WORKING WITH CONSTRUCTION COUNSEL ON YOUR CONSTRUCTION CONTRACT IS VALUE-ADDED

It is always good practice to have construction counsel assist you with your construction contract.  This may mean drafting your contract.  This may mean negotiating your contract.  This may mean advising you as to provisions in your contract that shift risk to you.  This may mean providing red-lined suggestions to the contract.   Or, this may mean all of the above, or a combination.   The point is having construction counsel work with you will allow you to appreciate risk you are assuming and risk you are allocating to the other party.    It will also allow you to consider provisions or language to provisions you should consider.  I cannot emphasize the importance of working with construction counsel when it comes to your construction contracts.  This is a value-added service.

One consideration is the forum selection provision.  This is the provision in the construction contract that may dictate the exclusive venue for disputes.  The forum selection provision is not a provision that should be cast aside because if there is a dispute it will be one of the first provisions your attorney will want to review.   Dismissing this provision could result in you being required to litigate your dispute or portions thereof in a non-preferred destination, as seen in this non-construction case, that may be more costly or disadvantageous to you for a variety of reasons.  A forum selection provision and the provisions in your contract dealing with dispute resolution are important provisions as these provisions advise you how to navigate disputes that may occur during the performance of the construction contract.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

TRANSFERRING VENUE OF MILLER ACT PAYMENT BOND LAWSUIT PER MANDATORY FORUM SELECTION PROVISION

Many construction contracts contain a forum selection provision that requires disputes to brought in a particular jurisdiction.  A mandatory forum selection provision will use words of exclusivity, like “shall,” that unequivocally requires disputes to be brought in that jurisdiction.  On the other hand, a permissive forum selection provision will not use words of exclusivity meaning a dispute “may” be brought in that jurisdiction.  Where to file a lawsuit is an initial, important consideration.  (For a further discussion on how Florida deals with forum selection provisions, check this posting.)

Under the federal Miller Act, governed under federal law, lawsuits are to be brought in the district where the contract was to be performed and executed, i.e., typically where the project is located.  40 USC s. 3133.  However, this does not mean that there is not a valid basis to sue in another jurisdiction, or move to transfer venue to another jurisdiction, such as when the underlying mandatory forum selection provision requires a jurisdiction different than the where the contract is to be performed or executed.

For example, in U.S. f/u/b/o John E. Kelly & Sons Electrical Construction, Inc. v. Hartford Fire Ins. Co., 2020 WL 704899 (D. Maryland 2020), a subcontractor filed a Miller Act payment bond lawsuit in Maryland against the prime contractor and prime contractor’s surety.  The federal project was performed in Maryland which is why the lawsuit was filed in Maryland.  The subcontract, however, required that lawsuits “shall be brought in Morgan County, Alabama.”  The prime contractor and its Miller Act payment bond surety moved to transfer venue from Maryland to Alabama.  The federal district court agreed to transfer venue finding that “as with any statutory venue provision [such as in the Miller Act], parties way waive its protections by agreeing to a mandatory forum selection provision.”  U.S., supra, at *3.

Mandatory forum selection provisions are given signifiant weight because this is the forum that parties bargained for prior to the occurrence of any dispute.  This is why examining forum selection provisions prior to filing a lawsuit is an initial, important consideration.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.