Missouri Real Estate Lawyer

A forum is the court where a lawsuit is filed. Parties to a contract can decide in advance where lawsuits will be filed. Such decision is stated in a forum selection clause. It is simply a short paragraph in a contract that identifies the state, or even the court, where lawsuits can be brought. A forum selection clause is important when the parties to the contract reside in different states.

Long-Arm Statute

Most states have a long-arm statute. Such statutes describe when the state has jurisdiction over a nonresident. Missouri’s long-arm statute lists seven circumstances when a non-Missouri resident can be sued in this state. One circumstance is when that person transacts any business in this state. Another is when that person forms a contract in this state. The contract formed or the business transacted must be the subject of the lawsuit.

In addition to a state’s long-arm requirements, the U.S. Supreme Court requires the person to have had a certain amount of contact with the state.  Generally, the contacts must be such that the nonresident would expect to come under the jurisdiction of the state. This contact must be in addition to contact involving the subject matter of the lawsuit. Obtaining jurisdiction over the out of state person must not offend “traditional notions of fair play and substantial justice.”

Personal Jurisdiction

Typically, a nonresident will file a motion claiming that the court lacks personal jurisdiction over the nonresident. The party will claim that the long-arm statute does not apply to them, or that they lack the requisite minimum contacts. The party that filed the lawsuit will assert that the nonresident waived these defenses with the forum selection clause. The issue then is whether the clause is valid and enforceable. A forum selection clause freely negotiated without fraud or overreaching is often enforceable. Once the party filing the lawsuit proves up the forum selection clause, the burden shifts to the nonresident.

The nonresident must demonstrate that the clause is unfair or unreasonable.  This is a heavy burden. A Missouri appeals court reviews the matter independently of the trial court’s finding.

Tort Claims

A forum selection clause will not include tort claims unless the clause specifically provides for tort claims. Tort claims include fraud, negligence, and breach of fiduciary duty.

Forum Selection Clause

The following is a typical forum selection clause.

Missouri Law and Venue. All parties hereto agree that this Operating Agreement is formed and entered into in the State of Missouri and that the Operating Agreement shall be interpreted and governed solely by Missouri law and procedure, without regard to any choice of law procedure.  All parties further agree that the St. Louis County Circuit Court is the reasonable, convenient, and proper venue for any and all legal and equitable actions regarding any dispute related to this Operating Agreement or any matter related to the Company, including any and all actions related to a tort, including but not limited to fraud, negligence, or breach of fiduciary duty.  All such actions shall therefore be commenced and adjudicated only in the St. Louis County Circuit Court.

Add a consent to jurisdiction clause to strengthen the forum selection clause.

Consent to Jurisdiction.  Each party hereto agrees that the State of Missouri possesses personal jurisdiction of the parties by reason of this Operating Agreement having been negotiated and entered into in the State of Missouri, and by reason of all parties otherwise possessing the requisite Due Process minimum contacts with the State of Missouri. Each party hereto accordingly waives any right to assert that the State of Missouri lacks personal jurisdiction over a party; such waiver is material to all parties to this Operating Agreement; and each party hereto has entered into this Operating Agreement in reliance upon said waiver.

Even though a contract might contain language similar to the above clauses, a nonresident party might claim that it did not draft the agreement. In that case, the nonresident asks the court to construe the above provisions against the party that drafted the provisions. The following clause helps counter such assertion.

Mutual Drafting. Each party hereto hereby asserts that he/she/it has materially and substantively participated in negotiating and in drafting this Operating Agreement, and this Agreement shall therefore not be construed against any party by reason alone of that party having drafted any portion of this Operating Agreement.

Take-Away

Parties to a lawsuit will often challenge the jurisdiction of a court outside of their home state. Such challenge can be time consuming and costly. A well drafted forum selection clause can resolve the dispute at a fraction of the cost.

Michael Sewell, JD, MBA has litigated more than 100 lawsuits in federal, state, administrative, and municipal courts since 2005, involving real estate, business, and personal disputes.

Please contact Michael Sewell for an initial consultation at no charge. (314) 942-3232 | michael@sewelllaw.net.

This article is for general informational purposes only. This information is not intended as legal advice. You should consult an attorney regarding how this information might apply to your specific circumstances.

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