The Arizona Supreme Court issued a unanimous decision in *Henderson v. Hon. Moskowitz/Sullivan*, rejecting the adoption of the "closely related party doctrine" for forum selection clause enforcement and establishing important precedent for contract interpretation in Arizona.
Justice Clint Bolick authored the opinion, in which all seven justices joined, addressing whether a non-signatory may enforce a forum selection clause against a signatory to a contract under the closely related party doctrine. The court held that existing contract provisions and established legal doctrines provide adequate protection for non-signatories without the need for this additional framework.
The case arose from a business dispute involving Nomad Capitalist USA, LLC, a consulting firm that offers services to individuals seeking to become "nomad capitalists" by relocating to foreign jurisdictions, obtaining foreign citizenship, and implementing offshore tax strategies. Robert Sullivan contracted with Nomad for these consulting services, paying approximately $52,500 to "internationalize [his] finances, freedom, and lifestyle."
The contract between Sullivan and Nomad is governed by Arizona law and contains a forum selection clause, though the specific language of that clause is not detailed in the available court documents. The dispute subsequently involved Andrew J. Henderson as petitioner, with Sullivan as the real party in interest and Judge Frank W. Moskowitz of the Maricopa County Superior Court as the respondent judge.
The case traveled through multiple levels of Arizona's court system before reaching the state's highest court. The Superior Court in Maricopa County, presided over by Judge Moskowitz, initially heard the matter under case number CV2023-010668. The Arizona Court of Appeals, Division One, then reviewed the case as 1 CA-SA 24-0163, filing their order on Aug. 7, 2024, before the Supreme Court accepted the petition for review.
The closely related party doctrine, which the court declined to adopt, would have allowed non-signatories to enforce forum selection clauses in certain circumstances where they have a close relationship to the contracting parties or the subject matter of the agreement. Courts in some jurisdictions have used this doctrine to extend forum selection clause benefits to parties who did not directly sign the contract but have substantial interests in the underlying transaction.
Instead of embracing this relatively new legal theory, the Arizona Supreme Court emphasized that traditional contract interpretation principles and existing doctrines adequately address situations where non-signatories seek to benefit from contractual provisions. The court noted that "other established doctrines providing non-signatories with benefits under a contract are ample."
This approach reflects the court's preference for legal certainty and adherence to fundamental contract law principles. By declining to adopt the closely related party doctrine, the court maintained that parties' rights and obligations should be determined primarily by the express terms of their agreements and well-established legal precedents.
The decision has significant implications for contract interpretation throughout Arizona, particularly in business disputes involving complex arrangements with multiple parties. Companies and individuals entering into contracts with forum selection clauses can now rely on clearer guidance about which parties may enforce these provisions and under what circumstances.
The ruling also provides certainty for legal practitioners advising clients on contract drafting and dispute resolution strategies. Rather than navigating the uncertain boundaries of an emerging doctrine, attorneys can focus on established legal principles and explicit contractual language when advising clients about forum selection clause enforcement.
For the offshore consulting industry specifically, this decision clarifies the legal landscape for disputes arising from international tax and citizenship planning services. Companies like Nomad Capitalist that serve clients seeking to relocate assets and establish foreign residency can better predict how Arizona courts will handle contractual disputes.
The court's decision to affirm and remand the case indicates that while the legal principle has been established, there may be remaining factual or procedural issues for the lower courts to address. This suggests that the immediate parties to the dispute will continue to work through the resolution of their specific claims under the newly clarified legal framework.
Attorneys Dennis I. Wilenchik and Brian R. Gifford of Wilenchik & Bartness represented Henderson, while Amy Wilkins Hoffman of Frost LLP represented Sullivan. The case demonstrates the complexity of modern business relationships and the ongoing evolution of contract law to address novel commercial arrangements.
The unanimous nature of the decision signals strong consensus among Arizona's highest judicial officers about the appropriate approach to forum selection clause enforcement. This broad agreement strengthens the precedential value of the ruling and provides clear guidance for future cases involving similar issues.
Looking forward, the decision establishes Arizona as a jurisdiction that prioritizes contractual clarity and established legal doctrine over emerging theories that might introduce uncertainty into commercial relationships. This approach may influence how businesses structure their agreements and choose governing law provisions in multi-jurisdictional transactions.