NUMBER 13-14-00126-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
IN RE THOMAS AGRESTI
On Petition for Writ of Mandamus.
NUMBER 13-14-00149-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
IN RE ING AMERICA EQUITIES, INC. AND SECURITY LIFE OF DENVER
INSURANCE COMPANY
On Petition for Writ of Mandamus.
NUMBER 13-14-00154-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
IN RE AMERICAN GENERAL LIFE INSURANCE COMPANY AND
AMERICAN INTERNATIONAL GROUP, INC.
On Petition for Writ of Mandamus.
NUMBER 13-14-00168-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
IN RE NELSON P. TODD, ORCHARD FINANCIAL GROUP, LLC, AND
ORCHARD ADMINISTRATORS, LLC
On Petition for Writ of Mandamus.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Benavides and Longoria
Memorandum Opinion by Chief Justice Valdez1
Raul A. Marquez M.D. and Rosario Parra, M.D., Trustee of the Raul A. Marquez
Trust Fund dated 9/03/03 (the “Marquez Trust”), brought suit against American
International Group Inc., American General Life Insurance Company, ING American
Equities Inc., ING Security Life Insurance Company of America, Security Life of Denver
Insurance Company, Thomas Agresti, Orchard Financial Group, LLC, Orchard
1 See TEX. R. APP. P. 52.8(d) (“When denying relief, the court may hand down an opinion but is not
required to do so.”); TEX. R. APP. P. 47.4 (distinguishing opinions and memorandum opinions).
2
Administrators, LLC, Nelson P. Todd, and Alberto Morales for, inter alia,
misrepresentation, fraud, civil conspiracy, negligent misrepresentation, and unjust
enrichment pertaining to the defendants’ financial planning services and the purchase
and sale of premium-financed life insurance policies. By four consolidated original
proceedings, the defendants, relators herein, contend that the trial court erred in denying
their motions to dismiss the underlying lawsuit based on a forum selection clause in the
representation agreement between Dr. Marquez and Agresti:2 Because we conclude that
the forum selection clause is permissive rather than mandatory, we deny the petitions for
writ of mandamus.
I. BACKGROUND
On September 2, 2003, Dr. Marquez signed an Agreement for Representation
("the Agreement") with attorney Thomas Agresti and his firm, Agresti & Associates, L.L.C.
(collectively "Agresti"). The Agreement provided that Agresti would provide services to
Dr. Marquez including “implementation of your 2003 Tax Plan” and “ongoing general legal
matters.” The Agreement specifically sets out the scope of services that Agresti would
provide as follows:
We will collect all necessary data from you or your designated agent. After
a comprehensive analysis we shall prepare an Initial Plan Presentation of
our findings which shall include recommendations of appropriate strategies,
financial impact of these strategies, costs to implement and costs to
maintain. These recommendations will become your Plan. After a thorough
review and discussion of your Plan, we will be responsible for implementing
and maintaining the agreed upon portions of your Plan, as indicated in the
attached Schedule A, in a manner that best meets your objectives.
2 The consolidated original proceedings are: In re Agresti, filed in cause number 13-14-00126-CV,
In re ING America Equities, Inc. and Security Life of Denver Insurance Company, filed in cause number 13-
14-00149-CV, In re American General Life Insurance Company and American International Group, Inc.,
filed in cause number 13-14-00154-CV, and In re Nelson P. Todd, Orchard Financial Group, LLC, and
Orchard Administrators, LLC, filed in cause number 13-14-00168-CV. Alberto Morales, although a
defendant in the proceedings below, opposes the motions to dismiss on the basis of the forum selection
clause and appears in these original proceedings as a real party in interest.
3
The Agreement further details Dr. Marquez's responsibilities under the Agreement
and outlines the fee structure for Agresti and the other professionals who would be
involved in the contemplated transactions. The Agreement contains the forum selection
clause at issue in these original proceedings. The paragraph containing the clause
provides:
This Agreement, and the application or interpretation thereof, shall be
governed exclusively by its terms and by the laws of the State of Colorado.
You agree that, in any action relating to or arising from this Agreement, the
State of Colorado is the proper jurisdiction and that Denver is the proper
venue to hear any such action.
On September 12, 2003, Agresti sent the Initial Plan Presentation (the “Plan”)
contemplated in the Agreement to Dr. Marquez. The Plan proposed, in part, that an
irrevocable trust be created to hold a large life insurance policy on Dr. Marquez and that
the benefits of the policy would be used to offset the estate taxes that would be due upon
Dr. Marquez's death. Under the Plan, the trust would obtain a loan to finance the payment
of the premiums for the policy, and while the policy itself would serve as the primary
source of collateral for the loan, Dr. Marquez would initially need to provide additional
outside collateral for the loan. This outside collateral was to be a letter of credit pledged
by Dr. Marquez. The parties proceeded to execute the Agreement and Plan.
Six years later, on September 19, 2009, Dr. Marquez and the Marquez Trust
brought suit against the relators alleging that:
Beginning in 2003, Defendants, individually and collectively, led Dr.
Raul A. Marquez and his wife, Dr. Rosario Parra, down a path toward what
they were told would be their future financial security. The path ended up
leading them directly into a financial storm of greed, recklessness and fraud.
According to Defendants, the investment to obtain financial security
was life insurance. The price for such financial security was minimal,
4
because it would be financed by others and the risk for such financial
security was low because interest rates were so low and investments were
doing so well. The investment would pay for itself. Beginning on December
28, 2003, when a life insurance policy was issued by the ING Defendants,
Defendants flipped and churned life insurance policies and charged
hundreds of thousands of dollars for premiums, interest, management fees,
load fees, policy fees and numerous other expenses, all designed to take
as much as they could from Dr. Marquez. Finally, after five and a half years
of the financial fiasco, Dr. Raul A. Marquez found himself out of pocket for
millions of dollars, and without any life insurance to protect his estate.
On January 25, 2011, Agresti filed a motion to dismiss the lawsuit based on the forum
selection clause in the Agreement. In separate motions, the other relators also filed
motions to dismiss based on the forum selection clause in the Agreement.
On April 4, 2011, the trial court heard arguments on the motions to dismiss and, at
that hearing, requested additional briefing from the parties. On May 21, 2013, the trial
court issued an order denying the relators’ motions to dismiss.3 These original
proceedings ensued. The relators contend generally that the trial court abused its
discretion in denying their motions to dismiss because the forum selection clause in the
Agreement requires that the lawsuit be filed in Colorado. The Court has requested and
received responses to the petitions from real parties in interest, Dr. Marquez and the
Marquez Trust, and from the real party in interest, Morales, and have also received replies
to these responses from relators.
3 The real parties contend that mandamus relief is barred by laches and relators’ dilatory actions in
failing to diligently pursue relief based on the forum selection clause. The underlying lawsuit was filed in
2009, the relators’ answers had been filed by February 2010, the motions to dismiss were filed in January
2011, the hearing on the motions to dismiss was held in April 2011, relators requested a status conference
and one was held in June 2012, the trial court denied the motions to dismiss on May 21, 2013, and these
original proceedings ensued beginning on February 26, 2014 and ending on March 18, 2014. In response,
relators contend, inter alia, that they did not receive notice of the trial court’s order denying their motions to
dismiss until January 16, 2014. It seems evident that a three-year delay in obtaining a ruling on a dispositive
motion, without accompanying evidence pertaining to a diligent and systematic effort to obtain a ruling, is
problematic at best. However, given our conclusion that mandamus relief is not warranted in this case on
other grounds, we need not further discuss this issue. See TEX. R. APP. P. 47.1, 47.4.
5
II. STANDARD OF REVIEW
Mandamus is appropriate when the relator demonstrates that the trial court clearly
abused its discretion and the relator has no adequate remedy by appeal. In re Reece,
341 S.W.3d 360, 364 (Tex. 2011) (orig. proceeding); In re Prudential Ins. Co. of Am., 148
S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding). The relator has the burden of
establishing both prerequisites to mandamus relief, and this burden is a heavy one. In re
CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003) (orig. proceeding).
A trial court clearly abuses its discretion if it reaches a decision that is so arbitrary
and unreasonable that it amounts to a clear and prejudicial error of law or if it clearly fails
to analyze the law correctly or apply the law correctly to the facts. In re Cerberus Capital
Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam). The
adequacy of an appellate remedy must be determined by balancing the benefits of
mandamus review against the detriments. In re Team Rocket, L.P., 256 S.W.3d 257, 262
(Tex. 2008) (orig. proceeding). Because this balance depends heavily on circumstances,
it must be guided by the analysis of principles rather than the application of simple rules
that treat cases as categories. In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 464 (Tex.
2008) (orig. proceeding). We evaluate the benefits and detriments of mandamus review
and consider whether mandamus will preserve important substantive and procedural
rights from impairment or loss. In re Prudential Ins. Co. of Am., 148 S.W.3d at 136.
The Texas Supreme Court has repeatedly held that mandamus relief is available
to enforce a forum selection clause in a contract. See, e.g., In re Fisher, No. 12-0163,
2014 WL 801160, at *5 (Tex. Feb. 28, 2014) (orig. proceeding); In re Lisa Laser USA,
Inc., 310 S.W.3d 880, 883 (Tex. 2010) (orig. proceeding); In re Laibe Corp., 307 S.W.3d
6
314, 316 (Tex. 2010) (orig. proceeding) (per curiam); In re ADM Investor Servs., Inc., 304
S.W.3d 371, 374 (Tex. 2010) (orig. proceeding); In re Int’l Profit Assocs., 286 S.W.3d 921,
922 (Tex. 2009) (orig. proceeding) (per curiam); In re Int’l Profit Assocs., 274 S.W.3d 672,
674 (Tex. 2009) (orig. proceeding) (per curiam); In re AutoNation, Inc., 228 S.W.3d 663,
665 (Tex. 2007) (orig. proceeding); In re AIU Ins. Co., 148 S.W.3d 109, 115–19 (Tex.
2004) (orig. proceeding). A trial court abuses its discretion when it fails to properly
interpret or apply a forum selection clause. In re Lisa Laser USA, Inc., 310 S.W.3d at
883; In re Laibe Corp., 307 S.W.3d at 316. Further, an appellate remedy is inadequate
when a trial court improperly refuses to enforce a forum selection clause because allowing
the trial to go forward will “vitiate and render illusory the subject matter of an appeal,” that
is, trial in the proper forum. In re AIU Ins. Co., 148 S.W.3d at 115 (quoting Jack B. Anglin
Co. v. Tipps, 842 S.W.2d at 269, 272 (Tex. 1992)); accord In re Laibe Corp., 307 S.W.3d
at 316. Allowing a lawsuit to proceed in a forum other than that for which the parties
contracted “promotes forum shopping with its attendant judicial inefficiency, waste of
judicial resources, delays of adjudication of the merits, and skewing of settlement
dynamics.” In re Fisher, 2014 WL 801160, at *5; see In re Lisa Laser USA, Inc., 310
S.W.3d at 883.
III. FORUM SELECTION CLAUSES
Forum-selection clauses are contractual arrangements whereby parties agree in
advance to submit their disputes for resolution within a particular jurisdiction. See Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 473 n. 14 (1985); RSR Corp. v. Siegmund, 309
S.W.3d 686, 700 (Tex. App.—Dallas 2010, no pet.); Phoenix Network Techs. (Eur.) Ltd.
v. Neon Sys., Inc., 177 S.W.3d 605, 611 (Tex. App.—Houston [1st Dist.] 2005, no pet.).
7
The enforcement of valid forum-selection clauses, bargained for by the parties, protects
the parties’ “legitimate expectations” and furthers “the vital interests of the justice system,”
such as sparing litigants the time and expense of pretrial motions to determine the proper
forum for disputes. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy,
J., concurring); see also Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 594 (1991);
RSR Corp., 309 S.W.3d at 700; Phoenix Network Techs., 177 S.W.3d at 611. The Texas
Supreme Court has adopted the federal analysis of forum selection clauses to determine
their enforceability. Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 793
(Tex. 2005); In re Automated Collection Technologies, Inc., 156 S.W.3d 557, 558–59
(Tex. 2004) (orig. proceeding); In re AIU Ins. Co., 148 S.W.3d at 111–14; Diamond
Offshore (Bermuda), Ltd. v. Haaksman, 355 S.W.3d 842, 846 (Tex. App.—Houston [14th
Dist.] 2011, pet. denied); see also In re Dingo Drilling, Inc., No. 14-13-00015-CV, 2013
WL 645206, at *2 (Tex. App.—Houston [14th Dist.] Feb. 21, 2013, orig. proceeding) (per
curiam mem. op.).
Forum selection clauses are presumptively valid. In re Laibe Corp., 307 S.W.3d
at 316; In re Int’l Profit Assocs., 274 S.W.3d at 680; Stokes Interest, G.P. v. Santo-Pietro,
343 S.W.3d 441, 444 (Tex. App.—El Paso 2010, no pet.). While there may be “extreme
circumstances” that prevent the enforcement of forum selection clauses, there is not “a
bright-line test for avoiding enforcement of forum selection clauses.” In re ADM Investor
Servs., 304 S.W.3d at 376 (following M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1,
17 (1972)). A trial court abuses its discretion in refusing to enforce a forum selection
clause unless the party opposing enforcement clearly shows: (1) enforcement would be
unreasonable or unjust, (2) the clause is invalid for reasons of fraud or overreaching, (3)
8
enforcement would contravene a strong public policy of the forum where the suit was
brought, or (4) the selected forum would be seriously inconvenient for trial. In re Laibe
Corp., 307 S.W.3d at 316; In re ADM Investor Servs., 304 S.W.3d at 375; see also In re
Brown, No. 05-13-01354-CV, 2013 WL 6115855, at *1 (Tex. App.—Dallas Nov. 21, 2013,
orig. proceeding). The burden of proof is heavy for the party challenging enforcement.
In re Laibe Corp., 307 S.W.3d at 316; In re ADM Investor Servs., 304 S.W.3d at 375; see
also In re Brown, 2013 WL 6115855, at *1.
A motion to dismiss is the proper procedural mechanism for enforcing a forum-
selection clause. Young v. Valt.X Holdings, Inc., 336 S.W.3d 258, 261 (Tex. App.—Austin
2010, pet. dism’d); Ramsay v. Tex. Trading Co., 254 S.W.3d 620, 626 (Tex. App.—
Texarkana 2008, pet. denied). While we review the trial court's ruling on a motion to
dismiss for abuse of discretion; see In re Lyon Fin. Servs., 257 S.W.3d 228, 231–32 (Tex.
2008) (orig. proceeding) (per curiam), to the extent that our review involves the
construction or interpretation of an unambiguous contract, the standard of review is de
novo. Phoenix Network Techs., 177 S.W.3d at 610; see also W. Tex. Hospitality, Inc. v.
Enercon Int'l, Inc., No. 07-09-0213-CV, 2010 WL 3417845, at *4 (Tex. App.—Amarillo
Aug. 31, 2010, no pet.) (mem. op.).
IV. PERMISSIVE OR MANDATORY NATURE OF FORUM SELECTION CLAUSE
Relators contend that the trial court erred in denying their motions to dismiss
because the forum selection clause in the Agreement is valid and binding and
encompasses the claims against them raised in this lawsuit. In response, the real parties
contend, inter alia, that the forum selection clause is not mandatory or exclusive, and thus
the trial court did not err in denying their motions to dismiss. Relators contend that the
9
real parties waived this issue by failing to raise it in the trial court. The real parties did not
raise this issue in their written responses to the motions to dismiss; however our review
of the reporter’s record on the hearing to dismiss indicates that the real parties argued
that the forum selection clause was not mandatory at the hearing on the motions to
dismiss. Counsel for the real parties expressly argued that the clause at issue is a “proper
venue” clause and “not an exclusive forum selection clause.” Counsel specifically
asserted that “[i]f the parties want to contract for exclusive venue or [an] exclusive place
of jurisdiction, they could have so stated and they did not.” Relators did not include the
reporter’s record from this hearing in their petitions on grounds that “no testimony was
adduced in connection with the matter complained.” See TEX. R. APP. P. 52.7(a)(2).
While relators were not required to include a transcript of the hearing with their mandamus
records because the hearing was not evidentiary, they were nevertheless required to fairly
represent the record and include all relevant and material information.
Accordingly, before determining whether the forum selection clause is mandatory
and enforceable, we first address whether the forum selection clause is mandatory or
merely permissive. See, e.g., Sw. Intelecom, Inc. v. Hotel Networks Corp., 997 S.W.2d
322, 324–25 (Tex. App.—Austin 1999, pet. denied).
A forum selection clause can be mandatory and exclusive, or permissive in nature.
See In re Fisher, 2014 WL 801160, at *8; Caldas & Sons, Inc. v. Willingham, 17 F.3d 123,
127 (5th Cir. 1994). A mandatory forum selection clause requires that all litigation be
conducted in a specified forum. UNC Lear Servs., Inc. v. Kingdom of Saudi Arabia, 581
F.3d 210, 219 (5th Cir. 2009); LeBlanc v. C.R. England, Inc., 961 F.Supp.2d 819, 828
(N.D. Tex. 2013). For a forum selection clause to be considered mandatory or exclusive,
10
the clause “must go beyond establishing that a particular forum will have jurisdiction and
must clearly demonstrate the parties' intent to make that jurisdiction exclusive.” City of
New Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501, 504 (5th Cir. 2004); see Keaty
v. Freeport Indonesia, Inc., 503 F.2d 955, 956–57 (5th Cir.1974) (per curiam); UNC Lear
Servs., Inc., 581 F.3d at 219; LeBlanc, 961 F.Supp.2d at 828; Valero Mktg. & Supply Co.
v. Gen. Energy Corp., 702 F.Supp.2d 706, 712 (S.D. Tex. 2010); see also TruGreen
Landcare, L.L.C. v. Telfair Cmty. Ass'n, Inc., CIV.A. No. H-12-514, 2013 WL 2147471, at
*2 (S.D. Tex. May 14, 2013). Where the agreement contains clear language showing that
jurisdiction is appropriate only in a designated forum, the clause is mandatory. Von
Graffenreid v. Craig, 246 F.Supp.2d 553, 560 (N.D. Tex. 1997). Stated otherwise, “[a]n
enforceable forum selection clause must contain explicit language regarding exclusivity.”
Mabon Ltd. v. Afri-Carib Enterprises, Inc., 29 S.W.3d 291, 297 (Tex. App.—Houston [14th
Dist.] 2000, no pet.).
In contrast, a permissive forum selection clause, often described as a “consent to
jurisdiction” clause, authorizes venue in a designated forum but does not prohibit litigation
elsewhere. LeBlanc, 961 F.Supp.2d at 828; Von Graffenreid, 246 F.Supp.2d at 561.
Consenting to the jurisdiction of one forum does not necessarily mean that a party has
selected an exclusive forum and waived its right to have the case heard in different
forums. City of New Orleans, 376 F.3d at 504. Thus, a forum selection clause providing
that a particular court “shall” have jurisdiction over a controversy may be permissive, even
though use of the term “shall” is typically mandatory, because it does not foreclose the
possibility that other courts may also have jurisdiction. See Caldas & Sons, Inc., 17 F.3d
at 127–28; Keaty, 503 F.2d at 956–57; see also TruGreen Landcare, L.L.C., 2013 WL
11
2147471, at *2.
When the terms of a forum selection clause are neither clearly mandatory nor
permissive, but instead ambiguous in nature, the court applies principles of contract law
to discern the parties' intent, if possible. Caldas & Sons, Inc., 17 F.3d at 127; Keaty, 503
F.2d at 957; LeBlanc, 961 F.Supp.2d at 828; RSR Corp., 309 S.W.3d at 700; Phoenix
Network Techs., 177 S.W.3d at 615; Sw. Intelecom, Inc., 997 S.W.2d at 324–25. Under
settled contract principles, when a forum selection clause is ambiguous, it should be
construed against the drafting party. Caldas & Sons, 17 F.3d at 127; see Tenneco, Inc.
v. Greater Lafourche Port Comm'n, 427 F.2d 1061, 1065 (5th Cir. 1970); LeBlanc, 961
F.Supp.2d at 828.4
In applying the foregoing principles, courts have determined that various forum
selection clauses which specify a particular jurisdiction, but do not exclude others, do not
create a mandatory and enforceable forum selection clauses. See, e.g., Mabon Ltd., 29
S.W.3d at 297 (holding that a forum selection provision was permissive where it provided
that “the laws of the Federal Government of Nigeria will apply and the Federal District of
Nigeria shall have venue”); Sw. Intelecom, Inc., 997 S.W.2d at 323 (holding that a forum
selection provision was permissive where it provided that “[t]his Agreement shall be
governed by the laws of the State of Minnesota. The Parties stipulate to jurisdiction and
venue in Ramsey County, Minnesota, as if this Agreement were executed in Minnesota.”);
Sutton v. Advanced Aquaculture Sys., Inc., 621 F. Supp. 2d 435, 443 (W.D. Tex. 2007)
4 See City of New Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501, 504–06 (5th Cir. 2004)
(holding that a forum-selection clause in which a party to the contract “consent[ed] and yield[ed] to the
jurisdiction of the State Civil Courts of the Parish of Orleans” was not mandatory because it was “susceptible
to more than one reasonable interpretation”); Keaty v. Freeport Indonesia, Inc., 503 F.2d 955, 956–57 (5th
Cir. 1974) (holding that a negotiated forum-selection clause stating that “the parties submit to the jurisdiction
of the courts of New York” was not mandatory because it was “subject to opposing, yet reasonable,
interpretations” and did not “clearly limit[ ] actions thereunder to the courts of a specified locale”).
12
(holding that forum selection clause was permissive where it stated that “[t]his contract
shall be construed and performed in accordance with [the] laws of the State of Florida
and jurisdiction and venue for any litigation arising out of it may be laid in Hillsborough
County, Florida.”); see also In re Dingo Drilling, Inc., 2013 WL 645206, at *2 (concluding
that a forum selection clause was permissive where it provided “[i]n the event of a failure
to settle the disputes [in] by negotiation, all disputes and arguments shall be transferred
for settlement to the court authorities of the Republic of Kazakhstan”); Apollo Prop.
Partners, LLC v. Diamond Houston I, L.P., No. 14-07-00528-CV, 2008 WL 3017549, at
*3 n.4 (Tex. App.—Houston [14th Dist.] Aug. 5, 2008, no pet.) (mem. op.) (stating that a
forum selection clause was permissive where it provided that “[t]he parties irrevocably
submit to the jurisdiction of any Illinois court, or federal court sitting in Cook County,
Illinois, to enforce ruling [sic] arising out of or relating to this Agreement; and the parties
consent to Cook County, Illinois and irrevocably waive to the fullest extent permitted by
law, any objection to such venue as being an inconvenient forum”); TruGreen Landcare,
L.L.C., 2013 WL 2147471, at *3 (holding that a forum selection clause was permissive
where it provided that the “parties stipulate and agree that venue for any action brought
hereunder shall [properly] lie in the state and federal courts situated in Fort Bend County,
Texas”); Safety-Kleen Sys., Inc. v. McCoy Freightliner, Inc., No. 4:10-CV-608, 2011 WL
2009958, at *4 (E.D. Tex. Apr. 11, 2011), report and recommendation adopted, 2011 WL
1986201 (E.D. Tex. May 23, 2011) (holding that a forum selection was permissive where
it stated “[t]his Agreement shall be interpreted and enforced according to the Laws of the
State of Texas and the parties agree to submit to the jurisdiction of the courts of the State
of Texas for any disputes arising under this Agreement.”); Moody v. Aqua Leisure Int'l,
13
CIV.A. No. H-10-1961, 2010 WL 4955397, at **2–3 (S.D. Tex. Nov. 30, 2010) (holding
that a forum selection clause was permissive where it stated that “jurisdiction and venue
shall lie with the state and federal courts located in Comal and/or Travis County, Texas.”).
In contrast, courts have determined that forum selection clauses that evidence a
clear intent to make that jurisdiction exclusive to be mandatory in application. See, e.g.,
In re Fisher, 2014 WL 801160, at *1 (holding that a forum selection clause was mandatory
where it provided that “each of the parties irrevocably submits to the non-exclusive
jurisdiction of each such court in any such proceeding, waives any objection it may now
or hereafter have to venue or to convenience of forum, agrees that all claims in respect
of the proceeding may be heard and determined in any such court and agrees not to bring
any proceeding arising out of or relating to this Agreement in any other court.”); Ramsay,
254 S.W.3d at 626 (holding that a forum selection clause was mandatory where it
provided that “[a]ll actions or proceedings arising . . . from this agreement or any
transaction covered hereby, shall be governed by the law of Illinois and may, at the
discretion and election of [ADM], be litigated in a court whose situs is within Illinois”); Deep
Water Slender Wells, Ltd. v. Shell Int'l Expl. & Prod., Inc., 234 S.W.3d 679, 683–84 (Tex.
App.—Houston [14th Dist.] 2007, pet. denied) (determining forum selection clause was
mandatory where it stated that the agreement “shall be governed exclusively by and
interpreted in accordance with the law of The Netherlands, and the parties irrevocably
agree that the courts of The Hague, The Netherlands shall have exclusive jurisdiction to
resolve any controversy or claim of whatever nature arising out of or relating to the
[agreement] or breach thereof”); Phoenix Network Tech., 177 S.W.3d at 610 (holding that
a forum selection clause was mandatory where it provided that “[t]he parties hereby agree
14
that this Agreement and the provisions hereof shall be construed in accordance with
English law and the venue for resolution of any disputes arising out of this Agreement
shall be the United Kingdom”); Valero Mktg. & Supply Co., 702 F.Supp.2d at 712 (holding
that a forum selection clause was mandatory where it stated that the parties “agree that
the sole jurisdiction for any claims shall be in state or federal courts located in Harris
County[,] Texas”).
In the instant case, the paragraph at issue in the Agreement includes both a choice
of law provision and a forum selection provision. The choice of law provision is both
specific and exclusive: “This Agreement, and the application or interpretation thereof,
shall be governed exclusively by its terms and by the laws of the State of Colorado.” The
use of “shall” typically, although not always, indicates a mandatory requirement, see
Caldas & Sons, Inc., 17 F.3d at 127–28; Keaty, 503 F.2d at 956–57; and the clause
expressly excludes the application of other law through the term “exclusively.”
The forum selection clause, in contrast, provides broadly that “the State of
Colorado is the proper jurisdiction and that Denver is the proper venue to hear any such
action.” Relators contend that under authorities such as Phoenix Network and Ramsey,
the forum selection clause is mandatory. See Ramsay, 254 S.W.3d at 626; Phoenix
Network Tech., 177 S.W.3d at 610. We conclude that these cases are distinguishable.
In Ramsey, the forum selection clause provided that “[a]ll actions or proceedings arising
. . . from this agreement or any transaction covered hereby, shall be governed by the law
of Illinois and may, at the discretion and election of [ADM], be litigated in a court whose
situs is within Illinois.” See Ramsay, 254 S.W.3d at 626. This clause gave one party the
unilateral right to dictate the venue, and the forum selection clause in this case contains
15
no such unilateral option. In Phoenix Network, the forum selection clause provided that
“the venue for resolution of any disputes . . . shall be the United Kingdom. See Phoenix
Network Tech., 177 S.W.3d at 610. The court concluded that the term “shall” generally
indicates a mandatory requirement, and the use of the definitive article “the” rather than
“a” indicated that the parties intended for the U.K. to be the exclusive venue. See id. at
615–16. In contrast, the forum selection here contains no mandatory language such as
“shall,” and, although the forum selection clause uses the definitive article “the,” that
usage alone does not express the clear intent that the forum is exclusive. See, e.g.,
Keaty, 503 F.2d at 956–57; see also Apollo Prop. Partners, LLC, 2008 WL 3017549, at
*3 n.4; TruGreen Landcare, L.L.C., 2013 WL 2147471, at *3; Safety-Kleen Sys., Inc.,
2011 WL 2009958, at *4. Although relators contend that usage of “the” as a definitive
article indicates that the clause is exclusive, we do not construe contracts or decide cases
based on the inclusion or exclusion of “magic words.” Falk & Fish, L.L.P. v. Pinkston's
Lawnmower & Equip., Inc., 317 S.W.3d 523, 527 (Tex. App.—Dallas 2010, no pet.); see
Deep Nines, Inc. v. McAfee, Inc., 246 S.W.3d 842, 846 (Tex. App.—Dallas 2008, no pet.).
Instead, we read the forum selection clause in its entirety and strike to give meaning to
every sentence, clause, and word to avoid rendering any portion inoperative. Phoenix
Network Tech., 177 S.W.3d at 615. In doing so, we conclude that the forum selection
clause is permissive rather than mandatory because it does not express a clear intent
that the State of Colorado is the exclusive jurisdiction for this litigation. The forum
selection clause contains no mandatory language like that utilized in the choice of law
provision, and it does not expressly exclude the possibility that the parties could litigate
in other jurisdictions. See PopCap Games, Inc. v. MumboJumbo, LLC, 350 S.W.3d 699,
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708 (Tex. App.—Dallas 2011, pet. denied) (“The use of different language in different
parts of a contract generally means that the parties intended different things.”).
V. CONCLUSION
The forum selection clause in this case establishes that Colorado will have
jurisdiction, but does not clearly demonstrate the parties’ intent to make that jurisdiction
exclusive. See City of New Orleans, Inc., 376 F.3d at 504. Having concluded that the
forum selection clause is permissive rather than exclusive, we need not consider whether
or not it is otherwise enforceable by the relators herein. See TEX. R. APP. P. 47.1, 47.4.
The Court, having examined and fully considered the petitions for writ of mandamus, the
responses thereto, and the replies, is of the opinion that relators have not met their burden
to show themselves entitled to the relief sought. Accordingly, the petitions for writ of
mandamus are DENIED in each of these causes. See TEX. R. APP. P. 52.8(a).
/s/ Rogelio Valdez
ROGELIO VALDEZ
Chief Justice
Delivered and filed the
29th day of May, 2014.
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in Re Thomas Agresti
Combined Opinion