Venue Selection Clauses in Construction Contracts: Contractors and Subcontractors Beware
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Most well written construction contracts, or any contract for that matter, have provisions governing venue for litigation of disputes arising out of or related to the contract. These types of provisions are commonly referred to as venue selection clauses. Depending on how the venue clause is worded, a court may require the parties to litigate their claims in a venue that does not jibe with what the parties intended. In the context of construction defect cases, and notwithstanding whether the venue clause is mandatory, parties may still be required to litigate in a forum other than the one they selected. Love’s Window & Door Installation, Inc. v. Acousti Engineering Company.
When reviewing venue selection clauses, Florida courts look at whether the choice of venue is mandatory or permissive. Regal Kitchens, Inc. v. O’Connor & Taylor Condominium Construction, Inc. Mandatory venue provisions require the parties to unequivocally specify that a particular forum be the exclusive venue for litigation concerning the agreement. Permissive venue selection clauses are nothing more than consenting to certain jurisdiction but do not exclude venue in another forum. If mandatory, the court will enforce the venue selected by the parties; if permissive, the court may find another venue is more appropriate than the one selected by the parties.
Despite this mandatory/permissive analysis, contractors and subcontractors should be aware of the recent Florida case of Love’s Window & Door Installation, Inc. v. Acousti Engineering Company. This construction defect case involved a condominium association that sued the project’s developers and general contractor. Thereafter, various third and fourth party complaints were filed, including a fourth party claim against a window installer. The contract between the subcontractor and this installer provided for venue in a jurisdiction other than where the association’s lawsuit was pending. The installer argued the mandatory venue clause in its subcontract required litigation in Volusia County rather than Osceola County, Florida. The subcontractor argued that there were exceptions to the mandatory venue rule and compelling reasons not to enforce the venue selection clause. In holding the claims between the subcontractor and installer were properly in Osceola County (where the association filed suit), the court considered the effect of multiple lawsuits, minimizing judicial labor, reducing the expenses to the parties, and avoiding inconsistent results. As such, the court found compelling reasons not to enforce the venue selection clause found in the subcontractor/installer subcontract.
A carefully drafted mandatory venue clause will typically alleviate any surprises as to the location where litigation involving the contract will take place. However, when it comes to construction defect cases, contractors and subcontractors should be aware of the holding of Love’s Window & Door Installation, Inc.