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The Eleventh Circuit Reinforces the Power of the Forum-Selection Clause

Forum-selection clauses are often included in contracts and agreements, but they are generally overlooked or given little value. However, when a possible dispute arises out of a contract or agreement containing a forum-selection clause, that clause becomes extremely important. The Eleventh Circuit issued a recent opinion affirming the power of a forum-selection clause. This reaffirmation provides insight into the mindset of the Eleventh Circuit and how it evaluates the entirety of a contract or agreement. More specifically, how the Eleventh Circuit honors the application of forum-selection clauses.

In 2008 and 2012, Dr. Warren Stiles and his wife obtained a loan from Bankers Healthcare Group. The loan agreement contained a forum-selection clause providing, in relevant part, that “venue for any action brought hereunder… shall be limited to Onondaga County, New York or Broward County, Florida.”

In 2014, Dr. Stiles was notified that due to his failure to satisfy his payment obligations under the loan agreement, Bankers Healthcare Group was filing suit in the agreed-upon forum in New York. Shortly thereafter, Dr. Stiles and his wife filed a lawsuit against Bankers Healthcare Group in the Middle District of Alabama, alleging that Bankers Healthcare Group had violated disclosure obligations under federal law and also asserted state law claims of negligence and fraud. Based on the forum-selection clause, Bankers Healthcare Group moved to dismiss the lawsuit and the District Court granted that motion.

On appeal, the Eleventh Circuit affirmed the District Court. In affirming the District Court, the Eleventh Circuit gave a liberal interpretation to the “any action brought hereunder” to include all the claims of Dr. Stiles and his wife, even claims that Dr. Stiles argued fell outside of the loan agreement. The Eleventh Circuit also opined that Mrs. Stiles was bound by the forum-selection clause even though she was not officially a party to the loan agreement in 2012. Finally, the Eleventh Circuit affirmed the District Court’s forum non conveniens analysis that the burden is on the Plaintiffs to show dismissal was unwarranted based on the public interest factors and that the interest of justice would be best served by holding the parties to their bargain and that there were no extraordinary circumstances to override the valid forum-selection clause.

“Takeaways” from the Eleventh Circuit’s findings: First, when drafting or entering into an agreement, be sure to read and understand the forum-selection clause, because one day it may matter. Second, as a litigator, when a dispute arises, check all the relevant documents for forum-selection clauses. Not only will this prevent you from looking incompetent to the courts and your peers, but this will also help you give informed advice to your client on whether or not to fight the selected forum or to concede the selected forum.

Matthew A. Barley

Claims for Spoliation of Evidence