By: Richard E. Guttentag, Esq. and Alex Beck, Esq., Stearns, Roberts & Guttentag, LLC
“Venue” refers to the geographical area or county where a lawsuit may be heard or tried. The parties to a contract may include a provision, known as a venue or forum selection clause, in a contract that establishes venue in a particular county in the event of a dispute. Absent a forum selection clause in a contract, a lawsuit shall be brought only in the county where: a) the defendant resides, or corporation has an office; b) where the cause of action accrued; or c) where the property in the litigation is located.
While forum selection clauses are presumptively valid, their validity is not absolute. In October 1999, the Florida legislature enacted legislation which voided any venue selection clause in a contract for improvement to real property involving a Florida contractor that requires the action to be brought outside Florida. Specifically, Fla. Stat. § 47.025 provides in part:
“Any venue provision in a contract for improvement to real property which requires legal action involving a resident contractor, subcontractor, sub-subcontractor, or materialman, as defined in part I of chapter 713, to be brought outside this state is void as a matter of public policy.”
A case examining this statute is Kerr Const., Inc. v. Peters Contracting, Inc., 767 So. 2d 610 (Fla. 5th DCA 2000). In Kerr, a subcontractor brought an action for breach of contract and for recovery under a payment bond against the general contractor and surety. At issue was a construction contract for improvement of real property in Orlando, Florida (located in Orange County). The subcontractor filed suit in Orange County Circuit Court, and the general contractor and surety moved to dismiss the case for improper venue based on a clause in the subcontract which provided that the agreement shall be construed in accordance with the laws of Kentucky and shall be enforced only in the courts of Kentucky.
The appellate court ruled that Fla. Stat. §47.025 rendered the venue selection clause in the contract void and unenforceable. The court held that the statute requires that venue lie in Florida for disputes arising out of contracts for improvement to real property involving Florida contractors. The court further explained that as a result of the venue provision in the contract being void, any legal action arising out of the contract shall be brought only in the Florida County where the defendant resides, where the cause of action accrued, or where the property in litigation is located. In this case, the court found that proper venue was in Orange County, Florida.
In reaching its decision, the court also discussed whether the choice of law provision in the contract (i.e. the provision providing that the agreement shall be construed in accordance with Kentucky law) would prevent the application of Florida law to determine the validity of the venue clause. The court ruled that the issue of venue was “procedural”, and therefore the law of the court where the action was brought (i.e. Florida law) applied rather than the law selected by the parties.
This case demonstrates that a venue provision in a contract for the improvement of real property involving a Florida contractor, subcontractor, sub-subcontractor, or material supplier, which requires a legal action to be brought outside of Florida is void and unenforceable.
About the Authors: Richard E. Guttentag is a partner with Stearns, Roberts & Guttentag, LLC, and is Board Certified in Construction Law by the Florida Bar. Mr. Guttentag exclusively in construction law including construction lien claims and defense, payment and performance bond claims and defense, bid protests, construction contract preparation and negotiation, and construction and design defect claims and defense. He can be reached for consultation at [email protected].
Alexander S. Beck is an associate with Stearns, Roberts & Guttentag, LLC. Mr. Beck in construction law including construction lien claims, payment and performance bond claims, bid protests, construction contract preparation, and construction and design defect claims He can be reached for consultation at[email protected].