[Cite as Keehan Tennessee Invest., L.L.C. v. Praetorium Secured Fund I, L.P., 2016-Ohio-8390.]


STATE OF OHIO                    )                         IN THE COURT OF APPEALS
                                 )ss:                      NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN                 )

KEEHAN TENNESSEE INVESTMENT,                               C.A. No.        15CA010800
LLC, et al.

        Appellants
                                                           APPEAL FROM JUDGMENT
        v.                                                 ENTERED IN THE
                                                           COURT OF COMMON PLEAS
PRAETORIUM SECURED FUND I, L.P.,                           COUNTY OF LORAIN, OHIO
et al.                                                     CASE No.   14CV183315

        Appellees

                                 DECISION AND JOURNAL ENTRY

Dated: December 27, 2016



        CANNON, Judge.

        {¶1}    Appellants—David Keehan; Donald J. Keehan Jr.; Donald J. Keehan Sr.; Keehan

Tennessee Investment, LLC; Durham Ridge Investments, LLC; Westlake Briar, LLC; 951 Realty

Ltd.; and Keehan Trust Funding, LLC—appeal from the judgment of the Lorain County Court of

Common Pleas granting the motion to transfer filed by Appellees Praetorium Secured Fund I,

L.P. (“Praetorium”); Development Finance, L.P. (“Development Finance”); and George V.

Cresson. For the reasons that follow, we affirm the judgment of the trial court.

                                                      I.

        {¶2}    This case stems from the alleged breach of certain loan commitments related to a

multi-million dollar development project in Tennessee (“the Project”). The following factual

allegations are taken from plaintiffs’ amended complaint and attached exhibits.

        {¶3}    Defendant Guardian Capital Advisors, Inc. (“Guardian”) entered into a loan
                                                 2


commitment with Keehan Tennessee Investment, LLC (“KTI”) and its principals (David

Keehan, Donald Keehan Jr., and Donald Keehan Sr.) to provide a $24.5 million loan (“Senior

Loan”). According to the complaint, Defendant Kenneth A. Miller is the “principal, manager

and/or managing partner” of Guardian. The Senior Loan was to be used to buy out equity

interest holders of the Project and to pay off an existing lender that had called its loan. Guardian

obtained personal cognovit guarantees from David and Donald Sr. as additional security on the

Senior Loan.

       {¶4}    KTI negotiated several short forbearance periods with the existing lender, but

Guardian failed to fund the Senior Loan within that time period as promised in the loan

commitment. In exchange for a $1.2 million extension fee, the existing lender granted KTI

another forbearance period on the existing loan. The extension fee was to be paid in two

installments: the first by KTI, and the second by Guardian. David paid the first installment of

$500,000 from the proceeds of a personal loan. Guardian failed to pay the second installment of

$700,000.

       {¶5}    KTI had also entered into a separate loan commitment with Development Finance

regarding a $3.5 million line of credit for construction of the Project (“Construction Loan”).

According to the complaint, Defendant George V. Cresson held himself out to be the manager of

Development Finance.

       {¶6}    Following Guardian’s failure to pay the second installment of the extension fee on

the existing loan, Development Finance (through Mr. Cresson) agreed to provide an additional

$700,000 to KTI in order to satisfy the remainder of the extension fee (“Bridge Loan”).

Plaintiffs assert that Mr. Cresson executed the Bridge Loan agreement on behalf of Development

Finance, an entity owned and controlled by Mr. Cresson, but that “at the eleventh hour and on
                                                3


the date of execution, Cresson unilaterally changed the identity of the lender from [Development

Finance] to [Praetorium], another entity owned and controlled by Cresson.”1            To provide

additional security for the Bridge Loan, Praetorium obtained a cognovit promissory note and

personal cognovit guarantees from Donald Sr. and David.          Cognovit guarantees were also

executed in favor of Praetorium by Plaintiffs Durham Ridge Investments, LLC (“Durham

Ridge”); Westlake Briar, LLC (“Westlake Briar”); 951 Realty Ltd. (“951 Realty”); and Keehan

Trust Funding, LLC (“Keehan Trust”).

       {¶7}    Plaintiffs allege that Guardian, Praetorium, and Mr. Cresson “demanded

substantial fees and imposed onerous collateral requirements” for the Bridge Loan. Durham

Ridge, Westlake Briar, and 951 Realty granted mortgages to Praetorium on certain Ohio

commercial properties as collateral, and Praetorium paid off the existing mortgages with

proceeds from the Bridge Loan. Keehan Trust also pledged certain equity interests in a publicly-

traded company as collateral, pursuant to a security agreement with Praetorium.             These

requirements increased the principal amount of the Bridge Loan from $700,000 to $2.95 million.

       {¶8}    It is alleged that Guardian and Praetorium subsequently failed to provide the

Senior Loan and the Construction Loan, respectively, by the agreed-upon date. As a result, the

Project’s existing lender filed a notice of foreclosure against KTI. In order to cancel the ensuing

foreclosure sale, plaintiffs obtained a loan for over $17.5 million from an alternative source.

Plaintiffs allege that KTI lost its majority ownership interest in the Project as a material

condition of the alternative loan.

       {¶9}    Plaintiffs filed a breach of contract action against Guardian and Praetorium, in the


1
  Although the complaint alleges the Bridge Loan was provided by both Praetorium and
Guardian, the attached promissory note and final loan agreement indicate the Bridge Loan was
provided solely by Praetorium.
                                                 4


Lorain County Court of Common Pleas, alleging breach of the loan commitments. Defendants

jointly removed the case to the United States District Court for the Northern District of Ohio,

Eastern Division, on the basis of complete diversity. Plaintiffs then filed an amended complaint,

which added claims for economic duress, fraud, and equitable subordination and also added

Development Finance, Mr. Cresson, and Mr. Miller as new party defendants.2

       {¶10} Guardian/Mr. Miller and Development Finance/Mr. Cresson each filed motions to

transfer the case to the United States District Court for the District of Nevada in Reno, Nevada.

These motions were granted on the basis of forum selection clauses in the loan commitment

letters from Guardian and Development Finance, which provided for exclusive jurisdiction in

Reno, Nevada. The Federal District Court of Nevada thereafter determined complete diversity

was lacking, as a result of an improperly pled complaint, and remanded the case back to the

Lorain County Court of Common Pleas.

       {¶11} Appellees (Praetorium, Development Finance, and Mr. Cresson) then filed a joint

motion to transfer the case to a Reno, Nevada state court, pursuant to Civ.R. 3(D), again based

on the forum selection clauses. Plaintiffs filed a brief in opposition; Guardian and Mr. Miller did

not object. The trial court granted appellees’ motion and stayed the case pending transfer.

Plaintiffs were ordered to refile the case in a Reno, Nevada state court within 60 days or the trial

court would enter an order of dismissal without prejudice. It is from this order that plaintiffs

(appellants herein) now appeal, raising four assignments of error.

2
  Plaintiffs had obtained a temporary restraining order in the Lorain County Court of Common
Pleas which prohibited Praetorium from obtaining a cognovit judgment on the personal
guarantees executed by plaintiffs. The United States District Court for the Northern District of
Ohio, Eastern Division, allowed the temporary restraining order to expire without a hearing.
Praetorium then took a cognovit judgment against plaintiffs in the Lorain County Court of
Common Pleas. This judgment was subsequently vacated and is also on appeal as a companion
case. See Praetorium Secured Fund I, L.P. v. Keehan Tennessee Invest., LLC, 9th Dist. Lorain
No. 15CA010757, 2016-Ohio-____.
                                                  5


                                                  II.

         {¶12} An order enforcing a forum selection clause and granting a 60-day stay pursuant

to Civ.R. 3(D) is a final, appealable order. Overhead, Inc. v. Standen Contracting, 6th Dist.

Lucas No. L-01-1397, 2002 Ohio App. LEXIS 1149, *5-6 (Mar. 11, 2002), citing Vintage Travel

Servs., Inc. v. White Heron Travel of Cincinnati, Inc., 2d Dist. Montgomery No. 16433, 1998

Ohio App. LEXIS 2246 (May 22, 1998). “‘The practical effect of this judgment is to preclude

plaintiffs, residents of Ohio, from pursuing a legal remedy in the courts of Ohio; consequently, a

substantial right of the appellants is adversely affected.’” Id., quoting Clark v. Consol. Foods

Corp., 5th Dist. Stark No. CA 4906, 1978 Ohio App. LEXIS 9014 (Dec. 13, 1978).

                                                 III.

                                   Second Assignment of Error

         The trial court erred as a matter of law by failing to submit the forum
         selection clauses to the trier of fact to determine the intent of the parties.

         {¶13} Appellants argue the forum selection clauses are ambiguous and thus should have

been submitted to the trier of fact to determine the parties’ intent.

         {¶14} “Terms in a contract are ambiguous if their meanings cannot be determined from

reading the entire contract, or if they are reasonably susceptible to multiple interpretations.”

Foley v. Empire Die Casting Co., 9th Dist. Summit No. 24558, 2009-Ohio-5539, ¶12. “‘The

decision as to whether a contract is ambiguous and thus requires extrinsic evidence to ascertain

its meaning is one of law.’” Id., quoting Ohio Historical Soc. v. Gen. Maintenance & Eng. Co.,

65 Ohio App.3d 139, 146 (10th Dist.1989). Questions of law are reviewed by an appellate court

de novo. Butler v. Joshi, 9th Dist. No. 00CA0058, 2001 Ohio App. LEXIS 2062, *13 (May 9,

2001).
                                                 6


       {¶15} All of appellants’ allegations arise out of the relationship created by the loan

commitments KTI entered into with Guardian and Development Finance. The term sheets

attached to the Senior Loan and Construction Loan commitment letters contain identical forum

selection clauses: “Governing Law and Jurisdiction. * * * The parties acknowledge and

consent to the exclusive jurisdiction of any competent court in Reno, Nevada.” Additionally, the

Construction Loan commitment letter, itself, contains the following language: “Exclusive

Jurisdiction. The parties acknowledge and consent to the exclusive jurisdiction of any competent

court in Reno, Nevada.”

       {¶16} Appellants first assert the forum selection clauses are ambiguous because they do

not expressly prohibit the filing of suit elsewhere than Reno, Nevada.        The clause clearly

provides, however, that Reno, Nevada has exclusive jurisdiction. “‘Exclusive jurisdiction’ is

defined as ‘[a] court’s power to adjudicate an action or class of actions to the exclusion of all

other courts[.]” EI UK Holdings, Inc. v. Cinergy UK, Inc., 9th Dist. Summit No. 22326, 2005-

Ohio-1271, ¶18, quoting Black’s Law Dictionary 856 (7th Ed.1999) (emphasis added).

Providing for exclusive jurisdiction is thus, very simply, the positive linguistic equivalent to

prohibiting the filing of suit elsewhere. This argument is not well taken.

       {¶17} Appellants next assert the term “jurisdiction” could possibly refer to subject

matter jurisdiction, as opposed to personal jurisdiction. Appellants argue, under that scenario,

that the clause would be without effect because parties cannot confer subject matter jurisdiction

upon a court by agreement.

       {¶18} It is, of course, true that a court’s subject matter jurisdiction “cannot be affected

by agreement or consent and is beyond the scope of the litigants to confer.” Colley v. Colley, 43

Ohio St.3d 87, 92 (1989) (Moyer, C.J., dissenting) (citations omitted). “Consent to jurisdiction,
                                                   7


which operates as a waiver, is significant only when personal jurisdiction is absent.” State ex

rel. Easterday v. Zieba, 58 Ohio St.3d 251, 256, fn. 3 (1991) (emphasis added). Further, the

competency of a court, with rare exception, consistently refers to the court’s subject matter

jurisdiction. See United States v. Morton, 467 U.S. 822, 828, fn. 6 (1984) (“As far back as

Pennoyer v. Neff, 95 U.S. 714 (1878), we drew a clear distinction between a court’s

‘competence’ and its jurisdiction over the parties[.]”); cf. id. at 828.

        {¶19} The forum selection clauses at issue provide that the parties “consent to the

exclusive jurisdiction of any competent court in Reno, Nevada.” The clause, in other words,

states the parties agree that any court in Reno, Nevada with subject matter jurisdiction over the

case (i.e., a “competent court”) may exercise personal jurisdiction over the parties (i.e., “consent

to”). If the term “jurisdiction” referred to subject matter jurisdiction, the phrases “consent to”

and “competent court” would be rendered superfluous and meaningless. Appellants’ argument is

untenable.

        {¶20} We hold the forum selection clauses are clear and unambiguous, as a matter of

law.

        {¶21} Appellants’ second assignment of error is without merit.

                                                  IV.

                                     First Assignment of Error

        The trial court erred as a matter of law by interpreting the forum selection
        clause in the loan commitments as mandatory.

        {¶22} Appellants assert the forum selection clauses are “permissive,” as opposed to

“mandatory,” and thus the trial court erred in granting the motion to transfer.

        {¶23} “The purpose of contract construction is to discover and effectuate the intent of

the parties.” Graham v. Drydock Coal Co., 76 Ohio St.3d 311, 313 (1996). “If a contract is
                                                  8


unambiguous, the language of the contract controls[.]” Foley, supra, at ¶12. Having held the

forum selection clauses at issue are unambiguous, interpretation of the clauses is a question of

law. Beckler v. Lorain City School Dist. Bd. of Educ., 9th Dist. Lorain No. 95CA006049, 1996

Ohio App. LEXIS 2802, *5 (July 3, 1996). Questions of law are reviewed by an appellate court

de novo. Butler, supra, at *13.

        {¶24} “‘Mandatory forum selection clauses contain clear language showing that

jurisdiction is appropriate only in the designated forum. In contrast, permissive forum selection

clauses authorize jurisdiction in a designated forum, but do not prohibit litigation elsewhere.’”

EI UK Holdings, supra, at ¶20, quoting K&V Scientific Co., Inc. v. Bayerische Motoren Werke

Aktiengesellschaft (“BMW”), 314 F.3d 494, 498 (10th Circ.2002).

        Where venue is specified with mandatory language, the clause will be enforced.
        Where a forum selection clause states ‘mandatory or obligatory language,’ it is a
        mandatory clause that limits litigation to the designated venue. However, ‘when
        only jurisdiction is specified the clause will generally not be enforced without
        some further language indicating the parties’ intent to make jurisdiction
        exclusive.’

Id. at ¶21 (citations omitted).

        {¶25} In determining whether a clause is permissive or mandatory, this court has found

the following factors significant: (1) reference to venue; (2) language indicating the parties’

intent to make jurisdiction exclusive; and (3) language indicating a suit elsewhere is forbidden.

Renacci v. Evans, 9th Dist. Summit No. 09CA0004-M, 2009-Ohio-5154, ¶18, citing EI UK

Holdings, supra, at ¶22.

        {¶26} Contrary to appellants’ assertion, the test applied in EI UK Holdings and Renacci

is a factor test; i.e., a court does not have to find each of the three factors is present in order to

interpret a forum selection clause as mandatory. Further, absence of the word “venue” is not

determinative. A finding of mandatory may be supported, however, when the only factor that
                                                 9


exists is language clearly indicating exclusivity. See Renacci, supra, at ¶20.

       {¶27} Although there is no explicit reference to venue, the clauses do contain language

indicating the parties’ intent to make jurisdiction exclusive. The phrase “exclusive jurisdiction”

is, without a doubt, a phrase of exclusivity. In fact, at least one court has held that the phrase

“must be filed,” more subtle than the phrase at hand, are “words of exclusivity.” Dayton

Outpatient Ctr., Inc. v. OMRI of Pensacola, Inc., 2d Dist. Montgomery No. 26169, 2014-Ohio-

4105, ¶18. The language in the case sub judice does not merely authorize jurisdiction in Reno,

Nevada, it clearly provides that jurisdiction is appropriate in Reno, Nevada to the exclusion of all

other jurisdictions. We therefore hold the forum selection clauses are mandatory, as a matter of

law.

       {¶28} Appellants’ second assignment of error is without merit.

                                                V.

                               Third Assignment of Error

       The trial court erred as a matter of law by enforcing the forum selection
       clause in the loan commitments.

       {¶29} Appellants argue against the trial court’s finding that the forum selection clauses

are enforceable.

       {¶30} “The party challenging the forum selection clause bears a heavy burden of

establishing that it should not be enforced.” Original Pizza Pan v. CWC Sports Group, Inc., 194

Ohio App.3d 50, 2011-Ohio-1684, ¶10 (8th Dist.) (citation omitted); see also Conway v.

Huntington Natl. Bank, 10th Dist. Franklin No. 11AP-1105, 2013-Ohio-1201, ¶9. “Absent

evidence of fraud or overreaching, a forum selection clause contained in a commercial contract

between business entities is valid and enforceable, unless it can be clearly shown that

enforcement of the clause would be unreasonable and unjust.” Kennecorp Mtge. Brokers, Inc. v.
                                                 10


Country Club Convalescent Hosp., Inc., 66 Ohio St.3d 173 (1993), syllabus; see also Preferred

Capital, Inc. v. Power Eng. Group, Inc., 112 Ohio St.3d 429 (2007), paragraph one of the

syllabus. “The enforceability of a forum-selection clause is a question of law that we review de

novo.” Original Pizza Pan, supra, at ¶10; Conway, supra, at ¶9.

       {¶31} Appellants do not challenge that the agreements at issue are between business

entities nor do they assert fraud or overreaching. Appellants also do not argue the clause

contained in the term sheets was not intended to govern the loan commitments.            Rather,

appellants raise three arguments in support of their position that enforcement of the forum

selection clauses was unreasonable and unjust.

       {¶32} Appellants first assert the clause was enforced against non-parties to the loan

commitments.

       {¶33} “Only a party to a contract or an intended third-party beneficiary of a contract

may bring an action on a contract in Ohio.” Thornton v. Windsor House, Inc., 57 Ohio St.3d

158, 161 (1991), citing Visintine & Co. v. New York, Chicago, & St. Louis RR. Co., 169 Ohio St.

505 (1959). Conversely, a non-party to a contract cannot be bound by the contract. WashPro

Express, LLC v. VERwater Environmental, LLC, 12th Dist. Butler No. CA2006-03-069, 2007-

Ohio-910, ¶9. An exception to this rule exists when a non-party “is so closely related to the

dispute that it is foreseeable that the party will be bound.” Highway Commercial Servs. v. Zitis,

No. 2:07-cv-1252, 2008 U.S. Dist. LEXIS 32487, *10 (S.D. Ohio Apr. 21, 2008).3

       {¶34} Some jurisdictions have applied this exception to shareholders, officers, and

directors of a corporation-signatory and to corporations wholly owned and controlled by a

3
 We note Ohio law and federal law “treat forum selection clauses similarly.” See, e.g., Baker v.
LeBoeuf, Lamb, Leiby & Macrae, 105 F.3d 1102, 1105 (6th Circ.1997), citing Gen. Elec. Co. v.
G. Siempelkamp GmbH & Co., 29 F.3d 1095, 1098, fn. 3 (6th Circ.1994) and Interamerican
Trade Corp. v. Companhia Fabricadora de Pecas, 973 F.2d 487, 488-489 (6th Circ.1992).
                                                 11


signatory. See Marano Ents. of Kansas v. Z-Teca Restaurants, L.P., 254 F.3d 753, 757 (8th

Circ.2001); Hugel v. Corp. of Lloyd’s, 999 F.2d 206, 209-210 (7th Circ.1993). In Ohio, this

exception appears to have only been applied, thus far, to agent-principal situations and to third-

party beneficiaries of a contract.     See WashPro Express, supra, at ¶13; Barrett v. Picker

Internatl., Inc., 68 Ohio App.3d 820, 826 (8th Dist.1990). The essential inquiry is whether,

under the totality of the circumstances, “‘it is fair and reasonable to bind a non-party to the forum

selection clause. * * * [T]his approach places emphasis on whether it should have been

reasonably foreseeable to the non-signatory that situations might arise in which the non-signatory

would become involved in the relevant contract dispute.’”          Veteran Payment Sys., LLC v.

Gossage, No. 5:14CV981, 2015 U.S. Dist. LEXIS 16261, *19 (N.D. Ohio Feb. 10, 2015),

quoting Regions Bank v. Wyndham Hotel Mgt., Inc., No. 3:09-1054, 2010 U.S. Dist. LEXIS

23371, *6 (M.D. Tenn. Mar. 11, 2010).

         {¶35} According to the complaint, David, Donald Jr., and Donald Sr. are principals of

KTI, an Ohio limited liability company. David signed the Senior Loan and Construction Loan

commitment letters as “managing member” of KTI. Both loan commitment letters indicate KTI

is the “borrower” and refer to David and Donald as “sponsors” or “guarantors” of the loans.4

         {¶36} It is also apparent that the Senior Loan, the Construction Loan, and the Bridge

Loan, were essentially part and parcel of one large attempted transaction between plaintiffs and

defendants.     On February 28, 2014, the cognovit guarantees were executed in favor of

Praetorium (via Mr. Cresson) on the Bridge Loan by David, Donald Sr., Durham Ridge,

Westlake Briar, 951 Realty, and Keehan Trust. David signed the cognovit note on behalf of

Keehan Trust as its “managing member.” D.J. Keehan signed the cognovit note on behalf of

4
    It is not clear from the documents whether “Donald” refers to Donald Jr. or Donald Sr.
                                                12


Durham Ridge and Westlake Briar as their “managing member.” Denise Keehan signed the

cognovit note on behalf of 951 Realty as its “member.” It is unclear from the record how

“Denise” is related to the other Keehans and whether “D.J.” refers to Donald Jr. or another

relative. As evidenced by the complaint, however, each individual-plaintiff and each entity-

plaintiff share the same Ohio address, with the exception of Donald Sr. who apparently resides in

Florida.

        {¶37} The commitment letter for the Senior Loan was issued five days later, on March

3, 2014, by Guardian (via Mr. Miller). The Construction Loan commitment letter was also

issued on March 3, 2014, by Development Finance (via Mr. Cresson) and references the non-

signatory plaintiffs:

        The following persons (‘Guarantors’), which shall be joint and severally liable for
        the Loan shall execute guaranties in form and substance acceptable to Lender:
        David Keehan, Donald Keehan, and all non-borrower mortgagors. It is
        contemplated that each of the guaranties will be enforced under Ohio law and
        each of these Guarantors, except Donald Keehan, shall be required to execute a
        cognovit.5

        {¶38} The next day, March 4, 2014, Praetorium (via Mr. Cresson) and KTI entered into

the final agreement on the Bridge Loan.        Appellants allege the Bridge Loan was actually

negotiated by Mr. Cresson initially on behalf of Development Finance. Included in the initial

disbursements of the Bridge Loan were, inter alia, (1) the final installment of the extension fee to

the existing lender, which Guardian failed to pay when negotiating the Senior Loan; (2) a fee to

Guardian in connection with the Senior Loan; (3) a fee to Development Finance in connection

with the Construction Loan; (4) and reimbursement to Praetorium for “expenses related to legal,




5
  As Donald Jr. was the only plaintiff who did not execute a cognovit, we assume “Donald”
refers to Donald Jr. The distinction is neither relevant nor determinative to the issue.
                                               13


underwriting, and due diligence services” associated with the Senior Loan and Construction

Loan.

        {¶39} In addition, all plaintiffs—signatory and non-signatory, alike—are suing for

breach of the loan commitments. The complaint alleges all plaintiffs were damaged by the

purported breach. Further, the complaint asserts the cognovit guarantees, the mortgages, and the

security agreement—in addition to the underlying Bridge Loan—should all be “invalidated and

rendered null and void” as a result of defendants’ breach of the Senior Loan and the Construction

Loan.

        {¶40} Under the totality of the circumstances, we find it was foreseeable to the non-

signatory plaintiffs that they would become involved in the contractual dispute between KTI and

defendants. It is disingenuous for appellants to argue otherwise. The trial court’s decision to

bind the non-signatory plaintiffs to the forum selection clauses was both fair and reasonable.

Appellants’ argument is not well taken.

        {¶41} Next, appellants assert there is no proof that any of the non-signatory plaintiffs

waived their right to file suit against defendants in the venue of their choice. The forum

selection clauses, however, are evidence of such a waiver in and of themselves. Because we

hold the non-signatory plaintiffs are bound by the forum selection clauses, this argument is also

not well taken.

        {¶42} Finally, appellants assert there will be duplicate cases proceeding through the

Ohio and Nevada court systems because of the separate suit filed by Praetorium on the cognovit

note in the Lorain County Court of Common Pleas. Pursuant to the “jurisdictional priority rule,”

appellants argue, the case sub judice should be remanded to the Lorain County Court of

Common Pleas for consolidation with the cognovit case.
                                                 14


       {¶43} “[W]hen actions involving the same subject matter and the same parties are

pending in two different Ohio courts that have concurrent jurisdiction, the court in which the

action was first commenced has priority of jurisdiction to maintain the action, and pendency of

an action may be pleaded as a defense to bar the second court’s jurisdiction.” Commercial

Union Ins. Co. v. Wheeling Pittsburgh Corp., 106 Ohio App.3d 477, 486 (2d Dist.1995), citing

State ex rel. Maxwell v. Schneider, 103 Ohio St. 492 (1921).

       {¶44} “‘However, the fact that an action involving the same subject matter and the same

parties is pending in a court of a sister state does not have the same effect.’” Id., quoting Hoppel

v. Greater Iowa Corp., 68 Ohio App.2d 209 (9th Dist.1980). See also Nationwide Mut. Fire Ins.

Co. v. Modroo, 11th Dist. Geauga No. 2004-G-2557, 2004-Ohio-4697, ¶12; Newman v.

Martinez, 4th Dist. Pike No. 15CA857, 2016-Ohio-647, ¶18.

       ‘“The rule of priority does not apply, as a matter of duty, between courts
       of different states. As a matter of comity, however, a court of one state
       may stay a proceeding pending before it on the ground that a case
       involving the same subject matter and the same parties is pending in a
       court of another state. Also, in view of the full faith and credit clause of
       the Federal Constitution, once the proceeding on the same case has been
       finally adjudicated by the court of a sister state, res judicata effect must be
       given to it by the court of the forum state.”’

Nationwide, supra, at ¶13, quoting Commercial Union, supra, at 486-487, quoting 20 American

Jurisprudence, 2d, Courts, Section 95, at 399 (1995).

       {¶45} Praetorium obtained a cognovit judgment from the Lorain County Court of

Common Pleas in Ohio, which was subsequently vacated. In a separate appeal, this court

affirmed that judgment in part and reversed it in part; thus the matter remains pending in the

Lorain County Court of Common Pleas. See Praetorium Secured Fund I, L.P. v. Keehan

Tennessee Invest., LLC, 9th Dist. Lorain No. 15CA010757, 2016-Ohio-____. Pursuant to R.C.
                                               15


2323.13(A), the Lorain County Court of Common Pleas has jurisdiction over the claims with

regard to the balance due on the cognovit note, but a Reno, Nevada court does not.

       {¶46} We held above that the forum selection clauses in the Senior Loan and the

Construction Loan provide for mandatory jurisdiction in Reno, Nevada. Appellants argue there

is a jurisdictional priority issue between the Ohio court and the Nevada court because both cases

involve the same subject matter and the same parties. Both courts are not Ohio courts, however,

and therefore appellants cannot raise the jurisdictional priority rule as a defense to enforcement

of the forum selection clauses. This argument is not well taken.

       {¶47} In short, Nevada does not have jurisdiction over the cognovit case. Ohio, due to

the forum selection clause agreed to by the parties, does not have jurisdiction over the amended

complaint filed in this case. The parties may choose to file a motion to stay the proceedings in

either the Ohio cognovit case or in this case once initiated in a Reno, Nevada state court. We

have reinstated a portion of the judgment in the cognovit case. See Praetorium, supra. Since it

has proceeded to judgment, in part, res judicata effect must be given to it by the Nevada court in

the case sub judice.

       {¶48} Appellants’ third assignment of error is without merit.

                                               VI.

                                 Fourth Assignment of Error

       The trial court erred as a matter of law by ruling that the case should be
       stayed, transferred or dismissed pursuant to Civ.R. 3(D).

       {¶49} A Civ.R. 3(D) motion to transfer raises the issue of personal jurisdiction.

“‘Personal jurisdiction is a question of law that appellate courts review de novo.’” Brislin v.

Albert, 9th Dist. Summit No. 27052, 2014-Ohio-3406, ¶5, quoting Fraley v. Estate of Oeding,

138 Ohio St.3d 250, 2014-Ohio-452, ¶11. Civ.R. 3(D) provides:
                                                 16


       When a court, upon motion of any party or upon its own motion, determines: (1)
       that the county in which the action is brought is not a proper forum; (2) that there
       is no other proper forum for trial within this state; and (3) that there exists a
       proper forum for trial in another jurisdiction outside this state, the court shall stay
       the action upon condition that all defendants consent to the jurisdiction, waive
       venue, and agree that the date of commencement of the action in Ohio shall be the
       date of commencement for the application of the statute of limitations to the
       action in that forum in another jurisdiction which the court deems to be the proper
       forum. If all defendants agree to the conditions, the court shall not dismiss the
       action, but the action shall be stayed until the court receives notice by affidavit
       that plaintiff has recommenced the action in the out-of-state forum within sixty
       days after the effective date of the order staying the original action. If the plaintiff
       fails to recommence the action in the out-of-state forum within the sixty day
       period, the court shall dismiss the action without prejudice. If all defendants do
       not agree to or comply with the conditions, the court shall hear the action. If the
       court determines that a proper forum does not exist in another jurisdiction, it shall
       hear the action.

In other words, “Rule 3(D) governs that unusual situation in which defendant objects to venue on

the ground of improper venue and the court finds that there is not an appropriate venue within

this state to which to transfer the action.” Civ.R. 3(D), editor’s note.

       {¶50} We have already determined the forum selection clauses are unambiguous,

mandatory, and enforceable. Pursuant to the clauses, the proper forum is exclusively in Reno,

Nevada. Thus, there is no proper forum in the state of Ohio. Appellees have consented to the

jurisdiction of Reno, Nevada, as evidenced by their joint motion to transfer.             Defendants

Guardian and Mr. Miller have not objected to the motion. Therefore, pursuant to Civ.R. 3(D),

the trial court did not err in staying the case pending transfer to a court of competent jurisdiction

in Reno, Nevada.

       {¶51} As an aside, appellants extract dicta from an Ohio Supreme Court case in support

of their argument that Civ.R. 3(D) does not apply to the case at bar. In Chambers v. Merrell-

Dow Pharmaceuticals, Inc., the Court stated:

       We have found no Ohio case in which Civ. R. 3(D) has been applied, undoubtedly
       because it can only be applied in the extremely rare pure transitory action where
                                                17


       both plaintiff and defendant are non-Ohio residents and the cause of action arose
       outside this state, but the defendant is ‘caught’ and served while momentarily in
       Ohio.

35 Ohio St.3d 123, 132 (1988), citing Anderson’s Ohio Civil Practice, Section 149.18, at 143-

145 (1987); Price v. Wheeling Dollar Savings & Trust Co., 9 Ohio App.3d 315 (12th Dist.1983);

Penrod v. Baltimore & Ohio RR. Co., 64 Ohio App.2d 216 (10th Dist.1979); Singleton v.

Denny’s, Inc., 36 Ohio App.3d 225 (9th Dist.1987); McWilliams v. U-Haul Internatl., Inc., 2d

Dist. Clark No. 2254, 1986 Ohio App. LEXIS 9217 (Nov. 20, 1986); and Gallimore v. Arcadia

Natl. Life Ins. Co., 2d Dist. Miami No. 85CA25, 1986 Ohio App. LEXIS 6818 (May 12, 1986).

       {¶52} The Supreme Court’s mention of Civ.R. 3(D) in the Chambers case was to dispel

the argument that adoption of the Civil Rule amounted to a rejection of the common law doctrine

of forum non conveniens. In context, the above-quoted statement was an explanation of why

Civ.R. 3(D) only applies when venue in the state of Ohio is not proper, as opposed to when

venue in a particular county in Ohio is not convenient. The Court does not hold that Civ.R. 3(D)

can only be applied in this one situation. Rather, the Court states this is the only situation in

which it had been applied at the time of the 1988 decision and aphoristically presumes it to be

the only situation in which it could be applied. The Court’s decision does not comment on the

Rule’s viability in future cases and, specifically, does not contemplate the application of the Rule

to a contractual forum selection clause. In fact, Civ.R. 3(D) has subsequently been applied to

enforce valid forum selection clauses. See, e.g., Barrett, supra; Four Seasons Enters. v. Tommel

Fin. Servs., 8th Dist. Cuyahoga No. 77248, 2000 Ohio App. LEXIS 5223 (Nov. 9, 2000);

Krygsman v. Gerken, 2d Dist. Montgomery No. 16062, 1997 Ohio App. LEXIS 2927 (July 3,

1997); see also Brislin, supra. Appellants’ reliance on Chambers is therefore misplaced.

       {¶53} Appellants’ fourth assignment of error is without merit.
                                                18


                                                VII.

       {¶54} For all of the foregoing reasons, the judgment of the Lorain County Court of

Common Pleas is hereby affirmed.

                                                                                  Judgment affirmed.




       There were reasonable grounds for this appeal.

       We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Lorain, State of Ohio, to carry this judgment into execution. A certified copy of

this journal entry shall constitute the mandate, pursuant to App.R. 27.

       Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

       Costs taxed to Appellants.




                                                       TIMOTHY P. CANNON
                                                       FOR THE COURT



SCHAFER, J.
CONCURS.

CARR, P. J.
CONCURS IN JUDGMENT ONLY.

(Cannon, J., of the Eleventh District Court of Appeals, sitting by assignment.)
                                         19


APPEARANCES:

ROBERT R. KRACHT, Attorney at Law, for Appellants.

RICHARD W. CLINE, Attorney at Law, for Appellees.
