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Contractual Venue Provisions Enforceable In Indiana

I previously posted that parties can contractually stipulate to jurisdiction in Indiana.  For example, lenders can bring lawsuits against out-of-state guarantors in Indiana, assuming that’s what the guaranty says.  In Sunburst Chemical v. Acorn Distributors, 2010 Ind. App. LEXIS 280 (2010) (.pdf), the Indiana Court of Appeals confirmed that venue also can be dictated by contract.

Venue vs. jurisdiction.  Workout specialists should know the difference between the terms “venue” and “jurisdiction.”  Sunburst Chemical helps with the distinction:  “jurisdiction involves the court’s ability to hear a particular case, whereas venue concerns the proper situs for trial.”  With regard to state-court litigation, “jurisdiction” basically refers to the state, and “venue” refers to the county.  (“Jurisdiction” actually has a more comprehensive meaning.  “Venue,” on the other hand, is a more specific concept and, as noted by Black’s Law Dictionary, means “the particular county . . . in which a court with jurisdiction may hear and determine a case.”) 

Venue.  Ind. Trial Rule 75(A) spells out Indiana’s venue requirements.  The question in Sunburst Chemical was whether a suit to enforce a credit agreement should have been heard in Allen County (the location of the defendant) or Marion County (where the credit agreement’s contractual venue provision stated the case should be).  In a case like Sunburst Chemical, by rule the proper venue would be Allen County – the county of the defendant’s residence.  But in Sunburst Chemical, the credit agreement had a Marion County venue stipulation.  In Indiana, contractual venue provisions are enforceable.  Although the venue provision in Sunburst Chemical was somewhat vague, the Court ultimately concluded that the “agreement established venue in Marion County, and the trial court did not err by denying Sunburst’s motion to transfer venue.” 

Mortgages.  Sunburst Chemical was not a mortgage foreclosure case but rather a suit on a credit agreement for the collection of money.  In cases involving the foreclosure of a mortgage, plaintiffs in Indiana may file suit in the county where the real estate is located.  Ind. Code § 32-30-10-3(a); I.C. § 32-29-7-6(a).  Venue thus focuses, not on the residence of a party, but on the location of the subject real estate. 

Why choose?  Indiana law in this area is favorable to creditors.  Assuming clear language in the contract, an out-of-county resident or company can be forced to defend a suit in a foreign county - usually the county in which the creditor resides or is located.  For plaintiffs/creditors, contractual venue provisions result in the savings of time and expense through the centralization of litigation in one’s own backyard.  And, at least in theory, they may secure some level of “home court advantage.”