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Enforceable Forum
Selection Clauses
By:
Thomas R. Himmelspach, Esq.
 Contracts
sometimes provide that any disputes will be resolved in
the courts of a particular jurisdiction. Some courts
have held, however, that such provisions are enforceable
only when they name the specific state where suit is to
be brought. Forum selection clauses that simply provide
a framework for identifying the forum state, such as the
state of residence of a party or its assignee, have been
held invalid by these courts. The Ohio Supreme Court is
now considering whether to hear an appeal that would
decide whether a forum selection clause must specify the
name of the state in whose courts any dispute will be
resolved.
In a case decided
February 1, 2006, the Seventh Circuit Court of Appeals
(covering Illinois, Indiana, and Wisconsin) considered
the validity of a forum selection clause that did not
identify the forum state by name. It also addressed for
the first time whether a federal court can exercise
jurisdiction over a non-resident defendant who otherwise
lacked the requisite minimum contacts to be subject to
jurisdiction in that Circuit.
An Out-of-State Assignee
The dispute in IFC Credit Corp. v. Aliano Bros. 7th
Cir. 2006, Case No. 05-1720, 2006 U.S. App. LEXIS 2439,
arose out of a contract for the leasing of
telecommunications equipment. NorVergeance, Inc. leased
the equipment to Aliano Bros., a construction firm, for
a monthly rental fee of $20,000. Both NorVergeance and
Aliano Bros. were New Jersey corporations. The contract
provided that if Aliano Bros. defaulted on the payments,
NorVergeance, or any business to whom it assigned the
contract, could sue in a state or federal court in the
state of the principal place of business of NorVergeance
or its assignee.
NorVergeance
assigned the contract to IFC, an Illinois corporation,
and shortly thereafter Aliano Bros. defaulted. IFC sued
Aliano Bros. in federal district court in Illinois for
non-payment of the contract obligation, and Aliano Bros.
moved to dismiss the case for lack of jurisdiction,
arguing that it had no contact with Illinois. The
federal district court granted the motion, holding that
the forum selection clause was invalid. IFC appealed to
the Seventh Circuit.
The Circuit court
acknowledged the basis on which the federal district
court had reached its decision. The Circuit court noted
that IFC had sued many times in various Illinois state
courts as assignee of NorVergeance contracts under the
same forum selection clause. The Circuit court further
noted that in most of those cases the courts had found
the clause invalid on grounds that it was insufficiently
specific, i.e., that it failed to identify by
name the state where suit would be brought. It was on
that basis that the federal district court had dismissed
the case.
The Seventh
Circuit, however, reversed. It noted that counsel for
Aliano Bros. had agreed at oral argument that the clause
would have been sufficiently specific if it had said
suit could be brought in New York or Vermont, or in a
federal district court in the First Circuit, “or in any
state that George W. Bush carried in the 2004
presidential election.” The court observed that in each
of those circumstances the specific forum state would
not be known at the time of contracting.
Courts Protect the Freedom
of Assignment
The court wrote that “[p]arties to contracts are not
benefited by rules that make assignment burdensome,” and
noted that if the contract had to identify the forum
state by name, that requirement would impede the
assignment of contracts. The requirement would be
burdensome because the assignee would have to litigate
in a state that might be inconvenient for it.
In reversing the district court’s dismissal order, the
Circuit court also distinguished between contracts
involving an individual and those involving two
corporations. In IFC, the court noted that the
contract was between two corporations and that Aliano
Bros., a construction firm, was experienced in
interpreting contracts. The court noted other decisions
where forum selection clauses were not enforced when
invoked against an individual who contracted with a
corporation. Had this been such a case, the court would
likely have applied the specificity requirement more
rigorously.
Current Decisions in Ohio
Courts
The IFC decision is consistent with some Ohio
appellate court decisions that a forum selection clause,
to be valid, need not identify the specific forum. For
example, in Preferred Capital, Inc. v. Ferris Bros.,
Inc. 9th Dist. No. 22581, 2005-Ohio-6221
(November 23, 2005), the court (in another
telecommunications equipment lease case) upheld a clause
stating that any action to enforce the contract would be
brought where the rentor or its assignee had its
principal offices. The court noted other Ohio decisions
upholding forum selection clauses “in commercial
contracts in which the jurisdiction is not stated with
particularity.” The Ohio Supreme Court has yet to
address the issue, however.
The court in
Preferred Capital noted also that under Ohio law a
defendant who agrees to a valid forum selection clause
cannot argue insufficient contacts with the forum state
to support jurisdiction “because the parties have waived
the due process/minimum contacts requirement for
personal jurisdiction by way of the forum selection
clause….” A dissenting judge in Preferred Capital
noted that the Ohio Supreme Court had recognized a forum
selection clause as effecting such a waiver only in a
case where the forum state was specifically identified.
The decision in
Preferred Capital was appealed to the Ohio Supreme
Court in January of 2006 on a discretionary appeal. The
court has not yet decided whether to hear the case. The
IFC decision should be instructive to the Ohio
court if it accepts the appeal in Preferred Capital.
Thomas Himmelspach
is a
Partner in the Health & Medicine
Practice Group of Buckingham, Doolittle & Burroughs, LLP.
He can be reached at
thimmelspach@bdblaw.com or 330.491.5284.
Repeal of Property Tax Rollback
By:
Brent D. Rosenthal, Esq.
 If
you’re a real estate investor or own commercial property
for your business, and you noticed an increase in your
last real estate tax bill, the elimination of the 10
percent real estate property tax rollback may help
explain why. As part of the state’s extensive budget
bill signed into law by Governor Taft in June 2005, the
tax reform package repealed a long-standing 10 percent
real estate rollback on all commercial and industrial
classified properties.
Beginning in tax
year 2005, the 10 percent reduction of the property tax
bill (or “rollback”) will apply only to property not
intended primarily for use in a business activity.
Those uses of real
property that are still eligible for the rollback are
limited to:
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Farming, or leasing property for
farming;
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Occupying, holding, or leasing
property improved with a one-, two-, or three-family
dwelling; or
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Holding vacant land that the county
auditor determines will be used for farming or to
develop one-, two-, or three-family dwellings.
All other real
property activities are deemed to be a “business activity”
and are therefore ineligible for the rollback. Every year,
the county auditor will review each real property parcel
to determine if it qualifies for the rollback as of
January 1st of the current tax year.
If you would like more information about how the repeal of
the 10 percent property tax rollback may affect you,
contact any Buckingham real estate attorney.
Brent Rosenthal
is a
Shareholder in the Business Law
and Real Estate &
Construction
Practice Groups of Buckingham, Doolittle & Burroughs, LLP.
He can be reached at
brosenthal@bdblaw.com or
614.227.4266.
IRS Establishes System of Cyclical Remedial
Amendent Periods
B y:
By:
Lisa M. deFilippis, Esq.
If you are an
employer who sponsors a retirement plan for your
employees, whether it is a 401(k) Plan, a Profit-Sharing
Plan, or a Defined Benefit Plan, you know that the
retirement plan must satisfy numerous IRS requirements in
form and in operation in order to be qualified for tax
purposes. When Congress changes or adds new qualification
requirements, plans must be amended to maintain their
tax-qualified status. It is very difficult to make all
necessary amendments by the effective dates of the new
legislation. So it has become common practice for the IRS
to grant a specific period of time during which a
retirement plan can be amended retroactively, provided
that the plan is being operated in accordance with the new
qualification requirements. This period of time is known
as the “remedial amendment period.” The term also refers
to the period of time that a retirement plan sponsor has
to retroactively amend a newly adopted plan or to adopt
other amendments that affect the plan’s qualified status,
and remain in compliance. In addition, an individually
designed plan (and sometimes a pre-approved plan) is
generally submitted to the IRS for a determination that
the plan is tax qualified within the remedial amendment
period. Recently the IRS has changed its approach to
reviewing retirement plans for tax qualification and to
issuing determination letters.
Rolling Remedial Amendment
Periods
The IRS has established a system of rolling remedial
amendment periods so that retirement plans have a five- or
six-year remedial amendment period cycle. Each
individually designed plan has a five-year remedial
amendment cycle. The cycles are staggered, so different
plans have different five-year cycles. A plan’s five-year
remedial amendment cycle is based on the last digit of the
employer identification number (EIN) of the employer
sponsoring the plan. The first of the five-year staggered
cycles runs from February 1, 2006 to January 31, 2007.
Under the new system, an individually designed plan must
be operated in accordance with all tax-qualification
requirements, but is required to be amended, and to be
submitted to the IRS for a determination letter confirming
its qualified status, only once every five years.
Pre-approved plans (meaning prototype and volume submitter
plans) have six-year remedial amendment period cycles.
For defined contribution plans, such as 401(k) plans, the
end of the first six-year cycle and the deadline for
prototype or volume submitter plan sponsors to submit such
plans to the IRS was February 1, 2006. Once the IRS
approves a prototype or volume submitter plan, the
adopting employers will have specific period of time,
established by the IRS, to adopt the updated plan.
Employers adopting pre-approved plans will need to adopt a
new plan document only every six years.
The remedial amendment period cycles apply to amendments
required by EGTRRA, changes adopted by a particular plan,
and changes in tax-qualification requirements during a
plan’s remedial amendment period cycle.
Actions Necessary
A retirement plan sponsor should determine the remedial
amendment period cycle and last day of the cycle for the
plan. Plan sponsors should confirm that all amendments
necessary to maintain compliance with tax-qualification
requirements since December 31, 2001, have been made or
are retroactively adopted, and that the plan is, and
continues to be, operated in compliance with all
requirements during the plan’s remedial amendment cycle.
Employers who maintain an individually designed plan, and
in some cases employers who have adopted pre-approved
plans, should prepare a determination letter submission
prior to the end of the plan’s remedial amendment period
cycle. For more information or for assistance in
preparing a submission, please call me or any member of
the BDB Taxation & Employee Benefits Practice Group.
Lisa deFilippis
is a
Partner in the Taxation & Employee
Benefits Sub-Group, which is a part of the
Business Law Practice Group of Buckingham,
Doolittle & Burroughs, LLP. She
can be reached at
ldefilippis@bdblaw.com or
216.615.7345.
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Prior to joining the law firm, Mr.
Cosgrove was the Assistant Director of Law for the
City of Cleveland Law Department, where he worked in
the Department’s Code-Enforcement section. While
there, he handled all stages of trial and appellate
code-related matters in state and federal courts.
He also prosecuted misdemeanor building, housing, and
zoning code cases in the Cleveland Municipal Court’s
Housing Division. Mr. Cosgrove serves as an
Adjunct Professor of Law, teaching client
interviewing, counseling, and negotiation at Case
Western Reserve School of Law.
Litigation
and Real Estate & Construction Law Practice Groups,
Partner
Litigation
Practice Group, Partner
Mr. Giorgianni’s practice focuses
on business litigation. He also has litigation
experience in the areas of fiduciary law,
administrative law, products liability, and
construction. Mr. Giorgianni was a law clerk to
Judge Cynthia Lazarus of the Ohio Court of Appeals,
Tenth District. He has represented clients at
evidentiary and other hearings in administrative
licensing matters before the Ohio State Medical Board,
the State Chiropractic Board, the Ohio Real Estate
Commission, and the State Board Examiners of
Architects. Mr. Giorgianni has also won
reversals from the Franklin County Environmental Court
and the Columbus Board of Commission Appeals of
land-use decisions by a city area commission.
Real Estate & Construction
Law
Practice Group, Associate
Ms. Gregg's practice is focused on
all aspects of commercial real estate transactions,
including commercial financing; acquisitions and
dispositions of commercial real estate; commercial
leasing of industrial, office and retail space; and
general matters of commercial real estate law.
Litigation
Practice Group,
Partner
Mr. Lombardi practices law with an
emphasis on Real Estate, Family Law, Personal Injury
Litigation, and Probate. He served as a referee
in Family Court in Stark County first from 1972-1977,
then from 1982-1984. Mr. Lombardi has completed
16 hours general mediation and 40 hours Divorce
mediation training through Community Mediation
Services of Central Ohio.
Litigation
Practice Group, Associate
Prior to joining the law firm, Mr.
O’Leary served as Municipal Court Judge in Cleveland,
Ohio. He was also formerly Chief Assistant
Director of Law for the Cleveland Law Department where
he supervised attorneys and staff assigned to the
Code-Enforcement section of the Department. Mr.
O'Leary advised the Law Director on all issues
regarding Cleveland’s Building, housing, zoning,
health, fire, and sidewalk codes. He also
advised City officials including, but not exclusive to
the Mayor of Cleveland, City-Council members, and
directors of several health and safety departments.
Employment & Workers' Compensation
Practice Group, Partner
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Boca
Raton's Open House Celebration
 On
February 16, the Boca Raton office hosted an Open House in
celebration of our new offices at 5355 Town Center Road.
The Mayor of Boca Raton and the President of the Greater
Boca Raton Chamber of Commerce joined the festivities by
participating in a ribbon cutting ceremony to mark the
event. The evening not only served to showcase our
new space, but also highlighted our 10 year anniversary in
Boca Raton.
Michael D. Mopsick,
Managing Partner of the Boca office also announced plans
to open a new office in the West Palm Beach area by the
middle of the year. All in all, approximately 300 clients
and representatives of the local community joined in the
celebration and the event was a wonderful success.
Kudos
 Donald A. Antrim
(Buckingham
ColumbusSM)
wrote an
article for the upcoming issue of the Ohio Optometric
Association's Perspectives. The
article is entitled, "Access Fees and Concierge Services."
 Robert W. Briggs
(Buckingham CantonSM)
was named to the Inside Business Power 100 List.
The list identifies the 100 most powerful individuals in Northeast
Ohio. Mr. Briggs was recognized for his role as Executive
Director of the GAR Foundation.
Thomas R. Himmelspach (Buckingham
CantonSM)
wrote an article for Martindale-Hubbell Counsel to
Counsel. Mr. Himmelspach's article is
entitled, "State Caps on Medical Malpractice Awards and
Not Unconstitutional."
 David J. Lewis
(Buckingham AkronSM)
was appointed by Hudson City
Council to the Hudson Board of Zoning and Building Appeals
to fill a vacancy created when Peter T. Cahoon's (Buckingham
AkronSM) term ended.
Pete served admirably and with distinction for 12 years!
 Andrew W. Owen
(Buckingham ColumbusSM)
wrote an article for the
March issue of Columbus CEO magazine.
His article was entitled, "Who's Afraid of the Big Bad
Wolf? Confessions of a Litigator Turned Juror."
 Victoria I. Rodriguez
(Buckingham AkronSM)
was admitted to practice
before the United State District Court, Northern District
of Ohio.
 Thomas J. Sigmund
(Buckingham ColumbusSM)
wrote an article for
Columbus CEO magazine. The article was
entitled, "Where There is a Will, There is a Way (and a
Wrong Way)." Its about common mistakes made with
estate planning.
 John P. Slagter (Buckingham
ClevelandSM)
wrote an article for the February issue of Properties Magazine, Inc.
The article is entitled, "Ohio Supreme Court Clarifies the
Procedure for a Constitutional Challenge of a Zoning
Regulation."
Speaking Out
Save the Date for these Upcoming Presentations:
March
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Thomas J. Sigmund
(Buckingham
ColumbusSM)
will be presenting to Key Bank on Estate Planning with
IRAs. Also, in April, Mr. Sigmund will be
speaking at Capital Law School's Tax Symposium on
Partnerships.
March 3 -
Brett L. Miller
(Buckingham
ColumbusSM)
will make a presentation at the Education Day program
sponsored by the Central Ohio Self Insurers Association.
His topic will be "Industrial Commission and Legislative
Update."
March 8-12 -
Philip A. Duvalsaint
(Buckingham
Boca RatonSM)
will chair a roundtable discussion on Film making at the
Delray Beach Film Festival in Delray Beach, Florida.
March 23 -
Jeffrey A. Halm
(Buckingham
CantonSM)
will be speaking to the Stark County Medical Society.
His topic will be "Risk Management and Asset Protection
Planning."
April 8 -
Nicholas T. George
(Buckingham
AkronSM)
will be the key note speaker at an annual event for
Entrepreneurship. He will discuss the
entrepreneurial spirit and how he has gone from a single
practitioner to the president of the largest law firm in
Summit County. The event will be held at the
University of Akron.
June 8 -
Scott J. Topolski
(Buckingham
Boca RatonSM)
will be presenting at a NBI Seminar in West Palm Beach,
Florida. His topic will be "Successfully
Collecting Debts and Judgments."
Out and About – Recent Presentations:
Business Practice Group
Steven A. Dimengo
(Buckingham
AkronSM)
presented at a Lorman Seminar in Akron on "Advanced
Sales and Use Tax in Ohio." Mr. Dimengo also spoke
at an Ohio Tax Conference. His topic was "Can
Anything Be a Business Fixture? (Exploring the
Limits of Funtime)." Finally, he presented to the
Akron Tax Club on "Tax-Free (Like-Kind) Exchanges of
Real Estate."
Employment & Workers' Compensation Practice Group
Gerald B.
Chattman
(Buckingham
ClevelandSM)
spoke at the Center for Nonprofit Excellence Seminar.
His topic was entitled, "Forming a New Nonprofit
Organization." Also, Mr. Chattman was interviewed by
Fox 1-Team Reporter, Lorrie Taylor. The topic of his
interview was "Real Estate Transactions Regarding Senior
Citizens Who May Be of Impaired Capacity and What
Constitutes a Legal and Binding Contract."
Barbara A. Knapic
(Buckingham
CantonSM)
made a presentation to Gallagher Bassette's claims
adjusters for Eaton Corporation. The topic of the
presentation was "The Care and Feeding of Your Workers'
Compensation Attorney."
Health & Medicine Practice Group
G. Brenda Coey
(Buckingham
CantonSM)
presented to the Ohio Health Care Association. Her
topic was "The Federal Pressure Ulcer Guidelines for
Nursing Homes."
Dirk E. Riemenschneider
(Buckingham
ClevelandSM)
lectured at Baldwin Wallace College to the athletic
training students on "Malpractice Issues and Sports
Related Injuries."
Litigation Practice Group
Christopher M. Ernst
(Buckingham
ClevelandSM)
spoke at the Wintergreen Expo and Conference sponsored
by the Ohio Landscape Association. His topic was
"Business Operations Update: Hot Topics." He
discussed the latest legal and tax issues.
Dale A. Nowak
(Buckingham ClevelandSM)
spoke at Cleveland State University Cleveland-Marshall
College of Law. His topic was "Discovery
Strategies."
Real Estate & Construction Practice Group
On February 23, BDB sponsored the Annual Real Estate &
Construction Law Seminar. Speakers and topics were
as follows:
Nicholas T. George
(Buckingham
AkronSM)
was the Master of Ceremonies.
John P. Slagter
(Buckingham ClevelandSM)
presented "Recent Developments in Land Use and Eminent
Domain."
Steven A. Dimengo
(Buckingham
AkronSM)
spoke on "Section 1031 - Deferring Tax on Real Estate
Sales."
David W. Woodburn
(Buckingham
AkronSM)
discussed "Wealth Planning: Protecting Your Real
Estate Assets."
Robert A. Hager
and
Henry I. Reder (Buckingham ClevelandSM)
presented "AIA Construction Contracts: Pros, Cons
and the Path Forward."
Trusts & Estates Practice Group
Thomas J. Sigmund
(Buckingham
ColumbusSM)
made a presentation to a group of planned giving
representatives for a Lutheran Foundation discussing the
pitfalls and opportunities of charitable giving.
Michael A. Renne
(Buckingham
ColumbusSM)
spoke on "Estate Planning" at the National Rural Electric
Cooperative Association (NRECA) Retirement Planning
Seminar in Columbus.
INFORMATION ON
SEMINARS OR SPEAKERS If
you are interested in obtaining information on upcoming
seminars or would be interested in having speakers from
Buckingham, Doolittle & Burroughs, LLP make a presentation
to your organization, please contact: Lorna
Henderson, Client Relations
Administrator, at
lhenderson@bdblaw.com
or
800.686.2825 ext. 86473. |
