Florida Court Issues Precedent-Setting Ruling, Adopts “Substantial Prejudice or Unfair Advantage” Standard as Law
ORLANDO, FL – Many contracts contain venue provisions requiring all disputes to be litigated within a certain geographical area, but the question of when a series of lawsuits in different states causes that provision to be waived has long gone unanswered in Florida court. In a precedent-setting decision, Florida’s Fifth District Court of Appeals has ruled that a waiver only lasts as long as the suit resulting in the waiver remains pending, unless the party wishing to avoid the waiver can demonstrate either substantial prejudice with regard to the first suit or significant unfair advantage gained by the party seeking to enforce the venue provision. As a result of its ruling in the case of Texas Auto Mart, Inc. vs. Thrifty Rent-a-Car System, Inc., the Fifth District Court of Appeals has adopted this “substantial prejudice or unfair advantage” standard as Florida law on the issue.
The ruling was issued following multiple lawsuits stemming from a lease agreement that Texas Auto Mart signed for a property in Orlando. The agreement contained a provision requiring that all disputes be litigated in Oklahoma. When Texas Auto Mart defaulted in its payments, Thrifty filed an eviction action in Florida to ensure that the court would have jurisdiction over the property, and Texas Auto Mart filed a counterclaim. When Texas Auto Mart abandoned the property, the court’s jurisdiction was no longer an issue and the suit was dismissed for lack of prosecution by either party. Thrifty then filed a suit in Oklahoma for the remaining unpaid rent.
Texas Auto Mart subsequently filed its own suit against Thrifty in Florida court, alleging constructive eviction. Texas Auto Mart argued unsuccessfully to the trial court that Thrifty’s first suit waived the Oklahoma venue provision in the lease forever. However Thrifty, represented by RumbergerKirk Partner Dan Gerber and attorney Tim Bench, obtained a dismissal of the Florida suit, arguing that any waiver ended when the first suit was dismissed. On appeal, it was determined that Texas Auto Mart’s Florida suit could not be heard in Florida court because Thrifty’s waiver of the venue provision lasted only as long as the suit Thrifty initially filed against Texas Auto Mart, Gerber and Bench also argued that Texas Auto Mart had not demonstrated the “substantial prejudice or unfair advantage” required for the waiver to be extended to a separate suit
RumbergerKirk Partner Dan Gerber represents clients in the areas of toxic tort, commercial litigation, product liability and governmental affairs.