Contractual waiver of personal jurisdiction under F.S. [section] 685.102: the long-arm statute's little-known cousin.

To most practitioners in Florida, F.S. [section] 48.193, more commonly known as the "long-arm statute," is second nature. After all, conventional wisdom says that [section] 48.193 is the only way for out-of-state persons and corporations to be subject to personal jurisdiction in Florida. Or is it? Another Florida statute, [section] 685.102, confers upon Florida courts jurisdiction over persons who contractually submit to such jurisdiction in certain types of transactions. One would think that with its potential usefulness for Florida residents who enter into contractual relationships with out-of-state persons or corporations, [section] 685.102 would be used often. Yet, the statute remains surprisingly untested, with not a single reported decision applying or even mentioning it. This article sheds some light on [section] 685.102, the little-known cousin of the much more familiar long-arm statute.

Section 685.102, which was first enacted in 1989, states in its entirety: 685.102. Jurisdiction

(1) Notwithstanding any law that limits the right of a person to maintain an action or proceeding, any person may, to the extent permitted under the United States Constitution, maintain in this state an action or proceeding against any person or other entity residing or located outside this state, if the action or proceeding arises out of or relates to any contract, agreement, or undertaking for which a choice of the law of this state, in whole or in part, has been made pursuant to s. 685.101 and which contains a provision by which such person or other entity residing or located outside this state agrees to submit to the jurisdiction of the courts of this state.

(2) This section does not affect the jurisdiction of the courts of this state over any action or proceeding arising out of or relating to any other contract, agreement, or undertaking.

(3) This section applies to:

(a) Contracts entered into on or after June 27, 1989; and

(b) Contracts entered into prior to June 27, 1989, if an action or proceeding relating to such contract is commenced on or after June 27, 1989.

Section 685.101, in turn, provides in relevant part:

685.101. Choice of Law

(1) The parties to any contract, agreement, or undertaking, contingent or otherwise, in consideration of or relating to any obligation arising out of a transaction involving in the aggregate not less than $250,000, the equivalent thereof in any foreign currency, or services or tangible or intangible property, or both, of equivalent value, including a transaction otherwise covered by s. 671.105(1), may, to the extent permitted under the United States Constitution, agree that the law of this state will govern such contract, agreement, or undertaking, the effect thereof and their rights and duties thereunder, in whole or in part, whether or not such contract, agreement, or undertaking bears any relation to this state.

Section 685.102(a), then, when read in conjunction with [section] 685.101(1), indicates that a person may bring an action in a Florida court against another person, regardless of whether the second person resides outside of Florida, provided that 1) the action "arises out of or relates to" any contract, agreement, or undertaking;(1) 2) the contract contains a choice-of-law provision specifying that Florida law will apply; 3) the second person has agreed to submit to the jurisdiction of Florida courts in that same contract; and 4) the contract falls within the scope of [section] 685.101.

In order for the contract to fall within [section] 685.101, subsection (1) specifies that the contract must "involve consideration" or "relate to an obligation" worth $250,000 or more. Assuming this threshold is met, [section] 685.101(1) allows parties "to the extent permitted under the United States Constitution" to specify that Florida law will govern the contract, regardless of whether the contract bears any relation to Florida. (2)

This is qualified by [section] 685.101(2), however, which excludes several types of transactions from application of the rule in subsection (1). Of these exceptions, the one that is of most general relevance is [section] 685.101(2)(a), (3) which provides:

(2) This section does not apply .to any contract, agreement, or undertaking: (a) Regarding any transaction which does not bear a substantial or reasonable relation to this state in which every party is either or a combination of: 1. A resident and citizen of the United States, but not of this state; or 2. Incorporated or organized under the laws of another state and does not maintain a place of business in this state.

Under this provision, [section] 685.101, and by extension [section] 685.102, do not apply if the contract 1) does not bear a substantial or reasonable relation to Florida, and 2) neither party is either a resident or citizen of Florida (if a natural person), or is incorporated or organized under the laws of a state other than Florida and does not maintain a place of business in Florida (if a business). Put another way, [section] 685.101 only applies if either 1) the contract bears a substantial or reasonable relation to Florida, or 2) at least one of the parties is either a resident or citizen of Florida (if a person), or is incorporated or organized under the laws of Florida or maintains a place of business in Florida (if a business).

Provided the conditions of [section] 685.102 are satisfied, the question of whether Florida courts would have personal jurisdiction over the parties solely by virtue of [section] 685.102(1) remains. Curiously, there are no published decisions, state or federal, even mentioning [section] 685.102, let alone interpreting it. That being said, a plain reading of [section] 685.102(1) strongly indicates that the Florida Legislature indeed intended for [section] 685.102(1) to grant Florida courts personal jurisdiction over parties under the circumstances specified in [section] 685.101(1), and this without regard to Florida's long-arm statute in [section] 48.193. This conclusion is supported by settled maxims of statutory construction, the statute's legislative history, and unpublished opinions giving precisely this interpretation to the statute.

Although neither [section] 685.102 nor [section] 685.101 is a model of clarity, the plain language of the statutes nonetheless leaves little doubt that the legislature intended them to vest Florida courts with personal jurisdiction over parties under the conditions specified. To construe this language in any manner other than what it really says, that persons under certain circumstances can contractually submit to personal jurisdiction in Florida for an action related to the contract, would violate "[t]he fundamental rule of construction [that] in determining legislative intent [courts must] first give effect to the plain and ordinary meaning of the language used by the Legislature." (4)

This conclusion may also be gleaned from the statute's title itself, "Jurisdiction." As noted by the Florida Supreme Court, "[r]eference to the title of the legislative act is also appropriate in determining legislative intent." (5) Likewise, it is well-established that "the legislature is presumed to know the existing law when it enacts a statute." (6) Thus, it must be presumed that the Florida Legislature knew of [section] 48.193, Florida's long-arm statute, and of Florida law regarding personal jurisdiction generally, and that although it understood what it was doing and the ramifications of its conduct, it nonetheless chose to enact [section] 685.102(1).

Because the purpose of [section] 685.102(1) can be understood well enough from its language, there should be no need to resort to legislative history. (7) Nonetheless, the legislative history supports the plain meaning of [section] 685.102(1). For instance, the Senate Staff Analysis and Economic Impact Statement of Bill 109, which was to modify [section] 671.105 ([section] 685.102 today), described the proposed Bill 109 and its likely effects:

SB 109 relates to contracts involving the equivalent of $250,000, excepting those for employment, personal purposes, involving certain sections of the U.C.C., or which relate to deposits in or extensions of credit by financial institutions located in Florida. In addition, the bill excludes contracts in which the concerned parties do not have enough presence in the state (minimum contacts) as to allow the state to adjudicate a future contractual dispute.

Taking into consideration the above mentioned exceptions, the bill permits parties to any such contract to agree that the laws of Florida will govern the contract. If parties have chosen Florida law, they may additionally agree to submit to the jurisdiction of Florida courts, which will enforce such a choice of forum to the limits permitted by the U.S. Constitution. The application of the bill is limited to contracts "arising out of a transaction involving" at least $250,000. (Emphasis added.)

This legislative history, which basically tracks the language of [section]685.102(1), confirms the purpose of the statute. Most notable is the phrase, "[I]f parties have chosen Florida law, they may additionally agree to submit to the jurisdiction of Florida courts, which will enforce such a choice of forum to the limits permitted by the U.S. Constitution." This cannot mean anything other than permitting Florida courts to enforce a person's contractual submission to personal jurisdiction in the state. And, the reference to "minimum contacts" also indicates that the statute involves personal jurisdiction issues.

Perhaps even more telling than the language of [section] 685.102(1) or its legislative history is the fact that the few courts that have applied the statute have agreed that [section] 685.102(1) grants Florida courts personal jurisdiction over out-of-state persons in actions related to contracts that fall within [section] 685.101(1).

One of these opinions is an order from Judge Harvey Schlensinger of the Middle District of Florida in the case of Stellar Group, Inc. v. Mid-Ohio Mechanical, Inc., No. 3:03-cv-1057 (Jan. 27, 2004). At issue before Judge Schlensinger was whether Mid-Ohio Mechanical was subject to personal jurisdiction in Florida. Stellar Group argued that it was, pursuant to [subsection] 685.102 and 685.101.

Judge Schlensinger initially found that the parties' contract fell within [section] 685.101, "[a]s it is undisputed that the [contracts] involved more than the required minimum dollar amount [$250,000] and none of the exceptions to the statute apply." Then, "[h]aving found the choice-of-law provision valid under Section 685.101, the court further finds that, pursuant to Section 685.102, the forum selection clause is valid and enforceable."

Judge Schlensinger then rejected Mid-Ohio's argument that the requirements of Florida's long-arm statute, [section] 48.193, applied to [section] 685.102. After noting that those requirements "are more stringent than those of the Constitution's Due Process Clause," Judge Schlensinger found that applying such requirements to [section] 685.102 would be improper because "Section 685.102 substitutes the constitutional limitations for the more restrictive limitations imposed by Florida's long-arm statute." Focusing on the plain language of [section] 685.102(1), he instead concluded that "the proper inquiry is whether Defendant has sufficient minimum contacts with the State of Florida to satisfy the due process clause of the United States Constitution." Judge Schlensinger ultimately held that Mid-Ohio was subject to personal jurisdiction under [section] 685.102.

Another case applying and interpreting [section]685.102 is Stellar Group, Inc., v. IHP Industrial, Inc., No. 16-2003-CA-003393 (Sept. 3, 2003), this time by the Fourth Judicial Circuit Court of Duval County. In reaching a similar conclusion to that of Judge Schlensinger, the court started its analysis by noting, "The standards for determining this Court's personal jurisdiction over IHP in this matter are set forth in Sections 685.101 and 685.102, Florida Statutes." Then, after determining that the parties' contract fell within [section] 685.101, the court found that "IHP has contractually agreed to submit to the jurisdiction of the courts of this state.... As a consequence, as set forth in Section 685.102 ... Stellar may maintain in this state this action against IHP...." The court further stated that "[i]n adopting Sections 685.101 and 685.102, the legislature has clearly substituted the 'extensive jurisdiction available ... under the federal constitution' for the more restrictive jurisdictional limitations prescribed by Florida's long-arm statute (Section 48.193)." Then, after applying a similar analysis to Judge Schlensinger's, the court found that the due process clause would not be offended by allowing Mid-Ohio to be sued in Florida.

Both of these opinions correctly found that [section]685.102, based on its plain language, served as a grant of personal jurisdiction in Florida courts in actions falling within [section] 685.101 which is wholly independent of [section] 48.193, the long-arm statute. They also found that applying the standards used in [section] 48.193 analyses to actions brought under [section]685.102 would be improper.

What's more, the Florida Supreme Court case of McRae v. J.D./M.D., Inc., 511 So. 2d 540 (Fla. 1987), which held that "a contractual choice of forum clause designating Florida as the forum cannot serve as the sole basis for asserting in personam jurisdiction over an objecting, non-resident defendant," does not at all change the conclusion that [section] 685.102 grants Florida courts personal jurisdiction over certain defendants under particular circumstances. The reason for this is that the McRae decision preceded [section] 685.102 by two years. As a result, the court's entire analysis centered on [section] 48.193 and, therefore, is of no import to an assertion of jurisdiction pursuant to [section] 685.102. This is evident from the language of the opinion itself. For instance, the court noted that "[t]he legislature has set forth in our long arm statute the policy of this state concerning when Florida courts can exercise in personam jurisdiction over nonresident defendants. Conspicuously absent from the long arm statute is any provision for submission to in personam jurisdiction merely by contractual agreement ."(Emphasis added.)

Recognizing this, the court in Stellar Group, Inc. v. IHP Industrial, Inc., concluded that it would be improper to apply McRae to [section] 685.102: "The jurisdictional restrictions of McRae are thus inapplicable to such contracts [that] fall within the specific terms of Sections 685.101 and 685.102." And in light of "Florida's well-settled rule of statutory construction that the legislature is presumed to know the existing law where a statute is enacted, including judicial decisions on the subject concerning which it subsequently enacts a statute," (8) it can be presumed that the legislature was aware of the McRae decision when it enacted [section] 685.102.

The Second District Court of Appeal opinion of Maschino v. Val-Pak Direct Marketing Systems, Inc., 902 So. 2d 196 (Fla. 2d DCA 2005), likewise has no bearing on [section]685.102. There, the court held that "[i]n Florida, the mere execution of a forum selection clause is insufficient to confer long-arm jurisdiction over out-of-state defendants." As with McRae, however, the court's analysis was based on [section] 48.193, which is irrelevant to [section] 685.102. Indeed, for this point the court cited to the McRae opinion, which again preceded [section]685.102 by two years.

Finally, it should be noted that [subsection] 685.102 and 685.101 are very similar to [subsection] 5-1401 and 5-1402 of New York General Obligations Law, which in stark contrast to their Florida counterparts, have been applied (and upheld) numerous times by New York state and federal courts. (9)

Conclusion

Based on the plain language of [section] 685.102, as well as settled maxims of statutory construction, legislative history, and the few unpublished opinions applying the statute, it seems clear that [section]685.102 does what it purports to do; that is, it grants Florida courts personal jurisdiction over out-of-state parties in contract actions that fall within [section]685.101. Yet, [section]685.102 is seemingly unknown when compared to [section] 48.193, Florida's long-arm statute, despite its being in existence for almost 20 years. When (or even if) this might change remains to be seen, but in the meantime, Florida practitioners who are drafting contracts with out-of-state persons or corporations worth at least $250,000 should be mindful of [section] 685.102. D

(1) For the sake of brevity, the terms "contract, agreement, or undertaking" will be referred to collectively as "contract."

(2) Because [section]685.101 only allows courts to exercise jurisdiction "to the extent permitted under the United States Constitution," there should be no issue with regard to the constitutionality of the statute.

(3) The others are contracts for labor or employment (subsection (b)), most contracts related to "personal, family, or household purposes" (subsection (c)), various contracts governed by other specific rules under [section] 671.105(2) (subsection (d)), and certain contracts "relating to extensions of credit by a deposit or lending institution" located in Florida (subsection (e)).

(4) State v. Sousa, 903 So. 2d 923,928 (Fla. 2005).

(5) Carlile v. Game and Fresh Water Fish Comm'n, 354 So. 2d 362,365 (Fla. 1977); see also State v. Webb, 398 So. 2d 820, 825 (Fla. 1981) ("The title is more than an index to what the section is about or has reference to; it is a direct statement by the legislature of its intent.").

(6) Schwartz v. Geico General Ins. Co., 712 So. 2d 773, 775 (Fla. 4th D.C.A. 1998) (internal quotations omitted); see also Allis-Chalmers Credit Corp. v. Dep't of Revenue, 456 So. 2d 899, 901 (Fla. 1st D.C.A. 1984) ("IT]he legislature must be assumed to know the meaning of the words and to have expressed its intent by the use of the words found in the statute.").

(7) See, e.g., Taylor Woodrow Constr. Corp. v. Burke Co., 606 So. 2d 1154, 1155 (Fla.1992) ("The court should look to legislative history only if the court determines that a statute's language is ambiguous."); Knowles v. Beverly Enterprises-Florida, Inc., 898 So. 2d 1, 12 (Fla. 2004) ("[N]ot only do we not need to resort to legislative history ... to understand this plain meaning; we cannot do so.") (emphasis in original).

(8) Wood v. Fraser, 677 So. 2d 15 (Fla. 2d D.C.A. 1996) (internal quotations omitted; emphasis added).

(9) See, e.g., Fleet Nat'l Bank, N.A. v. Liag Argentina, S.A., 2004 WL 2113283 (N.Y. Sup. Sep. 21, 2004); Cambridge Nutrition A.G. v. Fotheringham, 840 F. Supp. 299, 302 (S.D.N.Y. 1994) (both upholding personal jurisdiction under [section]5-1402(1), New York's counterpart to FLA. SWAT. [section]685.102(1)).

Edward M. Mullins and Douglas J. Giuliano practice at the international litigation and arbitration boutique Astigarraga Davis in Miami. Mr. Mullins serves as the publications chair of the International Law Section, John H. Rooney, Jr., chair.