SCOVT affirms, under Rule 12(b)(6), order dismissing complaint on motion made under 12(b)(3) based on violation of forum selection clause where plaintiff did not raise any issue as to the reasonableness of the forum selection clause or convenience of the agreed forum; holding that defendant’s alleged anticipatory repudiation of its contractual obligations did not discharge plaintiff’s obligation to comply with forum-selection clause..

Margolis v. Daily Direct LLC, 2023 VT 20


EATON, J. In this contract dispute, plaintiff Gary Margolis appeals the trial court’s grant of defendant Daily Direct LLC’s motion to dismiss plaintiff’s complaint. We affirm.

The complaint alleged breach of contract, violation of the Vermont Consumer Protection Act, and unjust enrichment. Defendant moved to dismiss pursuant to Vermont Rule of Civil Procedure 12(b)(3), arguing that the forum-selection clauses in the contracts were valid and required the complaint should be dismissed for plaintiff to refile in an appropriate court in Milwaukee. The trial court granted defendant’s motion.

On appeal, plaintiff argues that dismissal was improper because defendant’s anticipatory repudiation of its contractual obligations discharged plaintiff of performing any obligation to comply with the forum-selection clauses. Defendant argues that a forum-selection clause survives anticipatory repudiation of a contract unless the repudiation is directed at the forum-selection clause itself.

Venue and forum selection are separate legal questions. The proper mechanism to challenge the legal effect of a forum-selection clause is through a Rule 12(b)(6) motion to dismiss for failure to state a claim, not a challenge to venue under Rule 12(b)(3), and we will review under that standard. The complaint did not include copies of the contracts or mention the forum-selection clauses; however, we may properly consider the contracts themselves, even though they were outside plaintiff’s complaint, because “when the complaint relies upon a document . . . such a document merges into the pleadings and the court may properly consider it under a Rule 12(b)(6) motion to dismiss.” Kaplan v. Morgan Stanley & Co, 2009 VT 78, ¶ 10 n.4, 186 Vt. 605, 987 A.2d 258 (mem.).

Plaintiff’s argument is narrow and accordingly so is the scope of the issue presented to this Court. We are not presented with the issue of whether the forum-selection clause is unreasonable and should not be enforced. Nor are we presented with the doctrine of forum non conveniens as a basis for dismissal. This case is about the construction of a clause in a contract. Accordingly, we do not address the procedure or legal standards for forum non conveniens and unreasonableness challenges. We are exclusively presented with the narrow question of whether anticipatory repudiation of a contract discharges the nonbreaching party’s duty to comply with the contract’s forum-selection clause.

Based on the purpose of forum-selection clauses, our respect for freedom of contract, and the persuasive precedent available on this topic, we conclude that a forum-selection clause survives repudiation of a contract unless the repudiation is directed at the forum-selection clause itself, which is not the case here. For these reasons, we conclude that dismissal was appropriate for failure to state a claim under Vermont Rule of Civil Procedure 12(b)(6) and affirm on that basis.

Affirmed.

COHEN, J., concurring. I agree with the majority on the preservation issue, but I am troubled by the trial court’s one-line order dismissing the case without any review of the fundamental fairness of the forum-selection clause. Vermont law is clear: although they are prima facie enforceable, forum-selection clauses are not absolute. Enforcement of a forum selection clause is not automatic, and courts may disregard such clauses. Under this precedent, I view Vermont courts as needing to engage in some level of assessment of fundamental and procedural fairness when requiring Vermonters to litigate claims in a location at a significant expense and inconvenience to them. Although the majority is correct that the parties did not raise the question of the fairness of enforcement, it should be noted that courts in Vermont must apply appropriate equitable principles when mandated.

How cited