Claim professionals have to be aware of the law. As part of your undying commitment to getting your work done right, you have to know your stuff.
Most of us in the legal realm can acknowledge the empty abyss that is construction law cases that get before the Supreme Court of the United States (SCOTUS). Contract construction is typically not something that makes it all the way up the chain. But those of you that have been wanting some top end opinion on forum selection clauses – rejoice.
Last week, SCOTUS took on review of a 5th Circuit case involving a federal construction project in Texas. The general contractor in this case inserted a forum selection clause that required all litigation to be filed in Virginia. A subcontractor filed a suit against the general contractor in a Texas federal court, when the general failed to pay.
In In re Atl. Marine Const. Co., Inc., 701 F.3d 736 (5th Cir. 2012) cert. granted, 12-929, 2013 WL 1285318 (Apr. 1, 2013), the general contractor filed a motion to dismiss and/or transfer the matter in accordance with the forum selection clause – the trial court denied it. After an unsuccessful appeal to the 5th Circuit, the general filed for certiorari and was granted the pleasure of a SCOTUS review. Exciting, indeed.
For those of you that wondered what the 5th Circuit said, there was a concurrence with the trial court. The limited 5th Circuit opinion stated that the court, in determining a transfer of forum, must consider more than just the forum selection clause. The court should consider convenience, location of witnesses and documents, and property laws.
So we all now await the SCOTUS opinion. In the meantime, sureties and claim professionals should not feel very comfortable in their bonded principals’ forum selection clauses. Be wary that the court will look to more than the lettering of the contract.