Forum-Selection Clause Enforced

This blog post was written by Chadd Reynolds and David Cook.

In a recent decision, the Georgia Court of Appeals strengthened the broad application of forum-selection clauses.  The Court in Cemex Construction Materials Florida, LLC v. LRA Naples, LLC, reversed a trial courts denial of Cemex’s motion to dismiss based on the forum selection clause contained in the parties’ contract.  No. A15A0996, 2015 WL 6984505, at *2.  This case has strong implications for parties who sign a contract with provisions requiring actions to be commenced in unfavorable locations.

The contract signed by Cemex Construction Materials Florida, LLC (“Cemex”) and LRA Naples, LLC f/k/a Ginn-LA Naples LTD, LLLP (“Ginn”) contained a forum-selection clause that required “any action concerning this Agreement” to be brought in Lee County, Florida.  The contract, which the parties referred to as the “Four-Party Agreement,” modified three other prior contracts that did not contain a forum selection clause.  Cemex moved to dismiss Ginn’s complaint, arguing that the complaint should have been filed in Lee County, Florida.

The trial court, however, denied Cemex’s motion, noting that “the Four-Party Agreement purports to modify only certain provisions of the prior three contracts, [. . .] was entered into almost two and half years after the original agreement, [. . .] adds two other entities” and “contains its own standard, boilerplate provisions governing the contract.”  For these reasons, the trial court held that the Four-Party Agreement “should be read as a separate, independent agreement from the prior three agreements, to which the forum selection clause does not apply.”

In its decision reversing the trial court, the Georgia Court of Appeals first referenced the Georgia Supreme Court’s decision in The Park Avenue Bank v. Steamboat City Dev. Co., that “forum selection clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.”  317 Ga. App. 289, 294 (2012).  The Court then noted that the language in the forum-selection clause was broad – applying to “any action concerning” the Four-Party Agreement.  Ginn’s complaint alleged the existence of the Four-Party Agreement and sought relief from a payment due date contained within the Four-Party Agreement.  The Court held that Ginn’s complaint was an action concerning the Four-Party Agreement, thus requiring the complaint to be filed in Lee County, Florida.

Contract parties should carefully consider forum-selection clauses in their contracts.  As shown in this case, the courts of Georgia will enforce them except in rare circumstances.  Litigating in other jurisdictions can impose severe burdens on parties seeking to enforce or defend their rights arising from such contracts.

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