A recent decision by Florida’s First District Court of Appeal reaffirms that contractors can be made to litigate disputes in the county where the work was being performed, even if they do not generally have representatives in that county or have a principle location somewhere else.
In Kustom US, Inc. v. Herry, LLC a general contractor located in Seminole County, Florida, hired a subcontractor located in Bay County, Florida, to perform work on a project in Bay County. For those unfamiliar with Florida, Seminole County is in the middle of the state, near Orlando, and Bay County is about 6 hours away, in the panhandle, near Panama City Beach.
When the general contractor failed to pay the subcontractor, the subcontractor filed a lawsuit against the general contractor in Bay County, Florida. The general contractor responded to the lawsuit, in part, by challenging the location of the lawsuit. In support of this challenge, the general contractor filed an affidavit swearing that its principal location, and all of its agents and representatives were located in Seminole County, Florida. The general contractor argued that under 47.051, Florida Statutes, this was sufficient to require the lawsuit to be re-filed in Seminole County. Further, the general contractor argued that because the contract did not specify that payment was to be made in Bay County, the subcontractor’s claims did not accrue there.
In analyzing this argument, the First District Court of Appeal first examined 47.051, Florida Statutes, which states:
Actions against domestic corporations shall be brought only in the county where such corporation has, or usually keeps, an office for transaction of its customary business, where the cause of action accrued, or where the property in litigation is located. Actions against foreign corporations doing business in this state shall be brought in a county where such corporation has an agent or other representative, where the cause of action accrued, or where the property in litigation is located.
While the court noted that the general rule was that claims would only accrue where payment was to be made, it also noted that an exception to this rule exists where the damages need to be determined by evidence and are not immediately able to be calculated from the face of the complaint. Based on the allegations of the subcontractor’s complaint, the court felt this exception applied, and that the complaint alleged the existence of a contract formed in Bay County and the performance of work pursuant to that contract in Bay County. Under these facts, the court determined that Bay County was the proper venue and affirmed the trial court’s denial of the general contractor’s motion to transfer the case to Seminole County.
The result in this case is not remarkable. Contractors generally should expect to be sued in court in the county where the work is performed under multiple statutes. What is unique is that this case involves a disaster recovery contractor doing work in an area recently hit by hurricanes. Many contractors follow closely behind storms, and in many respects this is a positive thing. Contractors from outside the area are more likely to have equipment, manpower, and resources, that have not been impacted by the storm that can help a devastated recover. But those same contractors need to be aware that by performing work outside their usual geographic area, they are exposing themselves to being sued later on in those courts, which can make litigation much more expensive.
One way to combat this is to require subcontractors and property owners to enter into contracts that contain venue selection clauses. While these clauses can be challenged, in many instances that are enforced and can save significant amounts of time and money.