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Aries Entertainment, LLC v. Puerto Rican Association for Hispanic Affairs, Inc.

Court of Appeals of Kentucky

September 27, 2019

ARIES ENTERTAINMENT, LLC APPELLANT
v.
THE PUERTO RICAN ASSOCIATION FOR HISPANIC AFFAIRS, INC.; ROBERT ROLAND; [1] AND JACQUELENE N. BURKE APPELLEES

          APPEAL FROM HARLAN CIRCUIT COURT HONORABLE KENT HENDRICKSON, JUDGE ACTION NO. 17-CI-00329.

          BRIEF FOR APPELLANT: Danny Lee Lunsford, Jr. Harlan, Kentucky

          BRIEF FOR APPELLEES: Keith A. Nagle Middlesboro, Kentucky

          BEFORE: CLAYTON, CHIEF JUDGE; MAZE AND NICKELL, JUDGES.

          OPINION

          NICKELL, JUDGE.

         This case addresses enforceability of a choice of forum clause in contracts for four celebrities to appear in Florida at a scholarship fundraiser organized by the Puerto Rican Association for Hispanic Affairs, Inc. ("PRAHA"). When PRAHA stopped payment on five checks, Aries Entertainment, LLC ("Aries"), the Kentucky corporation representing the celebrities, filed a civil complaint against PRAHA and two of its corporate officers in Harlan Circuit Court alleging breach of contract and tortious interference with contract. Aries subsequently moved for default judgment. The trial court granted defense motions to dismiss the complaint-without prejudice-due to lack of jurisdiction under Kentucky's long-arm statute, KRS[2] 454.210, and lack of minimum contacts with the state. The trial court found PRAHA signed the contracts, each containing a choice of forum clause, but concluded enforcing the provision would be "unreasonable" because the fundraiser was a "single transaction" not rising "to the level of 'transacting business in this Commonwealth'" and "Kentucky has only a minimal interest in this action[.]" Having reviewed the record, briefs and law, we reverse and remand for further proceedings consistent with this Opinion.

         FACTS

         Aries is a Kentucky corporation based in Harlan, Kentucky. Aries represents four celebrities PRAHA hired to appear June 17-19, 2016, at "Florida Fandomania, " a weekend fundraiser organized by PRAHA and held in Fort Pierce, Florida. PRAHA alleges appearance fees and associated responsibilities were discussed exclusively by telephone and the internet; Aries drafted the four contracts and emailed them to PRAHA; the choice of forum clause was included but not negotiated; the contracts were signed on PRAHA's behalf in Florida; witnesses to the event are Florida residents; celebrities[3] appearing at the event are from California, Texas and Canada; Aries and PRAHA have no ongoing relationship; and no business between Aries and PRAHA actually occurred in Kentucky. PRAHA argues Aries, which has a business office in Harlan, Kentucky, is the only entity in this saga connected to the Commonwealth.

         PRAHA is a 26 U.S.C.A. § 501(c)(3) non-profit corporation based in Port St. Lucie, Florida. Robert Roldan and Jacquelene N. Burke, [4] PRAHA's President and Vice President, respectively, are Florida residents. PRAHA claims its sole business is raising money for scholarships for minority students in Florida via an annual fundraiser held in St. Lucie County, Florida. PRAHA claims it does all its business in Florida and has never sent an employee or representative to Kentucky and never outside Florida.

         Jose Garofalo, PRAHA's Director, signed the four personal appearance contracts as PRAHA's authorized signatory. Neither Roldan nor Burke signed the contracts. It is alleged Burke wrote five checks required by the contracts totaling $19, 000 which Roldan signed. When Aries attempted to deposit the checks, it learned payment had been stopped on all five checks.

         Each contract contained the following provision:

Article 12. Governing Law, Enforcement, Jurisdiction and Venue: For all purposes related to this Contract, the Parties agree that the Contract and any and all disputes arising therefrom shall be governed by and interpreted according to the laws of the Commonwealth of Kentucky. In the event there are any disputes or controversies that arise between the Parties pursuant to the Contract, the Parties agree that sole and exclusive jurisdiction for litigation rests in the Circuit Court for Harlan County, Commonwealth of Kentucky. Such disputes or controversies are understood to include, but not be limited to, resolving all disputes and differences under the Contract, and to review the terms of the Contract, and determine the amount payable by one party to the other, if any. In the event of any action based upon or arising out of any alleged breach by any party of any covenant or agreement contained in the Contract, in addition to any other rights and remedies to which they might be entitled, the prevailing party shall be entitled to recover reasonable attorneys' fees and other costs of such action from the non-prevailing party.

(Italics added.)

         In response to the stop payment orders, and consistent with the contracts, Aries filed suit in Harlan Circuit Court naming PRAHA, Roldan and Burke as defendants. Aries sought judgment against all three defendants; trial by jury; compensatory, liquidated and punitive damages; attorneys' fees; and both pre-and post-judgment interest.

         Responding jointly, Roldan and Burke objected to personal jurisdiction, moved to quash summons and moved to be dismissed from the suit. They argued neither was a party to the contracts; their names appeared on no contract; neither was named as a guarantor; neither had been to Kentucky; and neither could be summoned under Kentucky's long-arm statute. While their motion to dismiss was pending, Roldan and Burke filed a special answer to the complaint.

         PRAHA responded separately, objecting to personal jurisdiction, moving to quash summons and seeking dismissal of the complaint due to improper and void service of summons, improper venue, and lack of personal jurisdiction under Kentucky's long-arm statute plus lack of jurisdiction due to PRAHA having insufficient minimum contacts with the Commonwealth. PRAHA acknowledged signing the contracts with Aries and admitted the contracts contained a choice of forum clause, but argued the clause was unfair and unreasonable because the personal appearance contracts were for a one-time event "to be performed entirely in Florida" over a single weekend. While its motion to dismiss was pending, PRAHA filed a special answer to the complaint.

         At a hearing on October 26, 2017-mere days after motions to dismiss were filed-counsel for PRAHA acknowledged the only way for Aries to bring PRAHA before the Harlan Circuit Court was the choice of forum clause in the contracts. Counsel then stated such a clause would not be enforced if it were found to be unfair or unreasonable. Counsel's argument in support of the clause being declared unfair or unreasonable was PRAHA's lack of even minimal contacts with Kentucky and the "terrible hardship" PRAHA would encounter subpoenaing all the necessary witnesses from Florida, California, Texas and Canada-if they were even subject to subpoena in Kentucky. The trial court questioned whether Kentucky's long-arm statute applied. PRAHA's counsel candidly admitted PRAHA was not subject to jurisdiction under the long-arm statute. ...


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