Russo v. Barger – 1/26/2016
Arizona Court of Appeals Division One holds that a party may waive a valid forum selection clause by substantially participating in litigation without promptly seeking its enforcement.
The parties entered into a contract for the sale of a condo in a Mexican resort development. The contract contained a forum selection clause designating Mexico as the appropriate litigation venue. When the defendants failed to complete and deliver the condo as promised, the plaintiff filed suit in Maricopa County Superior Court. The defendants participated in the action and at one point moved for summary judgment on various grounds, but not on the basis of the forum selection clause. Three years into the litigation, the defendants invoked the forum selection clause in a motion to dismiss, which the trial court granted. The plaintiff appealed, arguing that the defendants waived the forum selection clause.
The Court of Appeals Division One reversed and held that the defendants waived the forum selection clause by substantially participating in the litigation without promptly seeking to enforce the clause. The Court noted that the waiver of an otherwise-enforceable forum selection clause by litigation conduct is consistent with Arizona’s jurisprudence on waivers in analogous contexts, such as notice-of-claim defenses and arbitration clauses. Although waiver ordinarily is a question of fact, the Court concluded that the extensive and undisputed record below fully supported a waiver in this case.
Judge Downie wrote the opinion, in which Presiding Judge Gould and Judge Gemmill joined.