ENFORCEMENT OF THEFORUM-SELECTION CLAUSE IN TEXAS

BY

HON. CRAIG ENOCH, Justice (Ret.)Winstead PC

401 Congress Ave., Suite 2100Austin, TX 78701

DAVID F. JOHNSONWinstead PC

777 Main St., Suite 1100Fort Worth, TX 76102

FIGHTING THE FORUM: AVOIDING LITIGATION INTEXAS STATE COURT

TARRANT COUNTY BAR ASSOCIATION

JANUARY 30, 2009

CRAIG T. ENOCHJustice (Ret.)

cenoch@winstead.com401 Congress Ave., Suite 2100

Austin, Texas 78701512.370.2883

Former Texas Supreme Court Justice Craig T. Enoch is a Shareholder and Chair of Winstead's AppellatePractice Group. Justice Enoch retired from the Texas Supreme Court after serving nearly 22 years as adistrict and appeals court judge.

Education

University of VirginiaSchool of LawLL.M., 1992

Southern Methodist UniversityDedman School of LawJ.D., 1975

Southern Methodist UniversityB.A., 1972

Professional Memberships & Affiliations

Past Chair, American Bar Association Judicial Division's Appellate Judges Conference in Chicago, Ill.;President, Appellate Judges Education Institute in Dallas; Elected member, American Law Institute, basedin Philadelphia, Pa.; Member, Institute for Judicial Administration at New York University; NationalCouncil of Chief Judges of Intermediate Courts of Appeals in Chicago; Texas Center for the Judiciary inAustin; Fellow, American, Texas and Dallas Bar Foundation; Texas Supreme Court's liaison to the StateBar of Texas Board of Directors (1998-2003); Former adviser to the National Center for State Courts inWilliamsburg, Va., and the Law and Organizational Economics Center in Lawrence, Kan.; Member, StateBar College; Member, Southern Methodist University Dedman School of Law Executive Board; Certifiedin Civil Trial Law by the Texas Board of Legal Specialization

Awards & Recognition

The Best Lawyers in America in the specialty of Appellate Law (2007); Distinguished Alumni Award fromSouthern Methodist University (2006); Marquis Who's Who in America (2006); Who's Who in AmericanLaw (2005); American Bar Association Judge Edward R. Finch Law Day Speech Award (2000); TexasEqual Access to Justice Commission Foundation Harold F. Kleinman Award (2000); Southern MethodistUniversity Dedman School of Law Distinguished Alumni Award for Judicial Service (1999); Recognizedby Texas Office of Court Administration for civil docket-management program improving case-handlingby courts and cutting case backlogs.

Professional Services

Lead counsel and advisor in trials and appeals. Representative and advisor in matters before state andfederal regulatory officials and agencies. Consulting and expert services on questions of professionalethics.

DAVID FOWLER JOHNSONDFJOHNSONAWINSTEAD.COM

777 Main St, Suite 1100Fort Worth, Texas 76102

(817) 420-8223

Through his appellate and trial experience, David aggressively strives to obtain the absolute best resultspossible for his clients. David's main practice area is in civil appellate law, and he is a founding member ofWinstead's Appellate Practice Group. David is a unique appellate lawyer in that he has extensive trialexperience as he has tried over twenty jury trials.

BOARD CERTIFICATIONS:*Board Certified — Civil Appellate Law, Civil Trial Law, and Personal Injury Trial Law — Texas

Board of Legal Specialization (Only One of Fourteen (14) Practicing Lawyers in TexasCertified in All Three Areas)

AWARDS AND HONORS:* Named by Fort Worth Texas Magazine as One of Tarrant County's Best Appellate Lawyers in

2004-2008* Named by Texas Monthly as a "Texas Rising Star" in 2004, 2006, 2007, 2008* Named One of D Magazine's "Best Lawyers Under 40 in Dallas" in 2004, 2006, 2007* Named One of D Magazine's "Best Lawyers in Dallas" for appellate law in 2008* Named One of Fort Worth Business Press's "Forty Under Forty" in 2003* The Editors of Texas Tech Law Review selected article entitled "Narrowing the Ability to Strike

Jurors: The Texas Supreme Court Addresses Important Voir Dire Issues" as theOutstanding Lead Article in 2007.

CURRENT LEGAL EMPLOYMENT:*Shareholder: Winstead PC

-General Civil Commercial and Personal Injury Appellate and Trial Practice*Adjunct Professor, Texas Wesleyan University School of Law (2006-2008)

-Appellate Advocacy

EDUCATION:Baylor University School Of Law, Waco, Texas, Juris Doctor, Magna Cum Laude, 1997Baylor University, Waco, Texas, B.B.A. in Accounting, 1994

ARTICLES AND CLE MATERIALS:David has published over nineteen (19) law review articles on topics including summaryjudgments, charge practice, preservation of error, voir dire, and other topics. David's articles havebeen cited as authority by federal courts, the Texas Supreme Court, the Texas courts of appealslocated in Waco, Texarkana, Tyler, Beaumont, and Houston (14 th District), and cited byMcDonald and Carlson in their Texas Civil Practice treatise and William V. Dorsaneo in the TexasLitigation Guide and in the Baylor Law Review, South Texas Law Review, and the TennesseeLaw Review. David has presented and/or prepared written materials for over forty (40) continuinglegal education courses in Texas, including multiple Texas State Bar events, University ofHouston events, and various local bar events.

TABLE OF CONTENTS

Introduction 1

Scope of The Clause 1

A. Courts Construe Clause Under Contract Construction Principals 1

B. Mandatory Versus Permissive Language In Clause 2

C. Breadth Of Language In Mandatory Clause 2

D. Review Of Pleadings As Compared To Clause 5

E. Time Period For Clause 6

F. Ambiguous Forum-Selection Clause 6

Historic Enforcement of Forum-Selection Clauses in Texas 6

IV. Texas Supreme Court Enforces Forum-Selection Clauses Following The Federal Test ForEnforcement 7

A. In re AIU Ins. Co., 148 S.W.3d 109 (Tex. 2004) 8

B. In re Autornated Collection Tech., Inc., 156 S.W.3d 557, 558-59 (Tex. 2004) 8

C. In re Autonation, 228 S.W.3d 663 (Tex. 2007) 9

D. Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 793 (Tex. 2005) 10

E. In re Lyon Fin. Servs., Inc., 257 S.W.3d 228 (Tex. 2008) (per curiam) 10

F. In re International Profit Associates, Inc., No. 08-0238, 2009 Tex. LEXIS 5(Tex. January 9, 2009). 11

V. Should The Enforcement of A Forum-Selection Clause Differ From An ArbitrationClause and A Jury-Waiver Clause? 12

VI. Impact of Choice-of-Law Provision On Enforcement Of A Forum-Selection Clause 15

VII. Enforcement of Forum-Selection Clause By Or Against A Non-Signatory To TheAgreement Containing The Clause 16

A. Estoppel Theory 16

1. Concerted Misconduct Estoppel Theory 18

2. Direct-Benefits Estoppel Theory 18

3. Unclean Hands Defense To Estoppel Theory 19

B. Transaction-Participant 20

C. Agency 21

VIII. Use of Forum-Selection Clause in Special Appearance/Objections To PersonalJurisdiction 22

IX. Defenses To A Motion To Dismiss Due To A Forum-Selection Clause 22

A. Defendant Has Not Met Burden 22

B. Scope of Clause Does Not Cover Plaintiffs Claim 23

C. Contract Defenses 23

D. Enforcement of Clause Would Be Unreasonable, Unjust, or Otherwise AgainstPublic Policy 24

E. Other Forum Would Recognize The Validity Of the Forum-Selection Clause 25

F. Waiver Of Right To Enforce Forum-Selection Clause 25

G. Laches 28

X. Forum-Selection Clause Is Viewed Differently From A Venue-Selection Clause 28

XI. Appellate Review of Trial Court's Decision Regarding Motion To Dismiss Due To AForum-Selection Clause 29

A. Trial Court's Findings And Conclusions 29

B. Mandamus or Appeal? 30

C. Standards of Review 31

D. Relator Should Challenge All Potential Bases For The Trial Court's Order 31

XII. Future of The Forum-Selection Clause In Texas 32

Introduction

As business deals become more andmore complex and frequently involve parties thatare citizens of different forums, the issue ofcontracting for dispute resolution in a particularforum has become very common. Parties oftenspend much time arid effort resolving this issuein the negotiation process that results in acontractual clause – a forum-selection clause – intheir agreement. A forum-selection clause is aclause in a contract that provides that any disputebetween the parties shall be filed in a particularjurisdiction. Otherwise stated, a "mandatoryforum-selection clause" is a contractualprovision that requires certain claims to bedecided in a forum or forums other than theforum in which the claims have been filed. SeeDeep Water Slender Wells, Ltd. v. Shell MelExploration & Prod, Inc., 234 S.W.3d 679, 687n.3 (Tex. App.—Houston [14th Dist.] 2007, pet.denied).

Of course, disputes arise when a partyto the contract simply disregards the forum-selection clause and files suit in a forum thatviolates the parties' agreement. For example, theparties may choose to have their disputesresolved in states such as New York, Illinois,California, and Florida, or may choose a foreigncountry such as England, Germany, or Brazil Ifa dispute arises, and a party files suit in Texas,the defendant may want to hold the plaintiff totheir agreement and have the dispute resolved inthe forum previously agreed upon. Thedefendant would then file a motion to dismiss thesuit. A motion to dismiss is the properprocedural mechanism for enforcing a forum-selection clause that a party to the agreement hasviolated in filing suit. See In re AIU Ins. Co., 148S.W.3d 109, 111-21 (Tex. 2004). Oncedismissed, the plaintiff would then have to filesuit in the jurisdiction contained in the parties'agreement. Otherwise, where there is a forum-selection clause that identifies Texas as theforum for dispute resolution, a plaintiff may raisethat in defense of a special appearance objection.

This paper addresses the many issuesinvolved in filing a motion to dismiss in Texasand attempting to enforce or defend against aforum-selection clause.

H. Scope of The Clause

The first issue that may arise inattempting to enforce such a provision is whetherthe dispute at hand actually falls in the scope ofthe agreement to submit certain disputes to aparticular forum for resolution. A court shouldfirst review whether a plaintiff's claims arewithin the scope of the forum-selection clausebefore determining whether that provision isenforceable. See Deep Water Slender Wells, Ltdv. Shell Int? Exploration & Prod, Inc., 234S.W.3d 679, 687-88 (Tex. App.—Houston [14thDist.] 2007, pet. filed) (analyzing scope beforeenforceability); Braspetro Oil Servs. Co. -Brazil v. Modec (USA), Inc., 240 Fed. Appx.612, 616 (5th Cir. 2007) ("Before we canconsider enforcing a forum-selection clause, wemust first determine 'whether the clause appliesto the type of claims asserted in the lawsuit.").

A. Courts Construe ClauseUnder ContractConstruction Principals

"A forum-selection clause is a creatureof contract." Phoenix Network Tee/is. (Europe)Ltd v. Neon Sys., Inc., 177 S.W.3d 605, 611(Tex. App.—Houston [1st Dist.] 2005, no pet.).A forum-selection clause does not govern claimsthat fall outside of its scope. See, e.g., MajorHelp Ctr. v. Ivy, Crews & Elliott, P.C., 2000 WL298282, Tex. App.—Austin 2000, no pet.)(DTPA claim was held to be independent ofagreement, and forum-selection clause did notapply); Busse v. Pacific Cattle Feeding Fund #1,Ltd., 896 S.W.2d 807, 813 (Tex. App.—Texarkana 1995, writ denied) (FSC did not applyto claims based on fraudulent inducement whererights and liabilities under the contract were notat issue); Pozero v. Alfa Travel, Inc., 856S.W.2d 243, 245 (Tex. App.—San Antonio1993, no writ) (forum-selection clause in cruiseticket contract did not apply to claims not basedon the contract). See also, Southwest Intelecom,Inc. v. Hotel Networks Corp., 997 S.W.2d 322,324-25 (Tex. App.—Austin 1999, pet. denied)(applying contractual interpretation principles toanalysis of forum-selection clause). Further, acourt may not read into or rewrite an agreementto favor such a clause. See Bates v. MTHHomes-Tex., L.P., 177 S.W.3d 419, 422 (Tex.App.—Houston [1st Dist.] 2005, no pet.) (courtsmay not expand upon the terms of the contract ortolerate a liberal interpretation of it by readinginto it an agreement to arbitrate when one does

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not otherwise exist); Belmont Constructors, Inc.v. Lyondell Petrochemical Co., 896 S.W.2d 352,356 (Tex. App.—Houston [1st Dist.] 1995, nowrit) (court cannot modify or rewrite anunambiguous contract to accommodatearbitration). An agreement should not beexpanded past what the parties actually agreed todo. See Clair v. Brooke Franchise Corp., No.02-06-216-CV, 2007 Tex. App. LEXIS 2805 *9-*12 (Tex. App.—Fort Worth April 12, 2007, nopet.).

B. Mandatory VersusPermissive Language InClause

Whether a trial court must dismiss acase may depend on whether the forum-selectionclause is mandatory or permissive. See Ramsayv. Texas Trading Co., Inc., 254 S.W.3d 620(Tex. App.—Texarkana 2008, pet. denied) (courtdetermined that trial court correctly dismissedsuit based on a mandatory clause; however, adissenting justice would have found the clause tobe permissive and reversed). Courts haverecognized that clauses in which parties merely"consent" or "submit" to the jurisdiction of aparticular forum will not justify dismissing a suitthat is filed in a different forum. See, e.g., Dunnev. Libbra, 330 F.3d 1062, 1063 (8th Cir. 2003);Keaty v. Freeport Indonesia, Inc., 503 F.2d 955,956-57 (5th Cir. 1974). See also In re WilmerCutler Pickering Hale And Door LLP, No. 05-08-0l395-CV, 2008 Tex. App. LEXIS 9692(Tex. App.—Dallas December 31, 2008, originalproceeding) (part of forum-selection clausedealing with any and all claims was merelypermissive and did not require a dismissal ofplaintiff's fraud claim); Apollo PropertyPartners, LLC v. Diamond Houston I, L.P., No.14-07-00528-CV, 2008 Tex. App. LEXIS 5884n. 4 (Tex. App.—Houston [14th Dist.] August 5,2008, no pet. hist.); Sw. Intelecom, Inc. v. HotelNetworks Corp., 997 S.W.2d 322, 323-26 (Tex.App.—Austin 1999, pet. denied) (clausewhereby parties "stipulate to jurisdiction [in]Minnesota, as if this Agreement were executedin Minnesota" was not a mandatory forum-selection clause); Weisser v. PNC Bank, NA.,967 So. 2d 327, 330 (Fla. Dist. Ct. App. 2007)(distinguishing mandatory forum-selectionclauses from permissive clauses that "constitutenothing more than a consent to jurisdiction andvenue in the named forum and do not excludejurisdiction or venue in any other forum").Simply consenting to one jurisdiction does not

mean that the party agreed that there was onlyone appropriate forum. Whereas, a mandatoryclause provides that there is only one appropriateforum for dispute resolution, and a trial courtshould dismiss a suit filed a forum that conflictswith the agreed-upon forum. See In re AIUInsurance Co., 148 S.W.3d 109, 111 (Tex. 2004)(the clause stated: "all litigation, arbitration orother form of dispute resolution shall take place.

A recent example of the differencebetween a mandatory and permissive clause is inIn re Wilmer Cutler Pickering Hale And DoorLLP, No. 05-08-01395-CV, 2008 Tex. App.LEXIS 9692 (Tex. App.—Dallas December 31,2008, original proceeding). There the clausestated:

Consent to Jurisdiction.[McAfee] and [Goyal] eachhereby irrevocably consent tothe jurisdiction of the courts ofthe State of Delaware for allpurposes in connection withany action or proceedingwhich arises out of or relates tothis Agreement and agree thatany action instituted under thisAgreement shall be broughtonly in the state courts of theState of Delaware.

Id. at *9. The defendant filed a motion todismiss the plaintiff's fraud claim that was filedin Texas. The court of appeals held that theclause did not require the dismissal of that claimbecause the broad "arises out of or relates to"language only modified a consent clause. Themandatory clause only dealt with actionsinstituted under the agreement, i.e., breach ofcontract claims. Id. Therefore, the court ofappeals denied the defendant's petition for writof mandamus and allowed the plaintiff's tort-based, fraud claim to continue in Texas.

C. Breadth Of Language InMandatory Clause

Review of Texas case law illustratesthat forum-selection clauses are broadly enforcedwhen "any and all" claims that "relate to" or"arise from" the contract are referenced. See,e.g., In re Jim Walter Homes, Inc., 207 S.W.3d888, 896 (Tex. App.—Houston [14th Dist.]2006, orig. proceeding) (in context of arbitration

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clause, Court recognized that the use of language"any" dispute "arising out of or related to" asbroad language that expressly includes tort andother claims). For example, in Deep WaterSlender Wells, Ltd. v. Shell InternationalExploration & Production, Inc., the broadforum-selection clause stated: "The Netherlandsshall have exclusive jurisdiction to resolve anycontroversy or claim of whatever nature arisingout of or relating to the Consulting Agreement orbreach thereof." 234 S.W.3d at 683-84(emphasis added). If the plaintiffs claims fallwithin the scope of the forum-selection clause,the analysis then turns to whether the clause isenforceable. Other examples of broad clausesare as follows:

In In re Autonation, Inc., theclause stated: "[t]he partiesagree that any action, suit orproceeding arising out of orrelative to this Agreement orthe relationship of Employeeand Company . ." 228S.W.3d 663,665 n. 3 (Tex.2007);

In In re AIU Insurance Co., theclause stated: "all litigation,arbitration or other form ofdispute resolution shall takeplace . . . "148 S.W.3d 109,111 (Tex. 2004);

In Michiana Easy Livin'Country, Inc. v. Holten, theclause stated: "You and I agreethat if any dispute between usis submitted to a court forresolution, such legalproceeding shall take placein..." 168 S.W. 3d 777, 792(Tex. 2005).

In Greenwood v. TillamookCountry Smoker, Inc., theclause stated: "the partieshereby agree that any legalaction concerning thisagreement... "857 S.W. 2d 654,655 (Tex. App.—Houston [1stDist.] 1993, no writ); and

In Tri-State BuildingSpecialties, Inc. v. NCIBuilding Systems, L.P., the

clause stated: "the partieshereto agree and stipulate thatvenue shall be in ... for anyand all claims and disputesarising out of all transactionsbetween [the parties]. . •" 184S.W.3d 242 (Tex. App.—Houston [1st Dist.] 2005, nopet.).

Courts broadly enforce clauses that use theseterms and generally apply them to all claimsasserted between the parties. However, anarbitration clause that omits these broad termsindicates that the parties did not wee to arbitrateall disputes arising out of their businessrelationship. See Associated Air Freight, Inc. v.Meek, No. 01-00-00994-CV, 2001 Tex. App.LEXIS 1586 (Tex. App.—Houston [1st Dist.]March 8, 2001, no pet.) (not designated forpublication) (finding that claims were outside ofscope of arbitration provision). See alsoBeckham v. William Bayley Co., 655 F.Supp.288, (N.D. Tex. 1987); Belmont Constructors,Inc. v. Lyondell Petrochem. Co., 896 S.W.2d352, 355 (Tex. App.—Houston [1st Dist.] 1995,orig. proceeding).

For example in Hooks Industrial, Inc. v.Fairmont Supply Company, the court held that anarrow forum-selection clause was notimplicated by the plaintiffs claims and thereforedid not require dismissal of the suit. No. 14-00-00062-CV, 2001 Tex. App. LEXIS 2568 (Tex.App.—Houston [14th Dist.] April 19, 2001, pet.denied) (not designated for publication). Theclause in that case stated that "any and all actionsat law ... for breach of ... this contract .. shall beinstituted and maintained only in a court ... inAllegheny County, Pennsylvania ...." Id. at *5."This contract" was a specific contract regardingthe purchase and sale of products. See id Theplaintiff sued the defendant in Harris County forbreach of the contract in failing to use reasonableefforts to promote the solicit orders for theplaintiff's products and in failing to purchaseproducts. See id. at *8-9. The court held that thesuit was not about the sales or purchases, whichwere controlled by the forum-selection clause;but rather, was about the failure to sell andpurchase. See id. Because the pleaded claimswere not within the scope of the forum-selectionclause, the court found that the plaintiff couldmaintain suit in the forum of its choice, barringany jurisdictional and due process impediments.See id at *9-10.

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For another example, consider theforum-selection clause language in Busse v.Pacific Cattle Feeding Fund #I, Ltd: "Thisagreement and the rights and obligations of theparties arising hereto shall be construed inaccordance with the laws of the State of Iowa,with venue in [certain Iowa counties]." 896S.W. 2d 807, 812-13. The court of appealsdetermined that the clause was narrowly writtenand did not encompass the extra-contractualclaims in that case: "[t]his case does not involvean interpretation or construction of thecontracts...." Id. at 813. "The rights,obligations, and cause of action do not arise fromthe contracts but from the Deceptive TradePractices Act, the Texas Securities Act, and thecommon law." Id. "A forum-selectionclause.., does not apply to a tort action allegingthat the plaintiff was induced bymisrepresentations to enter into the contract,where construction of the rights and liabilities ofthe parties under the contract is not involved."Id. See also Major Help Ctr., Inc. v. Ivy, Crews& Elliot, P.C., No. 03-99-00285-CV, 2000 Tex.App. LEXIS 1836 (Tex. App.—Austin March23, 2000, no pet.) (not designated forpublication) (finding DTPA claim was outside ofscope of forum-selection clause because it wasnot based on any contractual provision).Conspicuously missing from the contractlanguage in Busse was a reference to "any" or"all" claims "relating" to the agreement.

Highlighting the importance of thecontract language, other courts havedistinguished Busse when analyzing forum-selection clauses with much broader language.For example, in My Café-CCC Ltd. v. Lunchstop,Inc., the court of appeals enforced a forum-selection clause finding that the clause inquestion "encompasse[d] all causes of actionconcerning the contract." 107 S.W.3d 860, 867(Tex. App.—Dallas 2003, no writ). The courtexplained that the Busse case "only related tocontract disputes." 107 S.W.3d 860, 867 (Tex.App.—Dallas 2003, no writ). See also Clark,192 S.W.3d at 798-99 (finding Bussedistinguishable because forum-selection clause atissue encompassed "any action, claim or demandarising under or as a result of this Agreement..."and because parties were signatories to contract).

A court will resolve the scope of aforum-selection clause by looking to thelanguage of the parties' agreement anddetermining their intent by that language as

compared to the plaintiffs claims. In fact,having the language "arising out of or related to"does not mean that a plaintiffs claim willautomatically fall under the scope of a forum-selection clause. See Apollo Property Partners,LLC v. Diamond Houston I, L.P., No. 14-07-00528-CV, 2008 Tex. App. LEXIS 5884 (Tex.App.—Houston [14th Dist.] August 5, 2008, nopet.) (finding that plaintiffs claim did not fallwithin scope of forum-selection clause despiteuse of the language "arising out of or relatedto").

The Texas Supreme Court has recentlyrejected a plaintiff's argument that the his claimsfell outside the scope of a forum-selectionclause. See In re International Profit Associates,Inc., No. 08-0238, 2009 Tex. LEXIS 5 (Tex.January 9, 2009). The Court framed the issuethusly:

We held in In re WeekleyHomes, L.P., 180 S.W.3d 127,131-32 (Tex. 2005), a casedealing with arbitrationclauses, that whether claimsseek a direct benefit from acontract turns on the substanceof the claim, not artfulpleading. We said that a claimis brought in contract ifliability arises from thecontract, while a claim isbrought in tort if liability isderived from other generalobligations imposed by law.Id. at 132. The principlesexplicated in Weekley Homesapply here. Additionally, welook to federal law forguidance in analyzing forum-selection clauses. See AM,148 S.W.3d at 111-14. TheCourt of Appeals for the FifthCircuit recently reiterated thatit has foresworn "slavishadherence to a contract/tortdistinction; to hold to thecontrary would allow a litigantto avoid a forum-selectionclause with 'artful pleading."Ginter ex. rel. Ballard v.Belcher, Prendergast &Laporte, 536 F.3d 439, 444(5th Cir. 2008). The courtcalled for a common-sense

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examination of the claims andthe forum-selection clause todetermine if the clause coversthe claims. Id. at 444-45. TheFifth Circuit's approach isinstructive: determiningwhether a contract or someother general legal obligationestablishes the duty at issueand dictates whether the claimsare such as to be covered bythe contractual forum-selectionclause should be according to acommon-sense examination ofthe substance of the claimsmade. See Weekley Homes,180 S.W.3d at 131-32; see alsoIn re Kaplan Higher Educ.Corp., 235 S.W.3d 206, 209(Tex. 2007) (per curiam).

D. Review Of Pleadings AsCompared To Clause

In determining the nature of acause of action, the court looksto the plaintiffs petition as awhole. Fleetwood Constr. Co.,Inc. v. Western Steel Co., 510S.W.2d 161, 165 (Tex. Civ.App.—Corpus Christi 1974, nowrit). The pleadings will beconstrued as favorably aspossible for the pleader.Paradissis v. Royal Indemnity,496 S.W.2d 146, 148 (Tex.Civ. App.—Houston [14thDist.] 1973), aff'd, 503 S.W.2d526 (Tex. 1974). We take theallegations in the Pozeros'pleading as true. Hachar v.

County of Webb, 563 S.W.2d693, 694 (Tex. Civ. App.—SanAntonio 1978, writ ref d n.r.e.).

On appeal, the Deep WaterParties assert that this courtmust construe the allegationsin their petition as favorably aspossible, and they rely onPozero v. Alfa Travel, Inc., 856S.W.2d 243, 245 (Tex. App.—San Antonio 1993, no writ).Because no special exceptionswere sustained against thepetition, this court mustliberally construe the petitionto contain any claims thatreasonably may be inferredfrom the specific languageused in the petition, even if thepetition fails to state all of theelements of that claim.SmithKline Beecham Corp. v.Doe, 903 S.W.2d 347, 354-55(Tex. 1995). Nonetheless, wecannot use a liberalconstruction of the petition as alicense to read into the petitiona claim that it does not contain.See San Saba Energy, L.P. v.Crawford, 171 S.W.3d 323,336 (Tex. App.—Houston[14th Dist.] 2005, no pet). Thepetition must give fair noticeof the claims being asserted,and, if we cannot reasonablyinfer that the petition containsa claim, then we mustconclude the petition does notcontain this claim, even underour liberal construction. SeeSmithKline Beecham Corp.,903 S.W.2d at 354-55. Werespectfully disagree with thedifferent legal standard statedby the Pozero court. SeePozero v. Alfa Travel, Inc., 856S.W.2d 243, 245 (Tex. App.—San Antonio 1993, no writ).The Pozero court appeared to

Id. The Court concluded: "No matter howTropicpak characterizes or artfully pleads itsclaims, the claims and alleged damages arisefrom the contractual relationship between theparties, not from general obligations imposed bylaw. We conclude that Tropicpak's claims arewithin the scope of the forum-selection clauses."Id.

Another issue in determining whether aplaintiff's claims fail within the scope of theclause is how the trial court should construe theplaintiffs pleadings. One court of appeals hasstated the review of pleadings as follows:

Pozero v. Alfa Travel, Inc., 856 S.W.2d 243, 245(Tex. App.—San Antonio 1993, no writ).Another court of appeals disagreed with the"must construe as favorably as possible"standard, and stated:

5

strictly construe the forum-selection clause before it, andits analysis and result areincompatible with the currentanalysis adopted by theSupreme Court of Texas.Compare In re AIU Ins. Co.,148 S.W.3d at 111-14, withPozero, 856 S.W.2d at 245.

Deep Water Slender Wells, Ltd. v. Shell Int?Exploration & Prod., Inc., 234 S.W.3d 679, 689n.5 (Tex. App.—Houston [14th Dist] 2007, pet.denied).

E. Time Period For Clause

Courts find that unless there issomething in writing to the contrary, that aforum-selection clause will remain in force afterthe expiration or termination of the remainder ofthe agreement. See id.; Texas Source Group,Inc. v. CCH, Inc., 967 F.Supp. 234, 238-39 (S.D.Tex. 1997); Strata Heights Intl Corp. v.Petroleo Brasileiro, S.A., No. 02-20645, 2003WL 21145663, at *1, *6-7 (5" 1- Cir. April 28,2003). Indeed, such a clause is intended toaddress the forum in which the parties willlitigate any future disputes. See Deep WaterSlender Wells, Ltd. v. Shell Intl Exploration &Prod., Inc., 234 S.W.3d at 691.

F. Ambiguous Forum-SelectionClause

If there is an ambiguity in the forum-selection clause, the trial court is the correctparty to discern the correct meaning as intendedby the parties. See In re Sterling Chemicals,Inc., 261 S.W.3d 805 (Tex. App.—Houston[14th Dist.] 2008, original proceeding). InSterling Chemicals, the court of appealsdetermined that there was a latent ambiguityregarding a forum-selection clause in amemorandum of understanding ("MOU"). Seeid. The parties had a dispute regarding theMOU, and the plaintiff filed suit. The defendantfiled a motion to dismiss based on a forum-selection clause in the MOU. The plaintiffargued that the clause only applied to disputesregarding future agreements and not to the MOUitself, and referred to several othercontemporaneous agreements and their forum-selection clauses to support its argument. Thetrial court denied the motion to dismiss. Thecourt of appeals found that the MOU was not

ambiguous by itself, but when put in contextwith the other agreements, it was ambiguous.The court of appeals held that it could not findthat the trial abused its discretion in denying themotion to dismiss where the trial court sat as afact finder regarding an ambiguous forum-selection clause. The court of appeals did notdiscuss whether such a fact finding should beresolved by a jury or not, but certainly, in theinterim, the judge's decision stood as the factfinding. In theory, if a jury later finds to thecontrary, i.e., that the forum-selection clause didapply to the relevant dispute, then the defendantmay be able to raise the forum-selection clauseissue again on appeal after judgment.

IlL Historic Enforcement of Forum-Selection Clauses in Texas

Texas courts, like others across thecountry, had historically invalidated forum-selection clauses for violating public policy. Inre AIU Ins. Co., 148 S.W.3d 109, 111 (Tex.2004). See also M'S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9, 92 S. Ct. 1907, 1913,32 L. Ed. 2d 513 (1972). However, since theUnited States Supreme Court's landmarkdecision in MIS Bremen, and its later refiningpronouncements in Carnival Cruise Lines, Inc. v.Shute, 499 U.S. 585, 595-96, 113 L.Ed.2d 622,111 S.Ct. 1522 (1991), Texas courts have begunenforcing forum-selection clauses. See In re AIUIns. Co., 148 S.W.3d at 111-12.

Historically, Texas courts and federalcourts used different analyses to determine theenforceability of mandatory forum-selectionclauses. See Phoenix Network Techs. (Europe)Ltd. v. Neon Sys., Inc., 177 S.W.3d 605, 611-14(Tex. App.—Houston [1st Dist.] 2005, no pet.).Under the test of MIS Bremen and Shute, forum-selection clauses "are prima facie valid andshould be enforced unless enforcement is shownby the resisting party to be 'unreasonable' underthe circumstances." MIS Bremen, 407 U.S. at 10,92 S. Ct. at 1913; see Shute, 499 U.S. at 588, 111S. Ct. at 1525. The clause's opponent has a"heavy burden" to make a "strong showing" thatthe forum-selection clause should be set aside.MIS Bremen, 407 U.S. at 15, 92 S. Ct. at 1916.This burden includes "clearly" showing thatenforcement would be "unreasonable andunjust"; that the clause was "invalid for suchreasons as fraud or overreaching"; that"enforcement would contravene a strong publicpolicy of the forum in which suit is brought,

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whether declared by statute or by judicialdecision"; or that "the contractual forum will beso gravely difficult and inconvenient" that theopponent "will for all practical purposes bedeprived of his day in court." MIS Bremen, 407U.S. at 15, 18, 92 S. Ct. at 1916, 1917.

In contrast, most Texas courts ofappeals had recognized a two-part test todetermine whether a forum-selection clause wasvalid and enforceable: the clause wasenforceable if (1) the parties contractuallyconsented to submit to the exclusive jurisdictionof another jurisdiction and (2) the otherjurisdiction generally recognized the validity ofsuch provisions. See Satterwhite Aviation Serv.v. Int'l Profit Assocs., No. 01-07-00053-CV,2008 Tex. App. LEXIS 674 (Tex. App.—Houston [1 st Dist.] January 31, 2008, no pet. h.)(court cited historical standard as correctstandard even after Texas Supreme Courtopinions); My Cafe-CCC, Ltd. v. Lunchstop, Inc.,107 S.W.3d 860, 864-65 (Tex. App.—Dallas2003, no pet.); Holeman v. Nat'l Bus. Inst., Inc.,94 S.W.3d 91, 97 (Tex. App.—Houston [14thDist.] 2002, pet. denied); Barnett v. NetworkSolutions, Inc., 38 S.W.3d 200, 203 (Tex.App.—Eastland 2001, pet. denied); Mabon Ltd.v. Afri-Carib Enters., Inc., 29 S.W.3d 291, 296-97 (Tex. App.—Houston [14th Dist.] 2000, nopet.); Southwest Intelecom, Inc. v. HotelNetworks Corp., 997 S.W.2d 322, 324 (Tex.App.—Austin 1999, pet. denied); AcceleratedChristian Educ., Inc. v. Oracle Corp., 925S.W.2d 66, 70 (Tex. App.—Dallas 1996, nowrit); Greenwood v. Tillamook Country Smoker,Inc., 857 S.W.2d 654, 656 (Tex. App.—Houston[1st Dist.] 1993, no writ). See also In re GNCFranchising, Inc., 22 S.W.3d 929 (Tex. 2000)(Hecht, J. dissenting from denial of petition forwrit of mandamus). Even if these two thresholdcriteria were met, however, a forum-selectionclause would not bind a Texas court if theinterests of witnesses and public policy stronglyfavored that the suit be maintained in a forumother than the one to which the parties hadagreed. See My Cafe-CCC, Ltd., 107 S.W.3d at865; Holeman, 94 S.W.3d at 97; SouthwestIntelecom, Inc., 997 S.W.2d at 324; AcceleratedChristian Educ., Inc., 925 S.W.2d at 71;Greenwood, 857 S.W.2d at 656.

One court has held that the principaldifferences between the MIS Bremen and Shutetest and the Texas courts-of-appeals test were:

(1) the MIS Bremen and Shutetest views the forum-selectionclause as prima facie valid andenforceable, while the Texastest requires the clause'sproponent to establish, as athreshold matter, that theforum that the parties selectedrecognizes the validity of thegeneral type of forum-selectionclause and (2) the M/S Bremenand Shute test allows theopponent to defeat the forum-selection clause if, amongother things, its enforcementwould be unreasonable orunjust, while the Texas testdoes not expressly recognizethis enforcement exception.

Phoenix Network Techs. (Europe) Ltd. v. NeonSys., Inc., 177 S.W.3d at 611-14.

IV. Texas Supreme Court EnforcesForum-Selection Clauses FollowingThe Federal Test For Enforcement

The Supreme Court of Texas has issuedsix opinions dealing with the enforceability offorum-selection clauses: In re InternationalProfit Associates, Inc., No. 08-0238, 2009 Tex.LEXIS 5 (Tex. January 9, 2009); In re Lyon Fin.Servs., Inc., 257 S.W.3d 228, 232 (Tex. 2008)(per curiam); In re Autonation, 228 S.W.3d 663(Tex. 2007); Michiana Easy Livin' Country, Inc.v. Holten, 168 S.W.3d 777, 793 (Tex. 2005); Inre Automated Collection Tech., Inc., 156 S.W.3d557, 558-59 (Tex. 2004); and In re AIU Ins. Co.,148 S.W.3d 109, 111-14 (Tex. 2004).

"Texas state courts employ the federalstandard for analyzing forum selection clauses;thus, our analysis under federal law issubstantively similar to state law, and we applyTexas procedural rules." In re Omega Protein,Inc., NO. 01-08-00656-CV, 2009 Tex. App.LEXIS 419 (Tex. App.—Houston [1st Dist.]January 20, 2009, original proceeding) (citingMichiana Easy Livin' Country, Inc. v. Holten,168 S.W.3d 777, 793 (Tex. 2005)). One courthas come to at least two conclusions. "First, theTexas Supreme Court has expressly adopted theMIS Bremen and Shute test, including who hasthe burden to show that the forum-selectionclause should not be enforced and of what thatburden consists." See Phoenix Network Techs.

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(Europe) Ltd v. Neon Sys., Inc., 177 S.W.3d at611-14. "Second, the Texas Supreme Court hasimplicitly adopted the presumption from M/SBremen and Shute that forum-selection clausesare prima facie valid." Id. The Texas SupremeCourt's implicit adoption of the federalpresumption supplants the threshold requirementthat the clause's proponent establish that theforum that the parties selected recognizes thevalidity of forum-selection provisions. See id.

The following is a discussion of the sixTexas Supreme Court opinions dealing withforum-selection clauses and the issues raised inthose cases.

A. In re MU Ins. Co., 148S.W.3d 109 (Tex. 2004)

In In re AIU Insurance, AIU, a NewYork corporation, provided pollution-liabilitycoverage for, among other entities, a Delawarecorporation ("Dreyfus") with its principal placeof business in Texas. 148 S.W.3d 109, 110-11(Tex. 2004). Dreyfus sued A1U in Texas forbreach of contract, statutory, and tort claimsregarding whether certain environmental claimsagainst it were covered by the policy. See id. at111. AIU moved to dismiss the suit because thepolicy contained a forum-selection clauseproviding for suit in New York. See id Thetrial court denied AM's dismissal motion, thecourt of appeals denied writ of mandamus, andthe Texas Supreme Court granted writ. See id. at110-11.

The Court noted that this was the firstcase where it addressed the validity of a forum-selection clause. See id. at 111. Historically,forum-selection clauses were not favoredbecause they were viewed as "ousting" a court ofjurisdiction. See id. However, the Court notedthat the United States Supreme Court had heldthat such clauses should be given full effect"absent fraud, undue influence, or overweeningbargaining power." Id. (quoting Bremen v.Zapata Off-Shore Co., 407 U.S. 1, 32 L.Ed. 513,92 S.Ct. 1907 (1972)). The United StateSupreme Court held that such a clause shouldcontrol absent a strong showing that it should beset aside," and that "the correct approach [is] toenforce the forum clause specifically unless [theparty opposing it] could clearly show thatenforcement would be unreasonable and unjust,or that the clause was invalid for such reasons asfraud or overreaching." Id. A clause may come

under one of these exceptions "if enforcementwould contravene a strong public policy of theforum" where the suit was filed, or "when thecontractually selected forum would be seriouslyinconvenient for trial." Id.

The Texas Supreme Court held that theforum-selection clause was enforceable andrejected Dreyfus's arguments that certain of thefactors established in MIS Bremen and Shutemade the clause unenforceable. See id. at 111-16. The Court placed the burden on Dreyfus, theparty opposing enforcement of the forum-selection clause, to carry its "heavy burden" ofshowing that the forum-selection clause shouldnot be enforced under the MIS Bremen and Shutetest. Id. at 113-14. The Court found that Dryfusdid not meet its burden: "In the present case, theState of New York is not a 'remote alien forum.'There is no indication that AIU or Dreyfus choseNew York as a means of discouraging claims.Nor is there any evidence of fraud oroverreaching." Id. at 114. The Court held that itwas certainly foreseeable to Dreyfus that itwould have to litigate in New York, and thatDreyfus had shown that litigating in New Yorkwould essentially deprive it of its day in court.Id. at 113. After a lengthy discussion aboutwhether A/U had an adequate remedy at law, theCourt granted its petition for writ of mandamus.

B. In re Automated CollectionTech., Inc., 156 S.W.3d 557,558-59 (Tex. 2004)

Later the same year, the Texas SupremeCourt issued a per curiam opinion on the forum-selection clause issue. See In re AutomatedCollection Techs., Inc., 156 S.W.3d 557, 48 Tex.Sup. Ct. J. 162 (Tex. 2004). In re AutomatedCollection Technologies involved a suit betweena Texas corporate plaintiff and a Pennsylvaniacorporate defendant for failure to pay forservices rendered pursuant to a written contract.See id. at 558. The court stated, "In In re AIUIns. Co., we held that enforcement of forum-selection clauses is mandatory unless the partyopposing enforcement 'clearly shows thatenforcement would be unreasonable and unjust,or that the clause was invalid for such reasons asfraud or overreaching.' Id. at 559 (quoting In reAIU Ins. Co., 148 S.W.3d at 112). The Courtfound that the trial court abused its discretion inrefusing to enforce the forum-selection clause.The Court noted that the party opposing theclause's enforcement had not sustained "its

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burden" because it had "submitted no evidence"showing that enforcement would be"unreasonable or unjust" and had not assertedthat the clause was invalid. Id. Therefore, oncea party offers a seemingly valid forum-selectionclause in a contract between the plaintiff anddefendant, the Court clearly placed the burden toproduce evidence on the plaintiff to establishsome reason why it should not be enforced.

The Court also addressed a waiverargument. The plaintiff argued that thedefendant waived the forum-selection clause byanswering, filing counterclaims, serving writtendiscovery, and filing a motion to compeldiscovery shortly after filing a motion to dismissdue to the forum-selection clause. See id. at 558-59. However, the plaintiff never established anyprejudice as a result of the defendant's delay,participation in the suit, or counterclaims. SeeId. The Court held that the defendant did notwaive its right to enforce the forum-selectionclause:

Automated did not waiveenforcement of the forum-selection clause by seekingaffirmative relief on theunderlying contract and byparticipating in the underlyinglitigation. In AIU, weaddressed a similar waiverargument and concluded that adelay of five months in seekingenforcement of a forum-selection clause along withrequesting a jury trial, payingthe jury fee, and filing ageneral denial that did not raisethe forum-selection issue werenot sufficient to waive theforum-selection clause underconsideration in that case. Inso holding, we relied on casesconcerning waiver in thearbitration context we found tobe analogous. In re BruceTerminix Co., an arbitrationcase, held that "evensubstantially invoking thejudicial process does not waivea party's arbitration rightsunless the opposing partyproves that it sufferedprejudice as a result."

PSC asserts that the partieshave spent significant time andresources litigating thisdispute. . . [and] [a] dismissalwould result only induplication of time andresources that areunnecessary." But this doesnot establish that PSC has beenprejudiced by Automated'sparticipation in the underlyinglitigation and four-month delayin seeking enforcement of theforum-selection clause.Moreover, PSC chose toinitiate proceedings in a forumother than the one to which itcontractually agreed andcannot complain about anyduplication of time or effortsthat resulted from that choice.

Id. at 559-60.

C. In re Autonation, 228 S.W.3d663 (Tex. 2007)

In In re Autonation, the Court dealt withenforcing a forum-selection clause that existed ina covenant not to compete in an employmentrelationship. 228 S.W.3d 663 (Tex. 2007). Theplaintiff argued that public policy dictated thatthe employee should be allowed to file suit inTexas. The plaintiff cited DeSantis v.Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990),wherein the Court held that the enforcement of acovenant not to compete was a matterfundamental to Texas public policy and that itwould be governed by Texas law even if theparties had agreed to the law of a differentforum. The Court in Autonation determined thatthe forum-selection clause did not offend publicpolicy, and that it should be enforced. The Courtconcluded: "Accordingly, and without offendingDeSantis, we will not presume to tell the forty-nine other states that they cannot hear a non-compete case involving a Texas resident-employee and decide what law applies,particularly where the parties voluntarily agree tolitigate enforceability disputes there and nothere." Id. at 670.

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D. Michiana Easy Livin'Country, Inc. v. Ho/ten, 168S.W.3d 777, 793 (Tex. 2005)

In Michiana Easy Livin' Country, Inc. v.Holten, the Court reaffirmed, in a caseconcerning a ruling on a special appearance, that"enforcement of a forum-selection clause ismandatory absent a showing that 'enforcementwould be unreasonable and unjust, or that theclause was invalid due to fraud oroverreaching." 168 S.W.3d 777 (Tex. 2005).The Court first acknowledged that having aforum-selection clause in a contract does notmean that the defendant did not have sufficientcontacts with Texas such that a Texas courtwould have personal jurisdiction over thatdefendant: "Generally, a forum-selection clauseoperates as consent to jurisdiction in one forum,not proof that the Constitution would allow noother." Id. at 792-93. The Court then addressedthe plaintiff's argument that the defendantwaived enforcement of the clause by waiting twoyears, and shortly before the special appearancehearing, to first assert the clause. See id. at 293.The Court disagreed because the record indicatedthat little activity had occurred and that there wasnothing to suggest any prejudice the plaintiff inthe delay. See id. The Court then determinedthat the scope of the clause was broad enough toencompass the plaintiffs tort claims where itreferred to "any" dispute between the parties. Id.Finally, the Court determined that the trial courthad no discretion to refuse to enforce the clauseabsent a showing that "enforcement would beunreasonable and unjust, or that the clause wasinvalid due to fraud or overreaching." Id.

E. In re Lyon Fin. Servs., Inc.,257 S.W.3d 228 (Tex. 2008)(per curiam)

In In re Lyon Financial Services Inc., aTexas imaging company ("MNI") entered into alease with Lyon for the use of imagingequipment. 257 S.W.3d 228 (Tex. 2008) (percuriam). The lease agreement contained aforum-selection clause that provided that thestate and federal courts of Pennsylvania hadjurisdiction over all matters arising out of thelease, but that Lyon had the right to file suit inany jurisdiction where MN!, a surety, or thecollateral resided or were located. Furthermore,there were three related schedules allincorporating by reference the equipment leaseand a subsequent restructuring agreement

incorporating the previous lease. Theagreements also specified that Pennsylvania lawwould be used for interpretation. After a disputearose concerning whether Lyon had improperlycharged MNI for equipment, MNI sued Lyon inTexas state district court for usury and unjustenrichment. Lyon filed a motion to dismiss andasserted that the forum-selection clausemandated that MNI file suit in Pennsylvania.The trial court denied the motion, and the courtof appeals denied Lyon's petition for writ ofmandamus.

The Texas Supreme Court first statedthat forum-selection clauses are presumptivelyenforceable. It then addressed MNI's argumentsas to why the clause should not be enforced.First, MNI argued that the clause was a productof fraudulent misrepresentations. The Court heldthat fraudulent inducement to sign an agreementcontaining a forum-selection clause will not barenforcement of that provision unless the specificforum-selection clause was the product of fraudor coercion. MNI had an affidavit from itsrepresentative that stated that he was misled thatthe forum-selection clause only applied to aschedule that he was not suing upon. The Courtdetermined that this was insufficient because theagreements contained clauses that representedthat they were the entire agreements between theparties and that there were no priorrepresentations not contained in the agreements.The Court stated that a party who signs anagreement is presumed to know its contents, andthat includes documents specificallyincorporated by reference. Further, MNI'srepresentative failed to state that he would nothave signed the agreement absent the allegedmisrepresentation. The Court found that therewas no evidence that the forum-selection clausewas secured by a misrepresentation or fraud.

Second, MNI argued that the clauseshould not be enforced because there was adisparity in bargaining power in that MNITsrepresentative did not have legal advice, had noformal business school training, was not awareof the clause when he signed the agreement, andthat the agreements were presented on a take-it-or-leave-it basis. The Court determined thatthese facts did not show unfairness oroverreaching. The Court held that theagreements were not a result of unfair surprise oroppression because the forum-selection clausewas in all capital letters. The Court also foundthat the clause was not unfair simply because the

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clause allowed Lyon to file suit in Texas orPennsylvania and required MINI to solely file suitin Pennsylvania because these types of clausesdo not require mutuality of obligation so long asadequate consideration is exchanged.

Third, MNI argued that Pennsylvaniawas an inconvenient forum and that enforcingthe provision would produce an unjust result.MNI produced evidence that it was a smallbusiness and did not have the ability to pursueclaims in Pennsylvania. The Court stated that byentering into the agreements both partieseffectively represented to each other that theagreed forum was not so inconvenient thatenforcing the clause would deprive either partyof their day in court. The Court then held thatPennsylvania is not a "remote alien foram," andthat there was no proof that an unjust resultwould occur in enforcing the clause.

Fourth, MNI argued that it would beunjust to enforce the clause becausePennsylvania does not allow a corporation to suefor usury. The Court held that MNI's inability toassert its usury claim does not create a publicpolicy reason to deny enforcement of the clause.Texas law in an area does not establish publicpolicy that would negate a contractual forum-selection clause, absent a statute requiring suit tobe brought in Texas. Further, MINI made noshowing that even using Pennsylvania law, thatPennsylvania would not apply Texas law indetermining the parties' rights. Therefore, theCourt conditionally granted the petition andordered the trial court to grant the motion todismiss.

There are several interesting pointsraised by In re Lyon Financial Services Inc.First, the Texas Supreme Court will make it verydifficult for a plaintiff to argue that he wasdefrauded into entering into a foram-selection(or arbitration) clause where the agreementcontains language that it is the final agreementand that there are no other representationsoutside of the agreement. This language istypical in most agreements and seeminglytrumps a plaintiffs affidavit evidence to thecontrary. Second, the Court seems to be veryunwilling to find that a forum-selection clause isnot enforceable simply because the plaintiff didnot read it, it is contained in an "adhesion"contract, and/or it would be expensive for theplaintiff to litigate in the forum of choice.

F. In re International ProfitAssociates, Inc., No. 08-0238,2009 Tex. LEXIS 5 (Tex.January 9, 2009).

In In re International Profit Associates,Inc., the plaintiff entered into two-pageconsultation agreements with the defendantswhereby the defendants would provide businessconsulting services. No. 08-0238, 2009 Tex.LEXIS 5 (Tex. January 9, 2009). There was aforum-selection clause above the signature lineof the agreements that stated: "It is agreed thatexclusive jurisdiction and venue shall vest in theNineteenth Judicial District of Lake County,Illinois, Illinois law applying." Id. Thedefendants then recommended that the plaintiffhire an individual named David Salinas to helpincrease sales. Allegedly, Salinas thenembezzled large sums of money from theplaintiff. The plaintiff sued the defendants inTexas state court based on negligence, fraud,negligent misrepresentations, and a breach ofgood faith and fair dealing. The defendants fileda motion to dismiss the suit based on the forum-selection clauses contained in the agreements.

The plaintiff argued that the clauseswere unenforceable because (1) they wereambiguous; (2) they were procured throughoverreaching and fraud; (3) the interests of thedefendants' witnesses and the public favoredlitigating the case in Texas; and (4) enforcementof the clauses would effectively deprive theplaintiff of its day in court. The Texas SupremeCourt disagreed with each of these, and, in a percuriam opinion, conditionally granted thepetition and ordered the trial court to grant thedefendants' motion to dismiss.

The Court started its analysis with thefollowing statement: "Forum-selection clausesare generally enforceable, and a party attemptingto show that such a clause should not beenforced bears a heavy burden." Id. Indiscussing the ambiguity argument, the Courtstated that just because the clauses did notmention "litigation" did not mean that they wereambiguous:

A contract is ambiguous whenit is susceptible to more thanone reasonable interpretation.The forum-selection clauses inthis case are not susceptible tomore than one reasonable

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interpretation. Each clausespecifies that exclusivejurisdiction and venue shallvest in [Illinois]. The onlyreasonable interpretation is thatthe clauses fix jurisdiction andvenue for judicial actionsbetween the parties in aspecific location and court in

Id. The plaintiff also argued that the clauseswere ambiguous as to whether they applied tocontract and tort claims, and therefore its tortclaims should not be dismissed. The Courtrefused to answer that question because it foundthat all of the plaintiffs factual claims arose fromthe contact. The Court drew heavily fromarbitration and federal precedent regardingwhether a claim sounded in tort or contract.Specifically, the Court cited to its prior opinionin In re Weekley Homes, L.P., where the courtfound that certain tort claims sounded solely incontract and were controlled by an arbitrationclause. 180 S.W.3d 127, 131-32 (Tex. 2005).The Court stated that:

whether claims seek a directbenefit from a contract turnson the substance of the claim,not artful pleading. We saidthat a claim is brought incontract if liability arises fromthe contract, while a claim isbrought in tort if liability isderived from other generalobligations imposed by law.

2009 Tex. LEXIS 5. The Court stated that"determining whether a contract or some othergeneral legal obligation establishes the duty atissue and dictates whether the claims are such asto be covered by the contractual forum-selectionclause should be according to a common-senseexamination of the substance of the claimsmade." Id.

In analyzing the pleadings of the case,the Court stated that the plaintiffs claims allarose out of the consulting agreements becausethe defendants recommended Salinas in thecourse of their consulting work and because theagreements did not limit the scope of thedefendants' consulting work. The Courtdetermined that the plaintiffs claims were withinthe scope of the forum-selection clauses.

The Court then turned to the plaintiffsargument that the forum-selection clauses werenot enforceable because they were procured byfraud and overreaching. The plaintiff supportedthat allegation by arguing that its representativedid not know about the clauses and that thedefendants did not point those clauses out to herat a time when all of the communications weregoing on in Texas. The Court disagreed.Because the clauses were in two page contracts,were in the same font style and size as the otherterms of the contract, and were located near thesignature lines, the defendants had no duty toaffirmatively point them out to the plaintiff.

Finally, the Court dismissed theplaintiffs arguments regarding the interests ofthe witnesses and public, convenience oflitigation, and deprivation of the plaintiffs day incourt. The Court stated that the plaintiff couldhave foreseen litigation in Illinois, which is not aremote alien forum. Further, the fact that theremay be two suits — one in Texas against otherdefendants not parties to the agreements and onein Illinois against the defendants — did notdeprive the plaintiff of its day in court. TheCourt concluded: "[the plaintiff] presented noevidence to overcome the presumption that theforum-selection clauses are valid." Id.

V. Should The Enforcement of AForum-Selection Clause Differ FromAn Arbitration Clause and A Jury-Waiver Clause?

Arbitration, forum-selection, and jury-waiver clauses all fundamentally alter a party'sright to dispute resolution. However, thoseclauses seemingly have different tests for theirenforcement.

Texas courts liberally enforcearbitration clauses notwithstanding the fact that aparty waives its constitutional right to a jury trialand has a very limited right to appeal anarbitrator's decision. In Texas, arbitrationagreements are interpreted under general contractprinciples. See J.M Davidson, Inc. v. Webster,128 S.W.3d 223, 227 (Tex. 2003). To enforce anarbitration clause, a party must merely prove theexistence of an arbitration agreement and that theclaims asserted fall within the scope of theagreement. See In re Oakwood Mobile Homes,Inc., 987 S.W.2d 571, 573 (Tex. 1999). Further,there are instances where Texas courts haveenforced arbitration agreements against

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nonparties under the theory of estoppel. See,e.g., In re Weekly Homes, 189 S.W.3d 127 (Tex.2005); In re Kellog, Brown & Root, 166 S.W.3d732 (Tex. 2005). There is no requirement thatthe party relying on the arbitration agreementprove that it is conspicuous or that all partiesentered into the agreement voluntarily orknowingly.

Contractual jury waivers are clauses incontracts that state that the parties waive theright to a jury and will submit their disputes tothe court. Because contractual jury waivers areless intrusive than arbitration agreements,common sense would lead to the conclusion thatthey are at least as easily enforced as arbitrationagreements. However, because contractual jurywaivers are not enforced under the samestandards as arbitration clauses, parties have amore difficult burden to enforce jury waivers.

In In re Prudential, the Texas SupremeCourt for the first time held that contractual jurywaivers were enforceable. 148 S.W.3d 124 (Tex.2004). The Court held that such an agreementmay be unenforceable where it was not enteredinto voluntarily, knowingly, and intelligently:

[Al waiver of constitutionalrights must be voluntary,knowing, and intelligent, withfull awareness of the legalconsequences. We echo theUnited States Supreme Court'sadmonition that 'waivers ofconstitutional rights not onlymust be voluntary but must beknowing, intelligent acts donewith sufficient awareness ofthe relevant circumstances andlikely consequences.' Underthose conditions, however, aparty's right to trial by jury isafforded the same protectionsas other constitutional rights.

Id. Despite creating a "voluntary, knowing, andintelligent" requirement, the Courtacknowledged that a contractual jury waiver wasless of a depravation of constitutional rights thanan arbitration clause:

By agreeing to arbitration,parties waive not only theirright to trial by jury but theirright to appeal, whereas by

agreeing to waive only theformer right, they takeadvantage of the reducedexpense and delay of a benchtrial, avoid the expense ofarbitration, and retain theirright to appeal. The partiesobtain dispute resolution oftheir own choosing in amanner already afforded tolitigants in their courts. Theirrights, and the orderlydevelopment of the law, arefurther protected by appeal.And even if the option appealsonly to a few, some of the tideaway from the civil justicesystem to alternate disputeresolution is stemmed.

Id. The Texas Supreme Court once againaddressed contractual jury waivers in In re GECapital, where the court once again grantedmandamus relief to enforce a contractual jurywaiver. 203 S.W.3d 314, 316-17 (Tex. 2006).

Texas courts of appeals have been lessfriendly to the contractual jury waiver. InMikey's Houses, LLC v. Bank of America, N.A.,the Fort Worth Court of Appeals found that atrial court erred in enforcing a contractual jurywaiver because the defendant did not prove thatit was entered into voluntarily and knowingly.232 S.W.3d 145 (Tex. App.—Fort Worth 2007,no pet.). The court found that contractual jurywaivers were very different from arbitrationagreements. It found that "public policy favorsarbitration; the same cannot be said of the waiverof constitutional rights;" "although statutesgenerally require courts to compel contractualarbitration, no comparable statutory mandatedirects courts to enforce contractual jury trialwaivers"; "application of the standards forenforcing arbitration clauses would conflict withthe Brady 'knowing and voluntary' standard thatthe Texas Supreme Court adopted in In rePrudential"; and "a distinction exists between anagreement to resolve disputes out of court and anagreement to resolve disputes in court but towaive constitutional aspects of that in-courtresolution." Id. at 151-52.

In In re Credit Suisse First BostonMortgage Capital, L.L.C., the HoustonFourteenth Court of Appeals similarly did notenforce a contractual jury waiver. No. 14-08-

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00132-CV, 2008 Tex. App. LEXIS 4661 (Tex.App.—Houston [14th Dist.] June 17, 2008, orig.proceeding). The court then held that it wouldnot apply equitable estoppel in the context ofcontractual jury waivers:

We decline to recognize direct-benefits estoppel as a vehicleby which a jury waiver clausemay be applied to claimsagainst a party that did not signthe contract containing theclause. We are unaware of anycourt, in Texas or elsewhere,that has applied direct-benefitsestoppel to a jury waiverprovision.

The court then stated that arbitrationclauses are different from and implicate differentpolicy issues than jury waivers:

We recognize that Texascourts have occasionallyreferenced arbitrationprinciples in deciding jury-waiver issues. However, theseoccasional references do notsignal a departure from thelongstanding principle that jurywaivers are disfavored inTexas. Nor can Prudential orWells Fargo be read as placingjury-waiver provisions on thesame footing as arbitrationclauses. These mechanismscannot be treatedinterchangeably merelybecause they both lead todecisions by factfinders otherthan jurors. Jury waiverprovisions and arbitrationclauses implicate significantlydifferent policies andprinciples. In upholdingparties' freedom to contract,the Texas Supreme Courtnoted that arbitrationagreements--which arestrongly favored—allow partiesto contractually opt out of thecivil justice system altogether.The use of arbitration as anexample of contractual waivershould not be read as astatement that, henceforth, jury

waivers are to be analyzedinterchangeably witharbitration agreements.

id. at *13-14. The court concluded that it would"not use equitable estoppel as a vehicle tocircumvent the required "knowing andvoluntary" waiver standard." Id. at *14.

The Texas Supreme Court has notdiscussed why there are different standards forcontractual jury waivers than for arbitrationagreements or forum-selection clauses.However, in In re Prudential the Court clearlystated that contractual jury waivers were lessintrusive than arbitration agreements and forum-selection clauses. One reason that arbitrationclauses are favorably viewed is that there arefederal and state statutes extolling arbitration'svirtue and there is no such statute for jurywaivers. Of course, a statute should not be ableto trump a constitutional right. If the "knowingand voluntary" requirement is constitutional, itshould apply to arbitration agreementsnotwithstanding statutory enactments. However,it does not. Arbitration agreements are judged ascontractual clauses, and there merely has to be ashowing of mutual assent. Arbitrationagreements are valid and enforceable withoutany showing of voluntary and knowing waiverand there is no conspicuousness requirement.These agreements are often enforced against andby parties who were not even signatories to theagreements.

Moreover, courts have not limitedarbitration precedent solely to arbitration. Asthis article indicates, Texas courts applyarbitration precedent to forum-selection clauses.The Supreme Court's forum-selection clausecases liberally cite to and refer to arbitrationprecedent: Michiana Easy Livin' Country, Inc. v.Holten, 168 S.W.3d 777, 793 (Tex. 2005); In reAutomated Collection Tech, Inc., 156 S.W.3d557, 558-59 (Tex. 2004); and In re AIU Ins. Co.,148 S.W.3d 109, 111-14 (Tex. 2004).Enforcement of forum-selection clauses ismandatory unless the party opposingenforcement clearly shows that enforcementwould be unreasonable and unjust, or that theclause was invalid for such reasons as fraud oroverreaching. See In re AIU Ins. Co., 148S.W.3d at 112. The party opposing the clause'senforcement has the burden to prove the clause isinvalid. See id. Courts have not held that therehas to be any showing of knowing or voluntary

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agreement to a forum-selection clause.Moreover, courts have applied equitable estoppelso that non-signatories can enforce forum-selection clauses. See Phoenix Network Techs.(Europe) Ltd. v. Neon Sys., Inc., 177 S.W.3d605, 622-24 (Tex. App.—Houston [1st Dist.]2005, no pet.).

Is there any reason to apply arbitrationprecedent and presumptions to forum-selectionclauses and not to contractual jury waivers?Certainly, litigating in other countries of theworld has a huge impact on parties'constitutional rights. Few countries provide aright to a jury. Moreover, there are other rightsthat may be limited such as the examination ofwitnesses, presentation of evidence, and right toappellate relief. Why is there a lesser standardfor enforcing these provisions than for jurywaivers? There is no good reason. For example,in In re Palm Harbor Homes, Inc., the TexasSupreme Court held that when a contractual jurywaiver provision is subsumed within anarbitration agreement, the procedural andsubstantive rules concerning arbitration apply.195 S.W.3d 672, 675 (Tex. 2006). Why should adifferent, more strenuous, standard apply whenjury waiver clauses are not included inarbitration agreements?

Arbitration, forum-selection, and jurywaiver clauses should all be judged by the samestandard. They all deprive a party ofconstitutional rights — however, as courtsacknowledge, a party can waive those rights.They should all be judged either under thecontract/mutual assent standard of arbitrationagreements or by some higher "knowing andvoluntary" standard. Further, equitable estoppelshould apply to all of these clauses or none ofthem. There is no logical difference betweenthem.

VI. Impact of Choice-of-Law ProvisionOn Enforcement Of A Forum-Selection Clause

Another issue is the application ofchoice-of-law clauses on forum-selectionclauses. It is not uncommon for forum-selectionclauses to also provide that all of the contractualclauses will be construed by a foreignjurisdiction's law. For example, a clause maystate: "The validity, construction, interpretation,and effect of this Contract will be governed in allrespects by the law of England." "The most

basic policy of contract law is the protection ofthe justified expectations of the parties." Clair v.Brooke Franchise Corp., No. 02-06-216-CV,2007 Tex. App. LEXIS 2805 (Tex. App.---FortWorth April 12, 2007, no pet) (citing DeSantisv. Wackenhut Corp., 793 S.W.2d 670, 677 (Tex.1990)). Further, in construing a contract, a courtmust determine the parties' true intentions asexpres .sed in the contract by examining the entirewriting "in an effort to harmonize and give effectto all the provisions of the contract so that nonewill be rendered meaningless." ValenceOperating Co. v. Dorsett, 164 S.W.3d 656, 662(Tex. 2005).

Texas courts generally respect theparties' contractual choice-of-law and apply thelaw that the parties choose. See Ill. Tool Works,Inc. v. Harris, 194 S.W.3d 529 (Tex. App.—Houston [14th Dist.] 2006, no pet.) ("The partiescontractually agreed to apply the law of Illinoisto this contract. Texas courts will respect thatchoice and apply the law the parties choose.").Specifically, Texas courts uphold choice-of-lawprovisions in the context of the enforceability ofarbitration provisions. See In re Raymond James& Assocs., Inc., 196 S.W.3d 311, 321 (Tex.App.—Houston [1st Dist.] 2006, no pet.); In reJim Walter Homes, Inc., 207 S.W.3d 888, 896(Tex. App.—Houston [14th Dist.] 2006, orig.proceeding); In re Citigroup Global Mkts., Inc.,202 S.W.3d 477, 480-81 (Tex. App.—Dallas2006, no pet); In re Alamo Lumber Co., 23S.W.3d 577, 579 (Tex. App.—San Antonio2000, orig. proceeding). See also West Tex.Positron, Ltd. v. Cahill, No. 07-05-0297-CV2005 WL 3526483, at *2 (Tex. App.—Amarillo2005, no pet.) (parties' choice of Texas lawpointed to Texas interpretation of waiver). Seealso ASW Allstate Painting & Constr. Co. v.Lexington Ins. Co., 188 F.3d 307 (5th Cir. Tex.1999) (parties can choose state arbitration lawvia a choice-of-law clause).

Where the issue has been raised, somecourts hold that forum selection clauses are to beconstrued under the law of the forum that theparties have contractually agreed to. See, e.g.,Dunne v. Libbra, 330 F.3d 1062, 1064 (8th Cir.2003); Lambert v. Kysar, 983 F.2d 1110, 1118(1 st Cir. 1993); Nutter v. New Rents, Inc., 1991U.S. APP. LEXIS 22952 (4th Cir. 1991);Instrumentation Assocs. v. Madsen Elecs., 859F.2d 4, 7 (3d Cir. 1988); Gen. Eng`g Corp. v.Martin Marietta Alumina, Inc., 783 F.2d 352,357-58 (3d Cir. 1986); AVC Nederland B. V. v.

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Atrium Inv. rship, 740 F.2d 148 (2d Cir. 1984);Eisaman v. Cinema Grill Sys. Inc., 87 F.Supp.2d446 (D. Md. 1999); Triple Quest Inc. v.Cleveland Gear Co., 627 N.W.2d 379, 384 (N.D.2001); Jacobson v. Mailboxes, Etc. U.S.A., Inc.,419 Mass. 572, 575 (1995). See also HooksIndus., Inc. v. Fairmont Supply Co., No. 14-00-00062-CV, 2001 Tex. App. LEXIS 2568 (Tex.App.—Houston [14th Dist.] April 19, 2001, pet.denied) (not designated for publication) (courtinterpreted contract with forum-selection clauseunder law designated by parties).

For example in Ycrvuz, the court ofappeals dealt with how to interpret a forum-selection clause when the contract contained achoice-of-law provision. Yavuz v. 61 MM, Ltd,465 F.3d 418, 426-32 (10th Cir. 2006). Thecourt stated that there were several issues thathad to be addressed: "(1) Is the forum-selectionclause provision mandatory? ... (2) Are all ofMr. Yavuz's claims governed by the provision,or only some? ... (3) Does the clause bind Mr.Yavuz with respect to claims against all thedefendants, or with respect to only his claimsagainst FPM, or perhaps only those against FPMand Mr. Adi?" Id. at 427. The last issue dealtwith which parties could enforce the forum-selection clause. The court then analyzed indepth what law controlled and concluded thatthese issues should be determined under the lawchosen by the parties. See id. at 430-31.

Determining how a foreign countrywould interpret or enforce a forum-selectionclause may require the admission of evidence.Under Texas Rule Evidence 203, a trial courtmay consider affidavits in determining the law ofa foreign nation. See TEX. R. EVID. 203;Dankowski v. Dankowski, 922 S.W.2d 298, 302-03 (Tex. App.—Fort Worth 1996, writ denied).A trial court will likely not abuse its discretion inbelieving one credible expert witness overanother. See Phoenix Network Techs. Ltd. v.Neon Sys., Inc., 177 S.W.3d 605, 618 n. 15 (Tex.App.—Houston [14 th Dist.] 2005, no pet.) (in thecontext of whether a foreign jurisdiction wouldenforce a forum-selection clause, a trial court didnot abuse discretion in being advised on foreignlaw by one party expert's affidavit over theopponent's expert's affidavit).

It should be noted that a choice-of-lawprovision in a contract that applies only to theinterpretation and enforcement of the contractdoes not govern tort claims See Stier v. Reading

& Bates Corp., 992 S.W.2d 423, 433, 42 Tex.Sup. Ct. J. 493 (Tex. 1999); Red Roof Inns, inc.v. Murat Holdings, LLC, 223 S.W.3d 676, 684(Tex. App.—Dallas 2007, pet. denied). See alsoNCC Sunday Inserts, Inc. v. World Color Press,Inc., 759 F. Sapp. 1004, 1011 n.11 (S.D.N.Y.1991) (observing, although contract at issueprovided for construction of agreement underIllinois law, promissory estoppel is a claimoutside the contract and, therefore, parties'choice-of-law was not binding).

VII. Enforcement of Forum-SelectionClause By Or Against A Non-Signatory To The AgreementContaining The Clause

Another issue that will continue to be ofimportance is the enforceability of a forum-selection clause by a party that is not a signatoryto the contract or against a party that is notsignatory to the contract. The Texas SupremeCourt has noted six theories recognized by thefederal courts in which a nonsignatory may bebound to an arbitration agreement: "(1)incorporation by reference; (2) assumption; (3)agency; (4) alter ego; (5) equitable estoppel, and(6) third-party beneficiary." In re KelloggBrown & Root, Inc., 166 S.W.3d 732, 739, 48Tex. Sup. Ct. J. 678 (Tex. 2005). Importantly,when a defendant attempts to enforce a forum-selection clause that is contained in an agreementto which it is not a signatory or against a plaintiffthat is not a signatory, the defendant has theburden to establish some theory to allowenforcement of the clause. See CNOOCSoutheast Asia Ltd. v. Paladin Res. (Sunda) Ltd.,222 S.W.3d 889 (Tex. App.—Dallas 2007, pet.denied) ("When a party seeks to enforce a forum-selection clause against a nonsignatory to thecontract containing the forum-selection clause,that party bears the burden to prove the theoryupon which it relies to bind the nonsignatory tothe contract."). The two theories that are raisedmost often are estoppel and agency.

A. Estoppel Theory

The main exception that would allow anon-signatory to a contract to enforce a forum-selection clause is the estoppel theory. Texascases enforcing foram-selection clausespresuppose the existence of a contractualrelationship between the parties to the litigation,which includes a negotiated and agreed uponcontractual term regarding forum-selection. See

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In re AIU Ins. Co., 148 S.W.3d 109, 111 (Tex.2004); In re Automated Collection Tee/is., 156S.W.3d 557, 559 (Tex. 2004). Absent verylimited exceptions, forum-selection clauses donot govern litigation between strangers to thecontract, or between one party to a contract and astranger to it. See Westmoreland v. Sadoux, 299F.3d 462, 465 (5th Cir. 2002) (holding thatarbitration agreements "must be in writing andsigned by the parties" and may apply to non-signatories only "in rare circumstances"). TheFifth Circuit has aptly explained why courtsshould not readily allow nonsignatories toenforce clauses such as arbitration or forum-selection clauses:

Preliminary matters aside, wenow turn to the question ofwhether Sadoux could compelarbitration even though he wasnot party to an arbitrationagreement. . . The point isthat this twining of private andpublic fora facilitates theprivate choices of the marketby enforcing only theexpectation of parties capturedin their contracts.

It signifies that we will readthe reach of an arbitrationagreement between partiesbroadly, but that is a differentmatter from the question ofwho may invoke itsprotections. An agreement toarbitrate is a waiver ofvaluable rights that are bothpersonal to the parties andimportant to the open characterof our state and federal judicialsystems – an openness thiscountry has been committed tofrom its inception. It is thennot surprising that to beenforceable, an arbitrationclause must be in writing andsigned by the party invoking it.

Categories of dispute thatcannot exit the public courthouses aside, it is well andgood if the parties to a privateagreement wish to choose analternative dispute system, butwe are wary of choices

imposed after the dispute hasarisen and the bargain has longsince been struck. And hencewe will allow a nonsignatoryto invoke an arbitrationagreement only in rarecircumstances.

Directly put, the courts mustnot offer contracts to arbitrateto parties who failed tonegotiate them before troublearrives. To do so frustrates theability of persons to settle theiraffairs against a predictablebackdrop of legal rules—thecardinal prerequisite to alldispute resolution.

Westmoreland v. Sadowc, 299 F.3d 462(5th Cir. Tex. 2002).

Some Texas courts have applied an"equitable estoppel" theory to determine whethernon-signatories may rely upon a forum-selectionclause. See Phoenix Network Techs. (Europe)Ltd v. Neon Sys., Inc., 177 S.W.3d 605, 622-24(Tex. App.—Houston [1st Dist.] 2005, no pet.).Specifically, several courts of appeals hold thatequitable estoppel may permit a non-signatory toenforce a forum-selection clause where either ofthe following two circumstances were present:(1) "under 'direct benefits-estoppel,' a non-signatory may enforce an arbitration agreementwhen the signatory plaintiff sues it seeking toderive a direct benefit from the contractcontaining the arbitration provision" and (2)"[e]stoppel theory also applies when a signatoryplaintiff sues both signatory and non-signatorydefendants based upon substantiallyinterdependent and concerted misconduct by alldefendants." Phoenix, 177 S.W.3d at 622. Seealso In re Wilmer Cutler Pickering Hale AndDoor LLP, No. 05-08-01395-CV, 2008 Tex.App. LEXIS 9692 (Tex. App.—DallasDecember 31, 2008, original proceeding); DeepWater Slender Wells, Ltd. v. Shell IntlExploration & Prod, Inc., 234 S.W.3d at 693-94.

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1. ConcertedMisconduct EstoppelTheory

The Texas Supreme Court refused tofollow the "concerted-misconduct" estoppeltheory in the context of arbitration agreements.In In re Merrill Lynch Trust Co. FSB„ the Courtdid not allow non-signatory, affiliated companydefendants to enforce an arbitration agreement.235 S.W.3d 185, 191 (Tex. 2007). The affiliatedcompanies could not invoke the arbitrationagreement based on their relationship with thesignatory defendant, in the absence of anyallegations of alter ego. Disagreeing with someaspects of Fifth Circuit precedent, the Courtrejected the affiliated companies' estoppel theoryof substantially interdependent and concertedmisconduct:

[W]hile Texas law has longrecognized that nonparties maybe bound to a contract undertraditional contract rules likeagency or alter ego, there hasnever been such a rule forconcerted misconduct.Conspiracy is a tort, not a ruleof contract law. And whileconspirators consent toaccomplish an unlawful act,that does not mean theyimpliedly consent to eachother's arbitration agreements.As other contracts do notbecome binding on nonpartiesdue to concerted misconduct,allowing arbitration contractsto become binding on thatbasis would make them easierto enforce than other contracts,contrary to the ArbitrationAct's purpose.

Id. at 194. The Court denied the motion tocompel arbitration for the affiliated companies.In so holding, the Court essentially partiallyreversed its holding in Meyer v. WMCO-GPLLC, 211 S.W.3d 302 (Tex. 2006) (mentioningconcerted misconduct theory in support ofgranting motion to compel arbitration). See alsoIn re Trammell, No. 05-07-00351-CV, 2008 Tex.App. LEXIS 1396 *10 (Tex. App.—Dallas Feb.27, 2008, original proceeding) (The Courtdecided Merrill Lynch six months after theMeyer opinion and therefore overruled Meyer

regarding the application of the concerted-misconduct exception).

2. Direct-BenefitsEstoppel Theory

A defendant can potentially hold a non-signatory plaintiff to a forum-selection clausethat is contained in a contract to which theplaintiff is seeking a direct benefit from. In thecontext of arbitration agreements, the TexasSupreme Court held that "a litigant who suesbased on a contract subjects him or herself to thecontract's terms." In re FirstMerit Bank 52S.W.3d 749, 755 (Tex. 2001). The Court in In reKellogg Brown & Root, Inc., defined what itmeant by "to sue 'based on a contract," holdingthat "a non-signatory should be compelled toarbitrate a claim only if it seeks, through theclaim, to derive a direct benefit from the contractcontaining the arbitration provisions." In reKellogg Brown & Root, Inc., 166 S.W.3d 732,741 (Tex. 2005) (emphasis added). "While theboundaries of direct-benefits estoppel are notalways clear, nonparties generally must arbitrateclaims if liability arises from a contract with anarbitration clause, but not if liability arises fromgeneral obligations imposed by law." In re VestaIns. Group, Inc., 192 S.W.3d 759, 761, 49 Tex.Sup. Ct. J. 445 (Tex. 2006). With regard to anarbitration provision, the Texas Supreme Courthas held that parties can contractually agree tolimit the application of equitable estoppel. SeeMeyer v. WMCO-GP LLC, 211 S.W.3d 302, 306(Tex. 2006), overruled in part by In re MerrillLynch Trust Co. FSB, 235 S.W.3d 185 (Tex.2007).

For example, in St. Clair v. BrookeFranchise Corp., the court of appeals reversed atrial court's dismissal of a wife's suit against herhusband's former employer No. 2-06-216-CV ,2007 Tex. App. LEXIS 2805 (Tex. App.—FortWorth April 12, 2007, no pet. hist.). The courtof appeals found that the plaintiff was not boundby the forum-selection clause in a contractbetween defendant and her husband because shewas a non-signatory, and she did not seek orobtain benefits from the contract. See id. Thecourt framed the issue thusly:

[T]o be compelled to arbitrate,a nonsignatory must either (1)bring claims in a lawsuit thatseek direct benefits from acontract containing an

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that related to the very agreement containing thearbitration clause. Anco Insurance Services ofHouston v. Romero, 27 S.W. 3d at 6.Consequently, the defendant was precluded fromseeking enforcement of an arbitration clause.See id Additionally, in Hawkins v. KPMG LLP,the court found that the defendant could not relyon an equitable estoppel argument to enforce anarbitration provision where the defendant hadunclean hands:

arbitration clause, or (2)deliberately seek and obtainsubstantial benefits from thecontract itself outside oflitigation. Thus in this case,we could only enforce theforum selection clause againstTina if by bringing her claims,she sought direct benefits fromthe Agreement, determined bydeciding whether liability onher claims arises solely fromthe Agreement between Timand BFC and must bedetermined by reference to it,or if by her conduct during thelife of the Agreement, shedeliberately sought or obtainedsubstantial benefits from theAgreement itself.

Even if defendants were ableto make a prima facie showingthat equitable estoppel mightapply, the doctrine of uncleanhands would preclude the courtfrom applying equitableestoppel in this case. "Theunclean hands doctrine closesthe doors of a court of equityto one tainted withinequitableness or bad faithrelative to the matter in whichhe seeks relief."

The relief sought bydefendants in this case isenforcement of the terms of theWarrant against plaintiff.Defendants' invocation of theWarrant is tainted by bad faithin a number of ways. First,defendant KPMG hasstipulated on the public recordthat the Warrant agreementwas fraudulent. Second, as theparties discussed at oralargument, Harbourtowne itselfwas created for the solepurpose of facilitating the taxshelter at issue in this case -- atax shelter which KPMG hasacknowledged to be inviolation of federal tax taws.Third, defendants had ampleopportunity to choosearbitration in their ownengagement letters withplaintiff but failed to do so.What defendants ask this courtto do – enforce an arbitrationclause in a fraudulent contract,not signed by defendants,involving a phantom, now-defunct company, and bearingonly an incidental relationship

Id. The court held that the defendant only raisedthe second issue. After considering the evidencein the record, the court found that the plaintiffhad not sought a direct benefit from the contractoutside if litigation, and therefore, she was notestopped from bringing suit in Texas. See id.

3. Unclean HandsDefense To EstoppelTheory

Unclean hands is a potential defense toa party asserting an estoppel theory to enforce aforum-selection clause against a non-signatory.Under Texas law, "one who comes seekingequity must come with clean hands." TexasEnterprise Inc. v. Arnold Oil Company, 59 S.W.3d 244, 249 (Tex. App.—San Antonio, 2001, nowrit); Anco Ins. Sem. of Houston v. Romero, 27S.W. 3d 1 (Tex. App.—San Antonio 2000, pet.denied). The doctrine of "unclean hands"prohibits a party from seeking equitable relief ifits "own conduct in connection with the samematter or transaction has been unconscientious,unjust or marked by a want of good faith, or onewho has violated the principles of equity andrighteous dealing." In Re Jim Walter Homes,Inc. 207 S.W. 3d 888, 899 (Tex. App.—Houston[14th Dist.] 2006, orig. proceeding).

For example, the court in AncoInsurance Services of Houston v. Romero, foundthat a party seeking to enforce an arbitrationclause in a settlement agreement had uncleanhands because of that party's misrepresentations

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to the dispute at the heart ofthis lawsuit — would make amockery of this court'sequitable powers.

423 F. Stipp. 2d 1038 (N.D. Ca. 2006) (emphasisadded). It is questionable whether thisequitable defense would apply to assist asignatory to an agreement from defendingagainst a motion to dismiss filed by anothersignatory because the motion would be based ona pure breach of contract action and would notrely on equity.

Additionally, if the parties to theagreement choose a forum's law to control theinterpretation and enforcement of the agreement,including the forum-selection clause, and theforum would not allow third parties to enforcethe contract under an "equitable" exception, thenthose third parties should not be entitled toenforce it. Whether parties to a forum-selectionclause intended third parties to enforce thatprovision should be judged by the contract itself.See Meyer v. WMCO-GP, LLC, 211 S.W.3d 302,305-6 (Tex. 2006) ("We agree that an arbitrationprovision may limit the application of equitableestoppel"). This is consistent with otherprecedent that holds that equitable estoppelshould be judged under the law chosen by theparties in a choice-of-law clause. See, e.g.,Advertising Specially Institute v. Hall-Erickson,Inc., 2004 U.S. Dist. LEXIS 19090 (N.D. III2004) (equitable estoppel claim judged bychoice-of-law designated by parties); SLFLimited Pshp v. Molecular Biosystems, Inc., No.01-C-9576, 2003 U.S. Dist. LEXIS 21612 (ND.Iii December 2, 2003) (same); SperryMarketing, Inc. v. Swing W Slide Corp., No. 96-2155-GTV, 1997 U.S. Dist. LEXIS 2378 (D.C.Kan. February 13, 1997) (same).

B. Transaction-Participant

Another exception that would allow anon-signatory to enforce a forum-selectionprovision is the "transaction participant"exception. The Texas Supreme Court has neveraddressed whether it is appropriate to use thetransaction-participant analysis as a theory forallowing a non-signatory to enforce a forum-selection clause. See Deep Water Slender Wells,Ltd. v. Shell Intl Exploration & Prod, Inc., 234S.W.3d at 693. However, the Texas SupremeCourt would likely adopt an exception for non-signing parties that is similar to the one that the

Court has adopted for arbitration provisions. Toconclude that such a theory did not apply inTexas would enable a party to bypass a validforum-selection clause by naming in its petitiona signing party's representative who was not aparty to the contract solely to avoid the clause.

Where accepted, Texas courts haveconsistently defined "transaction-participant"very narrowly: "By transaction-participant, wemean an employee of one of the contractingparties who is individually named by anothercontracting party in a suit arising out of thecontract containing the forum-selection clause."Accelerated Christian Education, Inc. v. OracleCorp., 925 S.W.2d 66, 75 (Tex. App.—Dallas1996, no writ). See also, In re Wilmer CutlerPickering Hale And Door LLP, No. 05-08-01395-CV, 2008 Tex. App. LEXIS 9692 (Tex.App.—Dallas December 31, 2008, originalproceeding); CNOOC Southwest Asia Ltd v.Paladin Res. (SUNDA) Ltd, 222 S.W.3d 889,898-99 (Tex. App.—Dallas 2007, pet. denied);PCC Sterom, S.A. v. Yuma Exploration & ProdCo., No. 01-06-00414-CV, 2006 Tex. App.LEXIS 8702 (Tex. App.—Houston [1st Dist.]October 5, 2006, no pet.) (owner of signatory orsuccessor entity); Robbins & Myers, Inc. v. J.M.Huber Corp., 2002 WL 418206 *3 (Tex. App.—Dallas 2002, no pet.) (not designated forpublication); 1 ROY W. MCDONALD &ELAINE A. GRAFTON CARLSON, TEXASCIVIL PRACTICE (2nd ed. 2004) § 3.19, p. 382("'Transaction-participant' means an employee ofone of the contracting parties who is individuallynamed by another contracting party in a suitarising out of the contract containing the forum-selection clause"). If the defendant is simply anagent or employee of the signatory, and is beingsued for his or her work in the course of his orher relationship with the signatory, then the non-signatory defendant can enforce the clause.

For example, in Accelerated Christian,the plaintiff filed suit against Oracle and one ofits employees in a dispute involving the purchaseof software. See Accelerated Christian, 925S.W.2d at 68. The trial court dismissed the suitpursuant to a forum-selection clause in thecontract between Accelerated Christian andOracle, which was affirmed on appeal. See id. at68-69. Among other points of error, AcceleratedChristian contended that Oracle's employee,Brady, could not rely upon the forum-selectionclause because he was not a party to the contract.The court of appeals disagreed, stating the test

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described above, and pointing out thatAccelerated Christian sued both a signatory(Oracle) and non-signatory (Brady) allegingidentical claims against both. See id. at 75.

In the context of arbitration agreements,the Texas Supreme Court found that an agent ofa signatory, sued in that capacity, may enforce anarbitration agreement. In In re Merrill LynchTrust Co. FSB, investors agreed to arbitrate anydisputes with their investment company. 235S.W.3d 185 (Tex. 2007). As a part of theirfinancial plan, the investors set up an irrevocablelife insurance trust with a trust company that wasaffiliated with their investment company. See id.The trust company then purchased a variable lifepolicy from a life insurance company that wasaffiliated with the investment company. See id.Both of these affiliated companies had their owncontracts with the investors, neither of whichcontained an arbitration clause. See id. A lifeinsurance agent who worked for the investmentcompany received a commission. See id. Theinvestors sued the affiliates and the agent, butnot the investment company and alleged variousclaims, all related to the insurance trust, and allasserted against the defendants collectivelywithout differentiating the actions of each. Seeid. The defendants moved to compel arbitration,which the trial court denied, and the court ofappeals denied mandamus relief.

The Texas Supreme Court held that theclaims against the agent had to go to arbitrationbecause the agent acted on behalf of theinvestment company and the substance of thesuit was against the agent's conduct in the courseand scope of his employment. See id. at 188-89."Parties to an arbitration agreement may notevade arbitration through artful pleading, such asby naming individual agents of the party to thearbitration clause and suing them in theirindividual capacity." Id. at 188. "As there is noquestion [agent] was acting in the course andscope of his employment, if he is liable for thetorts alleged against him, then [investmentcompany] is too." Id. Importantly, the Court didnot find that employees/representatives canalways enforce an arbitration agreement: "Whenactions outside of the course of employmentcannot be attributed to an employer, the latterwould have no need to invoke its arbitrationprotections." Id. at 190.

To rely on this theory, the moving partyshould offer evidence that the non-signatory

defendant was an "employee" or "agent" of thesignatory. See, e.g., CNOOC S. W. Asia Ltd. V.Paladin Res. (SUNDA) Ltd, 222 S.W.3d 889(Tex. App.—Dallas 2007, pet. denied) (to bindan affiliate entity under agency principles, theremust be evidence of conduct by the affiliate thatwould give rise to actual or apparent authority).Finally, even where non-signatories are entitledto enforce a forum-selection clause, they do nothave any greater right to enforce the clause thanthe signatories themselves have. See In reTrammell, No. 05-07-00351-CV, 2008 Tex. App.',EMS 1396, *10 (Tex. App.—Dallas February28, 2008, original proceeding).

C. Agency

Another potential ground that couldbind a non-signatory to a contractual forum-selection clause is agency. In other words, aprincipal that allows an agent to bind theprincipal to the clause is bound to that clause.The existence of an agency relationship may bebased on actual or apparent authority. SeeWalker Ins. Servs. v. Bottle Rock Power Corp.,108 S.W.3d 538, 549-53 (Tex. App.—Houston[14th Dist.] 2003, no pet.). An essential elementof the principal-agent relationship is the allegedprincipal's right to control the actions of thealleged agent. See id. Actual authority is createdthrough written or spoken words or conduct ofthe principal communicated to the agent. See id.It may be implied from the conduct of the partiesor from the facts and circumstances surroundingthe transaction in question. See id. But a findingof actual authority cannot be based merely on thewords or deeds of the agent. See id. Apparentauthority, on the other hand, is created by writtenor spoken words or conduct by the principal tothird parties, not to the agent. See id. at 550.Absent actual or apparent authority, an agentcannot bind a principal. See CNOOC S. W. AsiaLtd. v. Paladin Res. (SUNDA) Ltd., 222 S.W.3d889 (Tex. App.—Dallas 2007, pet. denied)

For example, in Paladin, the court ofappeals found that in a special appearance appealthe plaintiff did not establish that thenonsignatory defendants were bound by theforum-selection clause naming Texas as thechosen forum. See id. The plaintiff allegedagency as a reason to bind the non-signatorydefendants, but the court of appeals held to thecontrary:

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To establish apparentauthority, Paladin was requiredto show that International andMuturi said or did somethingthat would lead a reasonablyprudent third party to believethat SAL, LTD, or SES had theauthority to bind them to theforum-selection clause. We donot look at the words orconduct of the alleged agent—in this case, SAL, LTD, orSES. Rather, we consider onlythe words or conduct of theprincipal—in this case,International and Muttni—tomake this determination.Here, the record does notcontain any evidence thatInternational or Muturi did orsaid anything to authorizeSAL, LTD, or SES to bindthem to the forum-selectionclause.

Id. See also PCC Sterom, S.A. v. YumaExploration & Prod. Co., No. 01-06-00414-CV,2006 Tex. App. LEXIS 8702 (Tex. App.—Houston [1st Dist.] October 5, 2006, no pet.).

VIII. Use of Forum-Selection Clause inSpecial Appearance/Objections ToPersonal Jurisdiction

The paper does not address the use offorum-selection clauses by plaintiffs in fightingattempts to have a suit dismissed due to personaljurisdiction. However, it should be noted thatpersonal jurisdiction is a waivabk requirement.See Halabu v. Petroleum Wholesale, LP., No.01-07-00614, 2008 Tex. App. LEXIS 3852 (Tex.App.—Houston [1st Dist] May 22, 2008, nopet.); PCC Sterom, S.A. v. Yuma Exploration &Prod. Co., No. 01-06-00414-CV, 2006 Tex.App. LEXIS 8702 (Tex. App.—Houston [1stDist.] October 5, 2006, no pet.). "A forum-selection clause is one of several ways in which alitigant may expressly or impliedly consent topersonal jurisdiction." Abacan Technical Servs.Ltd. v. Global Marine Intern. Servs. Corp., 994S.W.2d 839, 843 (Tex. App.—Houston [1stDist.] 1999, no pet.). Accordingly, if the parties'contract has a forum-selection clause thatdesignates Texas as the forum for conflictresolution, a plaintiff should raise that fact in

defending against a defendant's specialappearance or objection to personal jurisdiction.

Conversely, if a defendant that is suedin Texas has a contract that names another stateas a permissive forum for conflict resolution,then the defendant should raise that as a factor inconvincing the trial court that it did not havesufficient contacts in Texas to satisfy personaljurisdiction. See J.A. Riggs Tractor Co. v.Bentley, 209 S.W.3d 322 (Tex. App.—Texarkana 2006, no pet.). For example inBentley, the court of appeals stated:

In light of the scant[] evidencein support of Riggs' purposefulavailment, we note that theforum selection clause in thecredit agreement suggests thatRiggs anticipated suit inArkansas and further suggeststhat Riggs was not availingitself of the benefit of Texas'laws. Although forum-selection clauses are notdispositive, they "should notbe ignored in consideringwhether a defendant has'purposefully invoked thebenefits and protections of aState's laws."

Id. (internal citation omitted).

IX. Defenses To A Motion To DismissDue To A Forum-Selection Clause

Under the applicable legal standard, atrial court should presume that a mandatoryforum-selection clause is valid and enforceable.See MIS Bremen v. Zapata Off-Shore Co., 407U.S. 1, 10, 92 S. Ct. 1907, 1913, 32 L. Ed. 2d513 (1972); In re AIU Ins. Co., 148 S.W.3d at111-12. However, a party defending againstsuch a clause may raise certain arguments anddefenses to defeat a motion to dismiss based onsuch a clause.

A. Defendant Has Not MetBurden

A party moving to dismiss a case basedon a forum-selection clause does have the burdento establish the basic requirements for a contract.If the defendant fails to do so, then the trial courtdoes not abuse its discretion in denying a motion

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to dismiss. See, e.g., In re Int'l Profit Assocs.,No. 05-07-00454-CV, 2007 Tex. App. LEXIS5105 (Tex. App.—Dallas June 29, 2007, originalproceeding). For example, in In re Int? ProfitAssocs, the defendant had been sued for a pre-suit deposition in Texas. See id. The defendantargued that the trial court should deny therequest for deposition because of a forum-selection clause in the parties' agreement. See id.However, the defendant never offered theagreement into evidence. After the trial courtgranted the petition to take the deposition, thedefendant filed a petition for writ of mandamuschallenging that order. The court of appealsdenied the defendant's petition because theagreement and the forum-selection clause wasnot in the record. See id. Further, when adefendant attempts to enforce a forum-selectionclause that is contained in an agreement to whichit is not a signatory or against a plaintiff that isnot a signatory, the defendant has the burden toestablish some theory to allow enforcement ofthe clause. See CNOOC Southeast Asia Ltd. v.Paladin Res. (Sunda) Ltd., 222 S.W.3d 889 (Tex.App.—Dallas 2007, pet. denied) ("When a partyseeks to enforce a forum-selection clause againsta nonsignatory to the contract containing theforum-selection clause, that party bears theburden to prove the theory upon which it reliesto bind the nonsignatory to the contract.").

B. Scope of Clause Does NotCover Plaintiffs Claim

A party defending against a motion todismiss based on a forum-selection clause shouldassert that its claims do not fall within the scopeof the clause, and therefore, the clause does notrequire that the plaintiff file them in a particularforum. See In re Wilmer Cutler Pickering Hale& Door LLP, No. 05-08-01395-CV, 2008 Tex.App. LEXIS 9692 (Tex. App.—DallasDecember 31, 2008, original proceeding) (courtdenied the defendant's petition for writ ofmandamus and allowed the plaintiffs tort-based,fraud claim to continue in Texas because it felloutside of scope of clause); Apollo Prop.Partners, LLC v. Diamond Houston I, L.P., No.14-07-00528-CV, 2008 Tex. App. LEXIS 5884(Tex. App.—Houston [14th Dist.] August 5,2008, no pet.) (same). See a previous section ofthis paper on scope of the clause for furtherdiscussion.

C. Contract Defenses

One defense that a plaintiff may raiseconcerns regular contract-type defenses, such asfraud, undue influence, or overweeningbargaining power. See MS Bremen, 407 U.S. at10-15, 92 S. Ct. at 1913-16; In re AIU Ins. Co.,148 S.W.3d at 111-12. The most commondefense raised is fraud. However, it is importantto note that in Scherk v. Alberto-Culver Co., theUnited States Supreme Court clarified the fraudexception to enforceability mentioned in Bremento require that the forum-selection clause itselfmust be fraudulently induced, and not merely theagreement of which it was one provision. 417U.S. 506, 519 n.14, 94 S. Ct. 2449, 41 L. Ed. 2d270 (1974). See also In re Lyon FinancialServices Inc., 257 S.W.3d 228 (Tex. 2008) (percuriam) (fraud claim must apply solely to forum-selection clause and not contract in general); Inre GNC Franchising, Inc., 22 S.W.3d 929 (Tex.2000) (Hecht, J. dissenting from denial ofpetition for writ of mandamus). A partyasserting that it was fraudulently induced intoentering an agreement must show that (1) theother party made a material representation, (2)the representation was false and was eitherknown to be false when made or made withoutknowledge of its truth, (3) the representation wasintended to be and was relied upon by the injuredparty, and (4) the injury complained of wascaused by the reliance. See Am. Tobacco Co.,Inc. v. Grinnell, 951 S.W.2d 420, 436 (Tex.1997).

For example, in In re InternationalProfit Associates, Inc., the Texas Supreme Courtrejected a plaintiffs argument that the forum-selection clauses were not enforceable becausethey were procured by fraud and overreaching.No. 08-0238, 2009 Tex. LEXIS 5 (Tex. January9, 2009). The plaintiff supported that allegationby arguing that its representative did not knowabout the clauses and that the defendants did notpoint those clauses out to her at a time when allof the communications were going on in Texas.The Court disagreed. Because the clauses werein two-page contracts, were in the same fontstyle and size as the other terms of the contract,and were located near the signature lines, thedefendants had no duty to affirmatively pointthem out to the plaintiff. See id.

Another example is In re LyonFinancial Services Inc., where the TexasSupreme Court held that fraudulent inducement

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to sign an agreement containing a forum-selection clause will not bar enforcement of thatprovision unless the specific forum-selectionclause was the product of fraud or coercion. 257S.W.3d 228 (Tex. 2008) (per curiam). In thatcase, the plaintiff had an affidavit from itsrepresentative that stated that he was misled thatthe forum-selection clause only applied to aschedule that he was not suing upon. See id.The Court determined that this was insufficientbecause the agreements contained clauses thatrepresented that they were the entire agreementsbetween the parties and that there were no priorrepresentations not contained in the agreements.The Court stated that a party who signs anagreement is presumed to know its contents, andthat includes documents specificallyincorporated by reference. See id. Further, theplaintiffs representative failed to state that hewould not have signed the agreement absent thealleged misrepresentation. See id. The Courtfound that there was no evidence that the forum-selection clause was secured by amisrepresentation or fraud. See id.

D. Enforcement of ClauseWould Be Unreasonable,Unjust, or Otherwise AgainstPublic Policy

A plaintiff may also defend against amotion to dismiss based on a forum-selectionclause if enforcement of that clause would beunreasonable or unjust. See M/S Bremen, 407U.S. at 10-15, 92 S. Ct. at 1913-16; In re AIUIns. Co., 148 S.W.3d at 111-12. Enforcement ofa forum-selection clause would be unreasonableand unjust if (1) enforcement of the clause wouldcontravene a strong public policy of the forum inwhich suit was filed or (2) the balance ofconvenience is strongly in favor of litigation inthe forum in which suit was filed, and litigationin the forum identified in the clause would be somanifestly and gravely inconvenient to theresisting party that the resisting party effectivelywould be deprived of a meaningful day in court.See MIS Bremen, 407 U.S. at 15-19,92 S. Ct. at1916-18; In re AIU Ins. Co., 148 S.W.3d at 111-12. Courts have held that this is essentially afundamental fairness inquiry. In determining thefairness of such a clause, courts should consider(1) whether there is an indication that the forumwas selected to discourage legitimate claims, (2)whether the opposing party was given adequatenotice of the forum-selection clause, and (3)whether the opposing party retained the option of

rejecting the contract with impunity followingnotice of the forum-selection clause. SeeStobaugh v. Norwegian Cruise Line Ltd., 5S.W.3d 232, 235 (Tex. App.—Houston [14thDist.] 1999, pet. denied) (citing Carnival CruiseLines, Inc. v. Shute, 499 U.S. 585, 595, 111 S.Ct. 1522, 1528, 113 L. Ed. 2d 622 (1991)). Seealso Luxury Travel Source v. American Airlines,Inc., No. 02-08-100-CV, 2008 Tex. App. LEXIS9688 (Tex. App.—Fort Worth, December 31,2008, no pet. hist.).

Regarding notice of the clause, aplaintiff may attempt to argue that it did notknow that the forum-selection clause was in theagreement. However, courts will presume that aparty that signs an agreement knows its contents.See In re Lyon Fin. Servs., 257 S.W.3d 228, 232(Tex. 2008); Luxury Travel Source v. AmericanAirlines, Inc., No. 02-08-100-CV, 2008 Tex.App. LEXIS 9688 (Tex. App.—Fort Worth,December 31, 2008, no pet. hist.).

For example, in In re InternationalProfit Associates, Inc., the Texas Supreme Courtrejected a plaintiffs argument that the forum-selection clauses were not enforceable becauseof the interests of the witnesses and public,convenience of litigation, and deprivation of theplaintiffs day in court. No. 08-0238, 2009 Tex.LEXIS 5 (Tex. January 9, 2009). The Courtstated that the plaintiff could have foreseenlitigation in Illinois, which is not a remote alienforum. Further, the fact that there may have tobe two suits – one in Texas against otherdefendants not parties to the agreements and onein Illinois against the defendants – did notdeprive the plaintiff of its day in court. TheCourt concluded: "[the plaintiff] presented noevidence to overcome the presumption that theforum-selection clauses are valid." Id.

In In re Lyon Financial Services Inc.,the Texas Supreme Court addressed a plaintiffsmultiple arguments regarding why a forum-selection clause should not be enforced. 257S.W.3d 228 (Tex. 2008) (per curiam). Theplaintiff argued that the forum-selection clauseshould not be enforced because there was adisparity in bargaining power in that theplaintiffs representative did not have legaladvice, had no formal business school training,was not aware of the clause when he signed theagreement, and that the agreements werepresented on a take-it-or-leave-it basis. See id.The Court determined that these facts did not

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show unfairness or overreaching. See id. TheCourt held that the agreements were not a resultof unfair surprise or oppression because theforum-selection clause was in all capital letters.See id. The Court also found that the clause wasnot unfair simply because the clause allowed thedefendant to file suit in Texas or Pennsylvaniaand required the plaintiff to solely file suit inPennsylvania because these types of clauses donot require mutuality of obligation so long asadequate consideration is exchanged. See id

The plaintiff also argued thatPennsylvania was an inconvenient forum andthat enforcing the provision would produce anunjust result. See id. The plaintiff introducedevidence that it was a small business and did nothave the ability to pursue claims inPennsylvania. See id. The Court stated that byentering into the agreements both partieseffectively represented to each other that theagreed forum was not so inconvenient thatenforcing the clause would deprive either partyof their day in court. See id. The Court thenheld that Pennsylvania is not a "remote alienforum," and that there was no proof that anunjust result would occur in enforcing the clause.See id.

The plaintiff also argued that it wouldbe unjust to enforce the clause becausePennsylvania does not allow a corporation to suefor usury. The Court held that the plaintiffsinability to assert its usury claim does not createa public policy reason to deny enforcement ofthe clause. See id. Texas law in an area does notestablish public policy that would negate acontractual forum-selection clause, absent astatute requiring suit to be brought in Texas. Seeid Further, the plaintiff made no showing thateven using Pennsylvania law, that Pennsylvaniawould not apply Texas law in determining theparties' rights. See id. Therefore, the Courtconditionally granted the petition and ordered thetrial court to grant the motion to dismiss. See id.

If a plaintiff does not present anyevidence that litigating in the agreed-upon forumis manifestly or gravely inconvenient, a trialcourt does not err in granting the motion todismiss. See Deep Water Slender Wells, Ltd. v.Shell Int? Exploration & Prod, Inc., 234 S.W.3dat 693. One court has held that a forum-selectionclause could potentially be avoided if thedefendant was forum shopping. See In reBoehme, 256 S.W.3d 878 (Tex. App.—Houston

[14th Dist.] 2008, original proceeding).However, the court did not describe how thisconduct may occur where the plaintiff files thesuit. Rather, the court found that a defendant didnot forum shop by defending against a temporaryinjunction hearing, and then after obtaining anadverse result, asserting a forum-selectionclause. See id.

E. Other Forum WouldRecognize The Validity Ofthe Forum-Selection Clause

As stated earlier in this paper, Texascourts historically had a requirement that theparty moving to dismiss based on a forum-selection clause had to prove that the courts ofthe agreed forum would recognize the validity ofthe clause. See, e.g., Mahon, Ltd. v. 4fri-CaribEnters., Inc., 29 S.W.3d 291, 296-98 (Tex.App.—Houston [14th Dist.] 2000, no pet.).However, when the Texas Supreme Courtaddressed the standards for enforcing a forum-selection clause, the Court did not discuss thisrequirement. In re AIU Ins. Co., 148 S.W.3d at111-12. Accordingly, one court has held thatthere is no longer a requirement that a defendantestablish that the courts of the agreed forumwould recognize the validity of the clause. SeeDeep Water Slender Wells, Ltd v. Shell InaExploration & Prod, Inc., 234 S.W.3d at 695.Accordingly, this would seem to no longer be adefense to a motion to dismiss. However, thisfails to address the impact that a choice-of-lawprovision may have on the interpretation andenforceability of a forum-selection clause. Thisis discussed in this paper in the section dealingwith choice-of-law clauses.

F. Waiver Of Right To EnforceForum-Selection Clause

A party may waive its right to enforce aforum-selection clause. See In re AutomatedCollection Techs., Inc., 156 S.W.3d 557 (Tex.2004). There are two types of waiver – expressand implied. For example, the Texas SupremeCourt addressed intentional and implied waiverin In re GE Capital, 203 S.W.3d 314, 316-17(Tex. 2006). The Court addressed the plaintiffsargument that the defendant had waived acontractual jury waiver. The initial bench trialsetting was passed, and following the plaintiffsjury demand, the case was moved to the jurydocket. However, the defendant asserted that itdid not receive the jury demand and did not

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notice that the court had moved the case to thejury docket. The court found that the defendantdid not waive its contractual jury waiver byimmediately filing a motion to quash thedemand:

Waiver requires intent, eitherthe "intentional relinquishmentof a known right or intentionalconduct inconsistent withclaiming that right." InJernigan v. Langley, weexplained that:

Waiver islargely amatter ofintent, andfor impliedwaiver to befoundthrough aparty'sactions,intent mustbe clearlydemonstratedby thesurroundingfacts andcircumstances. There canbe no waiverof a right ifthe personsought to becharged withwaiver saysor doesnothinginconsistentwith anintent to relyupon suchright. Waiveris ordinarilya question offact, butwhen thesurroundingfacts andcircumstance

areundisputed,as in thiscase, the

questionbecomes oneof law.

As in Jernigan, we have noevidence here of GeneralElectric 's specific intention towaive its contractual right norcan we imply intent from thesurrounding facts andcircumstances. Thecircumstances here mayindicate inattention or a certainlack of care on the part ofGeneral Electric, but they donot imply that General Electricintended to waive itspreviously asserted contractualright by not complainingsooner.

Id. (internal citations omitted). Accordingly, it isdifficult to find intentional waiver solely on thebasis of actions and allowing trial courtproceedings to continue.

A party's implied waiver has to besubstantial and must cause some prejudice to theplaintiff before a court can avoid a forum-selection clause. When addressing waiver of aforum-selection clause, arbitration cases areanalogous. See Automated CollectionTechnologies, 156 S.W.3d. at 559. Like anyother contract right, parties can waive a forum-selection clause if they agree instead to resolve adispute in Texas courts. See Perry Homes v.Cull, 258 S.W.3d 580 (Tex. 2008) (arbitrationcase). A party waives a forum-selection clauseby substantially invoking the judicial process.See id. There is a strong presumption againstwaiver. See id. Waiver is a legal questiondecided on a case-by-case basis by reviewing thetotality of the circumstances. See id. Thosecircumstances include: 1) whether the movantwas the plaintiff, who chose to file in court, orthe defendant, who merely responded; 2) howlong the movant knew of the forum-selectionclause before seeking dismissal; 3) whether themovant knew of the clause all along; 4) howmuch pretrial activity related to the merits, ratherthan the clause; 5) how much time and expensehad been incurred in the ligation; 6) whether themovant sought or opposed the clause earlier inthe case; 7) whether the movant filed affirmativeclaims or dispositive motions; 8) what discoverywould be unavailable in the other forum; 9)

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whether activity in court would be duplicated inthe other forum; and 10) when the case was to betried. See id. However, one court of appeals hasheld that the delay factors set forth above maynot apply to a forum-selection clause analysis:

held that the defendant did not impliedly waiveits right to enforce the forum-selection clause:

The "delay" factors from PerryHomes do not translate wellfrom the arbitration context.One of the benefits ofarbitration is that it severelylimits pretrial discovery. Inthe arbitration context, then,engaging in significantdiscovery can be inconsistentwith an eleventh-hour requestfor arbitration. That concern isnot as pronounced when theclause in question is designednot to eliminate or lessenpretrial discovery but, rather,to simply specify the forumthat would resolve the dispute.

Automated did not waiveenforcement of the forum-selection clause by seekingaffirmative relief on theunderlying contract and byparticipating in the underlyinglitigation. In AIU, weaddressed a similar waiverargument and concluded that adelay of five months in seekingenforcement of a forum-selection clause along withrequesting a jury trial, payingthe jury fee, and filing ageneral denial that did not raisethe forum-selection issue werenot sufficient to waive theforum-selection clause underconsideration in that case. Inso holding, we relied on casesconcerning waiver in thearbitration context we found tobe analogous. In re BruceTerminix Co., an arbitrationcase, held that "evensubstantially invoking thejudicial process does not waivea party's arbitration rightsunless the opposing partyproves that it sufferedprejudice as a result."

PSC asserts that the parties"have spent significant timeand resources litigating thisdispute. . . [and] [a] dismissalwould result only induplication of time andresources that areunnecessary." But this doesnot establish that PSC has beenprejudiced by Automated'sparticipation in the underlyinglitigation and four-month delayin seeking enforcement of theforum-selection clause.Moreover, PSC chose toinitiate proceedings in a forumother than the one to which itcontractually agreed andcannot complain about anyduplication of time or effortsthat resulted from that choice.

See In re Boehme, 256 S.W.3d 878 (Tex. App.—Houston [14th Dist.] 2008, original proceeding).

Finally, the plaintiff must establish thatit suffered prejudice as a result of the actionsconstituting waiver. See Automated CollectionTee/is., 156 S.W.3d at 559. Delay alonegenerally does not establish waiver. See In reVesta Ins. Group, Inc., 192 S.W.3d 759, 763(Tex. 2006) (orig. proceeding). Instead, prejudiceconnotes an effort by the moving party to "gainan unfair tactical advantage of the opposingparty." See Perry Homes, 258 S.W.3d at 580.Generally, courts have looked to such factors as(1) the movant's access to information that wouldnot be discoverable in arbitration, and (2) theopponent's incurring costs and fees due to themovant's actions or delay.

For example, In re AutomatedCollection Technologies, Inc., the TexasSupreme Court also addressed a waiverargument. 156 S.W.3d 557 (Tex. 2004). Theplaintiff argued that the defendant waived theforum-selection clause by answering, filingcounterclaims, serving written discovery, andfiling a motion to compel discovery shortly afterfiling a motion to dismiss due to the forum-selection clause. See id. at 558-59. However,the plaintiff never established any prejudice as aresult of the defendant's delay, participation inthe suit, or counterclaims. See id. The Court

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Id. at 559-60.

One court has recently found that adefendant waived its right to enforce a forum-selection clause by allowing a co-defendant, whowas also an agent for the first defendant, to fileand hear a venue motion before the firstdefendant had a hearing on its motion to dismiss.See In re ADM Investor Services, Inc., 257S.W.3d 817 (Tex. App.—Tyler 2008, originalproceeding). The court held that the firstdefendant should not have allowed the trial courtto "irrevocably establish Hopkins County as thevenue where" the suit would be tried. Id. at 821.The court concluded: "ADM's failure to assert itsmotion to dismiss prior to the hearing on TexasTrading's motion to transfer venue wasinconsistent with its right to enforce the forum-selection clause. The granting of ADM's motionto dismiss would have resulted in prejudice toPrescott because she would be required to trytwo suits involving the same facts and the samewitnesses in two separate states, Texas andIllinois." Id. at 822. One justice dissented andfound that there was no waiver. Id.

Another court recently found thatwaiver did not occur where the defendantanswered, deposed three witnesses, producedtwo witnesses for deposition, exchangeddocuments, and participated in a temporaryinjunction hearing as a defendant. See In reBoehme, 256 S.W.3d 878 (Tex. App.—Houston[14th Dist.] 2008, original proceeding).

G. Laches

A plaintiff may assert that the defendantwaited too long to challenge via mandamus atrial court's ruling on a motion to dismiss."Although mandamus is not an equitableremedy, its issuance is largely controlled byequitable principles." In re Xeller, 6 S.W.3d618, 624 (Tex. App.—Houston [14th Dist.]1999, orig. proceeding). Equity aids the diligent,not those who slumber on their rights. SeeRivercenter Assoc. v. Rivera, 858 S.W.2d 366,367 (Tex. 1993) (orig. proceeding). Delay alonecan provide ample ground to deny mandamusrelief. See Xeller, 6 S.W.3d at 624. Cases inwhich laches has applied to deny mandamusrelief have involved delays of months. See id.(sixteen months); Tarrant County Hosp. Dist. v.Henry, 52 S.W.3d 434, 452 (Tex. App.—FortWorth 2001, no pet.) (finding !aches as tomandamus action stemming from two orders,

entered eight months and nineteen months beforemandamus was filed); In re Little, 998 S.W.2d287, 290 (Tex. App.—Houston [1st Dist.] 1999,orig. proceeding) (six months); Int? Awards, Inc.v. Medina, 900 S.W.2d 934, 935-36 (Tex.App.—Amarillo 1995, orig. proceeding) (fourmonths); Furr's Supermarkets, Inc. v. Mulanax,897 S.W.2d 442, 443 (Tex. App.—El Paso 1995,orig. proceeding) (same); Rivercenter, 858S.W.2d at 367-68 (same). The Texas SupremeCourt recently rejected a plaintiffs argument thatthe defendant waived its right to seek mandamusrelief from an order denying a motion to dismissbased on a forum-selection clause because oflaches – of course, this is a very fact-specificinquiry. See In re International ProfitAssociates, Inc., No. 08-0238, 2009 Tex. LEXIS5 (Tex. January 9, 2009).

X. Forum-Selection Clause Is ViewedDifferently From A Venue-SelectionClause

There is a distinction between clausesthat require a suit to be brought in another state –forum-selection clauses – and those that require asuit to be brought in a particular county in Texas– venue-selection clauses. "Forum" relates to thejurisdiction, generally a nation or State, wheresuit may be brought. See Liu v. CiCi Enters.,LP, No. 14-05-00827-CV, 2007 Tex- APP.LEX1S 81, 2007 WL 43816, at *2 (Tex. App.—Houston [14th Dist.] Jan. 9, 2007, no pet.) (mem.op.). "Venue," on the other hand, generallyrefers to a particular county or a particular court.See Gordon v. Jones, 196 S.W.3d 376, 383 (Tex.App.—Houston [1st Dist.] 2006, no pet.)."Thus, a "forum"-selection agreement is one thatchooses another state or sovereign as the locationfor trial, whereas a "venue"-selection agreementchooses a particular county or court within thatstate or sovereign." See In re Great LakesDredge & Dock Co. L.L.C., 251 S.W.3d 68, 72-79 (Tex. App.—Corpus Christi 2008, orig.proceeding) (trial court properly refused toenforce agreement contracting away mandatoryvenue).

As shown herein, forum-selectionclauses are generally enforceable. However, acourt may not enforce a venue-selection clause ifdoing so is inconsistent with Texas' venuestatutes. See In re Great Lakes Dredge & DockCo. L.L.C., 251 S.W.3d at 72-79. Venue-selection clauses are generally enforceable bystatute if they arise out of "major transactions" as

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defined by the statute. See TEX. CIV. PRAC. &REM. CODE § 15.020; In re Medical CarbonResearch Inst., L. L.C., No. 14-08-00104-CV,2008 Tex. App. LEX1S 2518 (Tex. App.—Houston [14th Dist.] April 9, 2008, originalproceeding) (agreement was not enforceablewhere it was entered into after suit was filed).

XL Appellate Review of Trial Court'sDecision Regarding Motion ToDismiss Due To a Forum-SelectionClause

A. Trial Court's Findings AndConclusions

A party that loses a motion to dismissbased on a forum-selection clause should requestthat the trial court make findings of fact andconclusions of law. The purpose of findings offact is the same as a jury verdict in that theyresolve the factual issues in the case. The partymust file a request for findings of fact andconclusions of law within twenty days of thesigning of the judgment. See TEX. R. CIV. P.296. The court is supposed to file its findings offact and conclusions of law within twenty daysof the request. See id. at 297. If the court fails todo so, then the requesting party must file a noticeof past due findings of fact and conclusions oflaw within thirty days of the filing of the originalrequest. See id. Thereafter, the court should filefindings of fact and conclusions of law withinforty days from the filing of the original request.See id. If a party fails to file a notice of past duefindings of fact and conclusions of law, he haswaived any error in the court failing to file such,and all facts will be presumed in favor of thejudgment. See Curtis v. Commission for LawyerDiscipline, 20 S.W.3d 227, 232 (Tex. App.—Houston [14th Dist] 2000, no pet.). Once thecourt files findings, a party can file a request foradditional findings of fact within ten days afterthe original findings are filed. See TEX. R. Cry.P. 298. This request for additional findings mustbe specific and must contain proposed findings,otherwise any error in refusing the request iswaived. See Alvarez v. Espinoza, 844 S.W.2d238, 241-42 (Tex. App.--San Antonio 1992, writdismtd).

If a trial court grants a motion todismiss, it is a final judgment, and the trial courtshould enter findings and conclusions. However,if the trial court denies the motion, it is aninterlocutory order, and the trial court may opt to

not file any findings and conclusions. In anappeal from an interlocutory order, the trialjudge may file findings and conclusions, but isnot required to do so. TEX. R. APP. P. 28.1. Ifthere are no findings, a court of appeals mustuphold the court's ruling on any valid legaltheory that was presented to the court and issupported by the evidence. See Davis v. Huey,571 S.W.2d 859, 862 (Tex. 1978). Furthermore,a court of appeals must imply that a trial courtmade all fact findings necessary to support thejudgment. See Carter v. William Sommerville &Son, Inc., 584 S.W.2d 274, 276 (Tex. 1979);Dresser Industries, Inc. v. Forscan Corp., 641S.W.2d 311, 316 (Tex. App.—Houston 114thDist.] 1982, no writ). In the context of a motionto compel arbitration, one court has stated:

Since there is no statement offacts or findings of facts in therecord, it must be presumed, asa matter of law, that the trialcourt found facts which willand do support the judgment.Nor is it incumbent upon theappellees to establish that thejudgment rendered by the trialcourt is supported by theevidence, the burden beingupon the appellant to bringforth a record which reveals areversible error.

Star Hill Co. v. Johnson Controls, Inc., 673S.W.2d 282, 283 (Tex. App.—Beaumont 1984,no writ). See also CNOOC Southwest Asia Ltd.v. Paladin Res. (SUNDA) Ltd, 222 S.W.3d 889,894 (Tex. App.---Dallas 2007, pet. denied) (inthe absence of express findings, findings impliedin favor of interlocutory order denying specialappearance). Dealing with a forum-selectionclause, one court stated that where there were noexpress findings, the trial court's order grantingthe motion to dismiss could be sustained on anyground contained in the motion. See Deep WaterSlender Wells, Ltd. v. Shell Inn Exploration &Prod, Inc., 234 S.W.3d at 693 n. 9. The samecourt found that where the trial court denied amotion to dismiss, that decision would also besustained by any ground supported by the record.See In re Boehme, 256 S.W.3d 878 (Tex. App.—Houston [14th Dist.] 2008, original proceeding).

Some courts have held that traditionallegal and factual sufficiency standards may beused in challenging findings in interlocutory

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orders. A court should review the findings andconclusions under the appropriate standards ofreview. See Beasley v. Hub City Tex., L.P., No.01-03-00287-CV, 2003 Tex. App. LEXIS 8550 *12 (Tex. App.—Houston [1st Dist.] September29, 2003, no pet.) (mem. op.); Green v.Stratoflex, 596 S.W.2d 305, 307 (Tex. Civ.App.—Fort Worth 1980, no writ). A courtshould sustain fact findings if there is evidenceto support them, and should review legalconclusions de novo. See Beasley v. Hub CityTar., L.P., No. 01-03-00287-CV, 2003 Tex. App.LEXIS 8550 * 12; CRC-Evans Pipeline InaInc. v. Myers, 927 S.W.2d 259, 263 (Tex.App.—Houston [1st Dist.] 1996, no writ).

Other courts have held that findings offact in an interlocutory order are not reviewed bylegal and factual sufficiency standards. See, e.g.,CSSC Inc. v. Carter, 129 S.W.3d 584, 593 (Tex.App.—Dallas 2003, no pet.); Tom James ofDallas, Inc. v. Cobb, 109 S.W.3d 877, 883 (Tex.App.—Dallas 2003, no pet.). In an appeal froman interlocutory order, the trial judge may filefindings and conclusions, but is not required todo so. TEX. R. APP. P. 28.1; Tom James ofDallas, Inc. v. Cobb, 109 S.W.3d at 883;Humble Exploration Co. v. Fairway Land Co.,641 S.W.2d 934, 937 (Tex. App.—Dallas 1982,writ refd n.r.e.). Findings of fact andconclusions of law filed in conjunction with anorder on interlocutory appeal may be "helpful" indetermining if the trial court exercised itsdiscretion in a reasonable and principled fashion.See Chrysler Corp. v. Blackmon, 841 S.W.2d844, 852 (Tex. 1992) (orig. proceeding)(mandamus review of sanction order); TomJames of Dallas, Inc. v. Cobb, 109 S.W.3d at883. However, they do not carry the sameweight on appeal as findings made under rule296, and are not binding when a court of appealsreviews a trial court's exercise of discretion. SeeIKB Indus., Ltd. v. Pro-Line Corp., 938 S.W.2d440, 442, 40 Tex. Sup. Ct. J. 273 (Tex. 1997);Tom James of Dallas, Inc. v. Cobb, 109 S.W.3dat 883.

B. Mandamus or Appeal?

If a trial court grants a motion todismiss based on a forum-selection clause, thenthe court dismisses the suit. That order is a finaljudgment, and the plaintiff may file an appealfrom it. See Deep Water Slender Wells, Ltd. v.Shell Int'l Exploration & Prod., Inc., 234 S.W.3d

679, 687 (Tex. App.—Houston [14th Dist.]2007, pet. denied).

However, if the trial court denies amotion to dismiss, that order is an interlocutoryorder that may not be appealed absent the partiesagreeing to a permissive appeal under TexasCivil Practice and Remedies Code section5 1.014(d). See, e.g., Mikey's Houses, LLC v.Bank of America, NA., 232 S.W.3d 145 (Tex.App.—Fort Worth 2007, no pet.) (parties andcourt of appeals agreed to a permissive appeal ofthe trial court's order denying a motion toenforce a contractual jury waiver). See alsoMichiana Easy Livin' Country, Inc. v. Holten,168 S.W.3d 777, 798 (Tex. 2005) (Medina, J.,dissenting) (no interlocutory appeal from thedenial of a summary judgment based on forum-selection clause). The Texas Supreme Courtheld that a party that has a motion to dismissdenied has no adequate remedy at law, andtherefore may challenge that order viamandamus. See In re AIU Ins. Co., 148 S.W.3d109, 111-14 (Tex. 2004). See also In reAutonation, 228 S.W.3d 663 (Tex. 2007). TheCourt observed that

"Subjecting a party to trial in aforum other than that agreedupon and requiring an appealto vindicate the rights grantedin a forum-selection clause isclear harassment" – harassmentthat injuries not just the non-breaching part but the broaderjudicial system, injectinginefficiency by enablingforum-shopping, wastingjudicial resources, delayingadjudication on the merits, andskewing settlement dynamicscontrary to the parties'contracted-for expectations.Accordingly, forum-selectionclauses – like arbitrationagreements, "another type offorum-selection clause" – canbe enforced throughmandamus.

In re Autonation, 228 S.W.3d at 667-68.

So, if a trial court denies a motion todismiss, the losing party has the right to file apetition for writ of mandamus challenging thatorder. There are no strict timelines to file a

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petition for writ of mandamus, except that aparty defending such a petition can challenge thepetition on the basis of laches if the relatordelays in filing the petition.

C. Standards of Review

If the trial court grants a motion todismiss based on a forum-selection clause, theplaintiff has a right to appeal that decision, andthe court of appeals reviews the trial court'sdecision under an abuse of discretion standard ofreview. See Apollo Properly Partners, LLC v.Diamond Houston I, L.P., No. 14-07-00528-CV,2008 Tex. App. LEXIS 5884 (Tex. App.—Houston [14th Dist.] August 5, 2008, no pet.);Deep Water Slender Wells, Ltd. v. Shell Int?Exploration & Prod, Inc., 234 S.W.3d 679, 687(Tex. App.—Houston [14th Dist.] 2007, pet.denied). However, to the extent that the reviewinvolves the construction or interpretation of anunambiguous contract, the standard of reviewover those matters is de novo. See id.; PhoenixNetwork Techs. (Europe) Ltd v. Neon Sys., Inc.,177 S.W.3d 605, 610 (Tex. App.—Houston [1stDist.] 2005, no pet.).

If a trial court denies a motion todismiss based on a forum-selection clause, thedefendant may file a petition for writ ofmandamus. See In re AIU Ins. Co., 148 S.W.3dat 109. A person may obtain mandamus relieffrom a court action if the trial court abused itsdiscretion and the party requesting mandamushas no adequate remedy by appeal. See In rePrudential Ins. Co. of Am., 148 S.W.3d 124,135-36 (Tex. 2004); Walker v. Packer, 827S.W.2d 833, 839 (Tex. 1992). Generally, a trialcourt abuses its discretion if "it reaches adecision so arbitrary and unreasonable as toamount to a clear and prejudicial error of law."Walker, 827 S.W.2d at 839-840.

With respect to factual issues or matterscommitted to the trial court's discretion, therelator must establish that the trial court couldreasonably have reached only one decision. SeeId. at 840. The reviewing court may notsubstitute its judgment for that of the trial court,and even if the reviewing court would havedecided the issue differently, it cannot disturb thetrial court's decision unless it is shown to bearbitrary and unreasonable. See id. at 839-40.For example, if there is an ambiguity in theforum-selection clause, the trial court is thecorrect party to discern the correct meaning as

intended by the parties and will not abuse itsdiscretion in denying the motion. See In reSterling Chemicals, Inc., 261 S.W.3d 805 (Tex.App.—Houston [14th Dist.] 2008, originalproceeding).

D. Relator Should Challenge AllPotential Bases For TheTrial Court's Order

A party challenging a trial court's orderon a motion to dismiss based on a forum-selection clause should challenge every potentialground that the trial court could have based itsruling on. The party challenging a trial court'sorder has the duty to challenge all potentialgrounds that would sustain the order. See Pagev. Hulse, No. 14-06-00731-CV, 2007 Tex. App.LEXIS 5827 (Tex. App.—Houston [14th Dist.]July 26, 2007, pet. denied); In the Interest ofMY. W and C.C. W, No. 14-06-00185, 2006Tex. App. LEXIS 10060 (Tex. App.—Houston[14th Dist.] November 21, 2006, pet. denied).Absent a specific complaint as to each potentialground, the court of appeals should summarilyaffirm the order on those unchallenged grounds.See Specialty Retailers v. Demoranville, 933S.W.2d 490, 493 (Tex. 1996). This rule is basedon the premise that an appellate court cannotalter an erroneous judgment in favor of achallenging party in a civil case who does notchallenge that error on appeal. See Britton v.Tex. Dept. of Criminal Justice, 95 S.W.3d 676,681 (Tex. App.—Houston [1st Dist.] 2002, nopet.) (citing Walling v. Metcalfe, 863 S.W.2d 56,58 (Tex. 1993)). "The reasoning is that, if anindependent ground fully supports thecomplained of ruling or judgment, but theappellant assigns no error to that independentground, then (1) we must accept the validity ofthat challenged independent ground, ... and thus(2) any error in the grounds challenged on appealis harmless because the unchallengedindependent ground fully supports thecomplained-of ruling or judgment." Id.

This rule has been specifically appliedto a challenge to a denial of a motion to dismissbased on a forum-selection clause. See In reTCW Global Project Fund II, Ltd., No. 14-08-00116-CV, 2008 Tex. App. LEXIS 8891 (Tex.App.—Houston [14th Dist] September 22, 2008,orig. proceeding). In TCW, the defendant filed amotion to dismiss based on a forum-selectionclause and asserted that it could enforce theclause due to direct-benefits estoppel and

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transaction-participant theories. The plaintiffasserted that the clause's scope did not apply tothe claims in the suit, and otherwise arguedagainst the application of the direct-benefitsestoppel and transaction-participant theories.The trial court denied the motion in a generalorder. The defendant filed a petition for writ ofmandamus and only argued that the trial courtabused its discretion because of the applicabilityof the direct-benefits estoppel and transaction-participant theories. In its response, theplaintiff/real party in interest argued that thedefendant waived its right to challenge the orderdue to unassigned error — the defendant neverchallenged the trial court's implied finding thatthe scope of the clause did not apply to theclaims in the suit. The defendant then arguedscope in its reply brief. The court of appealsagreed with the real party in interest and heldthat the defendant/relator could not raise theissue for the first time in its reply brief, andtherefore, it waived its right to complain of thetrial court's order. See id. at *10.

XII.

Future of The Forum-SelectionClause In Texas

Certainly, the future of forum-selectionclauses in Texas is favorable to theirenforcement. A forum-selection clause isessentially the same thing as an arbitrationclause: they are both contractual clauses thatdictate where and how disputes are to beresolved. The Supreme Court of the UnitedStates has stated that an arbitration agreement isa specialized kind of forum-selection clause. SeeRodriguez de Quijas v. Shearson/AmericanExp., Inc., 490 U.S. 477, 482-83, 109 S. Ct.1917, 1921, 104 L. Ed. 2d 526 (1989).Likewise, the Supreme Court of Texas hasdescribed an arbitration agreement as "anothertype of forum-selection clause" and has statedthat there is no meaningful distinction between anon-arbitration forum-selection clause and anarbitration clause. See In re AIU Ins. Co., 148S.W.3d at 115-16. Moreover, the SupremeCourt of Texas has applied precedents involvingwaiver of arbitration and availability ofmandamus to enforce a right to arbitration indetermining the same issues as to a non-arbitration forum-selection clause. See id. at115-16, 120-21. Generally, Texas courts arevery friendly to arbitration provisions, and thistrend should also apply to forum-selectionclauses.

The party wanting the forum-selectionclause should draft it broadly. As stated above,forum-selection clauses are broadly enforcedwhen "any and all" claims that "relate to" or"arise from" the contract are referenced.Alternative narrow language may enableplaintiffs to plead a case such that a defendantcannot enforce a forum-selection clause. Thefuture will certainly contain a large amount oflitigation concerning the enforceability of forum-selection provisions. As the outcome of thosedisputes can mean substantive, procedural, andeconomic advantages for a defendant, clients areencouraged to incorporate properly draftedforum-selection clauses into their agreements.

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