Determining Venue for Contract Litigation

Some of the first questions we often address during the evaluation and initiation of litigation under a contract are, “Where do we bring suit?” and “What law is to be applied?” When a contract is the basis for the litigation, there may or may not be a provision that addresses the location where the parties agree to settle their legal differences and what law is to be applied. This is intended to be a brief overview of where suit is to be brought, commonly known as “Venue,” and the issue of what law is to be applied.

Florida law authorizes parties to stipulate in their contract to the forum, venue and law that will be used to interpret and enforce their contract. Sonus-USA, Inc., v. Thomas W. Lyons, Inc. 966 So. 2d 992, 993 (Fla. 5th DCA 2007). Generally, if a forum selection clause unambiguously mandates that litigation is to be subject to an agreed upon forum, it would be reversible error of the trial court to ignore such a clause. Id. It is, therefore, necessary to determine whether a venue clause in a contract is mandatory or permissive and the general test for determining the nature of the clause is the use of language in the contract that indicates “exclusivity.” Id. Absent language of exclusivity, such as the clause clearly stating or indicating that any litigation must or shall be initiated in a specific forum, the clause is permissive and it is nothing more than consent to jurisdiction and venue in the named forum. Id. Merely consenting to jurisdiction in this manner does not exclude jurisdiction or venue in any other forum. Id.

Mandatory forum selection provisions which have been obtained through freely negotiated agreements are valid, unless shown by the resisting party to be unreasonable or unjust. Beaubien v. Cambridge Consolidated, LTD.  652 So.2d 936, 940 (Fla. 5th DCA 1995). The test of unreasonableness is not mere inconvenience or additional expense. Sonus-USA, Inc., v. Thomas W. Lyons, Inc.  966 So.2d 992, 993 (Fla. 5th DCA 2007); Manrique v. Fabbri. 493 So.2d 437, 440 (Fla. 1986). It is incumbent upon the party seeking to escape from the forum selection clause to show that trial in the contractual forum will be so gravely difficult and inconvenient that he will, for all practical purposes, be deprived of his day in court. Id.; McWane, Inc. v. Water Management Services, Inc., 967 So.2d 1006 (Fla. 1st DCA 2007).  Absent such a showing, there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold that party to his bargain. Manrique v. Fabbri. 493 So.2d 437, 440 (Fla. 1986).  Furthermore, the use of the word “shall” in the clause is clearly indicative of a mandatory provision rather than a permissible one. Sonus-USA, Inc., v. Thomas W. Lyons, Inc.  966 So.2d 992, 993 (Fla. 5th DCA 2007).

A federal case in Minnesota is on point in this matter and starts with the premise that courts generally begin with a presumption that a forum selection clause is permissive. Multifeeder Technology, Inc. v. British Confectionary Company Limited. 2009 WL 5033598 at 3 (D. Minn. 2009). The Court in Multifeeder also stated that phrases similar to “submits…to the jurisdiction” without more are permissive.  Id. at 4.  Additionally, a forum selection clause stating that party “irrevocably submits to” a particular jurisdiction contains no mandatory language and shows no intent to make jurisdiction exclusive. Florida State Board of Administration v. Law Engineering & Environmental Services, Inc.  262 F.Supp.2d 1004, 1008 (D. Minn. 2003).

With respect to the law to be applied, Florida law dictates that the law chosen by a contract applies so long as there is a reasonable relationship between the contract and the state whose law is selected and the selected law does not conflict with Florida law or confer an advantage on a non-resident party which a Florida resident does not have. Metric Systems Corporation v. McDonnell Douglas Corporation. 850 F.Supp 1568, 1578 (N.D. Fla. 1994). However, when a clause in a contract dictates that it shall be construed in accordance with the laws of a particular state, claims arising in tort are not ordinarily controlled by a contractual choice of law provision. Choice of law on tort claims is decided according to the law of the forum state. Burger King Corp. v. Austin. 805 F.Supp. 1007, 1012 (S.D. Fla. 1992).

If you have a contract issue and you are unsure of your rights and responsibilities under the contract, please contact one of our attorneys at The Hogan Law Firm. Our Firm has extensive experience in litigating contracts, including addressing issues of venue and choice of law, and we are able to provide guidance on a wide array of contractual issues to our clients.