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Monday, May 6, 2013

Supreme Court case could set legal precedent for some construction law

Business profit margin is affected by construction industry regulations
The SCOTUS' rulings affect construction
By Mark S. Mulholland

Anytime a construction law case gets to the Supreme Court of the United States, or SCOTUS, you know that construction law firms are going to be watching to see what precedents are set. In addition, construction attorneys will want to make sure that they advise their clients on how to take advantage of or adjust to the ruling in their own practice.

The case in question is Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas, which is about the Court’s decision in Stewart Organization, Inc. v. Ricoh Corp.

Without going too in depth for the non-legal readers, the case at hand will have a few key impacts on your day-to-day practice, which are laid out below. You’ll want to keep an eye on the proceedings in the coming months to find out if you need to make any changes.

1.  Forum selection causes may not be enforced

In the original case, a plaintiff petitioned to have the case moved from Texas to Virginia based on the forum selection clause in the original contract. This appeal was denied, though, because the courts focused on whether or not the venue change would be fitting based on the facts of the case. This was given more weight than the contract itself, which is important to remember.

In other words, agreeing to have any litigation heard in a specific location may not actually be carried out to the letter of the contract if a lot of the business is conducted elsewhere or there are extenuating circumstances that make it more appropriate to conduct the business elsewhere.

2.  Cover yourself when writing a forum selection cause and avoid future problems

If you want to avoid landing in the aforementioned situation, then keep a few factors in mind and try to arrange them to occur in the state where you would like the potential court case heard. This should ensure that both the letter of the contract and the relevant events match up.

First, consider where both parties and where the original negotiations of the contract took place. This could have major bearing on where a case is heard. In addition, the location of the project and the potential witnesses is important. As a result, if these are in a different location you should know that there is some risk of the contract not being upheld with regard to the forum selection clause.

3.  Specify that cases stay in state courts

If the forum selection clause includes a requirement to have the case stay in state court and not federal court, this might limit the possibilities in your favor. That’s because federal courts can only transfer cases to other federal courts.

About the author: Mark S. Mulholland is a partner at Ruskin Moscou Faltischek P.C., a New York construction law firm offering experienced construction attorneys and legal services.

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