# Eleanor Snyder, of the Estate of Leroy Liljedahl v. Bruton Smith

> Court of Appeals for the Seventh Circuit · July 3, 1984 · 736 F.2d 409

URL: https://www.frixlaw.com/law-library/cases/9472267

## Case

- **Full name:** Eleanor SNYDER, Executrix of the Estate of Leroy Liljedahl, Plaintiff-Appellee, v. Bruton SMITH, Defendant-Appellant
- **Court:** Court of Appeals for the Seventh Circuit
- **Decided:** July 3, 1984
- **Citations:** 736 F.2d 409
- **Precedential status:** Published
- **Opinion:** Dissent by Bauer
- **Judges:** Bauer, Flaum, Swygert
- **Cited by:** 124 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Overruled on other grounds by Felzen v. Andreas, 134 F.3d 873 (1998).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9472267

## How later opinions describe it (automated extraction)

- holding that a real estate partnership involved “commerce” within the meaning of the Act where the real estate at issue was located in Texas and the partners lived in Illinois, maintained a bank account in Illinois, and borrowed money from an Illinois bank
- holding that where the arbitration agreement contains a forum selection clause, only the district court in that forum can issue a § 4 order compelling arbitration
- holding that where arbitration agreement contains a forum selection clause, only the district court in that forum can issue a § 4 order compelling arbitration
- describing dilemma and holding that absent “compelling or countervailing” reason, district court must order arbitration as provided in contract even if forum is outside of district

## Opinion text

BAUER, Circuit Judge,
dissenting in part.
Although I agree with most of the majority’s well-written opinion, I am convinced that the district court properly compelled arbitration in the Northern District of Illinois. Section 4 extends the power to compel arbitration to “any United States district court which, save for such agreement, would have jurisdiction under Title 28.” 9 U.S.C. § 4 (1982) (emphasis added). The phrase “save for such agreement” apparently means “in the absence of the arbitration agreement.” See Couleur International Ltd. v. Saint-Tropez West, 547 F.Supp. 176, 177 (S.D.N.Y.1982); Warren Brothers Co. v. Community Building Corp. of Atlanta, Inc., 386 F.Supp. 656, 665 (M.D.N.C.1974). Here, the diversity of citizenship between the parties and the amount in controversy would vest the district court with subject matter jurisdiction in the absence of the parties’ agreement to arbitrate. Because the district court also had personal jurisdiction over the defendant, Section 4 seems to give the court the power to compel arbitration here. The majority, however, finds a conflict between Section 4’s requirement that the district court compel arbitration only in its own district, and the Section’s mandate that the parties arbitrate according to “the terms of the agreement.” Because the agreement here specified that the arbitration must occur in Houston, Texas, the majority holds that the district court could compel arbitration neither in its own district nor in any other district.
The provisions of Section 4 are inconsistent only if the parties’ forum selection clause is a “term of the agreement.” Under the majority’s interpretation, the broad power conferred on the district courts in Section 4 is completely negated whenever an arbitration agreement includes such a forum selection clause. The frustrating results of .this interpretation are apparent in the instant case, where the majority concludes that the district court is powerless to compel arbitration, even though the court meets the Section 4 jurisdictional requirement. Courts generally give effect to forum selection clauses, but such provisions need not be honored in the face of “some compelling and countervailing reason.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12 , 92 S.Ct. 1907, 1914 , 32 *421 L.Ed.2d 513 (1972). The interest in honoring the choice of forum here is outweighed by the need to give full effect both to the jurisdiction conferred under Section 4 and to the policy favoring arbitration that underlies the Federal Arbitration Act. Although I appreciate the majority’s concern that this interpretation might lead to forum shopping, it is important to remember that a district court may act under Section 4 only if it would have jurisdiction in the absence of the arbitration agreement and venue would be proper. Accordingly, I would affirm the district court’s order in its entirety.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9472267. Public record. Not legal advice.