New Case Law on Jurisdiction and Venue Clauses in Florida Contracts

By: Rana M. Gorzeck, Business, Finance and Real Property Law Attorney at Ward Damon, West Palm Beach 

 

Can parties to a Florida Contract agree in advance to subject a non-Florida-resident to the jurisdiction of the Florida courts in the event of a dispute?  The answer is YES, provided that the requirements of Sections 685.101-102 of the Florida Statutes are met.  These statutes, enacted in 1989, are satisfied if the Contract between the Florida resident and the non-Florida resident:  (1) provides that Florida law applies to the transaction; (2) provides that the non-resident expressly agrees to submit to the jurisdiction of the courts of Florida; (3) involves consideration of not less than $250,000; (4) does not violate the United States Constitution (primarily as to due process concerns); and (5) either bears a reasonable relationship to the State of Florida or one of the parties to the Contract is residing or organized in Florida.

Companies hoping to negotiate a Florida contract containing jurisdiction, venue, and choice of law provisions that will be entered into by non-resident persons or entities should keep the above-noted statutory requirements in mind.  Provisions of this type are preferred by business in Florida, so that, if a dispute arises, it will be resolved where the company does business—here in Florida, and not where the non-resident happens to reside.

In past cases, non-residents have successfully argued that they should not be subjected to the in personam jurisdiction of the Florida Courts merely as a result of a contract they entered into because of their right to due process under the United States Constitution.  Their reasoning was that non-residents should not be brought into the Florida Courts unless they have notice of their need to appear, and that it is unreasonable to subject them to the long arm jurisdiction of a foreign court, many miles from their home state.  In 2004, a Federal Court in Florida held that due process is nevertheless met in such a case if the choice of forum is “freely negotiated” by the parties and is not “unreasonable and unjust.”  Stellar Group, Inc. v. Mid-Ohio Mech., Inc., 2004 WL 568557, at 3 (M.D. Fla. Jan. 28, 2004).  As a result, a standard “boilerplate” pre-printed contract would not pass the Stellar Group test for due process since it is not “freely negotiated”.  Additionally, small consumer purchase contracts would not satisfy the personal jurisdictional requirements of Section 685, since the consideration involved in such contracts is typically less than $250,000.

In 2009, five years after the Stellar Group case, Florida’s Third District Court of Appeal construed Section 685 and permitted parties to a Contract to restrict personal jurisdiction to the Florida courts by contract alone, since the requirements of Section 685 were met.  Jetbroadband WV, LLC v. Mastec North America, Inc., 13 So.3d 159 (Fla. 3d DCA 2009).  As a result of the Jetbroadband case, assuming the requirements of Section 685 are met, and at least one of the parties is a Florida resident or entity, it should not even be necessary to show that the subject matter of the Contract bears a reasonable relationship to Florida in order for the Florida Courts to obtain jurisdiction.  This new case law in Florida, based upon Section 685, takes the Florida Courts one step further to achieving long arm personal jurisdiction over non-residents.

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