By: E. Carson Lange
When preparing or negotiating the terms of construction contracts, parties often indicate where any dispute that may arise between the parties must be litigated. Courts will generally enforce such “venue” or “forum selection” clauses, and such clauses, when carefully worded, can be an effective means to control where a case may be filed. However, in the context of construction disputes, Florida imposes some restrictions on this practice. There are a few important limitations to be mindful of when considering forum selection clauses in construction contracts.
First, Section 47.025, Florida Statutes, states that a forum selection clause that would require a Florida contractor or subcontractor to litigate outside the State of Florida is void as a matter of public policy. Where a contractor’s or subcontractor’s contract includes a foreign venue clause, even if strongly worded, the court will not enforce the clause. Instead, unless the parties stipulate to a different venue after the dispute arises, any dispute that arises between the parties must be litigated in the Florida county where either the defendant resides, the cause of action accrued, or the property in litigation is located. This statute is meant to protect Florida contractors and subcontractors from being forced into a foreign court.
Second, courts are free to ignore forum selection clauses where “compelling reasons” exist even when the chosen venue is located in the State of Florida. As illustrated in the recent Florida case of Love’s Window & Door Installation, Inc. v. Acousti Eng’g Co., 147 So.3d 1064 (Fla. 5th DCA 2014), such reasons often arise in multi-party litigation. In that case, the plaintiff, a condominium association, filed a construction defect complaint against a project developer and general contractor in Osceola County, Florida. The general contractor then filed a third party complaint against a subcontractor who worked on the construction project. The subcontractor then filed a fourth party complaint against a sub-subcontractor. The sub-subcontractor, based on a mandatory forum selection clause negotiated and memorialized in its contract with the subcontractor, moved to sever the fourth party action and transfer venue to Volusia County, Florida. The trial court denied the motion, and the appellate court affirmed. The appellate court found that there were compelling reasons not to enforce the forum selection clause including “avoiding multiple lawsuits, minimizing judicial labor, reducing the expenses to the parties, and avoiding inconsistent results.”
Third, construction liens must be recorded in the public records in the county where the labor, services and materials were provided, regardless of any contractual forum selection clause. Likewise, actions to enforce such liens are to be brought in the county in which the property is located.
So, the next time you see a forum selection clause in your construction contract, take a closer look and keep these things in mind. By understanding the limitations imposed by law on such provisions, you may be able to select a venue that is not only agreeable to the parties but one that will be upheld in court.