By: James Goodridge
St. John’s Law Student
American Bankruptcy Institute Law Review Staff
A forum-selection clause (“FSC”) is a contractual provision that designates a specific location for the resolution of disputes arising under a contract. Parties use FSCs to limit litigation expenses and avoid the risk of foreign laws, judges, and juries. Additionally, since FSCs often “figure centrally” in a business agreement, courts generally enforce FSCs “in all but the most unusual cases.” Adversary proceedings initiated by third-party trustees may present one of those “cases.” In In re Dozier Financial, Inc., a South Carolina bankruptcy court held relevant “public interests” made South Carolina an appropriate forum for a Chapter 7 trustee’s adversary proceeding against an accounting firm despite a valid FSC designating a Texas forum.
Following the filing of an involuntary Chapter 7 petition against Dozier Financial, Inc. (the “Debtor”) in the United States Bankruptcy Court for South Carolina, a trustee was appointed. The trustee filed a complaint against the Debtor’s principal, legal advisors, and accounting firm to recover losses resulting from Debtor’s improper security offerings to third-party investors. The accounting firm filed a motion to transfer venue to Texas pursuant to the FSC in the firm’s “Engagement Agreement” with Debtor, which provided that any suit or proceeding arising out of or relating to the Engagement Agreement would be brought solely in Texas. Additionally, the firm also argued a Texas forum was appropriate since the firm’s auditing of the relevant securities occurred in Texas.
The bankruptcy court found relevant public interests unique to South Carolina precluded the court from enforcing the FSC. In particular, the court noted that “the investments and losses in question involved a South Carolina business, investors located in South Carolina, and resulted in a South Carolina bankruptcy case.” Additionally, since the FSC (and the Engagement Agreement in its entirety) bound only the firm and Debtor, the court found pursuing the claims against the firm in Texas and the other five defendants in South Carolina would result in “substantially duplicative discovery” that would waste the time and resources of the parties, creditors, and court. Consequently, the court held the relevant public interests and practical considerations presented “unusual circumstances” that outweighed the deference typically owed to FSCs. Accordingly, the court declined to transfer venue. In its holding, the court relied heavily on case law from bankruptcy courts in several circuits detailing the unique presumptions surrounding FSCs in the bankruptcy context. The court noted that “[a]lthough there is the public policy of enforcing a contract . . . there [also] is the public policy of centralizing bankruptcy proceedings, and there is a strong presumption in favor of maintaining the venue of an adversary proceeding where the bankruptcy is pending.” Accordingly, the court found it to be “not unusual for prepetition contract obligations, particularly those dictating forum . . . to be modified or even ignored in a bankruptcy case.”
Readily employed in most Circuits, this policy of non-enforcement of FSCs in adversary proceedings ultimately benefits trustees, creditors, and the judicial economy by eschewing unnecessary, duplicative litigation. In all, the In re Dozier decision exemplifies an “unusual case” sufficient to overcome the typical deference owed to FSCs. Undoubtedly, however, the holding also serves as a warning to defendants in adversary proceedings brought by third-party trustees: when it comes to bankruptcy, your forum-selection clause is no talisman.
 A. Marine Const. Co., Inc. v. U.S. Dist. Ct. for W. Dist. of Texas, 571 U.S. 49, 66 (2013).
When parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties' settled expectations. A forum-selection clause, after all, may have figured centrally in the parties' negotiations and may have affected how they set monetary and other contractual terms; it may, in fact, have been a critical factor in their agreement to do business together in the first place. In all but the most unusual cases, therefore, “the interest of justice” is served by holding parties to their bargain.
 See In re Dozier Fin., Inc., 587 B.R. 637, 651 (Bankr. D.S.C. 2018).
 See id. at 643.
 Id. at 645 (“This engagement letter shall be governed by the laws of the State of Texas. Any suit, action or proceeding arising out of or relating to this engagement letter shall only be brought in the State of Texas and [the parties] agree to the personal jurisdiction of the courts of the State of Texas.”).
 See id. at 650.
 See id. at 651.
 See id. at 649.
 Id. at 650.
 See id. at 651; see also Atlantic Marine, 571 U.S. at 66 (emphasizing deference to FSCs “in all but the most unusual cases”).
 See In re Bavaria Yachts USA, LLLP, 575 B.R. 540, 560–563 (Bankr. N.D. Ga. 2017); In re Veros Energy, LLC, C/A No. 16-70021-JHH, 587 B.R. 134, 156–157, 2018 WL 1989475, at *16 (Bankr. N.D. Ala. Apr. 26, 2018); In re I.E. Liquidation, Inc., C/A No. 06-62179, 2015 WL 5307446, at *6 (Bankr. N.D. Ohio Sept. 10, 2015).
 In re Dozier, 587 B.R. at 649 (quoting In re Bavaria Yachts, 575 B.R. at 558) (second alteration in original) (internal quotations omitted).
 Id. (quoting In re Bavaria Yachts, 575 B.R. at 558 (citing In re Walker, 551 B.R. 679, 690 n.21 (Bankr. M.D. Ga. 2016))).
 See Kismet Acquisition, LLC v. Icenhower (In re Icenhower), 757 F.3d 1044, 1051 (9th Cir. 2014) (affirming nonenforcement of FSC in bankruptcy action in favor of forum of core bankruptcy proceeding); Fire Eagle LLC v. Bischoff (In re Spillman Dev. Group, Ltd.), 710 F.3d 299, 306 (5th Cir. 2013) (same); In re Iridium Operating LLC, 285 B.R. 822, 837 (S.D.N.Y. 2002) (declining to enforce FSC and emphasizing that strong public policy towards enforcing FSCs “not so strong” as to mandate enforcement when it would require transfer of a core bankruptcy proceeding from the forum in which the underlying bankruptcy case is pending); see also Creekridge Capital, LLC v. Louisiana Hosp. Ctr., LLC, 410 B.R. 623, 630 (D. Minn. 2009) (refusing to enforce FSC and instead transferring equipment lessor’s action to forum in which bankruptcy case was pending); In re Penson Worldwide, 587 B.R. 6, 16, n.46 (Bankr. D. Del. 2018) (noting “overriding public interest in centralizing entire dispute in the bankruptcy court”); In re N. Parent, Inc., 221 B.R. 609, 622 (Bankr. D. Mass. 1998) (“Retaining core proceedings in this Court, in spite of a valid forum selection clause, promotes the well-defined policy goals of centralizing all bankruptcy matters in a specialized forum to ensure the expeditious reorganization of debtors.”). But see In re D.E. Frey Group, Inc., 387 B.R. 799, 807 (D. Colo. 2008) (enforcing FSC and finding debtor failed to meet “its heavy burden under [M/S Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 10 (1972)] of showing that enforcing the forum selection clause would be unreasonable under the circumstances”).
 See In re Dozier, 587 B.R. at 650–651.