Contracts are an integral part of business transactions. Indeed, businesses and their lawyers spend many hours preparing and negotiating contracts covering myriad issues. Regardless of the type of business contract, it is imperative that parties clearly and succinctly state how and where any contractual disputes get resolved.
Oftentimes, contracts contain what is known as a venue provision that controls where disputes involving the contract will be resolved. A well-drafted contractual venue provision will require resolution of all claims involving that contract to be brought in one locale and in one court of law. By including a venue provision in a contract, the parties have attempted to control where disputes involving the contract will be resolved, thus preventing lawsuits from being brought in multiple locations or far away places. In some cases, however, the venue provision is not artfully worded, leaving the possibility of certain claims being litigated in one place, while others are required to be litigated in another.
Recently, the case of Inspired Capital, LLC v. Conde Nast (Fla. 3d DCA 2017), provided some additional clarity on contractual well-worded venue provisions and claims in a lawsuit. In Inspired Capital, plaintiff and defendant entered into a license agreement that contained the following venue provision:
[a]ny action or proceeding between Licensor and Licensee relating to this Agreement, whether pertaining to the interpretation or enforceability hereof or others, may only be brought in the courts of the State of New York, County of New York, or the federal courts located therein, and both parties consent to the exclusive jurisdiction of such courts.
The trial court in Inspired Capital initially dismissed plaintiff’s complaint, finding the above-referenced provision did not allow for suit to be brought in New York, as to claims for aiding and abetting, civil conspiracy, and misappropriation of trade secrets. Although the opinion does not go into great detail, it appears defendants argued that those claims did not relate to the license agreement and, therefore, were not within the scope of its venue provision.
The appellate court disagreed with the trial court’s ruling. Specifically, because the venue provision used the term “relating to,” the scope of the venue provision was very broad. Therefore, resolution of plaintiffs’ claims for aiding and abetting, civil conspiracy, and misappropriation of trade secrets required reference to the applicable license agreement. Those claims, according to the appellate court, had a significant relationship and clear nexus to the license agreement.
The holding in Inspired Capital demonstrates the need for parties to carefully choose their words when preparing venue provisions and other dispute resolution provisions in business contracts.