IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA25-36
Filed 19 November 2025
Cumberland County, No. 22CVS001277-250
EARNHARDT PLUMBING, LLC, Plaintiff,
v.
THOMAS BUILDERS, INC. and THOMAS PROPERTIES OF NORTH CAROLINA, LLC, Defendants.
Appeal by Defendants from Order entered 23 July 2024 by Judge Patrick T.
Nadolski in Cumberland County Superior Court. Heard in the Court of Appeals 12
August 2025.
Troy D. Shelton and James R. Vann for Plaintiff-Appellee.
Penn Stuart & Eskridge, P.C., by M. Shaun Lundy, for Defendants-Appellants.
HAMPSON, Judge.
Factual and Procedural Background
Thomas Builders, Inc., and Thomas Properties of North Carolina, LLC,
(collectively, Defendants) appeal from an Order requiring them to arbitrate a breach
of contract claim brought by Earnhardt Plumbing, LLC, in Cumberland County,
North Carolina. The Record before us tends to reflect the following:
Plaintiff entered into a written agreement with Defendants under which
Plaintiff agreed to provide and install a plumbing and gas line system for a hotel EARNHARDT PLUMBING, LLC V. THOMAS BUILDERS, INC.
Opinion of the Court
Defendants were constructing (the Contract). The Contract included an arbitration
clause:
Any claim arising out of or related to this Subcontract, except claims as otherwise provided in Subparagraph 4.1.3, shall be subject to arbitration. Prior to arbitration, the parties shall endeavor to resolve disputes by mediation. Claims not resolved by mediation shall be decided by arbitration. Demand for arbitration shall be filed in writing with the other party. A demand for arbitration shall be made within the time limits specified in the conditions of the Prime Contract as applicable, and in other cases within a reasonable time after the claim has arisen, and in no event shall it be made after the date when institution of legal proceedings based on such a claim would be barred by the applicable statute of limitation. The parties shall select the arbitrator by the same procedures set forth in Paragraph 19a for selection of the mediator; provided, however, that such arbitrator must have experience in the construction industry, either as a contractor, design professional, or attorney, and must have had no prior dealings with either party. The Arbitration shall be held at the discretion of the Contractor either at the Contractor’s principle [sic] place of business or where the project is located.
On 7 March 2022, Plaintiff filed a Complaint alleging Defendants had failed to
pay for the services rendered under the Contract, in the amount of $159,488.50.
Defendants moved to dismiss or stay the proceedings under the Contract’s arbitration
clause. Defendants sought to enforce the arbitration clause and, in particular, require
the arbitration take place in Tennessee, where Thomas Builders, Inc., is registered.
Plaintiff agreed the Contract required the matter be arbitrated but argued the
portion of the provision giving Defendants discretion to choose Tennessee as the
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forum for arbitration was unenforceable.
The trial court denied the motion to dismiss and allowed the motion to stay
proceedings pending arbitration. It held the provision placing the forum in Tennessee
was unenforceable under Section 22B-3 of our General Statutes and that the Federal
Arbitration Act (FAA) did not preempt the application of this provision. Accordingly,
it ordered arbitration be conducted in North Carolina.
Defendants appealed that decision to this Court. Earnhardt Plumbing, LLC v.
Thomas Buiders, Inc., 291 N.C. App 1, 893 S.E.2d 564 (2023). We concluded we could
not determine whether the FAA preempts Section 22B-3 in this case because the trial
court did not make any findings of fact regarding whether the Contract involves
interstate commerce. Id. at 6, 893 S.E.2d at 568. We therefore remanded the case to
the trial court for findings of fact as to whether the Contract evidences a transaction
involving interstate commerce and, based on that fact-finding, to apply the applicable
law to the forum-selection clause contained in the Contract. Id.
On remand, the trial court found the Contract involves interstate commerce
and concluded the FAA preempts Section 22B-3 as applied to the forum-selection
clause. However, it additionally determined the Contract’s forum-selection clause is
permissive, not mandatory, and therefore unenforceable under North Carolina law.
It directed the parties to arbitrate the matter in Cumberland County, North Carolina.
Defendants timely filed notice of appeal.
Appellate Jurisdiction
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The trial court’s Order allowing Defendant’s Motion to Stay Proceedings is
interlocutory and not final in nature. “An interlocutory order is one made during the
pendency of an action, which does not dispose of the case, but leaves it for further
action by the trial court in order to settle and determine the entire controversy.”
Veazey v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950). “Generally,
a party has no right to appeal an interlocutory order.” Cox v. Dina-A-Mate, Inc., 129
N.C. App. 773, 775, 501 S.E.2d 353, 354 (1998). However, as we previously held in
this case, the trial court’s Order denying Defendants their contractual right to select
the forum for arbitration affects a substantial right. 291 N.C. App. at 4, 893 S.E.2d
at 567. Accordingly, we have jurisdiction to review this matter pursuant to N.C. Gen.
Stat. § 7A-27(b)(3)(a) (2023). Id.
Issue
The sole issue on appeal is whether the trial court erred in holding the forum-
selection clause to be permissive—not mandatory—and unenforceable under North
Carolina law—despite the applicability of the FAA and the language of the clause
itself—and ordering the parties to arbitrate in Cumberland County, North Carolina.
Analysis
Defendants argue the trial court erred in ordering arbitration be held in
Cumberland County because the Contract contains a mandatory forum-selection
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clause that must be given effect under the Federal Arbitration Act. 1 That clause
provides:
The Arbitration shall be held at the discretion of [Defendants] either at [Defendants’] principle [sic] place of business or where the Project is located.
Defendants argue the FAA preempts North Carolina law, which would render this
clause unenforceable insofar as it provides for arbitration outside of North Carolina.
Plaintiff argues the FAA does not apply because the Contract does not involve
interstate commerce and, even if the FAA applied, it would also require arbitration
be conducted in North Carolina. Plaintiff also argues the trial court did not err in
determining the clause is permissive, rather than mandatory, and therefore
unenforceable.
A. Interstate commerce
As a threshold matter, we must determine if the FAA applies to the Contract.
“The FAA will apply if the contract evidences a transaction involving interstate
commerce.” Hobbs Staffing Servs., Inc. v. Lumbermens Mut. Cas. Co., 168 N.C. App.
223, 226, 606 S.E.2d 708, 711 (2005). “This is a question of fact, which an appellate
court should not initially decide.” Id. When this case initially appeared before us, we
noted the trial court had made no findings of fact regarding whether the contract
1 Plaintiff argues Defendants may not now assert arguments under the FAA because they “did
not seek to compel arbitration under the FAA” and instead relied on North Carolina law before the trial court. This is not reflected by the Record. In support of their Motion to Dismiss or Stay Proceedings, Defendants made arguments expressly based in the FAA. There is no indication Defendants waived arguments under the FAA.
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evidenced a transaction involving interstate commerce. 291 N.C. App. at 5, 893
S.E.2d at 568. Accordingly, we did not determine if the FAA applied and remanded
to the trial court to make the initial factual determinations as to whether the
Contract involved interstate commerce. Id. at 6, 893 S.E.2d at 568. Plaintiff—
apparently as an alternative basis for affirming the trial court 2—argues the trial
court erred in concluding on remand the Contract involved interstate commerce.
The trial court held:
The Contract involved or affected interstate commerce in that it was a contract between a party domiciled in North Carolina, on the one hand, and Tennessee, on the other.
In support of that conclusion, it found:
8. Requests for payment were submitted by the North Carolina Party, [Plaintiff], to the Tennessee Party, [Defendant].
9. Employees of [Defendant] traveled to North Carolina in connection with the Contract.
Plaintiff first argues the trial court erred because it did not find there was
“substantial” interstate commerce. No such finding is required. Plaintiff’s argument
appears to stem from preempted precedent. In the past, some courts, including our
Supreme Court, determined if a contract was subject to the FAA by examining
whether the parties, at the time they entered into the agreement, “contemplated
2 See generally, N.C.R. App. P. 10(c) (2025) (permitting an appellee to raise issues that deprived
it of an alternative basis in law for supporting the order appealed from without having to notice a separate or cross-appeal).
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substantial interstate activity.” Burke Co. Pub. Schs. Bd. of Ed. v. Shaver P’ship, 303
N.C. 408, 418, 279 S.E.2d 816, 822 (1981) (citations omitted). The United States
Supreme Court has rejected this construction, holding the FAA applies if the
transaction “in fact involve[s] interstate commerce, even if the parties did not
contemplate an interstate commerce connection.” Allied-Bruce Terminix Cos., Inc. v.
Dobson, 513 U.S. 265, 281, 130 L.Ed.2d 753 (1995). This construction reaches “to the
limits of Congress’ Commerce Clause power.” Id. at 270. Thus, the trial court was
only required to find facts supporting a conclusion the transaction involved interstate
commerce, and it did not err by failing to specifically find the commerce involved was
“substantial.”
Plaintiff also argues the trial court erred in ruling that the Contract involved
interstate commerce because it was “a contract between a party domiciled in North
Carolina, on the one hand, and Tennessee, on the other.” We agree that mere diversity
of parties does not on its own require the conclusion that an agreement involved
interstate commerce. See Burke, 303 N.C. at 418-19, 279 S.E.2d at 822. However, the
trial court also found that requests for payment were made across state lines, and
that employees of Defendants traveled across state lines in connection with the
Contract.
The FAA does not “require proof by affidavit or other specific evidence of the
nexus to interstate commerce.” Maxum Founds., Inc. v. Salus Corp., 779 F.2d 974,
978 n.4 (4th Cir. 1985). Where “the party seeking arbitration alleges that the
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transaction is within the scope of the Act, and the party opposing application of the
Act does not come forward with evidence to rebut jurisdiction under the federal
statute,” the FAA does not require additional proof of interstate commerce. Id.
Defendants have alleged the Contract involved interstate commerce, and Plaintiff
does not identify any evidence tending to show it did not, except that Plaintiff used
only materials from North Carolina and the labor of North Carolina employees. This
evidence does not rebut Defendants’ allegation because the origins of material and
labor involved are not the only factors by which interstate commerce may be
evidenced.
Additionally, the connections between the parties are similar to those our
courts and federal courts have held sufficient to support a conclusion an agreement
involved interstate commerce. See, e.g., United States ex rel. Red Hawk Contracting
v. MSK Constr., Inc., No. 1:16-cv-1183, 2018 WL 2121625, at *3 (M.D.N.C. 8 May
2018) (transaction requiring monthly billing from North Carolina corporation to
South Carolina corporation and transfer of payment through mail between states
involved interstate commerce). See also Gaylor, Inc. of North Carolina v. Vizor, LLC,
2015 WL 6659662 (N.C. Bus. Ct. 30 Oct 2015) (payment from Indiana party to North
Carolina party and personnel traveling from Indiana to North Carolina project site
“clearly evidences a transaction involving interstate commerce”). While these
opinions are not controlling upon our decision, they are in accord with the directive
of the United States Supreme Court that the FAA be applied “to the limits of
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Congress’ Commerce Clause power.” Allied-Bruce, 513 U.S. at 270. Thus, we agree
the Contract in this case, which involved payment requests and employees of
Defendants traveling across state lines, evidences a transaction involving interstate
commerce. The FAA therefore applies to the Contract.
B. Enforceability of forum-selection clause
Plaintiff further argues, even if the FAA applies to the Contract, it does not
preempt North Carolina law rendering the forum-selection clause unenforceable. The
FAA does not completely preempt state contract law because it does not “reflect a
congressional intent to occupy the entire field of arbitration.” Volt Info. Scis., Inc. v.
Bd. of Trs., 489 U.S. 468, 477, 103 L.Ed.2d 488 (1989). However, when there is a
conflict between federal and state law, the Supremacy Clause requires we give effect
to federal law. CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 663, 123 L.Ed.2d 387
(1993). See also DIRECTV, Inc. v. Imburgia, 577 U.S. 47, 64 n.1, 193 L.Ed.2d 365
(2015) (Ginsburg, J., dissenting) (“State laws are preempted by the FAA only to the
extent that they conflict with the contracting parties’ intent.”). The enforceability of
a contractual arbitration clause is a judicially determined conclusion of law that we
review de novo. Goldstein v. Am. Steel Span, Inc., 181 N.C. App. 534, 536, 640 S.E.2d
740, 742 (2007).
Plaintiff’s argument is based in a provision of our General Statutes that
renders void forum-selection clauses which require contracting parties to arbitrate
disputes outside of the State:
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Except as otherwise provided in this section, any provision in a contract entered into in North Carolina that requires the prosecution of any action or the arbitration of any dispute that arises from the contract to be instituted or heard in another state is against public policy and is void and unenforceable.
N.C. Gen. Stat. § 22B-3 (2023).
This provision is in conflict with the Federal Arbitration Act. “[The Supreme
Court has] held that the FAA pre-empts state laws which ‘require a judicial forum for
the resolution of claims which the contracting parties agreed to resolve by
arbitration.’ ” Volt, 489 U.S. at 478 (citing Southland Corp. v. Keating, 465 U.S. 1, 10,
79 L.Ed.2d 1 (1984)). “In enacting § 2 of the federal Act, Congress declared a national
policy favoring arbitration and withdrew the power of the states to require a judicial
forum for the resolution of claims which the contracting parties agreed to resolve by
arbitration.” Southland Corp., 465 U.S. at 10.
This preemption is in accord with the purpose of the FAA. Congress enacted
the FAA in 1925 “in response to widespread judicial hostility to arbitration
agreements.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 179 L.Ed.2d 742
(2011). The Supreme Court of the United States has described the Act as reflecting a
“liberal federal policy favoring arbitration,” Moses H. Cone Memorial Hospital v.
Mercury Constr. Corp., 460 U.S. 1, 24, 74 L.Ed.2d 765 (1983), and “the fundamental
principle that arbitration is a matter of contract.” Rent-A-Center, West, Inc., v.
Jackson, 561 U.S. 63, 67, 177 L.Ed.2d 403 (2010). The principal purpose of the FAA
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is to “ensure that private arbitration agreements are enforced according to their
terms[.]” Volt, 489 U.S. at 478. The terms of the agreement in this case state that
arbitration “shall be held at the discretion of [Defendants] either at [Defendants’]
principle [sic] place of business or where the Project is located.”
We have previously resolved the conflict between N.C. Gen. Stat. § 22B-3 and
this policy, holding when the FAA applies to a contract the forum-selection clause
contained in that contract is enforceable even if the forum designation is against the
law and public policy of North Carolina. Goldstein, 181 N.C. App. at 538, 640 S.E.2d
at 743 (designation of Fargo, North Dakota as forum for arbitration enforceable as
FAA “preempts North Carolina’s statute and public policy regarding forum
selection”).
Federal courts have likewise held North Carolina law preempted by the FAA
when addressing this issue. “[Section 22B-3] falls squarely within the preempted
category of state laws as recognized by Volt[.]” U.S. ex rel. TGK Enters., Inc. v. Clayco,
Inc., 978 F.Supp.2d 540, 549 (E.D.N.C. 2013) (holding as enforceable under FAA
agreement requiring parties to arbitrate in Missouri). See also Aspen Spa Props., LLC
v. Int’l Design Concepts, LLC, 527 F.Supp.2d 469, 473 (2007) (holding plaintiff had
correctly conceded FAA preempts Section 22B-3 and accordingly there were “no state-
law grounds for revoking the forum-selection clause” placing arbitration in King
County, Washington).
Despite this, Plaintiff asserts two arguments disputing preemption, the first
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based in Section 4 of the FAA and the second based on the “equal footing” principle.
We note that both arguments are generally applicable to the conflict between Section
22B-3 and the FAA and would undermine our holding in Goldstein. “Where a panel
of the Court of Appeals has decided the same issue, albeit in a different case, a
subsequent panel of the same court is bound by that precedent, unless it has been
overturned by a higher court.” In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2 30, 37
(1989). We briefly address each argument in turn.
Plaintiff first argues there is no conflict between the FAA and State law as
each mandates an identical result: that arbitration be conducted in North Carolina.
In support of this argument, it cites Section 4 of the FAA, which allows parties to a
written arbitration agreement to “petition any United States district court which,
save for such agreement, would have jurisdiction . . . for an order directing that such
arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4.
Under that statute: “The hearing and proceedings, under such agreement, shall be
within the district in which the petition for an order directing such arbitration is
filed.” Id. Plaintiff argues this provision forecloses an interpretation of the forum-
selection clause requiring arbitration be conducted in Tennessee, as Tennessee was
not the forum of the trial court action in this case.
Plaintiff wholly misinterprets Section 4 of the FAA. Section 4 creates a specific
procedure allowing a party to petition a federal district court to compel arbitration
when “aggrieved by the alleged failure, neglect, or refusal” of another party to
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arbitrate as required by a written agreement. Id. Even a cursory reading reveals this
statute is unrelated to the state court Order at issue in this case, which resolved
Defendants’ Motion to Stay Proceedings Pending Arbitration. As an example of the
application of this statute, if a party to the Contract in this case refused to arbitrate
following the entry of the Order staying proceedings, the opposing party could then
under Section 4 file a Petition to Compel Arbitration in a federal district court. The
language identified by Plaintiff requires such a Petition be filed in the federal district
court located in the forum mandated by the arbitration agreement’s forum-selection
clause. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Lauer, 49 F.3d 323, 327 (7th
Cir. 1995). It does not, as Plaintiff argues, relate in any way to the validity or
enforceability of the forum-selection clause itself.
Second, Plaintiff argues the “equal footing” principle prevents the FAA from
preempting Section 22B-3. The FAA “places arbitration agreements on an equal
footing with other contracts.” Rent-A-Center, 561 U.S. at 67. As such, arbitration
agreements are valid and can only revoked “upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C. § 2. Agreements to arbitrate may
be invalidated by “ ‘generally applicable contract defenses, such as fraud, duress, or
unconscionability,’ but not by defenses that apply only to arbitration or that derive
their meaning from the fact that an agreement to arbitrate is at issue.” AT&T
Mobility LLC, 563 U.S. at 339 (quoting Doctor’s Assoc., Inc. v. Casarotto, 517 U.S.
681, 687, 134 L.Ed.2d 902 (1996)). For example, a Montana statute invalidated
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arbitration clauses in contracts unless notice of the clause was given on the contract’s
first page. Casarotto, 517 U.S. at 681. The Supreme Court held that statute was
preempted by the FAA because, rather than being a generally applicable contract
defense, the statute “conditions the enforceability of arbitration agreements on
compliance with a special notice requirement not applicable to contracts generally.”
Casarotto, 517 U.S. at 687.
Plaintiff argues Section 22B-3 is a “generally applicable contract defense”
because it applies to “any provision in a contract entered into in North Carolina that
requires the prosecution of any action or the arbitration of any dispute that arises
from the contract to be instituted or heard in another state[.]” N.C. Gen. Stat. § 22B-
3. The statute applies not only to clauses selecting the forum for arbitration, but for
those selecting the forum for litigation as well.
Such an interpretation is directly at odds with the holding of the United States
Supreme Court that the FAA preempts state laws which “require a judicial forum for
the resolution of claims which the contracting parties agreed to resolve by
arbitration.” Southland, 465 U.S. at 10. Plaintiff has identified no authority holding
the equal-footing principle prevents the preemption of state law limiting the forum
the parties may select for arbitration. This interpretation also conflicts with our own
holding in Goldstein that the FAA preempts Section 22B-3. 181 N.C. App. at 538, 640
S.E.2d at 743; Civil Penalty, 324 N.C. at 384, 379 S.E.2d at 37.
Although Section 22B-3 “explicitly applies to all contracts, it applies to one type
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of provision only, forum-selection provisions.” Newman ex rel. Wallace v. First Atl.
Res. Corp., 170 F.Supp.2d 585, 592 (M.D.N.C. 2001). It is not a general contract
defense like “fraud, coercion, lack of consideration” or lack of meeting of the minds.
Id. (citing Casarotto, 517 U.S. at 686-87). Thus, as we have previously held, Section
22B-3 cannot be used to invalidate a forum-selection provision in an arbitration
agreement governed by the FAA. Therefore, the arbitration forum-selection clause in
the Contract here is enforceable under the FAA notwithstanding Section 22B-3.
C. Mandatory and permissive forum-selection clauses
In addition to directing it determine if the FAA applied to the Contract, our
previous decision in this case instructed the trial court to consider whether the forum-
selection clause is mandatory or permissive. 291 N.C. App. at 6, n.1, 893 S.E.2d at
568, n.1. The trial court concluded the forum-selection clause was permissive and
therefore unenforceable. Defendants argue the forum-selection clause is mandatory
and that the trial court erred by ordering arbitration be conducted in North Carolina.3
“When a jurisdiction is specified in a provision of a contract, the provision
3 Plaintiff argues the trial court’s interpretation of the forum-selection clause should be reviewed for abuse of discretion. Determining the enforceability of a forum-selection clause and whether it is unfair or unreasonable because of circumstances such as fraud or unequal bargaining power is “highly fact-specific” and indeed subject to review for abuse of discretion. Appliance Sales & Serv., Inc. v. Command Elec. Corp., 115 N.C. App. 14, 21-22, 443 S.E.2d 784, 789 (1994). However, in this case Plaintiff does not argue the agreement was unfair or unreasonable or that any factual circumstances otherwise render it unenforceable. The parties only dispute the meaning of the contract clause. “Issues relating to the interpretation of terms in an arbitration clause are matters of law, which this Court reviews de novo.” Epic Games, Inc. v. Murphy-Johnson, 247 N.C. App. 54, 61-62, 785 S.E.2d 137, 142-43 (2016).
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generally will not be enforced as a mandatory selection clause without some further
language that indicates the parties’ intent to make jurisdiction exclusive.” Mark Grp.
Int’l, Inc., v. Still, 151 N.C. App. 565, 568, 566 S.E.2d 160, 161 (2002). A clause
without such language generally only consents to the jurisdiction of a court,
“allow[ing] the parties to air any dispute in that court, without requiring them to do
so.” Id. at 567, 566 S.E.2d at 162 (quoting Leandra Lederman, Note, Viva Zapata!:
Toward a Rational System of Forum–Selection Clause Enforcement in Diversity
Cases, 66 N.Y.U. L.Rev. 422, 423 n. 10 (1991)). For example, a forum-selection clause
stating a contract “shall be subject to the . . . jurisdiction of the State of Colorado,”
without indicating that jurisdiction is “sole” or “exclusive” is permissive, and does not
require disputes be resolved in Colorado. Cable Tel. Servs., Inc. v. Overland Cont.,
Inc., 154 N.C. App. 639, 645, 574 S.E.2d 31, 35 (2002). Likewise, a clause providing
“[v]enue for any arbitration, settlement meetings, or any subsequent litigation
whatsoever shall be in the city of Contractor’s office as shown on page 1 of the
Subcontract” is not a mandatory selection clause. Se. Caissons, LLC v. Choate Const.
Co., 247 N.C. App. 104, 110, 784 S.E.2d 650, 657 (2016). Mandatory selection clauses
“have contained words such as ‘exclusive’ or ‘sole’ or ‘only’ which indicate that the
contracting parties intended to make jurisdiction exclusive.” Internet East, Inc. v.
Duro Commc’ns, Inc., 146 N.C. App. 401, 403, 553 S.E.2d 84, 86 (2001) (holding as
mandatory clause providing “The parties herewith stipulate that the State courts of
North Carolina shall have sole jurisdiction . . . and that venue shall be proper and
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shall lie exclusively in the Superior Court of Pitt County, North Carolina”). See also
Appliance Sales & Serv., 115 N.C. App. at 23, 443 S.E.2d at 790 (holding as
enforceable clause stating “the Courts in Charleston County, South Carolina shall
have exclusive jurisdiction and venue”).
Here, the forum-selection clause at issue provides “The Arbitration shall be
held at the discretion of [Defendants] either at [Defendants’] principle [sic] place of
business or where the Project is located.” Defendants argue two components of this
clause render it mandatory: (1) the “either-or” construction; and (2) the indication
that Defendants have discretion to choose the forum for arbitration between the two
options provided.
Our courts have not addressed whether an either-or forum-selection clause is
permissive or mandatory. Defendants cite to federal caselaw, primarily stemming
from a decision of the Southern District of New York. Full-Sight Contact Lens Corp.
v. Soft Lenses, Inc., 466 F.Supp. 71 (1978). In that case, the district court held as
enforceable a clause providing all disputes “shall be brought in either San Diego or
Los Angeles County.” Id. at 73. This disjunctive language “mandates more than that
a particular court has jurisdiction. The language mandates that the designated courts
are the only ones which have jurisdiction.” Hunt Wesson Foods, Inc. v. Supreme Oil
Co., 817 F.2d 75, 77-78 (9th Cir. 1987). While not relied upon in subsequent cases,
the Ninth Circuit has used the “either-or” construction as an example of a mandatory
forum-selection clause. Id. (contrasting with permissive forum-selection clause at
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issue which stated “the courts of California, County of Orange, shall have jurisdiction
over the parties”).
The clause in this case also provides the forum for arbitration will be chosen
“at the discretion of [Defendants].” The plain meaning of this language gives
Defendants the right to select the venue. Federal courts have held as mandatory
provisions granting one party to an agreement the right to choose the forum for
resolving disputes. See City of Rose City v. Nutmeg Ins. Co., 931 F.2d 13, 15 (5th Cir.
1991) (holding clause by which insurer agreed to submit to the jurisdiction “of any
court of competent jurisdiction” granted policyholder the right to choose venue and
insurer could not remove the case from state court). See also J&R Multifamily Group,
Ltd. v. UBS Real Estate Securities, Inc, 2019 WL 13218440 (S.D. Texas 20 Feb 2019)
(“The language ‘at Lender’s option’ in the forum-selection clause gives Defendants the
exclusive right to choose venue.”); Mosing v. Zloop, Inc., 2015 WL 1841212 (S.D. Texas
22 April 2015) (clause providing “Borrower agrees upon Lender’s request to submit
to the jurisdiction of the courts of Harris County, State of Texas” was mandatory and
enforceable).
While none of these decisions are controlling, we find their reasoning
compelling and Plaintiff has identified no caselaw holding otherwise with regard to
“either-or” constructions or clauses granting one party the right to choose the forum.
Instead, Plaintiff surveys North Carolina decisions to argue a mandatory forum-
selection clause must contain a modifier to “shall” such as “only,” “solely,” or
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“exclusively.” The rule is not so prescriptive: the clause need only contain words
“which indicate that the contracting parties intended to make jurisdiction exclusive.”
Cable Tel Servs., 154 N.C. App. at 644, 574 S.E.2d at 34-35. Here, the combination of
the “either-or” construction and assignment of discretion to select a forum to
Defendants makes clear the parties’ intent. The plain language of the forum-selection
clause demonstrates the parties agreed to give Defendants the right to choose the
appropriate forum for arbitration from the identified fora. Defendants may choose
between the location of its principal place of business or the site of the project.
Thus, the arbitration forum-selection clause in this case is mandatory and not
merely permissive. Therefore, the trial court erred in concluding the forum-selection
clause was not enforceable. Consequently, the trial court erred in entering its Order
requiring arbitration occur in Cumberland County, North Carolina.
Conclusion
Accordingly, the Order of the trial court is reversed and this matter remanded
for entry of an order allowing the parties to pursue arbitration in accordance with the
terms of the Contract, including the forum-selection clause.
REVERSED AND REMANDED.
Judges FLOOD and MURRY concur.
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