You represent a Brazilian corporation that is entering into a joint venture with a Colombian concern. The joint venture relates to the development of a multimillion dollar wind farm in northeastern Brazil. You are finalizing the agreement and now it is time to select a judicial forum to hear any eventual disputes arising out of the joint venture. Your respective clients have informed you and your counterpart that neither Brazil nor Colombia is an option, so you and your colleague agree to designate the courts located in Miami as the fora where any dispute under the joint venture agreement will be brought. The parties also agree to stipulate that they waive any jurisdictional objections with respect to the designated courts, and agree to designate Florida law as applicable to any eventual dispute. Miami, after all, is the gateway to Latin America and, if a dispute ever arises, you might as well litigate in Miami.

If such a contingency ever occurs, you may be surprised to find out that, unlike its sunny beaches and wonderful resorts, Florida courts may not be hospitable to hearing your clients’ claims and you may not have a sufficient basis to defeat a jurisdictional objection lodged by the adverse party — even where the adverse party agreed to designate Miami as the appropriate forum, waived its jurisdictional objections and agreed to designate Florida law as applicable.

Indeed, in a clear departure from the majority rule in most U.S. jurisdictions, Florida state courts consistently have held that contractual forum selection clauses, without more, do not confer personal jurisdiction over a nonresident party. Florida takes the minority view in regard to this issue, with the majority of U.S. jurisdictions finding that a forum selection clause is sufficient, on its own, to satisfy constitutional minimum contacts requirement. See Desai Patel Sharma Ltd. v. Don Bell Industries Inc., 729 So. 2d 453 (Fla. 5th DCA 1999). Florida's Fourth District Court of Appeal, in its recent Hamilton v. Hamilton decision, reaffirmed Florida’s minority position with respect to Florida forum selection clauses. No. 4D14-37, 2014 WL 3605485 (Fla. 4th DCA Jul. 23, 2014).

Hamilton involved a family feud where a stepson attempted to oust his stepmother from the family business in Michigan. After the death of the family patriarch, the stepson agreed to sell his share in the family business to his stepmother. They executed a stock purchase agreement that provided that it was “made in the State of Florida and shall be interpreted in accordance with the laws of the State of Florida. Venue shall be had in Broward County Florida and all parties agree to accept service of process by U.S. Mail to the addresses provided above.” Id. at *1.

Instead of following through on the agreement and selling his shares to his stepmother, the stepson organized a meeting with the other beneficiaries of the family business and voted the stepmother out as managing trustee, depriving her of her profits under the trust. The stepmother responded by filing suit against her stepson in Broward County for breach of contract and injunctive relief. The stepson moved to dismiss, arguing that the complaint did not establish a basis for personal jurisdiction under §§ 685.102 and 48.193, Florida Statutes, because (1) he was a resident of Michigan; (2) he did not reside in Florida; (3) he did not own, possess or lease any property in Florida; (4) he did not conduct business or enter into any contract in Florida; and (5) had no other contacts with Florida. The trial court, relying on the forum selection clause, denied the motion to dismiss and granted the stepmother’s injunction.

In reversing the trial court, the Fourth District looked to two of Florida’s seminal cases dealing with the enforcement of forum selection clauses against nonresident defendants: McRae v. J.D./M.S. Inc., 511 So. 2d 540 (Fla. 1987) and Jetbroadband WV LLC v. MasTec North America Inc., 13 So. 3d 159 (Fla. 3d DCA 2009).

In McRae, the Florida Supreme Court held that a Florida court does not have personal jurisdiction over a nonresident defendant on the sole basis of a forum selection clause under Florida’s long-arm statute. § 48.193, Fla. Stat. In McRae, J.D./M.D., a Delaware corporation that specialized in providing experts to assist in litigation brought suit against McRae, an attorney, and his client Shepard, both residents of Mississippi. The contract, however, contained a choice-of-law clause designating Florida law as applicable and contained a forum selection clause designating Palm Beach County, Florida, as the forum to hear any dispute.

In determining whether the court had personal jurisdiction over defendants under § 48.193, the court analyzed several cases that dealt with forum selection clauses, and concluded that in each of those cases, “there existed a basis other than the contract for the exercise of jurisdiction in the forum in which suit was initially filed.” 511 So. 2d at 543. Since neither defendant nor the transaction in question had any connection to Florida whatsoever, the McRae court held that exercising jurisdiction under Florida's long-arm statute, based on the existence of a forum selection clause alone, would be unconstitutional.

Similarly, in Jetbroadband, MasTec, a Florida corporation, sued Jetbroadband, a Virginia corporation, for the breach of a contract that contained a similar clause designating Florida law as the applicable law and circuit court in Miami-Dade County, Florida, as the forum to hear any disputes. Jetbroadband moved to dismiss based on lack of personal jurisdiction, but the trial court denied its motion. On appeal, the Third District Court of Appeal turned to §§ 685.101 and 685.102, Florida Statutes. These sections, enacted after the McRae decision, provide an alternate basis for personal jurisdiction.

Under these statutes, a nonresident will be subject to personal jurisdiction based on a forum selection clause alone if the contract: (1) includes a choice-of-law provision designating Florida law as the governing law; (2) contains a provision whereby the nonresident agrees to submit to the jurisdiction of the courts of Florida; (3) involves consideration of not less than $250,000; (4) does not violate the United States Constitution; and (5) bears a substantial or reasonable relation to Florida or at least one of the parties is a Florida resident or is incorporated under Florida laws.

With respect to the constitutional considerations embodied in the fourth prong set, the Third District held that a constitutional minimum contacts analysis is satisfied where, "in the commercial context," the forum selection clause was "freely negotiated" and "not unreasonable or unjust." 13 So. 3d at 163. Thus, a freely negotiated contract including a forum selection clause will, by itself, meet the minimum contacts requirement unless the adverse party can prove that the clause is unreasonable or unjust. The court thus dispensed with the minimum contacts analysis and, because all the requirements under §§ 685.101 and 685.102 were met, held that the statutes conferred personal jurisdiction upon the court over the parties.

Applying the McRae and Jetbroadband analyses, the Hamilton court held that the court lacked personal jurisdiction over the stepson under both § 48.193 and §§ 685.101 and 685.102. The court determined that, despite the fact that the stock purchase agreement satisfied the first three requirements set forth by the Third District in Jetbroadband, it failed to pass constitutional muster. The court noted that minimum contacts are established when the party makes the types of contacts with the state such that the party would reasonably anticipate being brought into court there. Although the stepson had faxed a copy of the agreement to Florida, that type of conduct is insufficient to establish the requisite minimum contacts independent of the forum selection clause. Ultimately, the court held that the complaint’s failure to establish “the requisite minimum contacts required by the Constitution” was a “fatal flaw in the stepmother’s jurisdictional quest.” 2014 WL 3605485, at *3.

Hamilton reaffirms Florida's minority position that simply including a forum selection clause in your contract, even where other factors are present, is not enough to confer personal jurisdiction over an objecting nonresident party. Taking the hypothetical situation involving the Brazilian-Colombian joint venture discussed in the introduction, it is likely that a Florida court would find that it did not have personal jurisdiction over one of the parties were it to lodge a jurisdictional objection.

Indeed, even though our hypothetical parties agreed (1) to designate Miami as the proper forum to adjudicate disputes; (2) to have Florida law apply to the contract; and (3) to waive jurisdictional objections, the dispute likely does not have a sufficient nexus to Florida, and the parties likely do not have sufficient minimum contacts with Florida as the agreement involved the development of a wind farm in northeastern Brazil.

In sum, when negotiating a contract with a nonresident that includes a Florida forum selection clause, it is important to ensure that the statutory requirements of §§ 685.101 and 685.102 are satisfied so as to not have an unpleasant surprise if and when you attempt to convince a Florida court that it has personal jurisdiction over your adverse party.

This article is reprinted with permission from Law360.