General Electric Company v. City of Tacoma

BOLDT, District Judge.

The questions presented on the motion to dismiss are whether the contract provision providing that litigation shall be in the particularly designated state court is illegal; and, if not, whether the provision is applicable to the issues presented in this case.

1

On the record made to this time, namely, without responsive pleading to the complaint and only upon motion to dismiss with affidavits submitted in connection therewith, in my opinion it cannot be determined whether or not the contract provision in question is or will be applicable to issues of fact or law that may be controverted.

This appears to be a case of first impression in the Ninth Circuit as to legality of a contract provision of the kind in question. Counsel have not cited, and no decision in this circuit has been found, of either district or circuit court, which is directly or indirectly applicable. A majority of the decisions, primarily earlier or older cases, hold that such a contract provision is illegal and, therefore, unenforceable. A respectable minority of the decisions, all relatively recent, hold that such a provision is not illegal and is enforceable if just and reasonable. The principal, or at least one of the principal, decisions to that effect is in the Second Circuit case, Wm. H. Muller v. Swedish and American Lines, 224 F.2d 806 , cert. den. 350 U.S. 903 , 76 S.Ct. 182 , 100 L.Ed. 793 .

2

In my opinion the better rule is that adopted and followed by the Second Circuit and by the other courts holding to the same effect. The provision in the particular contract in this case is reasonable under all of the circumstances so far disclosed. For these reasons, in so far

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as legality of the contract provision is concerned, the motion to dismiss is well taken.

As above stated, applicability of the contract provision in this particular case cannot be determined at this time. Therefore, when the pleadings have been completed and sufficient discovery has been had to show, either one way or the other, whether the contract provision is applicable to issues in the case, counsel may renew their contentions in that respect. If the contract provision is found applicable to issues presented in the case, the motion to dismiss will be granted; if not, the motion will be denied.

1

. The contract provides: “2.32

LITIGATION.

In the event that any litigation should arise concerning the construction or interpretation of any of the terms of this contract, the venue of such action or litigation shall be in the Superior Court of the State of Washington in and for the County of Pierce.”

2

. Contract provisions held illegal: Greenberg v. Panama Transp., D.C., 185 F. Supp. 320 ; The Ciano, D.C., 58 F.Supp. 261 ; Clark v. Lowden, D.C., 48 F.Supp. 261 ; United Fuel Gas Co. v. Columbian Fuel, 4 Cir., 165 F.2d 746 ; Mutual Reserve Fund Life Ass’n v. Cleveland Woolen Mills, 6 Cir., 82 F. 508 ; Home Ins. Co. of New York v. Morse, 20 Wall. 445 , 22 L.Ed. 365 .

Contract provisions held legal if reasonable: Chemical Carriers v. L. Smit & Co.’s Internationale Sleepdienst, D.C., 154 F.Supp. 886 ; Mittenthal v. Mascagni, 183 Mass. 19 , 66 N.E. 425 ; Sociedade Brasileira etc. v. Punta Del Eate, D.C., 135 F.Supp. 394 ; Cerro De Pasco Copper Corp. v. Knutsen, 2 Cir., 187 F. 2d 990 ; Murillo, Ltda. v. Bio Bio, D.C., 127 F.Supp. 13 ; 2 Cir., 227 F.2d 519 .