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Case Bulletin – West Virginia Decision Upholds Caperton Test Regarding Forum-Selection Clauses and Dismisses Case for Improper Venue

In East Coast Underground, LLC v. Daniel Utility Construction, Inc., the Circuit Court granted defendant’s motion to dismiss asserting that the Harrison County, West Virginia venue selection of the plaintiff was improper. Plaintiff-Petitioner appealed arguing that the forum-selection clause in the subject contract was unenforceable. Here, the parties entered into a subcontract which contained a forum-selection clause providing that the agreement was to be “governed and construed in accordance with the laws of the State of Arkansas.” The plaintiff brought an action seeking to recover sums due under the agreement in Harrison County, West Virginia. Upon defendant’s filing of the motion to dismiss, the plaintiff filed a response arguing that in entering the agreement, there were no discussions or any communication made to the plaintiff with respect to the forum-selection clause. Further, the plaintiff argued that there were not negotiations regarding the clause. The Circuit Court granted the motion to dismiss and this appeal followed.

 

The Court reiterated and affirmed the four part test established by Caperton v. A.T. Massey Coal Co., Inc., 225 W.Va. 128, 690 S.E. 2d 322 (2009) regarding whether a forum-selection clause is enforceable. The four part test sets forth the following anaylsis: (1) whether the clause was reasonably communicated; (2) whether the clause is mandatory or permissive; (3) whether the claims and parties involved in the suit are subject to the forum-selection clause; and (4) whether the resisting party has rebutted the presumption of enforceability by making a sufficient showing that enforcement of the clause would be unreasonable and unjust. The plaintiff-petitioner did not argue that the clause has mandatory force and covers the entities involved, but rather that additional communication is required outside of the written terms of the contract for the forum-selection clause to be enforceable.

 

The Court found no abuse of discretion by the Circuit Court in upholding the forum-selection clause of the subcontractor agreement at issue. In so holding, the Court provided that there was no evidence that the clause was not reasonably communicated or that enforcement would be unreasonable and/or unjust. Specifically, because the agreement was entered into by the sole member/manager of the plaintiff-petitioner, who stated that he was “intimately and exclusively” involved in the negotiating, executing and entering of the agreement, it could not argue against its enforcement. The clause was further in regular sized font and captioned under the heading “Choice of Law and Venue: Subcontractor’s Remedies.” In addition, there was a clause to the agreement that specifically set forth that the parties “each had the unlimited right and opportunity to make demands and proposals with respect to any subject matter…”

 

It therefore remains important, in the drafting of a contract, to include a forum-selection clause. Courts are not quick to afford a party an escape or alternative to the terms of an agreement, so long as the process and procedure by which the agreement was entered into comport with West Virginia law.