Are forum selection clauses enforceable in Utah construction contracts? Rocky Mountain Builders Supply v. Marks Explained

In Rocky Mountain Builders Supply v. Marks, the Utah Court of Appeals addressed whether a forum selection clause in a construction contract could compel an out-of-state homeowner to litigate in Utah, establishing important precedent for Utah contractors working across state lines.

Background and Facts
Rocky Mountain Builders Supply (RMBS), a Utah corporation, contracted with Steve Marks, a Montana resident, to install new roofs on structures at Marks’s Montana residence for $14,000. The contract contained a forum selection clause designating Utah as the forum for dispute resolution. When Marks refused to pay the remaining balance after completion, RMBS sued in Utah’s Fourth District Court. Marks moved to dismiss, arguing the forum selection clause was unenforceable and the court lacked personal jurisdiction.

Key Legal Issues
The court examined two critical questions: first, whether the forum selection clause was enforceable under the Restatement standard adopted in Prows v. Pinpoint Retail Systems, which requires that such clauses be given effect unless “unfair or unreasonable”; and second, whether Utah had a rational nexus to exercise jurisdiction over the Montana defendant.

Court’s Analysis and Holding
The Court of Appeals reversed the district court’s dismissal, applying correctness review to the jurisdictional determination. The court rejected arguments that the clause was unenforceable merely because Marks was an individual rather than a business entity, the contract involved residential property, or the amount in dispute was relatively small. Under Jacobsen Construction v. Teton Builders, the court found a rational nexus existed because RMBS was a Utah corporation with its principal place of business in Utah, satisfying Utah’s policy interest in providing its residents with a forum for legal claims.

Practice Implications
This decision reinforces that Utah courts will enforce forum selection clauses even against individual homeowners when a Utah party is involved and the clause is not fundamentally unfair. The ruling provides important guidance for Utah contractors working out-of-state, confirming that proper contractual provisions can establish Utah jurisdiction even for projects performed entirely outside Utah. However, practitioners should ensure forum selection clauses are reasonable and consider potential forum non conveniens challenges even when jurisdiction is established.