, the plaintiff argued that the following provision in a sales agreement between the parties did not extend to the plaintiff’s tort claims:

“The Sales Agreement is made and entered into, and shall be governed, enforced and interpreted in accordance with the laws of the State of Maryland. The Buyer hereby expressly consents to the jurisdiction of the courts of the State of Maryland with regard to all issues and questions of law or fact pertaining to the Sales Agreement. In the event that either party commences litigation to enforce the Sales Agreement, said litigation shall be brought in the courts of Howard County, Maryland.”

The plaintiff’s argument hinged on the fact that its tort claims related to a relationship with a third party, not the defendant.  The Court of Appeal did not agree, finding that the gravamen of the plaintiff’s complaint rested on an alleged breach of a confidentiality provision in the sales agreement.  According to the plaintiff, it was this disclosure that induced the third party to breach.

The Court of Appeal’s analysis is interesting but not precedential because the court did not certify that portion of the opinion for publication.  See Cal Rules of Court, Rule 8.1115.

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