Venue considerations in construction disputes.

• Author: Cobb, Christopher M.
• Position: Florida

During the early stages of a construction dispute, it is critical to consider how best to preserve or enforce a contractual venue provision. Construction disputes commonly include numerous players (i.e., owners, contractors, subcontractors, suppliers, etc.), which can result in multiple contracts among the related parties. With the multitude of contractual provisions and statutory requirements, coupled with defendants in different locations, even the most seemingly straightforward construction dispute can involve complex issues. This article discusses varying venue concerns that must be taken into account in construction disputes. Although the focus of this article involves Florida and state-based claims, readers should also be mindful that there are federal venue considerations that will come into play when litigating a federal Miller Act claim.1 When dealing with venues in Florida, there are two fundamental considerations: Should the lawsuit be brought in Florida and, if the answer is yes, where should venue lie within the state?

Venue in General

Before discussing venue considerations in a construction setting, one must first consider the fundamental principles of venue. Most Florida actions are governed by F.S. [section]47.011, the general venue statute. Florida's general venue statute controls actions brought under common law, as well as matters brought pursuant to statutes that do not contain specific venue provisions. (2)

In addition to the general venue statute, Ch. 47 also contains several specific venue statutes. If there is a specific venue statute, the next step is to determine whether there is a conflict between the specific statute and the general statute. All conflicts between the general statute and a specific venue statute will be resolved in favor of applying the specific statute. (3)

Absent some statutory venue exception, parties are generally free to establish venue by agreement or stipulation. (4) Many construction contracts contain venue provisions that have pre-determined the location and forum for bringing and maintaining disputes regarding the contract. (5)

Absent a negotiated contract, parties must look to the Florida Statutes for guidance to determine proper venue. The Florida Legislature has provided a roadmap to aid construction attorneys in navigating this issue by enacting a specific venue statute that voids contractual venue provisions requiring resident contractors, subcontractors, sub-subcontractors, or materialmen to litigate claims outside of the state of Florida for disputes involving improvements to real property in this state. For this reason, the initial consideration for a practitioner handling a construction action is to determine whether the action must be litigated in Florida.

The Scope of F.S. [section]47.025

In Florida, contractual provisions for the improvement of real property that require the action be brought outside of the state are void as a matter of public policy pursuant to F.S. [section]47.025. Section 47.025, entitled "Actions against contractors," provides as follows:

Any venue provision in a contract for improvement to real property which requires legal action involving a resident contractor, subcontractor, sub-subcontractor, or materialman, as defined in part I of chapter 713, to be brought outside this state is void as a matter of public policy. To the extent that the venue provision in the contract is void under this section, any legal action arising out of that contract shall be brought only in this state in the county where the defendant resides, where the cause of action accrued, or where the property in litigation is located, unless, after the dispute arises, the parties stipulate to another venue. (6)

Before litigants can employ the protections of this construction venue statute, a preliminary determination must be made regarding whether or not the statute even applies. Having a construction dispute is not in itself dispositive of whether [section]47.025 applies. The statute protects resident "contractors," "subcontractors," "subsubcontractors," and "materialmen," (7) as defined by F.S. [section]713.01, et seq. (8)

If the litigants at issue do not fall within one of the above defined categories, then [section]47.025 does not apply. When the lawsuit does not involve a "contractor," "subcontractor," "subsubcontractor," or "materialmen," an out-of-state venue provision may be enforceable unless void for some other reason. If, on the other hand, the affected party is identified as being in one of the above defined categories, then [section]47.025 would likely apply, and the venue will lie in Florida unless the parties stipulate to a non-Florida venue after the dispute arises.

Interpreting F.S. [section]47.025

The seminal case interpreting [section]47.025 is Kerr Construction, Inc. v. Peters Contracting, Inc., 767 So. 2d 610 (Fla. 5th DCA 2000). In Kerr, a Florida subcontractor filed suit against a contractor in Orlando for damages stemming from breach of a subcontract. (9) The subcontract at issue contained a venue selection clause, which stated: "This agreement shall be construed in accordance with the laws of the Commonwealth of Kentucky and shall be enforced only in the courts of the Commonwealth of Kentucky." (10) The contractor moved to dismiss the complaint for improper venue based upon the subcontract's forum selection clause. (11)

On appeal, the Fifth District reviewed the legislative intent of [section]47.025 and ruled that the subcontract's venue selection clause was void. (12) According to the court, venue needed to be determined in accordance with Florida's general venue statute (i.e., F.S. [section]47.011). (13) In rendering its decision, the court was careful to avoid choice-of-law issues so as not to create an overly broad ruling. Specifically, the Fifth District noted that [section]47.025 did not address choice-of-law clauses, and, thus, they would remain valid and applicable despite the venue selection clauses being void. (14) Hence, contracts could still require application of out-of-state law, even though the venue would lie in Florida.

Who Is Considered a "Resident" Under [section]47.025?

The above scenario seems to pave a comprehensive path for practitioners. However, the issue of who qualifies as a "resident" could arise, since [section]47.025 specifically references and applies only to "resident" contractors, subcontractors, sub-subcontractors, or materialmen. (15) Suppose that you represent a Florida-licensed contractor who resides in Mississippi but has offices in Mississippi and Florida. Your client is served with a complaint or arbitration demand from a homeowner who is bringing an action for alleged damages to an unfinished home-construction project located in Pensacola. The homeowners currently reside in Mississippi and have filed the action in Mississippi insomuch as the...