IFC Credit Corporation v. Rieker Shoe Corporation

FIFTH DIVISION
December 7, 2007

Nos. 1-05-1310, 05-1316, 05-1459, 05-1465, 05-1466, 05-1489, 05-1490, 05-1491, 05-1612,
05-2245, 05-2246, 05-2247, 05-2248, 05-2249, 05-2250, 05-2251, 05-2252 & 05-3751 (cons.)

IFC CREDIT CORPORATION, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. ) No. 04 L 13472
) (1-05-1310)
RIEKER SHOE CORPORATION, )
) Honorable
Defendant-Appellee. ) Paddy H. McNamara,
) Judge Presiding.
______________________________________________________________________________

IFC CREDIT CORPORATION, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. ) No. 04 M3 2654
) (1-05-1316)
THOMAS PRINTING, INC., and MICHAEL )
THOMPSON, ) Honorable
) Daniel M. Locallo,
Defendants-Appellees. ) Judge Presiding.
______________________________________________________________________________

IFC CREDIT CORPORATION, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. ) Nos. 04 M3 2649, 04 M3
) 2661, 04 M3 2670, 04 M3
MAIN STREET MORTGAGE OF CENTRAL FLORIDA, ) 2648, 04 M3 2647, 04 M3
INC., and LINDA SHOUP; POLY TECH INDUSTRIES, ) 2674
INC.; W & S HUBBLE, INC., and WILLIAM HUBBLE; ) (1-05-1459, 1465, 1466,
RESTAURANT GRAPHICS, INC., and THOMAS ) 1489, 1490, 1491)
STAVRAKIS; MODESTO STEEL COMPANY, INC.; )
and J & W CYCLES, INC., and NANCY JONES, ) Honorable
) James Ryan,
Defendants-Appellees. ) Judge Presiding.
______________________________________________________________________________
Nos. 1-05-1310 et al. (cons.)

IFC CREDIT CORPORATION, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. ) No. 04 M3 2652
) (1-05-1612)
WOLCOTT BURKEHOLDER, d/b/a Productive )
Solutions, ) Honorable
) James Ryan,
Defendant-Appellee. ) Judge Presiding.
______________________________________________________________________________

IFC CREDIT CORPORATION, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. ) Nos. 04 M3 2658, 04 M3
) 2646, 04 M3 2665, 04 M3
COLONIAL DISTRIBUTORS, INC.; SOUTH COAST ) 2655, 04 M3 2667, 04 M3
DENTAL LABORATORY, INC., and RICHARD HALE ) 2668, 04 M3 2673, 04 M3
II; A.M. LASALLE ELECTRIC, INC.; JEREMY ) 2660
NORMAND, d/b/a State Farm Insurance; ) (1-05-2245 to -2252)
BI-STATE INDUSTRIES, INC., and JAMES DUNCAN; )
D & R PACKAGING, INC., GREGORY RUSSELL and )
JOSEPH RUSSELL; CORONET WINDOW COMPANY; )
and REE’S CONTRACT SERVICE, INC. ) Honorable
) James Ryan,
Defendants-Appellees. ) Judge Presiding.
______________________________________________________________________________

IFC CREDIT CORPORATION, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. ) No. 04 M3 2657
) (1-05-3751)
TERRY STRENG, d/b/a Mountain Insurance )
Agency, ) Honorable
) James Ryan,
Defendant-Appellee. ) Judge Presiding.
______________________________________________________________________________

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Nos. 1-05-1310 et al. (cons.)

JUSTICE O’MARA FROSSARD delivered the opinion of the court:

Plaintiff IFC Credit Corporation (IFC) appeals from orders of the circuit court that

dismissed IFC’s breach of contract claims against the numerous defendants due to lack of

personal jurisdiction. IFC argues that the circuit court erred in refusing to enforce the forum

selection clause in the contracts signed by defendants and assigned to IFC. Defendants argue,

inter alia, that the forum selection provision was unreasonable and unenforceable because it

permits jurisdiction over defendants in any state in the United States in which IFC or any other

third-party assignee of the contract does business. Defendants also argue that the forum selection

provision was broad, boilerplate language buried in the contracts and failed to give adequate

notice to contracting parties of where they could expect to be required to appear in court.

Furthermore, defendants argue that the clause is void because it was procured by fraud. For the

reasons that follow, in this consolidated appeal, we conclude that the clause is enforceable under

Illinois law and therefore reverse the judgments of the circuit court and remand these cases for

further proceedings.

I. MOTION TO STRIKE

After the parties completed briefing the issues in this appeal, IFC filed a motion to strike,

complaining that certain defendants filed appendices with their appellate briefs that contained

materials (decisions rendered by various jurisdictions) that were not included in the record on

appeal. Specifically, the complained-of materials were: (1) Federal Trade Comm’n v.

NorVergence, Inc., No. 04-5414 (D.N.J. August 8, 2005); (2) People v. NorVergence, Inc., No.

2004-CH-655 (Cir. Ct. Sangamon Co., May 6, 2005); (3) IFC Credit Corp. v. Warner Robbins

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Nos. 1-05-1310 et al. (cons.)

Supply Co., No. 04 C 6093 (N.D. Ill. October 26, 2005); and (4) IFC Credit Corp. v. Magnetic

Technologies, Ltd., No. 04-M2-2637 (Cir. Ct. Cook Co., November 8, 2005). IFC’s motion to

strike these materials was taken with the case.

We have considered IFC’s contentions and defendants’ responses and hereby deny IFC’s

motion to strike the materials. Because the unpublished judgments are in the public records of

other courts and will aid this court in the efficient disposition of this consolidated appeal, we will

take judicial notice of the materials. Metropolitan Life Insurance Co. v. American National Bank

& Trust Co., 288 Ill. App. 3d 760, 764 (1997); Muller v. Zollar, 267 Ill. App. 3d 339, 341

(1994). We grant defendants’ request pursuant to Supreme Court Rule 366(a)(3) (155 Ill. 2d R.

366) to supplement the record on appeal with the materials attached in the appendices.

II. BACKGROUND

The forum selection clause in question has been the subject of nationwide litigation,

including litigation by various states’ attorneys general and the Federal Trade Commission (FTC).

Briefly summarized, some of the allegations contained in those complaints alleged that, from 2002

to 2004, NorVergence, Inc. (NorVergence), a corporation based in New Jersey, purchased

telecommunications services from common carriers and resold those services to small businesses.

NorVergence allegedly represented that customers could save 30% on telephone, cellular and

Internet services by leasing its Matrix equipment, which was merely a standard router or firewall

device that could provide only minimal savings, if any, and was worth a fraction of its cost under

the lease. NorVergence allegedly marketed its services as integrated, long-term packages and

promised customers they would receive uninterrupted services for the full five-year lease term, but

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it did not have a sustainable business plan. NorVergence allegedly put customers through a

rigorous application process and procured their signatures on a stack of forms. The fine print

provisions of the equipment rental agreement purported to render the contracts noncancelable and

to require consumers to pay the full amount for the five-year rental term regardless of any

equipment failure, misrepresentation, failure to provide services, or dissatisfaction with the

equipment for any reason. Despite representations that NorVergence would treat the numerous

forms as a unified agreement under which NorVergence would provide services, it immediately

sold or assigned the rental agreements to as many as 40 different finance companies.

On October 10, 2003, before defendants signed the contracts at issue here, NorVergence

and IFC, a corporation with its principal place of business in Morton Grove, Illinois, entered into

a master program agreement that governed the assignment of various equipment rental

agreements from NorVergence to IFC. According to the master program agreement, when IFC

agreed to purchase a rental agreement, NorVergence would assign to IFC all its rights, title and

interest in the agreement and equipment, including all monies due and to become due, but none of

NorVergence’s obligations under the agreement. IFC Credit Corp. v. Magnetic Technologies,

Ltd., 368 Ill. App. 3d 898, 899 (2006).

Defendants are 18 out-of-state businesses (and some of their owners or officers as

personal guarantors) that entered into virtually identical equipment rental agreements with

NorVergence for the use of the Matrix equipment. The signature or front page of the agreement

set forth the amount of the monthly payment to be made to NorVergence and the rental term of

60 months. A provision above the section for the renter’s signature stated:

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Nos. 1-05-1310 et al. (cons.)

“You agree to all the terms and conditions shown above and [sic] the

reverse side of this Rental, that those terms and conditions are a complete and

exclusive statement of our agreement and that they may be modified only by

written agreement between you and us. Terms or oral promises which are not

contained in this written Rental may not be legally enforced. You also agree that

the Equipment will not be used for personal, family or household purposes. You

acknowledge receipt of a copy of this Rental. Your obligations to make all Rental

Payments for the entire term are not subject to set off, with holding [sic] or

deduction for any reason whatsoever.

***

THIS RENTAL MAY NOT BE CANCELLED OR TERMINATED

EARLY.”

The back page of the agreement set forth various contract provisions in 21 unnumbered block

paragraphs of small typeface. Those block paragraphs were formatted into two columns. Among

those provisions were the following:

“ASSIGNMENT: YOU MAY NOT SELL, PLEDGE, TRANSFER, ASSIGN

OR SUBRENT THE EQUIPMENT OR THIS RENTAL. We may sell, assign

or transfer all or any part of this Rental and/or the Equipment without notifying

you. The new owner will have the same rights that we have, but not our

obligations. You agree you will not assert against the new owner any claims,

defenses or set-offs that you may have against us.

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Nos. 1-05-1310 et al. (cons.)

***

APPLICABLE LAW: *** This agreement shall be governed by, construed and

enforced in accordance with the laws of the State in which Rentor’s principal

offices are located or, if this Lease is assigned by Rentor, the State in which the

assignee’s principal offices are located, without regard to such State’s choice of

law considerations and all legal actions relating to this Lease shall be venued

exclusively in a state or federal court located within that State, such court to be

chosen at Rentor or Rentor’s assignee’s sole option. You hereby waive right to a

trial by jury in any lawsuit in any way relating to this rental.”

From the copies of the contract contained in the record on review, it is not clear whether more of

the above-cited language was also in boldfaced type. The back page also had a small box near the

bottom right corner that renters were asked to “initial if submitting via facsimile.”

At the time the leases were entered into, NorVergence’s principal office was located in

New Jersey. NorVergence assigned the contracts to IFC shortly after defendants signed the

contracts. IFC’s principal office was located in Morton Grove, Illinois.

In June of 2004, NorVergence involuntarily entered bankruptcy. While those bankruptcy

proceedings were pending, in November 2004, the FTC filed a complaint against NorVergence in

the United States District Court for the District of New Jersey. The FTC’s complaint accused

NorVergence of various unfair and deceptive acts in violation of section 45(a) of the Federal

Trade Commission Act (15 U.S.C. §45(a) (2000)). Neither NorVergence nor the trustee in

bankruptcy defended the lawsuit, and a default judgment was entered by the United States District

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Nos. 1-05-1310 et al. (cons.)

Court on June 29, 2005. In that judgment, the district court found, inter alia, that the

NorVergence rental agreements assigned after the bankruptcy court rejected those agreements

were void and unenforceable. The district court also found that the rental agreements in which

NorVergence still retained any residual rights were void and unenforceable. See Federal Trade

Comm’n, No. 04-5414 (D.N.J. August 8, 2005).

Also in November 2004, the Illinois Attorney General filed a complaint for injunctive and

other relief against NorVergence and its president Peter Salzano. That complaint accused

NorVergence and Salzano of various unfair and deceptive representations and acts in violation of

section 2 of the Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/2

(West 2004)). On May 6, 2005, a default judgment was entered in that case, declaring all of

NorVergence’s rental agreements void ab initio and unenforceable. People v. NorVergence, Inc.,

No. 2004-CH-655 (Cir. Ct. Sangamon Co., May 6, 2005). IFC was not a party to the action

brought by either the FTC or the Illinois Attorney General.

The matters before us began in August and December of 2004, when IFC sued each

defendant separately in the circuit court of Cook County for breach of contract. IFC alleged that

defendants failed and refused to pay the 60 monthly rental payments in the manner promised

under the equipment rental agreement. IFC sought recovery of all past-due payments and all

payments to become due pursuant to the 60-month rental term. The recovery IFC sought under

the agreements from the various defendants here ranged from $8,040 to $72,836.02.

Defendants individually filed motions to dismiss for lack of personal jurisdiction, pursuant to

either section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2004)) or

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section 2-301 of the Code (735 ILCS 5/2-301 (West 2004)). Defendants argued, inter alia, that

the forum selection clause was not enforceable because (1) it failed to sufficiently specify a forum

where litigation would take place; (2) it was unreasonable where defendants and their witnesses

resided outside Illinois, the contract was executed and services were to be provided outside

Illinois, defendants would suffer serious inconvenience if forced to litigate in Illinois, and the

boilerplate language forum selection clause was not equally bargained for; and (3) the rental

agreement was the product of fraud.

The circuit court, which consolidated some of the cases, granted defendants’ motions to

dismiss. The circuit court held the clause was invalid because it was not sufficiently clear and

specific where the contract did not actually select a particular forum in advance but, rather, the

proper forum was contingent upon the location of an unnamed assignee’s principal office. IFC

appealed, and this court has consolidated the 18 cases.

III. ANALYSIS

As noted above, the NorVergence leases have been the subject of litigation throughout the

United States, and there is a split of authority regarding the enforceability of the forum selection

clause. The forum selection clause was enforced in IFC Credit Corp. v. Aliano Brothers General

Contractors, Inc., 437 F.3d 606 (7th Cir. 2006) (overruling several district court cases that found

the clause invalid), Edge Telecom, Inc. v. Sterling Bank, 143 P.3d 1155 (Colo. App. 2006), OFC

Capital v. Colonial Distributors, Inc., 285 Ga. App. 815, 648 S.E.2d 140 (2007) (disagreeing with

an earlier Georgia appellate court’s ruling that the clause was invalid due to fraud), Liberty Bank,

F.S.B. v. Best Litho, Inc., 737 N.W.2d 312 (Iowa App. 2007); Susquehanna Patriot Commercial

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Nos. 1-05-1310 et al. (cons.)

Leasing Co. v. Holper Industries, Inc., 928 A.2d 278 (Pa. Super. 2007), and Studebaker-

Worthington Leasing, Corp. v. New Concepts Realty, Inc., 14 Misc. 3d 1233(A), 836 N.Y.S.2d

503 (N.Y. Dist. 2007). However, the forum selection clause was ruled invalid by Ohio’s Supreme

Court in Preferred Capital, Inc. v. Power Engineering Group, Inc., 112 Ohio St. 3d 429, 860

N.E.2d 741 (2007), by the Sixth Circuit in Preferred Capital, Inc. v. Sarasota Kennel Club, Inc.,

489 F.3d 303 (6th Cir. 2007) (not enforcing the clause although it was valid under federal law

because the Ohio Supreme Court's recent ruling controlled), and in one reviewing court in

Georgia in SRH, Inc. v. IFC Credit Corp., 275 Ga. App. 18, 619 S.E.2d 744 (2005). As

instructive as all of these cases are, they are not binding on this court. See Bowman v. American

River Transportation Co., 217 Ill. 2d 75, 91-92 (2005); Ramette v. AT&T Corp., 351 Ill. App. 3d

73, 83 (2004).

In reviewing orders on motions to dismiss, we apply a de novo standard of review.

Federal Insurance Co. v. St. Paul Fire & Marine Insurance Co., 271 Ill. App. 3d 1117 (1995).

We conclude that defendants have not met their burden to show that enforcement of the forum

selection clause would be unreasonable under the circumstances.

A forum selection clause in a contract is prima facie valid and should be enforced unless

the opposing party shows that enforcement would be unreasonable under the circumstances.

Calanca v. D&S Manufacturing Co., 157 Ill. App. 3d 85, 88 (1987), citing The Bremen v. Zapata

Off-Shore Co., 407 U.S. 1, 10, 32 L. Ed. 2d 513, 520, 92 S. Ct. 1907, 1913 (1972). This court

has stated that, “in order to hold a forum selection clause unenforceable, enforcement must

contravene the strong public policy of the forum or the chosen forum must be ‘seriously

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inconvenient for the trial of the action.’ ” (Emphasis in original.) Calanca, 157 Ill. App. 3d at 88,

quoting The Bremen, 407 U.S. at 16, 32 L. Ed. 2d at 524, 92 S. Ct. at 1916. If both parties

freely enter into an agreement contemplating such inconvenience should a dispute arise, then one

party cannot successfully argue inconvenience as the reason to void the forum clause. Maher &

Associates, Inc. v. Quality Cabinets, 267 Ill. App. 3d 69, 74-75 (1994). A forum selection

agreement reached through arm’s-length negotiation between experienced and sophisticated

business people should be honored by them and enforced by the courts, absent some compelling

and countervailing reason for not enforcing it. Calanca, 157 Ill. App. 3d at 88. However, a

forum selection clause contained in boilerplate language indicates unequal bargaining power, and

the significance of the provision is greatly reduced. Williams v. Illinois State Scholarship

Comm’n, 139 Ill. 2d 24, 72 (1990).

To determine the reasonableness of a forum selection clause, courts should consider: (1)

the law that governs the formation and construction of the contract; (2) the residency of the

parties; (3) the place of execution and/or performance of the contract; (4) the location of the

parties and their witnesses; (5) the inconvenience to the parties of any particular location; and (6)

whether the clause was equally bargained for. Dace International, Inc. v. Apple Computer, Inc.,

275 Ill. App. 3d 234, 238 (1995), citing Calanca, 157 Ill. App. 3d at 89.

We find that, after applying the factors set forth in Calanca, the forum selection clause is

valid. The first factor favors IFC, because the clause provides that the law governing the

agreement is the principal place of business of assignee IFC, or Illinois. The second factor is a

draw. Although defendants’ businesses are not located in Illinois, IFC’s principal offices are

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located in Morton Grove, Illinois.

The third factor favors defendants. The record indicates that the agreements were

executed, the equipment was to be installed, and services were to be provided in defendants’

respective home states, which have some interest in resolving these contract disputes.

Although defendants contend the fourth factor favors them, most do not identify any

potential witnesses whose testimony could not be procured or who would be seriously

inconvenienced if the cases proceed in Illinois. Defendant Poly Tech Industries argues that it was

fraudulently induced to enter the contract by Brook Batchelor, an agent or employee of the now-

defunct NorVergence, who allegedly made numerous promises about high quality services and

reduced costs and failed to disclose various contract provisions. Poly Tech Industries contends

that Batchelor lives in Georgia. Even assuming, arguendo, that Batchelor is a necessary witness,

Poly Tech Industries does not establish that his testimony could not be obtained through an

evidence deposition.

Regarding the fifth factor, although litigation in their respective home states would clearly

be more convenient for each defendant, mere inconvenience does not provide a basis for voiding a

forum selection clause. Dace International, Inc., 275 Ill. App. 3d at 239-40. Defendants do not

establish that litigating in Illinois would be so serious a hardship that they would have to abandon

their defense.

Finally, the sixth factor does not favor defendants. Defendants claim their bargaining

power was so inferior to NorVergence’s that it would be unreasonable to enforce the clause

against them. As defendants contend, it appears that the forum selection clause was boilerplate

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language in the preprinted agreement and the parties did not engage in any negotiation over those

terms. Nevertheless, the fact that they did not object to or attempt to negotiate the clause is no

reason to invalidate it. They were business entities as opposed to ordinary consumers, and this

court is not persuaded that they were in need of protection when contracting for business

services. Most of the defendants are corporations, a business form that suggests a certain level of

sophistication. Moreover, the clause was not hidden in the contract simply because it was in small

print on the back of the agreement. Although defendants may not have read the terms on the

back of the agreement, a provision on the front page above their signatures referenced the

conditions on the reverse side, and they initialed the back page.1 Defendants have not shown that

they were inexperienced in business matters, and the few facts we have about them suggest they

were on a level playing field in terms of negotiating with NorVergence.

We conclude that the forum selection clause is reasonable. Defendants, however, attack

the validity of the clause on the additional grounds of lack of specificity, violation of Illinois public

policy, and procurement by fraud.

A. Unspecified Forum

Defendants argue that the forum selection clause is unenforceable because it does not

sufficiently designate a particular forum but, rather, is a floating forum provision that is contingent

on the location of the principal offices of NorVergence or any potential unnamed assignee.

Defendants cite Whirlpool Corp. v. Certain Underwriters at Lloyd’s London, 278 Ill. App. 3d

1
Defendants D & R Packaging, Inc., Gregory Russell and Joseph Russell dispute this

fact, and we address their argument below.

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Nos. 1-05-1310 et al. (cons.)

175, 180 (1996), for the proposition that “[g]ood policy dictates that a true forum selection clause

should be clear and specific” because parties who contract to try their case in a specific forum

could be giving up important rights and the clause seeks to bind a state to try a case it otherwise

might not want.

Whirlpool, however, does not assist defendants’ arguments in the instant case. The

mandatory language of the forum selection clause at issue here is not similar to the permissive

language of the service of suit clause analyzed in Whirlpool, which merely stated that the

defendant, located in London, England, would submit to the jurisdiction of any court of

competent jurisdiction within the United States. When the Michigan-based plaintiff filed suit in

Illinois, the defendant argued that agreeing to submit to the jurisdiction of the Illinois courts did

not preclude defendant from arguing that the forum plaintiff chose was inconvenient. This court

held, inter alia, that the defendant was not foreclosed from raising its forum non conveniens

argument because the wording of the clause was clearly permissive and contained no mandatory

language binding the parties to a particular forum. Whilrpool Corp., 278 Ill. App. 3d at 179-80.

Here, in contrast, mandatory language provides:

“This agreement shall be governed by *** the laws of the State in which Rentor’s

principal offices are located or, if this Lease is assigned by Rentor, the State in

which the assignee’s principal offices are located *** and all legal actions relating

to this Lease shall be venued exclusively in a state or federal court located within

that State, such court to be chosen at Rentor or Rentor’s assignee’s sole option.”

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This mandatory language binds defendants to a particular forum, i.e., state or federal courts where

NorVergence’s or an assignee’s principal offices are located. Moreover, a prior paragraph in the

contract informed defendants that NorVergence could sell, assign or transfer the rental agreement

and equipment without notifying defendants. We do not read Whirlpool to require a forum

selection clause to designate a forum by name.

We also do not find the clause here unfair or unreasonable simply because the proper

venue may change depending on the location of the principal office of the rentor or its assignee.

There are legitimate business reasons for this type of forum selection clause, which facilitates the

marketability of commercial paper because financial institutions can depend on selling it freely.

Furthermore, the clause put defendants, who are business entities, on notice at the time of

contracting that they were assuming the risk of litigating in a less convenient forum. When they

signed the contracts, defendants had notice that any litigation would take place in New Jersey,

where NorVergence’s principal offices were located. Defendants also had notice that the location

of the forum could change if NorVergence moved or assigned the contracts. Despite this

flexibility, the assignee cannot randomly select any forum within the United States, but must

litigate any legal dispute in the state where its principal offices are located. We find that this

forum selection clause is clear and specific and its contingent nature due to the provisions

concerning assignment does not render it unfair or unreasonable.

B. Public Policy

The Ohio Supreme Court found this same forum selection clause invalid, holding that it

violated Ohio’s strong public policy against requiring individuals to appear in foreign jurisdictions

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without their knowing waiver of personal jurisdiction. Preferred Capital, Inc., 112 Ohio St. 3d at

434, 860 N.E.2d at 746. The Ohio court noted that NorVergence had already entered into a

master program agreement with the assignee but did not disclose that information to the

defendant lessees. Based on the superior knowledge and position of NorVergence and the

assignee in comparison to the defendant lessees, the Ohio court concluded that the defendant

lessees were not fully apprised of the potential for a truly floating forum. The Ohio court held

that when one party to a floating forum clause possesses undisclosed information of its intent to

assign almost immediately to a company in a foreign jurisdiction, the clause is unreasonable and

against Ohio public policy absent a clear showing that the other party knowingly waived personal

jurisdiction and assented to litigate in any forum. Preferred Capital, Inc., 112 Ohio St. 3d at 434,

860 N.E.2d at 746.

Similarly, defendants here argue that enforcement of the clause violates the public policy

behind Illinois’s general venue statute to protect against “ridiculous long-distance forum abuse,

and the unfair burdening of a forum not connected to the litigation.” Williams, 139 Ill. 2d at 72;

see also Martin-Trigona v. Roderick, 29 Ill. App. 3d 553, 555 (1975) (holding a venue waiver

provision was “void as against public policy,” where the Illinois venue statute intended to protect

a defendant from being sued in an oppressive and costly action in a county arbitrarily selected by a

plaintiff, wherein the defendant did not reside or in which no part of the transaction occurred

which gave rise to the cause of action).

We do not find the reasoning of the Ohio court persuasive, and defendants’ reliance on

Williams and Martin-Trigona is misplaced.

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The contract terms explicitly permitted NorVergence to assign the contract without

notifying defendants, and that provision is not rendered unreasonable by the immediacy of the

assignment or the master program agreement between NorVergence and IFC. There are valid

business reasons for these assignment and forum selection provisions–they reflect the modern-day

reality of the leasing industry, where negotiable paper involving leasing equipment is bought and

sold with regularity and it often is not known at the time of the initial transaction whether it will

be sold and to whom. See Preferred Capital, Inc., 112 Ohio St. 3d at 435-36, 860 N.E.2d at 748

(Stratton, J., dissenting, joined by Lanzinger, J.) (adopting the reasoning of the United State

Court of Appeals for the Seventh Circuit in IFC Credit Corp., 437 F.3d 606). The contract

language was plain, unambiguous and available in the original contract for these business entities

to read and understand. Requiring some further disclosure of the final assignee before

acknowledging defendants’ waiver of personal jurisdiction is not warranted in this context among

business entities.

Neither Williams nor Martin-Trigona assists defendants’ argument that the forum selection

clause here violates Illinois public policy. In Williams, our supreme court clarified that the

holding of the Martin-Trigona court did not turn on whether the semantic focus of the clause was

a venue waiver or a true forum selection clause, but on the effect the clause had on the parties in

light of the public policy behind the general venue statute to protect against “ridiculous

long-distance forum abuse, and the unfair burdening of a forum not connected to the litigation.”

Williams, 139 Ill. 2d at 71-72. That statement of public policy, however, occurred in dramatically

different circumstances from those of our case. Specifically, in Martin-Trigona, 29 Ill. App. 3d at

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555-56, this court voided a venue waiver provision in a lease when a landlord tried to sue in Cook

County, Illinois, to recover rent from the defendants who had rented an apartment in Champaign,

Illinois. In Williams, our supreme court concluded that forum selection clauses in guaranteed

student loan agreements were invalid, noting that the contracts amounted to adhesion contracts

because the students “were in a disparate bargaining position, and, if they wanted the loan, were

forced to ‘take it or leave it.’ ” Williams, 139 Ill. 2d at 72. Moreover, with the contractual clause

being embedded in a boilerplate agreement, its significance was “greatly reduced because of the

inequality in the parties’ bargaining power.” Williams, 139 Ill. 2d at 72.

Defendants here are not similarly situated to the indigent students in Williams or apartment

renters in Martin-Trigona, who had to choose between signing an agreement and forgoing a

student loan or a home. The courts ruled that forcing the students or renters to litigate in a

distant forum would have deprived them of their day in court. Williams, 139 Ill. 2d at 72; Martin-

Trigona, 29 Ill. App. 3d at 556. Here, in contrast, defendants were business entities. If they did

not like NorVergence’s contract terms, they could have chosen to lease telecommunications

equipment elsewhere or negotiated a modification of the terms of the contract.

Defendants contend that because they were unsophisticated about telecommunications and

the leasing industry, they were like ordinary consumers in small transactions in the marketplace

and, thus, entitled to some leniency under Illinois law concerning the enforcement of forum

selection clauses. The First District has consistently enforced forum selection agreements

between experienced business people. See Aon Corp. v. Utley, 371 Ill. App. 3d 562, 570 (2006)

(where a California employee of a corporation headquartered in Illinois tried to avoid litigation in

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Illinois concerning her alleged breach of contract); Dace International, Inc., 275 Ill. App. 3d at

241 (where an Illinois computer sales consultant firm tried to sue a California computer

manufacturer in Illinois for breach of contract); Calanca, 157 Ill. App. 3d at 88 (where an Illinois

salesman tried to sue his former employer, a Wisconsin corporation, in Illinois for breach of

contract to obtain commissions owed him). Support for this disparate treatment of consumers

and business entities is found in the Uniform Commercial Code; Leases (UCC-Leases), which

defines a consumer lease as one made to “a lessee who is an individual and who takes under the

lease primarily for a personal, family, or household purpose.” 810 ILCS 5/2A-103(1)(e) (West

2006). Furthermore, section 2A-106 of the UCC-Leases limits the power of parties to consumer

leases to choose an applicable law or judicial forum. 810 ILCS 5/2A-106 (West 2006).

Specifically, section 2A-106 renders unenforceable agreements where the law chosen is that of a

jurisdiction other than where the lessee resides, or where the judicial forum chosen would not

otherwise have jurisdiction over the lessee. 810 ILCS 5/2A-106 (West 2006).

The Second District, however, made an exception and refused to enforce a forum

selection clause when an Illinois leasing company tried to sue a California certified public

accountant (CPA) in small claims court in Illinois for $3,810.91 owed for the rental of mailing

equipment. Mellon First United Leasing v. Hansen, 301 Ill. App. 3d 1041 (1998). The court

concluded that the forum selection clause was not negotiated at arm’s length between experienced

business persons of the same stature but, rather, was part of boilerplate language in small print on

the back of a preprinted form and, thus, more like an adhesion contract. Mellon First United

Leasing, 301 Ill. App. 3d at 1046. The court also concluded that the CPA was more akin to an

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ordinary consumer involved in a small transaction than a sophisticated businessperson because she

was engaged in a newly organized proprietary business, she was not in the office equipment

business, and there was no indication that she had any such expertise regarding the leased

equipment. Moreover, when she was negotiating the lease with the original California vendor, she

had no reason to believe–before she signed the lease terms–that she would be dealing with an

Illinois corporation if a legal dispute arose. Mellon First United Leasing, 301 Ill. App. 3d at 1046.

Defendants here urge us to follow Mellon, but the reasoning of that case is not persuasive

and the distinctions it sought to draw are ambiguous. The difficulty in applying Mellon with any

consistency is particularly evident in this case where the 18 defendants are all business entities but

of varying degrees of experience, size and sophistication. For example, defendant Wolcott

Burkeholder, d/b/a Productive Solutions, is self-employed and provides services to another

business that supplies custom equipment and engineering services mainly in the foundry industry.

At the other end of the business sophistication spectrum is defendant Ree’s Contract Service, Inc.,

which IFC contends is a federal government contractor that recruits, hires and trains retired police

and military personnel for security detail, employs about 450 employees, and earned over $25

million in revenue in 2003. Mellon has limited practical application, and we are not inclined to

fashion some type of business-sophistication standard out of nebulous factors like small, newly

minted businesses or a lack of expertise concerning the particular equipment or service leased.

Instead of Mellon, we follow Dace International, Inc., which held business entities to their

contractual bargains, but clarified that Illinois courts have not accepted the federal law trend of

enforcing forum selection clauses in contracts involving unsophisticated consumers in small

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transactions in the marketplace without any real opportunity to consider the acceptance of a

forum selection clause. See Dace International, Inc., 275 Ill. App. 3d at 241, discussing Carnival

Cruise Lines, Inc. v. Shute, 499 U.S. 585, 113 L. Ed. 2d 622, 111 S. Ct. 1522 (1991). We reject

defendants’ argument that their bargaining power was so inferior to NorVergence’s that it would

be unreasonable to enforce the forum selection clause against them.

C. Fraud

Defendants also contend that the forum selection clause is unenforceable because the

entire agreement between defendants and NorVergence is tainted with fraud and is void ab initio.

Defendants point to the numerous actions commenced by various states’ attorneys general and the

FTC and certain default judgments rendered in those actions. This court, however, has already

ruled that assignee IFC was not in privity with NorVergence for purposes of res judicata. IFC

Credit Corp., 368 Ill. App. 3d at 901. Moreover, defendants’ general allegations of fraud directed

at NorVergence are not sufficient to invalidate the provisions of the forum selection clause. In

order to invalidate the clause on the ground of fraud and overreaching, the fraud alleged must be

specific to the forum selection clause itself. Scherk v. Alberto-Culver Co., 417 U.S. 506, 519

n.14, 41 L. Ed. 2d 270, 281 n.14, 94 S. Ct. 2449, 2457 n.14 (1974); Rouse Woodstock, Inc. v.

Surety Federal Savings & Loan Ass'n, 630 F. Supp. 1004, 1009 (N.D. Ill. 1986).

We also reject defendants’ argument that the forum selection clause was procured by

fraud and overreaching because it was buried in the contract. Although the typeface of the clause

was small, it was legible and of the same size print as the other contract terms on the back page of

the agreement. Moreover, above the signature line on the front page of the agreement, is the

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sentence “You agree to all the terms and conditions shown above and [sic] the reverse side of this

Rental ***.” Defendants complain that NorVergence’s salespeople did not mention the forum

selection clause, but defendants are business entities and they had the opportunity to read the

forum selection provision before signing and initialing the document. Consequently, they are

presumed to have read, understood, and agreed to be bound by its terms. Dace International,

Inc., 275 Ill. App. 3d at 240. Furthermore, there is a valid business reason for including a floating

forum clause in a contract; such provisions make it easier for the lessor to sell its interest in the

lease payments to a finance company. IFC Credit Corp., 437 F.3d at 612-13; Preferred Capital,

Inc., 112 Ohio St. 3d at 432, 860 N.E.2d at 745.

D. Choice-of-Law Clause

Citing the Restatement (Second) of Conflict of Laws, defendant Poly Tech Industries,

Inc., argues that the forum selection clause should be construed under New Jersey law because

the Illinois choice-of-law rules should apply, and that under New Jersey law, floating forum

selection clauses are not enforceable (Copelco Capital, Inc. v. Shapiro, 331 N.J. Super. 1, 750

A.2d 773 (N.J. Super. App. Div. 2000)). We disagree.

The agreement provides, in pertinent part, that it “shall be governed by, construed and

enforced in accordance with the laws of *** the State in which the assignee’s principal offices are

located, without regard to such State’s choice of law considerations.” The agreement clearly and

unambiguously calls for the application of Illinois law. Under Illinois law, we have found the

forum selection clause enforceable.

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E. Defendant D & R Packaging, Inc.

Finally, defendants D & R Packaging, Inc., Gregory Russell and Joseph Russell argue that

they never consented to jurisdiction by virtue of a forum selection clause, contending that the

lease they saw and signed contained only the front or signature page, they never initialed any

second page, and the lease attached by IFC to its complaint did not contain a second page.

We reject defendants’ argument. According to the provision just above their signature on

the lease, they agreed to all the terms and conditions shown on the reverse side of the lease. They

also signed the delivery and acceptance certificate, wherein they acknowledged that they had

reviewed and understood all the terms and conditions of the lease.

IV. CONCLUSION

We hold that the circuit court erred by granting defendants’ motions to dismiss and

refusing to enforce the forum selection clause. We reverse the orders of the circuit court and

remand these causes for proceedings consistent with this opinion.

Reversed and remanded with directions.

TULLY and GALLAGHER, JJ., concur.

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