A recent appellate decision reaffirmed Florida’s departure from the majority rule that allows parties to contractually submit to a court’s jurisdiction.
In Hamilton v. Hamilton, 142 So. 3d 969 (4th DCA July 23, 2014), the Fourth District Court of Appeal considered a contract dispute involving a stepson who transferred his interest in the family’s Michigan business to his stepmother via a stock purchase agreement. Both the stepson and stepmother were residents of Michigan. The stepson, who had intentions to move to Florida, requested inclusion of Florida choice of law and venue provisions, and affirmatively agreed to submit to Florida’s jurisdiction to resolve any dispute arising out of the agreement.
After the transfer of his interest was consummated, the stepson voted his former interests along with his siblings to remove the stepmother as managing trustee of the company trust. Pursuant to the agreement, the stepmother sued the stepson in Broward County, Florida for specific performance, breach of contract and an injunction. The stepson moved to dismiss on the basis of lack of personal jurisdiction, which the lower court denied. In overturning the lower court’s ruling, the Fourth DCA stated that failure to establish the requisite minimum contacts was “the fatal flaw in the stepmother’s jurisdictional quest.” Hamilton, 142 So. 3d at 972.
As held by the Florida Supreme Court, “a forum selection clause, designating Florida as the forum, cannot operate as the sole basis for Florida to exercise personal jurisdiction over an objecting non-resident defendant.” McRae v. J.D./M.D. Inc., 511 So. 2d 540, 542 (Fla. 1987). As pointed inHamilton, McRae was decided prior to the enactment of sections 685.101 and 685.102 of the Florida Statutes. Thus, for further clarification of this statutory scheme, the Fourth DCA reviewed a 2009 opinion by the Third DCA, Jetbroadband WV v. Mastec North America, 13 So. 3d 159 (3d DCA 2009).
In Jetbroadband, the Third DCA considered the interplay between sections 685.101 and 685.102, summarizing the statutes as setting forth five requirements to confer personal jurisdiction by contract. The contract must (1) include a choice of law provision designating Florida law as the governing law, (2) include a provision whereby the non-resident agrees to submit to the jurisdiction of the courts of Florida, (3) involve consideration of not less than $250,000, (4) not violate the U.S. Constitution, and (5) either bear a substantial or reasonable relation to Florida or have at least one of the parties be a resident of Florida or incorporated under its laws. Jetbroadband, 13 So. 3d at 162.
The stepmother in Hamilton was unable to establish the requisite minimum contacts required by the Constitution, thus failing to withstandJetbroadband’s fourth factor. Although “some” contact with Florida was evidenced in the form of faxing copies of the stock purchase agreement to Florida, this was “insufficient to establish that the stepson had a connection with the State of Florida independent of the forum selection clause to establish the requisite minimum contacts.” Hamilton, 142 So. 3d at 972.
From a practical standpoint, when negotiating a contract with the intention of designating Florida as the forum to resolve disputes, the parties must ensure that all five factors set forth in Jetbroadband are satisfied.