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Thursday, June 28, 2007

Ind. Decisions - 7th Circuit issues one today

In Carolyn Kochert v. Adagen Medical (ND Ind., Allen Sharp, Judge), a 10-page opinion, Judge Sykes writes:

This appeal presents the question whether a claim for fraudulent inducement of a contract is subject to the contract’s forum-selection clause, and if so, whether the district court correctly dismissed this suit for improper venue. Carolyn Kochert, a medical doctor based in Lafayette, Indiana, filed a single-count complaint in federal court in the Northern District of Indiana seeking damages against Adagen Medical International, Inc., and North American Medical Corporation (collectively “Adagen”), each with principal places of business in Georgia. Kochert alleged Adagen made fraudulent written and verbal representations to induce her to enter into a contract to purchase a piece of medical equipment. The district court dismissed Kochert’s complaint for improper venue, citing the contract’s “Governing Law/Venue/Forum” clause, which provides (among other things) that Kochert consents to “jurisdiction, venue and forum in the State Court of Fulton County, Georgia.” The court took the view that any misrepresentation forming the basis of Kochert’s fraudulent inducement claim “necessarily” became “part of” the contract, making the claim subject to the forum-selection clause.

We affirm, but on different reasoning. A misrepresentation made in the inducement of a contract is not “necessarily” incorporated into the contract. A fraudulent inducement claim generally requires an election of remedies: either affirm the contract, retain the benefits, and seek damages, or rescind the contract, return the benefits, and seek restitution (reimbursement for expenses incurred as a result of the fraud). Here, Kochert elected to affirm the contract and sue for damages; that election, however, does not necessarily make the alleged misrepresentation “part of” the contract, as the district court apparently thought was required for the forum-selection clause to apply.

But dismissal for improper venue was correct in any event. The forum-selection clause contains no language limiting its application to certain categories of claims or remedies. The parties agreed to the State Court of Fulton County, Georgia, as the place of “jurisdiction, venue and forum” for disputes about their respective rights and obligations without regard to the nature of the claim; that choice is valid, enforceable, and broad enough to apply to Kochert’s fraudulent inducement claim.

Posted by Marcia Oddi on June 28, 2007 01:19 PM
Posted to Ind. (7th Cir.) Decisions