Arbitration & Mediation

Forum Selection Clause Loses to Lien Foreclosure

By Christopher B. Hopkins, Esq.

The Fifth DCA recently addresses the question of the enforceability of a contractual forum selection clause when there is a companion case which must be brought in a different venue. In John Mason v. Homes By Whitaker, Inc., the parties had a contract (with a mandatory forum selection clause) to build a house in Clay County. The forum selection clause required disputes be brought in Marion County. A dispute arose and the buyer sued in Marion County -- but the builder foreclosed and had to file in Clay County. Ironic, since presumably it was the builder's form which selected the venue.

The court ruled that the lien foreclosure case could not be moved and that it trumped the forum selection clause. Generally, a forum selection clause should be enforced "absent a showing that the clause is unreasonable or unjust." A court can disregard it if there are "compelling reasons not to enforce it." Here, consolidation would avoid multiple suits, minimize judicial labor, reduce expenses, and avoid inconsistent results. In short, the two disputes involve the same parties and essentially the same "basic dispute" and it "makes no sense" to have two actions.

Full post as published by Florida Arbitration Law on February 20, 2008 (boomark / email).