NV Supreme Court Shuts Out Exclusive Application Of Forum Selection Clause

Mr. Desage, a Nevada resident, and Cadeau Express, Inc., a Nevada corporation, defaulted on several promissory notes payable to AW Financial Group, LLC, a Nevada limited-liability company.  Because everyone involved had a Nevada connection, it may seem unsurprising that AW brought suit in Nevada state court.  The notes, however, included the following forum selection provision:

"This Note shall be construed in accordance with and shall be governed by the internal laws of the State of California applicable to contracts made and wholly performed therein which shall govern the validity, construction, performance and effect of this Note.  The Superior Court of Los Angeles County and/or the United States District Court for such County shall have jurisdiction and venue over all disputes between the parties.  The parties hereby irrevocably submit and consent to the non-exclusive jurisdiction of any federal or state court located within Los Angeles, California over any dispute arising out of or relating to this Note."

The notes also included an arbitration provision.  When the defendants moved to dismiss AW's action, the Nevada court ordered the parties to arbitrate in California.  After an arbitration award of nearly $37 million in favor of AW, the Nevada court confirmed the award and entered judgment.

On appeal to the Nevada Supreme Court, the defendants argued that the above provision when read with the arbitration provision reflect the parties intent that California was to be the exclusive forum for resolving all issues relating to arbitration and that the Nevada court lacked subject-matter jurisdiction ab initio.  The Supreme Court rejected this argument, finding that because "the forum-selection clause was unambiguously nonexclusive, the contract did not prohibit the parties from filing suit in Nevada".  Desage v. AW Financial Group, LLC, 2020 Nev. Unpub. LEXIS 432.

This trail sign isn' puzzling, just alarming . . .



Tags: Nevada