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NEWMAN/HAAS RACING v. UNELKO CORP.

February 1, 1993

NEWMAN/HAAS RACING, an Illinois general partnership, Plaintiff,
v.
UNELKO CORPORATION, an Illinois Corporation, HOWARD G. OHLHAUSEN and DAVID OHLHAUSEN, Defendants.


ALESIA


The opinion of the court was delivered by: JAMES H. ALESIA

ORDER

Plaintiff, Newman/Haas Racing ("Newman") filed this action in the Circuit Court for the Nineteenth Judicial Circuit of Lake County, Illinois against defendants Unelko Corporation ("Unelko"), Howard G. Ohlhausen, and David Ohlhausen for breach of contract. Defendants removed this action to the United States District Court for the Northern District of Illinois. Before the court is plaintiff's motion to remand this action to the Circuit Court for the Nineteenth Judicial Circuit of Lake County, Illinois. For the reasons stated below, plaintiff's motion is denied.

 I. FACTS

 This is a suit for breach of contract. The plaintiff, Newman/Haas Racing, commenced an action for breach of contract against the defendants, Unelko Corporation and its President, Howard Ohlhausen, and Vice President, David Ohlhausen. Complaint, PP 1-5. Plaintiff alleges that it entered into a sponsorship agreement with defendants whereby the defendants would pay the plaintiff to affix decals bearing the name of Unelko products to its cars and the uniforms of its drivers. Complaint, PP 16-23. Plaintiff filed suit for breach of contract alleging that defendants failed to pay the negotiated amount. Id.

 Plaintiff filed its action in the Circuit Court for the Nineteenth Judicial Circuit of Lake County, Illinois. The defendants moved pursuant to 28 U.S.C. § 1441(a) to remove the case to the United States District Court for the Northern District of Illinois on the ground that this court could have exercised original diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(2). *fn1" Defendants then filed in the district court their answer to plaintiff's complaint which denied that a contract was ever formed between the parties. Answer, PP 6, 8, 9, 17. Defendants also commenced an action for declaratory judgment in the Circuit Court for the County of Oakland, Michigan seeking a declaration that the sponsorship agreement is "null, void and of no effect." Plaintiff's Reply Memorandum in Support of Motion to Remand ("Plaintiff's Reply"), Exhibit A (citing complaint filed in the Circuit Court for the County of Oakland, Michigan).

 Plaintiff filed this motion to remand the case to the Circuit Court for the Nineteenth Judicial Circuit of Lake County, Illinois based on two theories. First, the alleged sponsorship agreement contained a forum selection clause that plaintiff argues amounted to a waiver of the defendants' right to remove. Second, plaintiff argues that defendants cannot oppose the plaintiff's motion to remand because by filing a subsequent action for declaratory judgment in the Circuit Court for the County of Oakland, Michigan, defendants violated the common law doctrine of "mend the hold."

 II. DISCUSSION

 A. Forum Selection Clause

 Plaintiff argues that the case should be remanded to the Circuit Court for the Nineteenth Judicial Circuit of Lake County, Illinois because the forum selection clause contained in the alleged sponsorship agreement amounts to waiver of defendants' right to remove. The defendants contend that they did not enter into the alleged contract with the plaintiffs. In the alternative, defendants argue that the forum selection provision amounts only to an agreement to litigate in Cook or Lake County Illinois, while reserving the defendants' right to remove any action to the federal court in those counties. The forum selection clause provides that "the parties hereto consent to venue and jurisdiction of the Federal and State courts located in Lake and/or Cook County, Illinois." Complaint, Appendix A, P 9.

 The Supreme Court has held that forum selection clauses are prima facie valid and should be enforced absent a showing that enforcement would be unjust or unreasonable. Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972). In some circumstances these clauses may act as a waiver of a defendant's right to remove an action to federal court. Colonial Bank & Trust Co. v. Cahill, 424 F. Supp. 1200, 1202 (N.D. Ill. 1976) (defendant may expressly agree in advance to submit to the jurisdiction of any court and thereby waive the right to remove). The Court holds, however, that the language in the forum selection clause here does not constitute waiver of defendants' right to remove.

 Plaintiff argues that the provision entitles whichever party commences an action under the contract to choose among any of the designated fora and to have that choice respected. Plaintiff's Reply, at 7. Plaintiff further contends that allowing removal would deprive the complainant of the benefit of that choice by giving the other party the ability to overrule it. Id. at 7-8. The court disagrees with this interpretation because the plain language of this clause makes clear that defendants did not waive their right to remove. *fn2"

 Where the contract provides that the parties consent to the jurisdiction of state or federal court within a particular geographic region, the agreement does not constitute waiver of a defendant's right to remove. For example, in Oberweis Dairy, Inc. v. Maplehurst Farms, Inc., 1989 U.S. Dist. LEXIS 253 (N.D. Ill. January 10, 1989), the court denied the plaintiff's motion to remand to state court on the basis of a forum selection clause similar to the one in the instant case. Id. at *4. That provision stated:

 
The parties agree that each party may institute any action against the other arising out of or relating to this Agreement in any state or federal court of general jurisdiction in the State of Illinois and each party irrevocably submits to the jurisdiction of such courts and waives any objection he may have to either the jurisdiction or venue or such court.

 Id. The court found that this clause meant that "any dispute between these parties will be brought in a courtroom located in Illinois and will be decided pursuant to Illinois law." Id. See also Proyecfin de Venezuela, S.A. v. Banco Industrial de Venezuela, S.A., 760 F.2d 390, 397 (2d Cir. 1985) (holding that "a forum selection clause that merely puts jurisdiction in either a federal or state court does not constitute . . . waiver of [a foreign] sovereign's right to remove under 1441(d)."). Thus, the ...


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