Laws, Life, and Legal Matters - Court Cases and Legal Information at Leagle.com - All Federal and State Appeals Court Cases in One Search

Popularizing the Law^™

Search millions of pages of law with a single query

Home

Top News

Search

I. FACTUAL HISTORY

Central to the dispute underlying this appeal is the Harman Mine, an underground coal mine located in Buchanan County, Virginia, that produced very high quality metallurgical coal. Prior to 1993, Harman Mine was owned by Inspiration Coal Corporation (hereinafter referred to as "Inspiration") through three subsidiaries: Harman Mining Corporation (hereinafter referred to as "Harman Mining"), Sovereign Coal Sales, Inc. (hereinafter referred to as "Sovereign"), and Southern Kentucky Energy Company (hereinafter referred to as "Southern"). For many years, all of the coal from the Harman Mine had been sold to Wellmore Coal Corporation (hereinafter referred to as "Wellmore"), a subsidiary of United Coal Corporation. In April 1992, Sovereign and Southern entered a coal supply agreement (hereinafter referred to as "the 1992 CSA") with Wellmore. Under the 1992 CSA, Wellmore was to purchase from Sovereign and Southern approximately 750,000 tons of coal per year for a period of ten years.

In 1993, Hugh M. Caperton (hereinafter referred to as "Mr. Caperton"), a plaintiff below and appellee herein, formed Harman Development Corporation^{[ 2 ]} (hereinafter referred to as "Harman Development").^{[ 3 ]} In that same year, Harman Development purchased the three previously mentioned subsidiaries of Inspiration: Harman Mining,^{[ 4 ]} Sovereign^{[ 5 ]} and Southern, and thereby became the owner of the Harman Mine.^{[ 6 ]} Harman Development, Harman Mining, and Sovereign are all plaintiffs to this action below, and are appellees herein (hereinafter collectively referred to as "the Harman Companies"). In 1997, in order to fund improvements to the Harman Mine, the Harman Companies sold all the Harman Mine reserves to Penn Virginia Corporation, and then leased back those reserves that could be mined in a cost-effective manner.

From the time the Harman Companies became owners of the Harman Mine until 1997, coal from the Harman Mine was purchased by Wellmore in accordance with the 1992 CSA. Prior to the expiration of the 1992 CSA, in March of 1997, a new CSA with a higher price per ton of coal (hereinafter referred to as "the 1997 CSA") was negotiated between Sovereign, Wellmore, and Harman Mining.^{[ 7 ]} The 1997 CSA was to be in effect for a period of five years, commencing retroactively on January 1, 1997. It included, among other things, a force majeure clause,^{[ 8 ]} and a forum-selection clause requiring that "[a]ll actions brought in connection with this Agreement shall be filed in and decided by the Circuit Court of Buchanan County, Virginia."^{[ 9 ]}

During the course of the 1992 CSA, and at the time the 1997 CSA was executed, one of Wellmore's primary customers was LTV Steel (hereinafter referred to as "LTV"). Wellmore sold and shipped nearly two-thirds of the coal it purchased from the Harman Companies to LTV's coke plant located in Pittsburgh, Pennsylvania.^{[ 10 ]} On July 19, 1997, LTV announced that it intended to close its Pittsburgh coke plant due to a change in emissions regulations promulgated by the Environmental Protection Agency.

A.T. Massey Coal Company (hereinafter referred to as "Massey"), a defendant below and appellant herein, had tried unsuccessfully for several years to sell its West Virginia mined coal directly to LTV.^{[ 11 ]} Due to its lack of success in selling to LTV on its own, Massey determined to acquire LTV's supplier, Wellmore, and its parent corporation, United Coal Corporation (hereinafter referred to as "United").^{[ 12 ]} Massey purchased Wellmore and United on July 31, 1997. Since there was no long-term agreement between LTV and Wellmore, Massey hoped to substitute its own coal for the Harman Mine coal that Wellmore had been supplying to LTV. An internal Massey memorandum admitted during trial revealed that Massey understood there were risks to its plan, most notably the possibility that the relationship between LTV and Wellmore might not continue under Massey ownership of Wellmore. The circuit court found that, in spite of this risk, and despite the knowledge that LTV was "extremely reluctant to change a long-established, successful coal blend" that included coal from the Harman Mine, Massey nevertheless "provided LTV with firm price quotes for coal mainly from Massey Mines, not Harman coal, and insisted that LTV make Massey its sole-source provider via a long-term coal contract."^{[ 13 ]} As a consequence of Massey's actions, LTV ceased buying coal from Wellmore. Thereafter, on August 5, 1997, Wellmore, at the direction of Massey, gave notice to the Harman Companies by letter stating that if LTV did in fact close its Pittsburgh plant, then Wellmore anticipated a pro rata reduction in tonnage under the force majeure clause of the 1997 CSA.

Subsequent to Wellmore's August 5th letter, Massey entered into negotiations with the Harman Companies for the purchase of the Harman Mine. During the course of these negotiations, confidential information regarding the Harman Mine's operations, including its desire to eventually mine adjoining Pittston reserves,^{[ 14 ]} as well as confidential information pertaining to the finances of the Harman Companies and of Mr. Caperton, personally, was shared with Massey. The Harman Companies also expressed to Massey their disagreement that the LTV closure of its Pittsburgh coke plant constituted a force majeure event.

Thereafter, on December 1, 1997, Wellmore, at Massey's direction, declared force majeure based on LTV's closure of its Pittsburgh coke plant, and advised the Harman Companies that it would purchase only 205,707 tons of the 573,000 minimum tons of coal required under the 1997 CSA. According to the express findings of the circuit court on this point,

[o]nly after Massey's marketing efforts caused the loss of LTV's business did Massey direct Wellmore to declare "force majeure" against Harman, a declaration which Massey knew would put Harman out of business. Massey acknowledged Wellmore was readily able to purchase and sell the Harman coal, but instead chose to have Wellmore declare "force majeure" based upon a cost benefit analysis Massey performed which indicated that it would increase its profits by doing so. Furthermore, before Massey directed the declaration of "force majeure", Massey concealed the fact that the LTV business was lost and Massey delayed Wellmore's termination of Harman's contract until late in the year, knowing it would be virtually impossible for Harman to find alternate buyers for its coal at that point in time. Once Wellmore suddenly stopped purchasing Harman's output, Harman had no ability to stay in business. In the meantime, Massey sold Wellmore.

Massey continued in negotiations with the Harman Companies and Mr. Caperton for Massey's purchase of the Harman Mine, and the parties agreed to close the transaction on January 31, 1998. However, Massey delayed and, as the circuit court found, "ultimately collapsed the transaction in such a manner so as to increase [the Harman Companies'] financial distress."^{[ 15 ]}

In addition, Massey utilized the confidential information it had obtained from the Harman Companies to take further actions, such as purchasing a narrow band of the Pittston coal reserves surrounding the Harman Mine in order to make the Harman Mine unattractive to others and thereby decrease its value. During the negotiations for the sale of the Harman Mine to Massey, Massey had also learned that Mr. Caperton had personally guaranteed a number of the Harman Companies' obligations.^{[ 16 ]} Subsequently, the Harman Companies filed for bankruptcy.

Thereafter, in May 1998, Harman Mining and Sovereign sued Wellmore in the Circuit Court of Buchanan County, Virginia, alleging causes of action for breach of contract and for breach of the covenant of good faith and fair dealing arising from Wellmore's declaration of force majeure. However, Harman Mining and Sovereign voluntarily withdrew their tort claim prior to trial. Following trial on the contract claim, a jury found in favor of Harman Mining and Sovereign and awarded $6 million in damages.^{[ 17 ]}

II. PROCEDURAL HISTORY

Shortly after the Virginia action was filed, on October 29, 1998, Harman Development, Harman Mining, Sovereign and Mr. Caperton, individually, filed the instant action in the Circuit Court of Boone County, West Virginia, against A.T. Massey Coal Company, Inc., Elk Run Coal Company, Inc., Independence Coal Company, Inc., Mar Fork Coal Company, Inc., Performance Coal Company, and Massey Coal Sales Company, Inc. (hereinafter collectively referred to as "the Massey Defendants").^{[ 18 ]}

The first amended complaint in this action was filed on December 10, 1998, and asserted claims of tortious interference with existing contractual relations, tortious interference with prospective contractual relations, fraudulent misrepresentation, civil conspiracy, negligent misrepresentation, and punitive damages. Though numerous pre-trial motions were filed in the underlying action, one in particular is relevant to our resolution of this matter: in December 1998, the Massey Defendants filed a motion to dismiss. In their memorandum in support of the motion, the Massey Defendants argued, inter alia, that the forum-selection clause of the 1997 CSA required this action to be filed in Buchanan County, Virginia. The circuit court denied the Massey Defendants' motion to dismiss.

Ultimately, only three of the theories of liability asserted in this action were presented to the jury for a verdict:^{[ 19 ]} tortious interference, fraudulent misrepresentation and fraudulent concealment. On August 1, 2002, the jury found in favor of all plaintiffs on all three grounds and returned a verdict, including punitive damages, of $50,038,406.00. On August 30, 2002, the Massey Defendants filed a motion seeking judgment as a matter of law, a new trial, or, in the alternative, remittitur. Following a lengthy delay, by order entered March 17, 2005, the circuit court denied the post-trial motions. An appeal to this Court followed.^{[ 20 ]}

On November 21, 2007, this Court handed down its written opinion reversing the judgment of the circuit court and remanding for entry of an order dismissing with prejudice the case against the Massey Defendants.^{[ 21 ]} Subsequently, two of the justices who had participated in deciding the appeal voluntarily disqualified themselves, two circuit court judges were designated to sit on this Court by temporary assignment for the purpose of deciding the case on rehearing, and the November 21, 2007, opinion of the Court was vacated. The case was submitted on rehearing on March 12, 2008, and the Court's opinion, again reversing the judgment of the circuit court and remanding for entry of an order dismissing with prejudice the case against the Massey Defendants, was filed on April 3, 2008.^{[ 22 ]}

Thereafter, Mr. Caperton and the Harman Companies filed a petition for writ of certiorari in the United States Supreme Court asserting that acting Chief Justice Benjamin's refusal to grant their motions seeking his disqualification amounted to a violation of the Due Process Clause of the Fourteenth Amendment to the United States Constitution.^{[ 23 ]}

The Supreme Court granted the petition on November 14, 2008. Thereafter, by a five-four decision,^{[ 24 ]} the Supreme Court reversed and remanded the case concluding that Justice Benjamin's participation in the decision of this case created an "unconstitutional `potential for bias.'" Caperton v. A.T. Massey Coal Co., Inc., ___ US ___, ___, 129 S. Ct. 2252, 2262, 173 L. Ed. 2d 1208 (2009) (see opinion for factual details regarding the issue of Justice Benjamin's disqualification).

Following the reversal of this case by the United States Supreme Court, the Harman Companies and Mr. Caperton filed in this Court motions seeking, in part, "affirmance of judgment or, in the alternative, for reconsideration and denial of the petition for appeal."^{[ 25 ]} This Court denied the motions and, on September 9, 2009, oral argument was heard anew in this matter.^{[ 26 ]}

III. STANDARD OF REVIEW

The dispositive issue in this case is whether the circuit court erred in denying the Massey Defendants' motion to dismiss on the issue of the forum-selection clause. "Courts generally consider a motion to dismiss, based upon a forum selection clause, as a motion to dismiss for improper venue." Franklin D. Cleckley, Robin J. Davis, & Louis J. Palmer, Jr., Litigation Handbook on West Virginia Rules of Civil Procedure, � 12(b)(3)[5], at 376 (2d ed. 2006). "This Court's review of a trial court's decision on a motion to dismiss for improper venue is for abuse of discretion." Syl. pt. 1, United Bank, Inc. v. Blosser, 218 W. Va. 378, 624 S.E.2d 815 (2005).

In deciding this issue, we must first determine the applicability and enforceability of the forum-selection clause at issue. In this regard, we now hold that "[o]ur review of the applicability and enforceability of [a] forum[-]selection clause is de novo." Hugel v. Corporation of Lloyd's, 999 F.2d 206, 207 (7th Cir. 1993) (citing Northwestern Nat'l Ins. Co. v. Donovan, 916 F.2d 372, 375 (7th Cir.1990);Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 956 (10th Cir. 1992)). Cf. Syllabus point 1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d 415 (1995) ("Where the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review.").

With due consideration for these standards, we proceed to our analysis of this case.

IV. DISCUSSION

A. Motion for Affirmance or Reconsideration of Petition for Appeal

Prior to reaching the merits of this appeal, we wish to address an issue that developed as a result of the disqualification of Justice Benjamin from this case. In motions filled in this Court following the reversal of the case by the United States Supreme Court, the Harman Companies and Mr. Caperton sought, in relevant part, "affirmance of judgment or, in the alternative, for reconsideration and denial of the petition for appeal." Although this Court denied the motions by order entered September 3, 2009, we nevertheless wish to discuss our grounds for so doing, and to establish a clear procedure to be applied in the event that similar circumstances arise in the future.

In their motions, Mr. Caperton and the Harman Companies argued, in part, that the jury verdict should be affirmed, because the disqualification ruling by the United States Supreme Court left the case with a non-majority split vote of two-two. In denying the motion, this Court explained in its Order of September 3, 2009, that

by [asking this Court to] retroactively impose[] a tie vote, the Corporate Appellees [Mr. Caperton and the Harman Companies], in a manner contrary to well-accepted principles of appellate procedure, seek . . . to constrain this Court's discretion to proceed on remand. Plainly stated, this Court has not yet reached a final decision in this matter and therefore cannot be equally divided.

In addition, we note that the motion was properly denied based upon the reasoning used by the United States Supreme Court in Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 106 S. Ct. 1580, 89 L. Ed.2d 823 (1986).

In Aetna Life, the United States Supreme Court addressed the issue of whether an Alabama Supreme Court Justice should have recused himself from the case. The United States Supreme Court concluded that the justice was disqualified and should have recused himself. As a result of the disqualification of the justice, the vote in the case became four-four. The United States Supreme Court determined that the opinion by the Alabama Supreme Court could not survive because of the four-four decision. Consequently, the Alabama Supreme Court decision was vacated and the case was remanded for further proceedings. The opinion in Aetna Life cited the following procedure that was used by Alabama when a justice was disqualified:

If Justice Embry had disqualified himself, the decision of the trial court would not have been affirmed by a vote of an equally divided court. Rather, Ala. Code � 12-2-14 (1975), which authorizes the appointment of special justices in the event disqualifications result in an even-numbered court which is evenly divided on a matter, would presumably have come into play.

Aetna Life, 475 U.S. at 828 n.5, 106 S. Ct. at 1589 n.5. After the case was remanded, the matter was reheard by the Alabama Supreme Court and that Court once again affirmed the verdict for the plaintiff. See Aetna Life Ins. Co. v. Lavoie, 505 So.2d 1050 (Ala. 1987).

Thus, Aetna Life stands for the proposition that, when the United States Supreme Court disqualifies a state court justice, and such disqualification leaves an equally divided state court, the case must be remanded for appointment of a new judge as provided by state law.

West Virginia does not have a statute that expressly addresses the issue of the disqualification of a justice. However, the disqualification issue is addressed in our state constitution and rules of appellate procedure. Under Art. VIII, � 3 of the West Virginia Constitution, it is stated that "[w]hen any justice is temporarily disqualified or unable to serve, the chief justice may assign a judge of a circuit court or of an intermediate appellate court to serve from time to time in his stead." It is further provided in Rule 29(g) of the Rules of Appellate Procedure that:

When any justice shall disqualify himself or herself pursuant to the provisions of this rule, the chief justice or acting chief justice may, in his or her discretion, assign a senior justice, senior judge, or circuit judge to service for the disqualified justice. The chief justice shall promptly notify the Clerk of the Supreme Court of his or her decision regarding the necessity of the appointment of a substitute justice and the Clerk of the Supreme Court shall promptly notify the other justices and the parties of such decision.

Thus, in accordance with our state constitution, our rules of appellate procedure, and the United States Supreme Court's decision in Aetna Life Ins. Co. v. Lavoie, we now expressly hold that, where the disqualification of a Justice of this Court, either by decision of the United States Supreme Court or by his or her personal decision made after an opinion has been issued by this Court, renders the decision of this Court a tie vote, then the Chief Justice or Acting Chief Justice of this Court may, in his or her discretion, assign a senior justice, senior judge, or circuit judge to serve in the place of the disqualified justice pursuant to Art. VIII, � 3 of the West Virginia Constitution and Rule 29(g) of the West Virginia Rules of Appellate Procedure.

The motions by Mr. Caperton and the Harman Companies additionally asked, in the alternative, that this Court reconsider its prior decision to grant Massey's petition for appeal. This motion was also denied in this Court's order of September 3, 2009, wherein the Court observed that "[b]ecause it lacks specific directions about how to proceed, the opinion of the Supreme Court of the United States constitutes a general�rather than a limited�remand." (Citing Syl. Pt. 2, in part, State ex rel Frazier & Oxley v. Cummings, 214 W. Va. 802, 591 S.E.2d 728 (2003) ("Limited remands explicitly outline the issues to be addressed by the [lower] court and create a narrow framework within which to [lower] court must operate. General remands, in contract, give [lower] courts authority to address all matters so long as remaining consistent with the remand."). This Court went on to explain that, "[e]ven if this Court were obliged to reconsider whether the petition for appeal should be granted, it is plain from the record that this case presents several points that are proper for the consideration of this Court, and that the appeal was properly allowed." (Citing W. Va. Const. Art. VIII, sec. 4).

B. Forum-Selection Clause

Although numerous issues have been raised on appeal in this case, we find that the instant matter may be resolved on the issue of the forum-selection clause contained in the 1997 CSA between Sovereign Coal Sales, Inc., Wellmore Coal Corporation, and Harman Mining Corporation.

The 1997 CSA between Sovereign, Wellmore, and Harman Mining provided that the "[a]greement, in all respects, shall be governed, construed and enforced in accordance with the substantive laws of the Commonwealth of Virginia. All actions brought in connection with this Agreement shall be filed in and decided by the Circuit Court of Buchanan County, Virginia. . . ." In the proceeding below, the Massey Defendants filed a motion to dismiss alleging, in relevant part, that the forum-selection clause in the 1997 CSA required that any action related to that agreement be brought in the Circuit Court of Buchanan County, Virginia. Accordingly, the Massey Defendants argued that the action was improperly before the Circuit Court of Boone County, West Virginia, and that the instant action should therefore be dismissed.^{[ 27 ]} The circuit court denied the motion to dismiss.

This case presents the first opportunity for this Court to address substantive issues involving forum-selection clauses. By way of definition, it has been recognized that "[a] `forum selection' provision in a contract designates a particular state or court as the jurisdiction in which the parties will litigate disputes arising out of the contract and their contractual relationship." 17A Am. Jur. 2d Contracts � 259, at 255 (2004) (footnote omitted). While forum-selection clauses historically were disfavored, such is no longer the case, so long as the clause is fair and reasonable:

The right of an injured party to legal redress is jealously guarded by the courts. Formerly, no agreement confining the right of a party to sue in a particular court or tribunal or in the courts or tribunals of a certain jurisdiction, or to determine the venue of a suit in such a way as to deprive the defendant of his statutory privileges as to place of trial was enforced, unless perhaps where the agreement was made after the cause of action had arisen and was part of a fair compromise. A minority of courts still follow this older rule.

During the past two decades, the rules governing the validity of various "forum selection" clauses have been relaxed considerably, the courts following a pattern similar to that which has already been discussed in connection with arbitration clauses. Thus, while it remains true today that a clause or provision unreasonably or improperly attempting to deprive a court of its jurisdiction will not be enforced, the modern trend is to respect the enforceability of contracts containing clauses limiting judicial jurisdiction, if there is nothing unfair or unreasonable about them. This trend is directly traceable to the landmark case of M/S Bremen v Zapata Off-Shore Co., [407 U.S. 1, 92 S. Ct. 1907, 32 L. Ed. 2d 513 (1972)], in which the United States Supreme Court upheld the validity of a freely negotiated forum selection clause in a commercial contract between an American firm and a German concern, which specified that any dispute must be determined by the English courts. . . . 7 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts � 15:15, at 290-301 (4th ed. 1997) (footnotes omitted). See also 17A Am. Jur. 2d Contracts � 259, at 255-56 ("While there is contrary authority, generally modern courts will enforce forum-selection clauses entered into by parties to a contract provided that the clauses are not unfair, unreasonable, or unjust under [the] circumstances." (footnotes omitted)).

Although this Court has not had occasion to address substantive issues involving forum-selection clauses, we have previously indicated our general approval of forum-selection clauses by noting that they are not contrary to public policy:

Unquestionably, forum selection clauses are not contrary to public policy in and of themselves for they are sanctioned in commercial sales agreements under W. Va. Code � 46-1-105(2). Although an early case in our jurisprudence held void a clause in a stock certificate requiring that stockholders bring suit in New York, Savage v. People's Building, Loan and Savings Association, 45 W. Va. 275, 31 S.E. 991 (1898), later cases have sanctioned, at least implicitly, forum selection clauses. Axelrod v. Premier Photo Service, Inc., 154 W. Va. 137, 173 S.E.2d 383 (1970). Board of Education v. W. Harley Miller, Inc., 159 W. Va. 120, 221 S.E.2d 882 (1975). . . .

As the Federal court observed, West Virginia appears not to subscribe to the rule that choice of forum clauses are void per se. "Rather the rule of most jurisdictions and the rule that this Court believes that West Virginia should and would adopt is that such clauses will be enforced only when found to be reasonable and just". Leasewell, Ltd. v. Jake Shelton Ford Inc., 423 F. Supp. 1011, 1015 (S.D.W. Va. 1976). See also, Kolendo v. Jarell, Inc., 489 F. Supp. 983 (S.D.W. Va. 1980).

General Elec. Co. v. Keyser, 166 W. Va. 456, 461-62 n.2, 275 S.E.2d 289, 292-93 n.2 (1981). See also Franklin D. Cleckley, Robin J. Davis, & Louis J. Palmer, Jr., Litigation Handbook on West Virginia Rules of Civil Procedure � 12(b)(3)[5], at 376-77 (2d ed. 2006) (hereinafter referred to as "Litigation Handbook") ("The Supreme Court has indicated in passing that forum selection clauses are not contrary to public policy." (citing General Electric Co. v. Keyser)).

Having found no impediment to the enforcement of forum-selection clauses in general, we now must endeavor to specifically determine whether the forum-selection clause of the 1997 CSA should have been enforced in the instant case.

In Phillips v. Audio Active Limited, 494 F.3d 378 (2d Cir. 2007), the United States Court of Appeals for the Second Circuit articulated a four-part test for determining whether a claim should be dismissed based upon a forum-selection clause. We find this test supported by reason and logic, and by the manner in which such cases have been resolved in other courts; therefore, we now hold that

[d]etermining whether to dismiss a claim based on a forum[-]selection clause involves a four-part analysis. The first inquiry is whether the clause was reasonably communicated to the party resisting enforcement. . . . The second step requires [classification of] the clause as mandatory or permissive, i.e., . . . whether the parties are required to bring any dispute to the designated forum or [are] simply permitted to do so. [The third query] asks whether the claims and parties involved in the suit are subject to the forum selection clause. . . .

If the [forum-selection] clause was communicated to the resisting party, has mandatory force and covers the claims and parties involved in the dispute, it is presumptively enforceable. . . . The fourth, and final, step is to ascertain whether the resisting party has rebutted the presumption of enforceability by making a sufficiently strong showing that "enforcement would be unreasonable [and] unjust, or that the clause was invalid for such reasons as fraud or overreaching."

Phillips, 494 F.3d at 383-84 (internal citations omitted) (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S. Ct. 1907, 1916, 32 L. Ed. 2d 513 (1972)). See also Dexter Axle Co. v. Baan USA, Inc., 833 N.E.2d 43, 49 (Ind. Ct. App. 2005) ("Having found that the forum selection clause in the Consulting Agreement is valid, binding, and enforceable, we must next consider whether it applies to any or all of Dexter's claims against Baan."); Deep Water Slender Wells, Ltd. v. Shell Int'l Exploration & Prod., Inc., 234 S.W.3d 679, 687 (Tex. App. 2007) ("In deciding whether to enforce a mandatory forum-selection clause, courts must determine whether the claims in the case at hand fall within the scope of the forum-selection clause and whether the court should enforce the clause. In addition to resolving issues of scope and enforceability, courts also may have to decide issues as to whether nonsignatories to the contract can enforce the forum-selection clause contained therein."). We now follow this analysis to ascertain whether the instant case should have been dismissed pursuant to the forum selection clause.

1. Reasonably Communicated.

The first question we must answer is whether the forum-selection clause was reasonably communicated to Mr. Caperton and the Harman Companies. "Although a strong presumption of enforceability attaches to forum selection clauses, see M/S Bremen, 407 U.S. at 15, 92 S. Ct. 1907, '[t]he legal effect of a forum-selection clause depends in the first instance upon whether its existence was reasonably communicated to the plaintiff . . . .'" Electroplated Metal Solutions, Inc. v. American Servs., Inc., 500 F. Supp. 2d 974, 976 (N.D. Ill. 2007) (internal citation omitted) (quoting Effron v. Sun Line Cruises, Inc., 67 F.3d 7, 9 (2d Cir. 1995)). See also 17A C.J.S. Contracts � 237, at 211 (1999) ("A forum selection clause is unenforceable as to a plaintiff who did not have sufficient notice of the forum selection clause prior to entering the contract.").

This prong of the analysis is easily resolved as Mr. Caperton and the Harman Companies have not argued that the forum-selection clause was not reasonably communicated to them. Furthermore, Sovereign and Harman Mining were parties to the agreement, and Mr. Caperton signed the contract in his capacity as president of Sovereign. Therefore, these parties cannot claim ignorance of the plainly worded forum-selection clause, which "clearly convey[ed] to any reader that any action regarding the [CSA] must be brought in a specific court, and the location of that court [was] readily ascertainable . . . ." Klotz v. Xerox Corp., 519 F. Supp. 2d 430, 433 (2007). Moreover, though Harman Development, the parent company of Sovereign and Harman Mining, was not a party to the 1997 CSA, Mr. Caperton is the sole owner of Harman Development. Since Mr. Caperton had knowledge of the clause, Harman Development is deemed to have knowledge of the clause. See Clark v. Milam, 192 W. Va. 398, 402, 452 S.E.2d 714, 718 (1994) ("Generally, a corporation ' knows,' or `discovers,' what its officers and directors know."). Thus, we find sufficient evidence in the record of this case to establish that the forum-selection clause was reasonably communicated to those who now resist its application.

2. Mandatory or Permissive.

The second step in our analysis is to determine whether the forum-selection clause is mandatory or permissive. It has been widely recognized, and we now expressly hold that "[t]here are two types of forum[-]selection clauses: mandatory and permissive. A mandatory forum[-]selection clause contains clear language indicating that jurisdiction is appropriate only in a designated forum. A permissive forum[-]selection clause authorizes litigation in a designated forum, but does not prohibit litigation elsewhere." Litigation Handbook � 12(b)(3)[5], at 376 (footnote omitted) (citing K.&V. Scientific Co., Inc. v. Bayerische Motoren Werke Aktiengesellschaft ("BMW"), 314 F.3d 494 (10th Cir. 2002)). See also Weisser v. PNC Bank, N.A., 967 So. 2d 327, 330 (Fla. Dist. Ct. App. 2007) ("'Permissive [forum selection] clauses constitute nothing more than a consent to jurisdiction and venue in the named forum and do not exclude jurisdiction or venue in any other forum.' . . . In contrast, mandatory forum selection clauses provide `for a mandatory and exclusive place for future litigation.'" (citations omitted)); Great N. Ins. Co. v. Constab Polymer-Chemie GmbH & Co., No. 5:01-CV-0882 (NAM) (GJD), 2007 WL 2891981, at *8 (N.D.N.Y. 2007) ("A mandatory forum selection clause grants exclusive jurisdiction to a selected forum and should control absent a strong showing that it should be set aside. . . . In contrast, ' a permissive forum selection clause indicates the contracting parties' consent to resolve their dispute in a given forum, but does not require the dispute to be resolved in that forum. . . .'" (internal citations omitted)).

Resolution of the question of whether a forum-selection clause is mandatory or permissive requires scrutiny of the particular language used.

In determining whether a forum selection clause is mandatory or permissive, the language of the clause must be examined. For example, in Quinones, the Florida Supreme Court found that the forum selection clause was permissive, not mandatory, because it provided that the creditor "may" institute legal proceedings in specified courts, not that it "shall" do so.[Quinones v. Swiss Bank Corp. (Overseas), S.A., 509 So. 2d 273, 275 (Fla. 1987)] (emphasis added) . . . . "Conversely forum selection clauses which state or clearly indicate that any litigation must or shall be initiated in a specified forum are mandatory." Shoppes Ltd.[P'ship v. Conn, 829 So. 2d 356, 358 (Fla. Dist. Ct. App. 2002)] (emphasis added) (citing Mgmt. Computer Controls, Inc. v. Charles Perry Constr., Inc., 743 So. 2d 627 (Fla. 1st DCA 1999)).

Weisser, 967 So. 2d at 330. The Weisser Court also cited Regal Kitchens, Inc. v. O'Connor & Taylor Condominium Construction, Inc., 894 So. 2d 288, 290 (Fla. Dist. Ct. App. 2005), wherein the court examined a forum-selection clause which stated that "[a]ny litigation concerning this contract shall be governed by the law of the State of Florida, with proper venue in Palm Beach County." (Emphasis added). The Regal Kitchens Court observed that the clause was mandatory as to the law to be applied, but permissive as to the forum, commenting that,

[i]n the instant case, although the venue clause unequivocally states that Florida law shall apply to any litigation of the subcontract, it lacks mandatory language or words of exclusivity to show that venue is proper only in Palm Beach County. See Shoppes Ltd. P'ship v. Conn., 829 So. 2d at 357-58. That is to say, this clause does not unequivocally mandate that a controversy or dispute be litigated in Palm Beach County, nor does it waive any other territorial jurisdiction. The language merely allows a party to file suit in Palm Beach County.

894 So. 2d at 291-92.

Thus, to be enforced as mandatory, a forum-selection clause must do more than simply mention or list a jurisdiction; in addition, it must either specify venue in mandatory language, or contain other language demonstrating the parties' intent to make jurisdiction exclusive.

A forum selection clause is mandatory if jurisdiction and venue are specified with mandatory or exclusive language. John Boutari & Sons, Wine & Spirits, S.A. v. Attiki Imp. & Distribs., Inc., 22 F.3d 51, 53 (2d Cir. 1994). In Boutari, the Second Circuit held that "[t]he general rule in cases containing forum selection clauses is that [w]hen only jurisdiction is specified the clause will generally not be enforced without some further language indicating the parties' intent to make jurisdiction exclusive." Boutari, 22 F.3d at 52 . . . . Great N. Ins. Co., 2007 WL 2891981, at *8 (additional citations omitted). See also K & V Scientific Co., Inc. v. Bayerische Motoren Werke Aktiengesellschaft ("BMW"), 314 F.3d 494, 499 (10th Cir. 2002) ("'[W]here venue is specified [in a forum-selection clause] with mandatory or obligatory language, the clause will be enforced; where only jurisdiction is specified [in a forum-selection clause], the clause will generally not be enforced unless there is some further language indicating the parties' intent to make venue exclusive.'" (quoting Paper Express, Ltd. v. Pfankuch Maschinen GmbH, 972 F.2d 753, 757 (7th Cir.1992)). See also Printing Servs. of Greensboro, Inc. v. American Capital Group, Inc., 637 S.E.2d 230, 232 (N.C. Ct. App. 2006) ("'[T]he general rule is when a jurisdiction is specified in a provision of contract, the provision generally will not be enforced as a mandatory selection clause without some further language that indicates the parties' intent to make jurisdiction exclusive. Indeed, mandatory forum selection clauses recognized by our appellate courts have contained words such as "exclusive" or "sole" or "only" which indicate that the contracting parties intended to make jurisdiction exclusive.'" (quoting Mark Group Int'l, Inc. v. Still, 566 S.E.2d 160, 161 (N.C. Ct. App. 2002))).

An example of a case illustrating a forum-selection clause that used mandatory language is Docksider, Ltd. v. Sea Technology, Ltd., 875 F.2d 762 (9th Cir. 1989). In that case, the plaintiff entered into a contract with the defendant to distribute equipment manufactured by the defendant. The contract contained a forum-selection clause that included the following pertinent language: "Licensee hereby agrees and consents to the jurisdiction of the courts of the State of Virginia. Venue of any action brought hereunder shall be deemed to be in Gloucester County, Virginia." Docksider, 875 F.2d at 763. A dispute arose over the contract that resulted in the plaintiff filing an action against the defendant in a federal district court in California. The district court dismissed the action, finding that the forum-selection clause required the case be filed in a Virginia court. The plaintiff appealed, arguing that the forum-selection clause was permissive, not mandatory. The Court of Appeals for the Ninth Circuit disagreed with the plaintiff, ruling as follows:

The critical language in [the clause] is the final sentence: "Venue of any action brought hereunder shall be deemed to be in Gloucester County, Virginia." The district judge concluded that this language represented the parties' intent to pursue any litigation that arose only in Virginia. [Plaintiff] contends that this interpretation is erroneous because the contractual language does not contain any express mandatory term such as "exclusively" that would indicate the parties' intent to vest Virginia with exclusive jurisdiction. [Plaintiff] has cited numerous cases as support for this position, relying principally on Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75 (9th Cir. 1987).

. . . .

Hunt Wesson is distinguishable because the forum selection clause underlying this action contains the additional sentence stating that "[v]enue of any action brought hereunder shall be deemed to be in . . . Virginia." This language requires enforcement of the clause because [plaintiff] not only consented to the jurisdiction of the state courts of Virginia, but further agreed by mandatory language that the venue for all actions arising out of the license agreement would be Gloucester County, Virginia. This mandatory language makes clear that venue, the place of suit, lies exclusively in the designated county. Thus, whether or not several states might otherwise have jurisdiction over actions stemming from the agreement, all actions must be filed and prosecuted in Virginia.

Docksider, 875 F.2d at 763-64.

In accordance with the foregoing authorities, we now hold that the determination of whether a forum-selection clause is mandatory or permissive requires an examination of the particular language contained therein. If jurisdiction is specified with mandatory terms such as "shall,"^{[ 28 ]} or exclusive terms such as "sole," "only," or "exclusive," the clause will be enforced as a mandatory forum-selection clause. However, if jurisdiction is not modified by mandatory or exclusive language, the clause will be deemed permissive only.

Turning to the instant case, the forum-selection clause utilized mandatory language that identified the jurisdiction wherein disputes would be tried: "[a]ll actions brought in connection with this Agreement shall be filed in and decided by the Circuit Court of Buchanan County, Virginia." (Emphasis added). Accordingly, we are presented with a mandatory forum-selection clause. See Ex parte Bad Toys Holdings, Inc., 958 So. 2d 852, 856 (Ala. 2006) ("The forum-selection clause in the purchase agreement provides that '[v]enue for any legal action which may be brought hereunder shall be deemed to lie in Sullivan County, Tennessee' (emphasis added). The . . . use of the word `shall' in the forum-selection clause makes the clause mandatory, not permissive."); Town of Homer v. United Healthcare of Louisiana, Inc., 948 So. 2d 1163, 1167 (La. Ct. App. 2007) ("We find the forum selection clause at issue to be clear and explicit. The clause expressly states that the proper venue for any legal action shall be East Baton Rouge Parish. There is no ambiguity in this mandatory provision."); Polk County Recreational Ass'n v. Susquehanna Patriot Commercial Leasing Co., Inc., 734 N.W.2d 750, 758 (Neb. 2007) ("The forum selection clause in the Thornridge lease provides that any action concerning the lease `shall be' brought in Pennsylvania. We read this forum selection clause to be a mandatory clause . . . ."); General Elec. Co. v. G. Siempelkamp GmbH & Co., 29 F.3d 1095, 1099 (6th Cir. 1994) ("Because the clause states that `all' disputes `shall' be at Siempelkamp's principal place of business, it selects German court jurisdiction exclusively and is mandatory."). Having determined that the forum-selection clause at issue in this case is a mandatory clause, we must now determine whether the claims and parties involved in the suit are governed by said clause.

3. Claims and Parties.

The third part of our analysis is to determine whether the claims and parties involved in the suit are governed by the forum-selection clause. We address these questions separately.

a. Are the claims asserted in the instant suit subject to the forum-selection clause?^{[ 29 ]}

Mr. Caperton and the Harman Companies have argued that the claims asserted in this action are not governed by the forum-selection clause because they are tort, as opposed to contract, claims. We disagree.

It has been recognized that,

[w]hen a party seeks to enforce a mandatory forum-selection clause, a court must determine whether the claims in question fall within the scope of that clause. . . . The court bases this determination on the language of the clause and the nature of the claims that are allegedly subject to the clause.

Deep Water Slender Wells, Ltd. v. Shell Int'l Exploration & Prod., Inc., 234 S.W.3d 679, 687-88 (Tex. App. 2007) (citing Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 221-22 (5th Cir. 1998)). See also Phillips v. Audio Active Ltd., 494 F.3d 378, 388 (2d Cir. 2007) ("[W]hen ascertaining the applicability of a contractual provision to particular claims, we examine the substance of those claims, shorn of their labels."). Accordingly, we expressly hold that, to determine whether certain claims fall within the scope of a mandatory forum-selection clause, the deciding court must base its determination on the language of the clause and the nature of the claims that are allegedly subject to the clause.

Turning to the case at hand, we must first examine the language of the mandatory forum-selection clause at issue. Because the 1997 CSA expressly states that it "shall be . . . construed . . . in accordance with the substantive laws of the Commonwealth of Virginia," we will scrutinize the language of the clause pursuant to Virginia law. Notably, under Virginia law, "[w]ritten contracts are construed as written, without adding terms that were not included by the parties. When the terms in a contract are plain and unambiguous, the contract is construed according to its plain meaning. The words that the parties used are normally given their usual, ordinary and popular meaning." Heron v. Transportation Cas. Ins. Co., 650 S.E.2d 699, 702 (Va. 2007).

The forum-selection clause of the 1997 CSA states in plain language that it applies to "[a]ll actions brought in connection with this Agreement." Due to the inclusion of the phrase "all actions," we perceive no intent by the parties to this agreement to limit in any way the type of actions to which it applies. Thus, for example, it would apply equally to contract claims, tort claims and statutory claims, so long as such claims are "brought in connection with" the 1997 CSA.

Considering next the "usual, ordinary and popular meaning" of the phrase "in connection with," we find the intended scope of the forum-selection clause to be quite broad. Heron, 650 S.E.2d at 702. The word "connection" in the context herein used, is generally understood to mean "[t]he condition of being related to something else by a bond of interdependence, causality, logical sequence, coherence, or the like; relation between things one of which is bound up with, or involved in another." II The Oxford English Dictionary 838-39 (1970 re-issue). See also Random House Webster's Unabridged Dictionary 431-32 (2d ed.1998) (defining "connection" in part as "association; relationship . . ."); Webster's Third New International Dictionary 481 (1993) (defining "connection" in relevant part as "the state of being connected or linked . . . relationship or association in thought (as of cause and effect, logical sequence, mutual dependence or involvement)"). Thus, so long as the claims asserted in this action bear a logical relationship to the 1997 CSA, they fall within its scope, regardless of whether they sound in contract, tort, or some other area of the law.

Other courts considering forum-selection clauses that contained broad language such as that used in the instant clause have similarly determined that the clauses were not intended to apply merely to breach of contract claims, but rather were intended to apply to other claims as well. For example, the United States Court of Appeals for the Second Circuit was asked to determine the scope of a forum-selection clause that stated: "'any legal proceedings that may arise out of [the agreement] are to be brought in England.'" Phillips, 494 F.3d at 382. In determining the meaning of "arise out of," the court contrasted language such as "in connection with" as being more expansive: "[w]e do not understand the words `arise out of' as encompassing all claims that have some possible relationship with the contract, including claims that may only `relate to,' be `associated with,' or `arise in connection with' the contract." Id., 494 F.3d at 389 (emphasis added) (citations omitted). In a different case, the Second Circuit also rejected an interpretation of a forum-selection clause that utilized the phrase "in connection with" as applying only to breach of contract claims:

There is ample precedent that the scope of clauses similar to those at issue here is not restricted to pure breaches of the contracts containing the clauses. The Managing and Members' Agent's Agreements speak, . . . with respect to the forum selection clauses, in terms of submission for "all purposes of and in connection with" the agreements (emphasis added). In Bense v. Interstate Battery System of America, 683 F.2d 718, 720 (2d Cir.1982), we held that a forum selection clause that applied to "causes of action arising directly or indirectly from [the agreement]" covered federal antitrust actions. Similarly, the Supreme Court in Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S. Ct. 2449, 41 L. Ed. 2d 270, reh'g denied, 419 U.S. 885, 95 S. Ct. 157, 42 L. Ed. 2d 129 (1974), held that controversies and claims "arising out of" a contract for the sale of a business covered securities violations related to that sale. Id., 417 U.S. at 519-20, 94 S. Ct. at 2457. We find no substantive difference in the present context between the phrases "relating to," "in connection with" or "arising from." We therefore reject the [Appellants'] contention that only allegations of contractual violations fall within the scope of the clauses.

Roby v. Corporation of Lloyd's, 996 F.2d 1353, 1361 (2d Cir. 1993).

Given the similarities between the phrases "in connection with" and "in relation to," we also note that the Third Circuit has reasoned,

In this case, we must interpret the provision in the forum selection clause that gives the English courts exclusive jurisdiction over "any dispute arising . . . in relation to" the 1990 Agreement. The ordinary meaning of the phrase "arising in relation to" is simple. To say that a dispute "arise[s] . . . in relation to" the 1990 Agreement is to say that the origin of the dispute is related to that agreement, i.e., that the origin of the dispute has some "logical or causal connection" to the 1990 Agreement. Webster's Third New International Dictionary, 1916 (1971).

John Wyeth & Bro. Ltd. v. CIGNA Int'l Corp., 119 F.3d 1070, 1074 (3d Cir. 1997). See also Klotz v. Xerox Corp., 519 F. Supp. 2d 430, 434 & n.4 (S.D.N.Y 2007) (concluding that "[p]laintiff raises no challenge to the scope of the forum selection clause, nor could she, since the expansive language of the provision�covering '[a]ny action in connection with the Plan by an Employee'�plainly encompasses her claims"; and further commenting that "[p]laintiff's state law tort and contract claims are also part of an `action in connection with the Plan' and are covered by the clause" (footnote omitted)); Doe v. Seacamp Assoc., Inc., 276 F. Supp. 2d 222, 227 (D. Mass. 2003) ("A review of the case law leads me to conclude that the tort claims, too, are covered by the forum selection clause. The forum selection clause was worded to indicate that it governed any claim related to or arising from a contract, the subject of which were the terms and conditions of John Doe's enrollment at Seacamp."); Dexter Axle Co. v. Baan USA, Inc., 833 N.E.2d 43, 49 (Ind. Ct. App. 2005) (finding tort and statutory claims were subject to forum-selection clause).

Turning to the instant case, we note that the forum-selection clause issue was addressed below in the context of a motion to dismiss; therefore, we consider the claims as they were asserted in the amended complaint.^{[ 30 ]} Notably, though, only three of the claims asserted in the amended complaint were ultimately presented to the jury for a verdict, indicating that there was insufficient evidence to support the remaining claims. Accordingly, in deciding whether the claims asserted below were "brought in connection with" the 1997 CSA, we will limit our consideration to only those three claims that ultimately went to the jury. Those three claims, all sounding in tort, were: (1) tortious interference; (2) fraudulent misrepresentation; and (3) fraudulent concealment. Based upon our review of these tort claims, we conclude that they were indeed "brought in connection with" the 1997 CSA.

All of the injuries alleged in connection with the three aforementioned tort claims flow directly from Wellmore's declaration of force majeure, an event that is inextricably connected to the 1997 CSA. While the amended complaint methodically sets out numerous details of purported pre-force majeure wrongful conduct, no injury resulted from any of that alleged conduct without the declaration of force majeure under the 1997 CSA.

For example, "Count I" of the amended complaint alleges tortious interference with existing contractual relations, and specifically identifies existing contracts with Wellmore (the 1997 CSA), Penn Virginia (the lease of the Harman Coal reserves), and the UMWA (a labor contract). Certainly a claim of interference with the 1997 CSA itself is related to that contract. With respect to the Penn Virginia and UMWA contracts, it was Wellmore's declaration of force majeure that placed the Harman Companies and Mr. Caperton in the position of being unable to fulfill their contractual obligations. Without the force majeure, those contractual relations would have been unaffected by the actions of the Massey Defendants. Thus, this claim is "brought in connection with" the 1997 CSA.

"Count II" of the amended complaint alleged tortious interference with prospective contractual relations, again involving Wellmore, Penn Virginia and the UMWA. As with Count I, the key to these claims remains Wellmore's wrongful declaration of force majeure. In the absence of the declaration of force majeure, the Harman Companies would not have been forced into bankruptcy and their prospective contractual relationships would not have been impeded by Massey. Therefore this claim is "brought in connection with" the 1997 CSA.

Finally, "Count III" alleges fraudulent misrepresentation, deceit and concealment either related to the declaration of force majeure itself or related to subsequent negotiations between the Harman Companies and the Massey Defendants "regarding their intentions to enter into a settlement agreement with Harman in connection with the 1997 CSA." Insofar as this claim either relates directly to the declaration of force majeure under the 1997 CSA, or to the parties' efforts to reach a settlement with respect to the 1997 CSA, it is "brought in connection with" the 1997 CSA.

Accordingly, because none of the relevant claims asserted in the amended complaint would have existed in the absence of Wellmore's declaration of force majeure under the 1997 CSA, these claims are all "brought in connection with" the 1997 CSA and, as a consequence, are within the scope of the forum-selection clause contained therein.^{[ 31 ]}

Go to the Conclusion of the Opinion

A service of YellowBrix, Inc.

I.

FACTUAL HISTORY

II.

PROCEDURAL HISTORY

III.

STANDARD OF REVIEW

IV.