A forum selection provision in a contract requires all litigation to be handled in a specific court, or forum (e.g. the local county court or US District Court). This type of clause is beneficial to certain types of companies that need predictability and uniformity when contracting with a variety of parties in many different states.
For example, in Walbridge Alidinger Company v. Moorehead Electric Company, Inc., the issue was whether Oakland County was a reasonably convenient place for a declaratory action involving an Indiana based corporation. MCL 600.745(2)(b). In a subcontract agreement with Wallbridge, Moorehead agreed to perform work on a project in Indiana.
Even though the project was in Indiana, Moorehead agreed that the subcontract would be subject to Michigan law and any litigation would be in Oakland County, Michigan. Michigan Courts have continually held that where a provision is unambiguous, it must be enforced as written unless it is contrary to public policy. Rory v. Continental Ins. Co., 473 Mich. 457, 470; 703 NW2d 23 (2005). Nonetheless, Moorehead argued that Michigan is not a reasonably convenient place for trial because it is an Indiana company with limited contacts with Michigan.
The Michigan Court of Appeals has held that “a determination of what is a reasonably convenient’ place for trial requires a determination whether Michigan is logical venue that is well-suited for the purpose of deciding this action.” Lease Acceptance Corp v. Adams, 272 Mich. App 209, 225-226; 724 NW2d 724 (2006).
Additionally, Michigan Courts have considered the following factors when determining whether Michigan is a convenient place for the litigation:
- The private interest of the litigants, including the location of the parties, ease of access to sources of proof, the distance from the incident giving rise to the litigation, and other practical problems that contribute to the ease, expense, and expedition of the trial;
- Matters of public interest, including consideration of which state law will govern the case, potential administrative difficulties, and people concerned by the proceeding; and
- Reasonable promptness on the part of the part of the defendants in raising the issue of forum non-conveniens dismissal. Id. at 226-227, citing Cray v. Gen Motors Corp, 389 Mich. 382, 395-396; 207 NW2d 393 (1973).
Considering these factors, the Michigan Court of Appeals found that Michigan was a reasonably convenient place for trial. First, the geographic distances from the relevant locations in Indiana to the court’s location in Michigan are also not particularly long or overly burdensome. Furthermore, many of the businesses involved in the action are Michigan business and Moorehead elected to do business with a Michigan corporation.
In conclusion, choice of forum can be included in an agreement and should be done so carefully since forum non conveniens (i.e. an inconveniently-located court) is a possible defense to such a provision. As such, it is important to be aware of provisions which waive your right to object to a particular court.
This article was authored by law clerk Roger Leshinsky. If you have specific questions about this issue, please contact the attorneys of Demorest Law Firm, PLLC.
