I’ve had a few clients ask about the enforceability of venue clauses, those pesky provisions that attempt to dictate where a lawsuit relating to the project must be brought. As is often the case, the answer depends on the state in which the project is located. For some variety, I reached out to some fellow construction attorneys around the country for their thoughts and I’ve provided their comments below. As you will see, some states have passed statutes that prohibit venue clauses that require litigation outside of the state in which the contract is located, while other states allow venue outside of the state, so long as the terms of the venue clause are reasonable.
Kansas—Rob Pitkin, construction attorney who can be followed at @KCconstrlawyer, notes that a forum selection clause in a construction contract under Kansas law will not be enforced unless the selected forum bears a reasonable relationship to the transaction. Kansas courts have also refused to enforce forum selection clauses when such a clause would otherwise contravene a strong public policy declared by statute. Some Kansas statutes that may otherwise affect the enforceability of a forum selection clause include enforcement of the Kansas Fairness in Private and Public Construction Acts, the Kansas anti-indemnity statute, and mechanic’s lien cases.
Missouri— Rob also notes that Missouri is among the majority of jurisdictions that will enforce forum selection clauses as long as they are not unreasonable or as long as they do not contravene a strong public policy or state interest. The only venue statute in Missouri that would likely impact a forum selection clause on a construction contract is if the underlying dispute relates to a lien on real estate, which would require the lawsuit to be brought in the county in which the real estate is located.
Nebraska-The Nebraska Prompt Payment Act, Neb. Rev. Stat. §§ 81-2401 to 81-2408, voids contract provisions attempting to apply another state’s laws or requiring litigation or arbitration of claims outside of Nebraska.
North Carolina—Melissa Dewey Brumback, construction attorney and author of Construction in North Carolina, notes that an out-of-state forum selection clause for a project in North Carolina is against public policy and unenforceable as provided in N.C. Gen.Stat. § 22B-3. But, she adds that North Carolina law has been preempted by the Federal Arbitration Act (FAA). See Aspen Spa Properties, LLC v. Int’l Design Concepts, LLC, 527 F. Supp. 2d 469, 473 (E.D.N.C. 2007). Thus, a requirement to bring arbitration in another jurisdiction may be enforceable.
Pennsylvania—Wally Zimolong, construction attorney and author of Supplemental Conditions, notes that section 514 of the Pennsylvania Contractor and Subcontractor Payment Act makes invalid forum selection clauses and choice of law provisions that attempt to designate venue outside of Pennsylvania when the construction project is located in Pennsylvania.
Tennessee—Matthew DeVries, construction attorney and author of Best Practices Construction Law, notes that an out-of-state forum selection clause for a project where the property is located in Tennessee is void and unenforceable. Under Tennessee’s Truth in Construction and Consumer Protection Act, TCA 66-11-208, it is unlawful to make “a contract, subcontract or purchase order subject to the substantive laws of another state” or to mandate “that the exclusive forum for any litigation, arbitration or other dispute resolution process is located in another state.”
Virginia– Christopher Hill, LEED AP, construction attorney and author of Construction Law Musings blog notes that Va. Code Section 8.01-262.1 requires that where a Virginia based construction company enters into a contract for construction, any litigation or arbitration must be held in the jurisdiction of the project (or other proper venue within Virginia) and that out of state forum selection clauses are unenforceable. In short, any enforcement of a construction contract against a Virginia contractor must take place in the Commonwealth of Virginia.
If you are doing work outside of your home state, make sure you review the construction contract for a venue clause. If there is a venue clause, you would be well served to ask your construction counsel if the clause is enforceable.