Late last year, the United States Supreme Court ruled that forum selection clauses in a construction contract are enforceable and, in some states, may require a construction dispute to be litigated outside of the state in which the project is located.
The case, Atlantic Marine Construction Co. Inc., involved a construction project in Texas. Atlantic Marine was awarded a project at Fort Hood and subcontracted with J-Crew Management, a Texas company. The contact contained a forum selection clause requiring any litigation to be brought in Virginia state or federal court, Atlantic Marine’s home state.
J-Crew was owed about $160,000 on the project and sued Atlantic in Texas. Atlantic asked the court to move the case to Virginia as required by the forum selection clause. J-Crew argued that the case should stay in Texas and the court should apply Texas law that provides that a forum selection clause that requires a claim to be litigated in another state may be voidable. The Supreme Court ultimately held that the trial court should have moved the case to Virginia.
This is an important case for contractors that work in states that do not prohibit forum selection statute, like Texas. Nebraska statute, section 45-1209, on the other hand, provides that forum selection clauses that seek to require the parties to litigate the case outside of Nebraska are void and will not be enforced.
Take Away—Review your contract for forum selection clauses. If the work is performed in Nebraska, any dispute should be litigated in Nebraska. If you are doing work in other states, make sure you know that state’s law on where litigation may take place.