{"id":890252,"date":"2016-07-15T16:46:40","date_gmt":"2016-07-15T22:46:40","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=890252"},"modified":"2016-07-15T16:46:40","modified_gmt":"2016-07-15T22:46:40","slug":"forum-selection-clauses-in-construction-contracts-after-atlantic-marine","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/forum-selection-clauses-in-construction-contracts-after-atlantic-marine\/","title":{"rendered":"Forum-Selection Clauses in Construction Contracts &#8211; After Atlantic Marine"},"content":{"rendered":"<p>Jeffrey R. Appelbaum, Daniel M. Haymond, Erin Luke and Bill Thrush | Thompson Hine LLP | July 11, 2016<\/p>\n<p><strong>Key Notes:<\/strong><\/p>\n<ul>\n<li><a href=\"https:\/\/www.myconstructionexpert.com\/blog\/supreme-court-rules-courts-must-give-controlling-weight-forum-selection-clause-transferring-action-selected-forum-exceptional-circumstances\/\"><em>Atlantic Marine<\/em><\/a> ruled that forum-selection clauses in construction contracts will control in all but the most exceptional cases<\/li>\n<li>In some states, forum-selection clauses are invalid if they require litigation in a jurisdiction other than where the project is located<\/li>\n<li>But some courts are now using Atlantic Marine to enforce forum-selection clauses despite such legislation<\/li>\n<li>Other public policy considerations may also play a factor<\/li>\n<li>Parties should consider the effect of Atlantic Marine and its progeny when reviewing forum-selection clauses in construction contracts<\/li>\n<\/ul>\n<p><strong><i>Atlantic Marine<\/i><\/strong><\/p>\n<p>Construction contracts often dictate where any litigation between the parties must be commenced. In\u00a0<i>Atlantic Marine v. US District Court\u00a0<\/i>(2013), the Supreme Court unanimously upheld such a forum-selection clause in a construction contract between a contractor and a subcontractor.<\/p>\n<p>The <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/dispute-resolver-u-s-supreme-court-enforces-forum-selection-clause-construction-subcontract\/\"><i>Atlantic Marine <\/i><\/a>case involved a project on federal land. The U.S. Army Corps of Engineers contracted with Atlantic Marine Construction Company to build a child development center at the Fort Hood Army Base in Killeen, Texas. Atlantic Marine entered into a subcontract with J-Crew Management for the work. The subcontract included a forum-selection clause stating that all disputes would be litigated in Virginia, not Texas.<\/p>\n<p>The Supreme Court ruled that the case should be transferred to Virginia, holding that:<\/p>\n<p>When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause. Only under extraordinary circumstances unrelated to the convenience of the parties should a [motion to transfer] be denied.<\/p>\n<p><strong>Impact<\/strong><\/p>\n<p>The <i>Atlantic Marine <\/i>decision strengthened the force of forum-selection clauses in construction cases. Previously, federal courts enjoyed broad discretion to authorize a venue change to a more convenient forum based on a variety of factors. The existence of a forum-selection clause was just one factor to be considered by the judge.<\/p>\n<p>After <i>Atlantic Marine<\/i>, <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/supreme-court-opinion-instructs-enforcement-forum-selection-clauses\/\">forum-selection clauses<\/a> are given more weight. The Supreme Court has made clear that forum-selection clauses will control in all but the most exceptional cases.<\/p>\n<p><strong>Exceptions<\/strong><\/p>\n<p>While most courts post-<i>Atlantic Marine<\/i> have upheld forum-selection clauses, exceptions may still apply, particularly for construction claims.<\/p>\n<p>Anti-Forum-Selection Statutes<\/p>\n<p>Some states have statutes that invalidate forum-selection clauses requiring litigation in an out-of-state venue. For example, many states require construction claims to be litigated in the state where the project is located and prohibit the parties from agreeing to a different venue by contract.<\/p>\n<p>Some courts believe that <i>Atlantic Marine<\/i> does not apply in cases where a state statue prohibits or voids forum-selection clauses because <i>Atlantic Marine<\/i> is based on the presumption of a \u201cvalid\u201d forum-selection clause:<\/p>\n<ul>\n<li><em>Michels Corp v. Rockies Express Pipeline LLC<\/em> (Ohio Ct. App. 2015): Ohio court declared a forum-selection clause in a contract between a construction company and a natural gas pipeline operator \u201cvoid and unenforceable\u201d because it violated an Ohio statute limiting forum selection and choice of law for real estate improvement projects to the area where the project was located. Court cited Atlantic Marine for the notion that forum-selection clauses exist within the confines of statutory limitations, indicating that the clauses can be disregarded if state law conflicts.<\/li>\n<li><em>Waguespack v. Medtronic, Inc.<\/em> (M.D. La. 2016): Louisiana court denied a motion to transfer stemming from a forum-selection clause in an employment agreement because it violated a Louisiana statute that renders forum-selection clauses void if they violate the public policy of the state. Court noted that Atlantic Marine presupposes a valid forum-selection clause and that courts post-Atlantic Marine continue to analyze whether state statutes express a public policy consideration that would invalidate a forum-selection clause.<\/li>\n<\/ul>\n<p>However, other jurisdictions continue to give strong weight to forum-selection clauses in the post-<i>Atlantic Marine <\/i>world, even in the face of competing legislation:<\/p>\n<ul>\n<li><em>KNL Construction, Inc. v. Killian Construction Co.<\/em> (M.D. Pa. 2014) (see also opinion on motion for reconsideration): Pennsylvania court transferred a case to Missouri pursuant to a forum-selection clause in a contract between a general contractor and one of its subcontractors regarding construction of a hotel in Pennsylvania, even though a Pennsylvania statute required such disputes to be litigated in Pennsylvania. The court refused to read Atlantic Marine as creating an exception for anti-forum-selection clauses and noted that Atlantic Marine did not involve a statute like the Pennsylvania statute. The court held that the Pennsylvania statute was not a compelling state interest that would negate a privately contracted-for forum-selection clause.<\/li>\n<li><em>Bowen Engineering Corp. v. Pacific Indemnity Co.<\/em> (D. Kan. 2015): Kansas court transferred litigation between an Indiana engineering firm and an Illinois metal fabrication company regarding a project in Kansas to Missouri pursuant to a forum-selection clause in the parties\u2019 contract, even though Kansas law required litigation to be in the county where the property is located. The court interpreted the Kansas Fairness in Private Construction Contract Act (KFPCCA) very narrowly and held that the law did not directly prohibit the use of forum-selection clauses, in contrast to other state codes that are more explicit.<\/li>\n<\/ul>\n<p>Parties should always research and consider local law when considering forum-selection clauses post-<i>Atlantic Marine<\/i>.<\/p>\n<p>Some courts post-<i>Atlantic Marine<\/i> will disregard forum-selection clauses for general public policy considerations, in line with the <i>Atlantic Marine <\/i>holding:<\/p>\n<ul>\n<li><em>Lieberman v. Carnival Cruise Lines<\/em> (D. N.J. 2014): Federal court denied a request to transfer venue pursuant to a forum-selection cause because the plaintiff was extremely ill with cancer and undergoing chemotherapy treatment, and transferring to the contracted-for jurisdiction would have effectively deprived the plaintiff of \u201cher day in court.\u201d<\/li>\n<li><em>Joseph Monastiero v. appMobi, Inc.<\/em> (N.D. Cal. 2014): Parties signed an employment agreement with a forum-selection clause agreeing to litigate all claims in Pennsylvania. The plaintiff, a former employee and California resident, filed suit against the defendant Pennsylvania corporation in California state court. The California court ultimately determined that enforcement of the forum-selection clause \u201cwould be unreasonable or unjust,\u201d would effectively deprive the plaintiff of \u201chis day in court,\u201d and would diminish his rights as a California resident \u201cin violation of public policy.\u201d<\/li>\n<\/ul>\n<p>The Court in <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/need-witness-testimony-trump-forum-selection-clause\/\"><i>Atlantic Marine <\/i><\/a>made clear that public policy considerations like the above could warrant a change in venue in spite of a forum-selection clause. The Court stated that private interests of the parties should not be considered (the parties already agreed to a contract and other private interests should not be considered in lieu of the contract) \u2013 but public policy considerations may still come into play for some courts.<\/p>\n<p><strong>Conclusion<\/strong><\/p>\n<p>Forum-selection clauses will be given strong weight in all but the most exceptional circumstances. Anti-forum-selection statutes may provide an exception in certain states, while other jurisdictions may uphold forum-selection clauses even in the face of such legislation. Other public policy considerations may also be a factor in certain states. Parties should consider these issues when evaluating forum-selection clauses in construction contracts.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jeffrey R. Appelbaum, Daniel M. Haymond, Erin Luke and Bill Thrush | Thompson Hine LLP | July 11, 2016 Key Notes: Atlantic Marine ruled that forum-selection clauses in construction contracts will control in all but the most exceptional cases In some states, forum-selection clauses are invalid if they require litigation in a jurisdiction other than&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/forum-selection-clauses-in-construction-contracts-after-atlantic-marine\/\">Continue reading <span class=\"screen-reader-text\">Forum-Selection Clauses in Construction Contracts &#8211; After Atlantic Marine<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9419,72,9418],"class_list":["post-890252","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-atlantic-marine","tag-construction-contracts-2","tag-forum-selection-clauses","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Forum-Selection Clauses in Construction Contracts - After Atlantic Marine - Advise &amp; 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