Will an Iowa court honour our clause sending disputes to another state's courts?
Not as a jurisdictional bar. In Davenport Machine & Foundry Co. v. Adolph Coors Co. the Supreme Court held "that clauses purporting to deprive Iowa courts of jurisdiction they would otherwise have are not legally binding in Iowa", and held further "that under a motion to dismiss an Iowa action without prejudice on the ground of forum nonconveniens, such a clause, if otherwise fair, will be given consideration along with the other factors presented, in determining whether the Iowa court should decline to entertain the suit." Davenport came up on a special appearance and the clause did not get the case out of Iowa: "The clause in question does not deprive Iowa courts of jurisdiction, and the special appearance is not well taken." The Court reversed, left the defendant to move for dismissal on remand, and said "We express no opinion at this time on whether such a motion should be sustained or overruled." A clause pointing the other way is different. In EFCO Corp. v. Norman Highway Constructors, Inc. the Court read Davenport narrowly, "our disapproval of such clauses was only with respect to a denial of personal jurisdiction to a court that clearly had jurisdiction based on the activities of the defendant", and upheld jurisdiction on a clause by which the customer consented to the Iowa District Court for Polk County, because "This is not a case in which a choice-of-forum clause has been used to deprive a court of jurisdiction that it otherwise has. It is a case of consent to jurisdiction. Such consent has long been recognized under Iowa law." EFCO restated the line in Davenport's own words: "The issue [was] not whether courts in [the state chosen in the contract] had jurisdiction under the clause; it [was] whether the clause [deprived] other courts of jurisdiction they would otherwise possess."
The trap
The direction of the clause decides its fate in Iowa. An inbound clause consenting to Iowa jurisdiction is a consent the Court enforced in EFCO; an outbound clause purporting to strip an Iowa court of jurisdiction it otherwise has is, on Davenport's words, not legally binding, and survives only as one factor in a forum non conveniens discretion. An adhesion argument is no shortcut against the clause either: in EFCO a clause printed on the reverse of a form contract, on a side carrying no signature lines, which the signing officer testified he had not read, was "insufficient to establish the invalidity of the choice-of-forum clause as a matter of law", and the Court said what followed from that: "Consequently, the issue was one of fact for the district court to resolve in ruling on the motion to dismiss." It then held that "The district court did not err in assuming in personam jurisdiction over Norman." And for an in-state construction contract there is a statute, a term the section defines widely, as "a public, private, foreign, or domestic agreement relating to construction, alteration, repair, or maintenance of any real property in this state", including agreements for architectural services, demolition, design services, development, engineering services and excavation, and excluding only an agreement between this state and another state: a provision requiring any litigation, mediation, arbitration or other dispute resolution proceeding arising from the contract to be conducted in another state is void and unenforceable as contrary to public policy, and the section adds that such proceedings shall be conducted in this state (Iowa Code § 537A.6(2)(b), (4)).
11 authorities
- case314 N.W.2d 432Davenport Machine & Foundry Co. v. Adolph Coors Co.Iowadecided 1982read it at the source ↗
The words that state the rule
After consideration of Field and the other authorities, we hold that clauses purporting to deprive Iowa courts of jurisdiction they would otherwise have are not legally binding in Iowa.
- case314 N.W.2d 432Davenport Machine & Foundry Co. v. Adolph Coors Co.Iowadecided 1982read it at the source ↗
The words that state the rule
We further hold, however, that under a motion to dismiss an Iowa action without prejudice on the ground of forum nonconveniens, such a clause, if otherwise fair, will be given consideration along with the other factors presented, in determining whether the Iowa court should decline to entertain the suit.
- case606 N.W.2d 297EFCO Corp. v. Norman Highway Constructors, Inc.Iowadecided 2000read it at the source ↗
The words that state the rule
Our reading of that decision suggests that our disapproval of such clauses was only with respect to a denial of personal jurisdiction to a court that clearly had jurisdiction based on the activities of the defendant.
- case606 N.W.2d 297EFCO Corp. v. Norman Highway Constructors, Inc.Iowadecided 2000read it at the source ↗
The words that state the rule
This is not a case in which a choice-of-forum clause has been used to deprive a court of jurisdiction that it otherwise has. It is a case of consent to jurisdiction. Such consent has long been recognized under Iowa law.
- case606 N.W.2d 297EFCO Corp. v. Norman Highway Constructors, Inc.Iowadecided 2000read it at the source ↗
The words that state the rule
We believe that this evidence is insufficient to establish the invalidity of the choice-of-forum clause as a matter of law. Consequently, the issue was one of fact for the district court to resolve in ruling on the motion to dismiss. 1 The district court did not err in assuming in personam jurisdiction over Norman.
- statuteIowa Code § 537A.6enactment date not established
The words that state the rule
Any litigation, mediation, arbitration, or other dispute resolution proceeding arising from or relating to an in-state construction contract shall be conducted in this state.
- statuteIowa Code § 537A.6enactment date not established
The words that state the rule
As used in this section, “in-state construction contract” means a public, private, foreign, or domestic agreement relating to construction, alteration, repair, or maintenance of any real property in this state and includes agreements for architectural services, demolition, design services, development, engineering services, excavation, or any other improvement to real property in this state, including buildings, shafts, wells, and structures, whether on, above, or under real property in this state. “In-state construction contract” does not include any agreement between this state and any other state.
- statuteIowa Code § 537A.6enactment date not established
The words that state the rule
A provision of an in-state construction contract is void and unenforceable as contrary to public policy if the provision does any of the following: a. Makes the in-state construction contract subject to the laws of another state. b. Requires any litigation, mediation, arbitration, or other dispute resolution proceeding arising from the in-state construction contract to be conducted in another state.
- statuteIowa Code § 537A.6enactment date not established
The words that state the rule
The laws of this state shall apply to every in-state construction contract.
- case314 N.W.2d 432Davenport Machine & Foundry Co. v. Adolph Coors Co.Iowadecided 1982read it at the source ↗
The words that state the rule
The proceeding is now before us on a special appearance, which challenges jurisdiction. Iowa R.Civ.P. 66. The clause in question does not deprive Iowa courts of jurisdiction, and the special appearance is not well taken. Upon remand Coors may if it chooses present a motion to dismiss or other appropriate motion asking the district court to decline to entertain the action, without prejudice to a suit in Colorado. We express no opinion at this time on whether such a motion should be sustained or overruled.
- case606 N.W.2d 297EFCO Corp. v. Norman Highway Constructors, Inc.Iowadecided 2000read it at the source ↗
The words that state the rule
We made that clear by stating the issue as follows: The issue [was] not whether courts in [the state chosen in the contract] had jurisdiction under the clause; it [was] whether the clause [deprived] other courts of jurisdiction they would otherwise possess.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.