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Alabama Supreme Court Upholds Forum Selection Clause

In Ex parte Consol. Pipe & Supply Co., Inc., No. 1170050, 2018 WL 3083719 (Ala. June 22, 2018), the Alabama Supreme Court overturned an order granting a motion to transfer venue based upon a valid forum-selection clause. The Court held that the doctrine of forum non conveniens cannot be used to frustrate an otherwise valid forum-selection clause.

On March 22, 2016, Bolt Construction & Excavating, LLC (“Bolt Construction”) entered into a contract with Consolidated Pipe & Supply Co., Inc. (“Consolidated Pipe”) to provide materials for use on a project to be completed in Morgan County, Alabama (the “Contract”). After Bolt Construction allegedly failed to pay Consolidated Pipe for materials supplied for use on the project, Consolidated Pipe filed suit against Bolt Construction and its guarantor in the Circuit Court of Morgan County, Alabama.

Bolt Construction filed a motion to transfer the case to the Circuit Court of Jackson County, Alabama. Bolt Construction argued that Jackson County, Alabama was the proper venue pursuant to Alabama Code, 6-3-7 (a). Bolt Construction argued that, in the alternative, the case should still be transferred given that the primary witnesses and documents relevant to the claims of non-payment were located in Jackson County, Alabama, based upon the doctrine of forum non conveniens. The Circuit Court of Morgan County, Alabama granted Bolt Construction’s motion and the case was transferred.

Consolidated Pipe filed a Petition for Writ of Mandamus seeking reversal of the change of venue. Consolidated Pipe argued that the Circuit Court improperly transferred the case to Jackson County, Alabama in light of the fact that the Contract contained a forum selection clause. The clause dictated that all actions were to be filed in the Circuit Court of Morgan County, Alabama. The Alabama Supreme Court agreed, granted the Petition for Writ of Mandamus, and entered an order overturning the order transferring the case out of Morgan County, Alabama.

In reaching its conclusion, the Alabama Supreme Court held that Bolt Construction had failed to establish why the forum selection clause did not control. Given this failure, the Court found that Alabama law dictated that the Court should have enforced the valid provision of the Contract. The Court further held that the doctrine of forum non conveniens can only be relied upon in support of a motion to transfer if there is more than one court in which the action might have been properly filed. When a forum-selection clause is enforceable, there is no other court in which the action in question “might have been properly file and a party cannot rely upon the doctrine of forum non conveniens.

This case is a good reminder as to the importance of forum selection clauses in construction contracts. Their purpose is to avoid disputes such as the one that arose in this case and the Alabama Supreme Court has clarified that absent evidence as to why the clause should not be enforced, a party may not rely upon the doctrine of forum non conveniens as an alternative to forum shop after a dispute arises.