UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS UPHOLDS FORUM SELECTION CLAUSE AS TO AN ARCHITECT

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS UPHOLDS FORUM SELECTION CLAUSE AS TO AN ARCHITECT

In Northview Christian Church, Inc. v. Monolithic Instructors, Inc., 2010 U.S. Dist. LEXIS 64113 (N. D. Tex. June 28, 2010), LPDJ Architects LLC (“Architects”) moved the Court to dismiss plaintiff’s claims because they were filed in an improper venue. The Architects relied upon a contractual provision which stated that any actions arising out of the services provided would be filed in the State or Federal courts located in Salt Lake County, Utah. Despite this language, plaintiff filed its lawsuit in federal court in Texas, claiming Texas was the “nerve center” of the joint venture.

The Court held the forum selection clause was enforceable, unless plaintiff could clearly show that “enforcement would be unreasonable and unjust, or that the clause was invalid for such reason as fraud or overreaching.” The Court held because Plaintiff could not show such, that the Northern District of Texas was an improper venue. Exercising its powers under 28 U.S.C. § 14.06(a), the Court severed the claims against the architect and transferred the case to Utah.

The Court then addressed whether Architects was a “prevailing party”. The agreement provided: “In the event that it becomes necessary for either party to incur legal fees to enforce the terms of this agreement, the prevailing party will be entitled to reasonable attorney’s fees.” The Court held Architects had incurred reasonable fees associated with enforcing the terms of the agreement and that Architects were the “prevailing party”. The Court granted Architects’ Motion for Attorney’s Fees.

Architects, engineers and others involved in construction projects should include forum selection clauses and be aware that provisions allowing recovery of attorney’s fees do not apply simply to the party who ultimately prevails. Rather, attorney’s fees may be recovered when the party seeks enforcement of any portion of the agreement. This would include not only issues such as venue, but would also include enforcing provisions regarding conditions precedent to litigation (such as mandatory pre-suit mediation and arbitration).