Do Not Overlook Reviewing the Forum Selection Provision in the Contract
Many contracts contain what is known as a forum selection provision. This provision may state that disputes arising out of the contract MUST be brought in the exclusive venue of a specific county or state. Do not overlook this provision because this provision is enforceable and will likely dictate where you will need to file suit in the event of a dispute. For instance, if you have a contract for services performed in Miami-Dade County, Florida (or you live in that County, or is receiving goods in that County), you may not want to agree to litigate disputes arising from that contract out-of-state or even in a different Florida County. Regardless, a forum selection provision is a provision that should be factored in on the frontend when negotiating or executing the contract because, well, disputes happen. This is one reason why it is good to always have attorneys involved when reviewing contracts or pointing out issues for you to consider with respect to the contract.
In Hendel v. Internet Escrow Services, Inc., 46 Fla.L.Weekly D293b (Fla. 3d DCA 2021), the plaintiff owned an art gallery in Miami. The plaintiff entered into a transaction to purchase artwork from a seller. The transaction was done through a website owned by the defendant that handled the escrow-related services for the transaction. The plaintiff needed to click on web-based buttons from the defendant to agree to its terms for the transaction. When the plaintiff received the artwork, he discovered it was a forgery, prompting the plaintiff to file the lawsuit in Miami Dade-County, Florida against the defendant. The defendant moved to dismiss the lawsuit based on the forum selection provision in the agreement, which required disputes to be litigated exclusively in Orange County, California. The forum selection provision provided:
Governing Law; Venue
This Agreement will be construed in accordance with and governed exclusively by the laws of the State of California applicable to agreements made among California residents and to be performed wholly within such jurisdiction, regardless of such parties’ actual domiciles. All parties submit to personal jurisdiction in California, and venue in the County of Orange, State of California. The aforementioned choice of venue is intended by the parties to be mandatory and not permissive in nature. Each party hereby waives any right it may have to assert the doctrine of forum non conveniens or similar doctrine or to object to jurisdiction or venue with respect to any proceeding brought in accordance with these General Escrow Instructions.
While the trial court originally denied the defendant’s motions to dismiss in response to the original complaint and first amended complaint, the trial court finally granted the motion in response to the plaintiff’s second amended complaint. “The second amended complaint superseded the amended complaint [and original complaint], permitting [the defendant] to conduct motion practice on the new pleading with additional evidence obtained following its answer to the [first] amended complaint on a preserved venue issue.” Hendel, supra. Stated differently, just because the trial court originally denied the motion to dismiss based on the forum selection provision based on the evidence presented, the defendant continued to preserve this argument; when the plaintiff filed a new operative complaint, the defendant was able to renew the motion to dismiss based on additional presented evidence justifying the basis to dismiss.
The appellate court affirmed the trial court’s dismissal on the forum selection provision “based on improper venue in Miami-Dade County pursuant to the mandatory forum selection clause contained in the [contract].” Hendel, supra
Please contact David Adelstein at [email protected] or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.
