Forum selection provisions are NOT to be overlooked. Ever. Treat them seriously. Even on federal projects where there is a Miller Act payment bond. Consider forum selection provisions on the front end when negotiating your contract.
In a recent opinion, U.S. f/u/b/o Timberline Construction Group, LLC vs. Aptim Federal Services, LLC, 2024 WL 3597164 (M.D.Fla. 2024), a joint venture prime contractor was hired by the federal government to build a temporary housing site. The joint venture prime contractor obtained a Miller Act payment bond. The joint venture then entered into a subcontract with one of its joint venture members and the member-subcontractor then engaged a sub-subcontractor. The sub-subcontractor claimed it was owed $3.5 Million and sued the member-subcontractor, as well as the prime contractor’s Miller Act payment bond, in the Middle District of Florida. The member-subcontractor and the Miller Act payment bond sureties moved to transfer venue to the Middle District of Louisiana pursuant to a forum selection clause in the contract between the sub-subcontractor and the member-subcontractor. The contract provided that the exclusive venue would be a United States District Court located in Louisiana.
Forum selection provisions are analyzed in federal court under 28 U.S.C. 1404(a): “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.” U.S. f/u/b/o Timberline, supra at *2. A forum selection provision is presumptively valid and given controlling weight. Id. (quotations and citations omitted).
The sub-subcontractor argued that venue was appropriate in the Middle District of Florida under the Miller Act. The sub-subcontractor was correct in this regard. But, as the District Court maintained, “binding precedent directs us to give the forum-selection clause the same fore we would generally give it in any other civil action. This is so because the Miller Act’s venue provision is ‘merely a venue requirement’ and not jurisdictional.” U.S. f/u/b/o Timberline, supra, at *2. And as often the case, private contracting parties can agree to litigate Miller Act claims in other venues based on their agreed-upon forum selection provision. Id.
While the District Court agreed with the sub-subcontractor that Florida has an interest in having a local controversy resolved in its courts which weighs against transfer, the District Court found: (1) a Miller Act claim deals with a federal question and courts routinely apply laws of other jurisdictions to resolve breach of contract claims; (2) Louisiana judges could resolve this dispute no different than Florida judges; and (3) the sub-subcontractor cannot show the case would unfairly burden Louisiana citizens with jury duty. This is important because the sub-subcontractor bore the heavy burden in demonstrating that transferring the case to the forum per the forum selection provision is unwarranted. The sub-subcontractor could not carry this burden.
Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.