ACCEPTED
01-14-00907-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
11/30/2015 5:17:47 PM
CHRISTOPHER PRINE
CLERK
IN THE COURT OF APPEALS
FOR THE FIRST DISTRICT OF TEXAS
AT HOUSTON
FILED IN
_______________________________ 1st COURT OF APPEALS
HOUSTON, TEXAS
11/30/2015 5:17:47 PM
NO. 01-14-00907-CV
CHRISTOPHER A. PRINE
_______________________________ Clerk
CRUM & FORSTER SPECIALTY INSURANCE COMPANY, Appellant
v.
CREEKSTONE BUILDERS, INC., et al., Appellees
________________________________________
On Appeal from the 215th Judicial District Court
Harris County, Texas
Cause No. 2014-29616
________________________________________
APPELLANT CRUM & FORSTER SPECIALTY INSURANCE
COMPANY’S MOTION FOR REHEARING AND
MOTION FOR EN BANC RECONSIDERATION
________________________________________
BRIAN S. MARTIN
Texas State Bar No. 13055350
RODRIGO “DIEGO” GARCIA, JR.
Texas State Bar No. 00793778
CHRISTOPER H. AVERY
Texas State Bar No. 24069321
THOMPSON, COE, COUSINS & IRONS, L.L.P.
One Riverway, Suite 1400
Houston, Texas 77056-1988
(713) 403-8210 Telephone
(713) 403-8299 Facsimile
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TABLE OF CONTENTS
TABLE OF CONTENTS ............................................................................................i
TABLE OF AUTHORITIES .................................................................................... ii
ISSUES PRESENTED ON REHEARING...............................................................iv
RELEVANT BACKGROUND ................................................................................. 2
ARGUMENT ............................................................................................................. 3
A. The Panel Did Not Apply the Correct Factors in Its Analysis .................. 4
B. Appellees Failed to Meet Their Burden of Proof ...................................... 6
1. Private Interest Factors ..................................................................... 8
2. Public Interest Factors .................................................................... 14
CONCLUSION AND PRAYER ............................................................................. 17
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INDEX OF AUTHORITIES
Baker v. Bell Helicopter Textron, Inc.,
985 S.W.2d 272 (Tex. App.—Fort Worth 1999, pet. denied) .................................. 5
Brenham Oil & Gas, Inc. v. TGS-NOPEC Geophysical Co.,
__ S.W.3d __, 01-13-00349-CV, 2015 WL 4591788 (Tex. App.—Houston [1st
Dist.] July 30, 2015, no pet.) ..................................................................................... 4
Bosch v. Frost Nat’l Bank,
__ S.W.3d __, 01-14-00191-CV, 2015 WL 4463666 (Tex. App.—Houston [1st
Dist.] July 21, 2015, no pet.) ................................................................................... 11
CCC Group, Inc. v. S. Cent. Cement, Ltd.,
450 S.W.3d 191 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ............................ 6
Crum & Forster Specialty Ins. Co. v. Creekstone Builders, Inc.,
__ S.W.3d __, 01-14-00907-CV, 2015 WL 6488276 (Tex. App.—Houston [1st
Dist.] Oct. 27, 2015, no. pet. h.)................................................................................ 1
Davis v. Nat’l Lloyds Ins. Co.,
__ S.W.3d __, 01-14-00278-CV, 2015 WL 6081411 (Tex. App.—Houston [1st
Dist.] Oct. 13, 2015, no. pet. h.).............................................................................. 11
Exxon Corp. v. Choo,
881 S.W.2d 301 (Tex. 1994) ..................................................................................... 3
In re Doe 10,
78 S.W.3d 338 (Tex. 2002) ....................................................................................... 6
In re Pirelli Tire, L.L.C.,
247 S.W.3d 670 (Tex. 2007) ................................................................................... 10
Lenoir v. Marino,
469 S.W.3d 669 ....................................................................................................... 11
Love v. State Bar of Texas,
982 S.W.2d 939 (Tex. App.—Houston [1st Dist.] 1998, no pet.) .......................... 14
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Lumenta v. Bell Helicopter Textron, Inc.,
01-14-00207-CV, 2015 WL 5076299 (Tex. App.—Houston [1st Dist.] Aug. 27,
2015, no. pet. h.) ....................................................................................................... 7
Mercer v. Daoran Corp.,
676 S.W.2d 580 (Tex. 1984) ................................................................................... 13
Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co.,
279 S.W.3d 650 (Tex. 2009) ................................................................................... 12
Piper Aircraft Co. v. Reyno,
454 U.S. 235 (1981) ............................................................................................ 4, 10
Quixtar Inc. v. Signature Management Team, LLC,
315 S.W.3d 28 (Tex. 2010) ....................................................................................... 4
RSR Corp. v. Siegmund,
309 S.W.3d 686 (Tex. App.—Dallas 2010, no pet.) .............................................. 10
State Farm Fire & Casualty Co. v. Gandy,
925 S.W.2d 696 (Tex. 1996) ..................................................................................... 2
Truong v. Vuong,
105 S.W.3d 312 (Tex. App.—Houston [14th Dist.] 2003, no pet.)........................ 17
iii
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ISSUES PRESENTED ON REHEARING
1. This case involves an insurance coverage dispute regarding whether the
subject policies provide the insureds coverage relative to a construction-
defects suit in South Carolina. The policies were issued in Texas, through a
Texas broker, delivered to the insured in Texas, and specifically exclude
coverage for operations in South Carolina. In making its forum non
conveniens analysis, the Panel gave primary emphasis to facts relating to the
underlying construction-defects suit rather than the facts relating to the
issuance of the policies. For purposes of this coverage dispute, Appellees
did not meet their burden of showing that Texas is an inconvenient forum for
litigation.
2. The Panel incorrectly considered conclusory and unsupported allegations in
granting Defendants’ motion to dismiss under the doctrine of forum non
conveniens, including conclusory statements, allegations in pleadings, and
unsupported legal opinions.
3. By placing the focus of the forum non conveniens analysis on the underlying
tort action (to which Appellant Crum & Forster was not a party) rather than
on the insurance coverage dispute between the parties, and by basing its
decision on items that are not properly considered under the forum non
conveniens doctrine, the Panel has substantially rewritten forum non
conveniens law. Because the decision of the Panel will affect a substantial
number of future cases involving forum non conveniens, this case presents
an extraordinary circumstance that should be reviewed by the Court en banc
to either maintain the uniformity of the Court’s decisions or explain why
such a fundamental change in forum non conveniens law is being made.
iv
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TO THE HONORABLE JUDGES OF THE COURT OF APPEALS:
Pursuant to Tex R. App. P. 49, Appellant Crum & Forster Specialty
Insurance Company files this Motion for Rehearing and Motion for En Banc
Reconsideration. In this lawsuit, insurer Crum & Forster seeks declaratory relief
regarding whether it owes insurance coverage for a $55 million judgment
(“Underlying Judgment”) entered against Appellee Creekstone SC I in state court
in South Carolina. The trial court dismissed this case for lack of a convenient
forum, and the Panel affirmed. Crum & Forster Specialty Ins. Co. v. Creekstone
Builders, Inc., __ S.W.3d __, 01-14-00907-CV, 2015 WL 6488276 (Tex. App.—
Houston [1st Dist.] Oct. 27, 2015, no. pet. h.).
The Panel’s opinion improperly deprives Crum & Forster of its choice of a
Texas venue. The Panel accomplished this by giving controlling weight to the
forum non conveniens factors applicable to the underlying construction-defect
lawsuit against Creekstone. That suit has been tried and has resulted in the
Underlying Judgment. The present case is a contractual coverage dispute
involving insurance policies issued in Texas that exclude South Carolina coverage.
The Panel erred by not recognizing the difference between the present contract
action and the prior tort action and basing its forum non conveniens analysis on
factors irrelevant to a contract dispute.
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Declaratory judgment actions to resolve insurance coverage disputes are an
important tool under Texas law and have been recommended by the Texas
Supreme Court. See State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696,
714 (Tex. 1996) (noting that when a coverage dispute arises, “it is not unusual” for
an insured or an insurer to file a declaratory judgment action because such disputes
“can often be expeditiously resolved in an action for declaratory judgment”). The
Panel’s decision has the potential to greatly undercut the efficacy of declaratory
judgment actions in Texas by denying Texas as a venue solely because some of the
underlying facts that gave rise to the coverage dispute occurred outside of Texas.
Such a fundamental change in declaratory judgment law should not happen without
careful consideration of the ramifications of the Panel’s decision both by the Panel
and the Court en banc.
RELEVANT BACKGROUND
Crum & Forster issued general liability policies to five related entities,
including Appellees1 Creekstone Builders, Inc., Creekstone SC I, LLC, and
Nashville Creekstone, LLC. CR 120–122, 139, 215, 286. The policies were issued
through a Texas broker and delivered in Texas. CR 120–122, 139, 215, 286.
The policies contained a State Operations Exclusion (“SOE”) that
specifically excluded coverage for any claim arising out of the insureds’ operations
1
Appellees are Creekstone Builders, Inc., Creekstone SC I, LLC, Nashville Creekstone, LLC, and Creekstone
Builders’ president Everett Jackson and vice president Stephen Keller. For simplicity, the collective term
“Appellees” is used herein, unless it is necessary to refer to the Appellees individually
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in South Carolina. CR 280, 350. In 2010, Appellees were sued in South Carolina
for construction defects in an apartment-to-condominium construction project in
South Carolina. CR 45–46. Crum & Forster denied coverage for the claim
because of the SOE. A judgment for more than $55 million was entered against
Creekstone SC I in June 2014. CR 46.
In May 2014, Crum & Forster filed this suit (“Lawsuit”) against Appellees
seeking declaratory relief on whether the judgment was covered under the policies
in light of the SOE precluding coverage for South Carolina. CR 5. Appellees
answered and filed a motion to dismiss on grounds of forum non conveniens and
the failure to join the plaintiff in the underlying suit an indispensable party. The
trial court granted Appellees’ motion on both grounds. CR 407. The Panel
affirmed the trial court’s judgment on the forum non conveniens ground and
expressly did not consider the indispensable party ground. See Panel Op., 2015
WL 6488276, at *9 & n.3.2
ARGUMENT
Forum non conveniens is an equitable doctrine exercised by courts to
prevent the imposition of an inconvenient jurisdiction on a litigant. Exxon Corp. v.
Choo, 881 S.W.2d 301, 302 (Tex. 1994). The “central focus of the forum non
2
Several weeks after Crum & Forster filed this Lawsuit, Creekstone SC I and other parties filed
an action in federal court in South Carolina seeking a declaration that Crum & Forster is
obligated to pay the judgment entered in the underlying case and additional relief. That action
remains pending at this time.
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conveniens inquiry is convenience.” Quixtar Inc. v. Signature Management Team,
LLC, 315 S.W.3d 28, 33 (Tex. 2010) (quoting Piper Aircraft Co. v. Reyno, 454
U.S. 235, 249 (1981)). Appellees as movants bore the burden to prove entitlement
to dismissal on forum non conveniens grounds. See Brenham Oil & Gas, Inc. v.
TGS-NOPEC Geophysical Co., __ S.W.3d __, 01-13-00349-CV, 2015 WL
4591788, at *15 (Tex. App.—Houston [1st Dist.] July 30, 2015, no pet.).
A. The Panel Did Not Apply the Correct Factors in Its Analysis
A forum non conveniens analysis requires that the court balance public and
private interest factors to decide if dismissal is appropriate. See id. at *16. In its
opinion, the Panel improperly focused more on the public and private factors as
they relate to the underlying tort action than to the present coverage dispute. While
South Carolina may have a connection to the construction-defect case, South
Carolina was a stranger to the issuance and interpretation of the insurance policies.
The Court’s reference to facts relevant to the underlying suit may have been
made because Appellees, who bore the burden of showing that the balance of
factors favors dismissal, made no effort to address the factors that relate to the
coverage case brought in Texas.3 The facts surrounding the construction work
done by Creekstone and the resulting defects in construction have already been
litigated and reduced to judgment. There will be no reason in this case to inquire
3
The deficiencies in Appellees’ proof will be discussed in more detail in the next section.
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into the details of the construction work, the damages allegedly suffered by the
purchasers of the condominium units, or anything else that happened on the ground
in South Carolina. That story has ended.
The appropriate forum non conveniens analysis in this case should be on the
public and private factors that relate to negotiation and issuance of the contract and
application of the contract terms to the written judgment. See Baker v. Bell
Helicopter Textron, Inc., 985 S.W.2d 272, 277 (Tex. App.—Fort Worth 1999, pet.
denied) (explaining forum non conveniens decisions are made pursuant to “the
facts or circumstances of the particular case” (emphasis added)). Nonetheless,
Appellees did not present facts relevant to the contract-interpretation issues present
in this Lawsuit, but instead focused on the fact that the underlying tort case
occurred in another state. Appellees simply provided no evidence proving that it
would be inconvenient for them to litigate this declaratory judgment action in
Texas.
The Panel took the sparse facts supplied by Appellees and conducted its
forum non conveniens analysis without asking the basic question of whether Texas
is a substantially inconvenient forum for a coverage case involving policies issued
in Texas to a group of insureds who have their principal place of business in Texas
and that exclude coverage for South Carolina operations.
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The Panel also gave undue influence to the fact that Creekstone SC I was a
South Carolina limited liability company without explaining why that is an
important fact in this litigation. There is no evidence that any document related to
Creekstone SC I is maintained by the company in South Carolina or that any of its
officers or employees who might be witnesses in this case are located in South
Carolina.
In short, the Panel’s analysis improperly puts its focus on evidence relating
to the underlying construction project, but that is not an issue in this case. The
inquiry that must be made is whether the public and private interest factors as
applied to the present coverage dispute support dismissal of the suit in Texas.
B. Appellees Failed to Meet Their Burden of Proof
Appellees bore the burden to prove entitlement to dismissal on forum non
conveniens grounds. Brenham Oil, 2015 WL 4591788, *15. The Panel
determined that Appellants did not need to present evidence at the hearing on its
motion to dismiss, but instead could rely on evidence attached to their motion.
Panel Op., 2015 WL 6488276, *5–6. The Panel recognized that Appellants were
required to present “some evidence” in support of their motion. Id.
The term “some evidence” does not include speculation or unsupported,
conclusory allegations or statements. See In re Doe 10, 78 S.W.3d 338, 342 (Tex.
2002); CCC Group, Inc. v. S. Cent. Cement, Ltd., 450 S.W.3d 191, 202 (Tex.
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App.—Houston [1st Dist.] 2014, no pet.). This Court recently reiterated that a trial
court’s implicit findings supporting a forum non conveniens decision cannot be
arbitrary and will be affirmed only “so long as they are also supported by the
evidence.” Lumenta v. Bell Helicopter Textron, Inc., 01-14-00207-CV, 2015 WL
5076299, at *4 (Tex. App.—Houston [1st Dist.] Aug. 27, 2015, no. pet. h.) (mem.
op.) (emphasis added).
As the Panel noted, the only evidence Appellees presented was attached to
their motion to dismiss. The evidence generally consisted of an affidavit from the
corporate entity that is the judgment creditor of Creekstone SC I for the underlying
suit,4 corporate documents relating to “Creekstone Management, LLC” (showing it
is a Texas corporation), and the underlying judgment. Appellees did not offer any
evidence discussing where the contract formation and issuance occurred, whether
Creekstone SC I still has any physical presence in Texas, where any witnesses are
located, or whether Texas is an inconvenient forum for any witness other than the
judgment creditor (who is not a party to the suit and may not even be a witness in
this case).
It is against this record that the propriety of dismissal must be evaluated.
4
Creekstone SC I’s judgment creditor is East Bridge Lofts Property Owners Association, Inc. (“POA”).
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1. Private Interest Factors
Appellees presented very limited evidence on the private interest factors in
support of their motion to dismiss. Moreover, it is the evidence Appellees did not
present that most glaringly demonstrates why the trial court erred by dismissing
this Lawsuit. Appellees did not present any evidence indicating (1) where the
sources of proof potentially relevant to this Lawsuit are located, (2) where
Appellees’ own corporate representatives and employees are located, (3) where the
subject insurance policies were negotiated, (4) where witnesses Appellees will
possibly use to litigate this Lawsuit are located, or (5) why it is inconvenient,
financially or otherwise, for Appellees to participate in this Lawsuit. In the
absence of this evidence, Appellees cannot meet their burden.
Instead of providing relevant information, Appellees presented a single
affidavit from a representative of the judgment creditor in the underlying suit,
Amanda Graham. CR 45–48. The Panel noted that Graham made the following
assertions in her affidavit:
Graham averred that the condominiums that were the subject of the
construction-defects suit are located in South Carolina, that the POA
obtained a judgment in South Carolina against Creekstone SC I, that
the “dispute turns on South Carolina witnesses,” that South Carolina
is the only state that can exercise jurisdiction over all parties
interested in the outcome of the insurance coverage dispute, and that a
suit concerning insurance coverage is also pending in South Carolina
federal court and involves the POA, Creekstone SC I, Creekstone
Builders, and Crum & Forster.
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Panel Op., 2015 WL 6488276, at *7. From these assertions, the Panel concluded,
“It is clear from the record that at least some of Creekstone’s sources of proof and
witnesses are located in South Carolina.” Id. For several reasons, the Panel’s
reliance on Graham’s assertions was misplaced.
First, Graham’s assertions that “condominiums that were the subject of the
construction-defects suit are located in South Carolina” and “POA obtained a
judgment in South Carolina against Creekstone SC I” are wholly irrelevant.
Appellees and the Panel provided no explanation for why the location of the
condominiums or where the Underlying Judgment was rendered have any bearing
on whether this declaratory judgment action is convenient in Texas.
Second, Graham’s assertion that the “dispute turns on South Carolina
witnesses” is wholly conclusory and thus no evidence. Citing to Supreme Court of
Texas precedent, the Panel explained, “Creekstone was not required to submit
detailed lists of the witnesses that it plans to call or the evidence that it plans to
introduce at trial.” Panel Op., 2015 WL 6488276, at *7 (citing Quixtar, 315
S.W.3d at 34). However, the Panel improperly interpreted this precedent to mean
that Appellees did not have to present any evidence regarding the witnesses they
plan to call.
The Quixtar court, while explaining that the movant need not conduct an
“extensive investigation” and provide the substance of all its potential witnesses’
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testimony, held, “Obviously, there needs to be enough information ‘to enable the
District Court to balance the parties’ interests.’” Quixtar, 315 S.W.3d at 34
(quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981)); see also RSR Corp. v.
Siegmund, 309 S.W.3d 686, 713 (Tex. App.—Dallas 2010, no pet.) (holding that
forum non conveniens movant failed to meet burden of proof by presenting “a
conclusory statement that it would be ‘hardship’ to litigate in Dallas and presenting
an affidavit explaining [movant’s] lack of presence in Texas”). In prior appeals in
which this Court affirmed dismissal based on forum non conveniens, the movant
provided at least some explanation regarding why witnesses located in the sought-
after forum had a connection to the issues in dispute.5 Neither in the Graham
affidavit nor anywhere else have Appellees identified a single witness who can
provide relevant testimony to this case who lives or works in South Carolina.
5
See, e.g., Lumenta, 2015 WL 5076299, at *2 (“Moreover, all the ‘key witnesses’ are in
Indonesia, including the INTSC representatives, who conducted the official investigation of the
crash and recovery of the wreckage; the Manado Airport employees, who tracked and
communicated with the helicopter; the mechanics, who serviced the helicopter; and all the
employees of the companies that owned, chartered, maintained, and operated the helicopter.”);
Brenham Oil, 2015 WL 4591788, at *18 (“[T]here are other material witnesses who are located
in Togo and Israel. The Togolese government was assisted at the negotiations with Brenham Oil
by Yair Green, an Israeli lawyer, and Raphael Edery, an Israeli economic adviser. It is
undisputed that Siah and his superior Dammipi Noupokou, the Togolese Minister of Energy and
Mines, are located in Togo. TGS asserts that it is unable to obtain vital defense testimony in a
Texas court because the Togolese witnesses refused to participate in discovery in Texas, and
their testimony could not be secured through the Texas court because Togo is not a party to the
Hague Convention on the Taking of Evidence Abroad.”); see also In re Pirelli Tire, L.L.C., 247
S.W.3d 670, 678 (Tex. 2007) (“First, key evidence and witnesses concerning damages are in
Mexico. Benitez, the only witness to the accident, together with the accident investigators and
all medical personnel are in Mexico. The witnesses most likely to be familiar with the condition
and maintenance of the truck and the tire, the truck’s owner and its importer, are in Mexico.”).
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A conclusory statement in an affidavit never constitutes “some evidence.”
See Lenoir v. Marino, 469 S.W.3d 669, 686 (Tex. App.—Houston [1st Dist.] 2015,
pet. filed) (“Conclusory statements in affidavits are insufficient to establish the
existence of a fact.”). Conclusory statements are so fundamentally flawed, that
objections to such statements cannot be waived. See Bosch v. Frost Nat’l Bank, __
S.W.3d __, 01-14-00191-CV, 2015 WL 4463666, at *4 (Tex. App.—Houston [1st
Dist.] July 21, 2015, no pet.). The Panel’s reliance on conclusory affidavit
testimony was erroneous and in contradiction of this Court’s precedent.
It is also notable that Appellees did not provide any statement, conclusory or
otherwise, regarding whether they plan to use witnesses or evidence from South
Carolina in the Lawsuit. Instead, Appellees submitted their judgment creditor’s
conclusory statement on the issue—a non-party to this Lawsuit. Clearly, a non-
party’s conclusory statement about witnesses is not evidence that Appellees will be
inconvenienced if they try this Lawsuit in Texas.
Furthermore, neither Creekstone nor the Panel explained why any witnesses
are needed. Again, this is a contract interpretation case, not a fact-intensive tort
case. As this Court frequently recognizes, extrinsic evidence and testimony
generally have no role in a contract interpretation case. See, e.g., Davis v. Nat’l
Lloyds Ins. Co., __ S.W.3d __, 01-14-00278-CV, 2015 WL 6081411, at *6 (Tex.
App.—Houston [1st Dist.] Oct. 13, 2015, no. pet. h.); Dupree v. Boniuk Interests,
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Ltd., __ S.W.3d __, 01-14-00864-CV, 2015 WL 4624117, at *9 (Tex. App.—
Houston [1st Dist.] Aug. 4, 2015, no pet.).
In its Original Petition, Crum & Forster contends it does not owe coverage
because one of the policies does not apply to any of the Creekstone defendants in
the underlying suit, and the other policies contain the unambiguous SOE. CR 9–
10. These issues will be decided by a court’s review of the policies. See Pine Oak
Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650, 655 (Tex. 2009)
(“The duty to defend depends on the language of the policy setting out the
contractual agreement between insurer and insured.”). Indeed, even in the
declaratory judgment action filed in South Carolina federal court, Creekstone
asserts legal arguments—not evidentiary grounds—as for why the exclusion does
not apply. CR 64 at ¶ 30. Appellees do not even suggest, let alone provide
evidence to show, that it would be more inconvenient to make this argument in
Texas.
Third, Graham’s assertion “that South Carolina is the only state that can
exercise jurisdiction over all parties interested in the outcome of the insurance
coverage dispute” is clearly not a statement of fact but a conclusory legal
opinion—a legal opinion Graham is not qualified to make. A conclusory opinion
on a matter of law reserved for the court’s determination is not evidentiary. See
Tex. R. Civ. P. 39 (providing trial court determines whether a party is
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indispensable); Mercer v. Daoran Corp., 676 S.W.2d 580, 583 (Tex. 1984).
Additionally, the Panel does not explain why this statement is important. In its
first appellate issue, Appellees argued that the judgment creditor is an
indispensable party to this Lawsuit. However, the Panel expressly did not address
this issue. Panel Op., 2015 WL 6488276, at *9 n.3.
Fourth, Graham’s assertion that “a suit concerning insurance coverage is
also pending in South Carolina federal court and involves the POA, Creekstone SC
I, Creekstone Builders, and Crum & Forster” is again not evidence showing that
South Carolina would be a more convenient forum for the parties. Merely because
a party files a suit in a chosen venue does not mean that venue is more convenient
than any other venue. Hence, the Panel erred by deciding this statement is
evidence supporting the trial court’s dismissal.
Finally, the Panel apparently determined that allegations in a pleading
establish that Creekstone SC I lacks a Texas connection:
Although Crum & Forster alleged in its original petition in the
underlying action that Creekstone SC I was organized under the laws
of South Carolina but had a principal place of business in Texas,
Creekstone alleged in the federal action, which it attached as
evidence to its motion to dismiss, that Creekstone SC I “is a South
Carolina limited liability company.”
Id. at *7 (emphasis added). Based on this allegation, the Panel determined that
Texas is a poor choice for venue because “the one defendant in the underlying
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action that is a party to the judgment in the construction-defects suit, Creekstone
SC I, is a South Carolina entity.” Id.
The Panel’s determination is erroneous because an allegation in a pleading is
not evidence. See Love v. State Bar of Texas, 982 S.W.2d 939, 943 (Tex. App.—
Houston [1st Dist.] 1998, no pet.). More importantly, whether Creekstone SC I is a
South Carolina limited liability company is irrelevant to this contract-interpretation
action (and also does not disprove that Creekstone SC I has a principal place of
business in Texas). The Panel did not explain why the place of Creekstone SC I’s
incorporation is material to this Lawsuit and its place of business is not.
Accordingly, the Panel improperly considered the private interest factors by
focusing on the location of the underlying tort claims instead on how the factors
apply to this declaratory judgment action.
2. Public Interest Factors
The Panel next analyzed the public interest factors. Panel Op., 2015 WL
6488276, at *8–9. The Panel began by acknowledging that Texas is a proper
forum for this declaratory judgment action: “Crum & Forster is correct that
Creekstone Builders is a Texas entity and that Crum & Forster’s broker involved in
issuing the policies is located in Houston. As a result, Texas does have an interest
in adjudicating this dispute, and there is at least some justification for retaining the
case in Texas.” Id. at *8.
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Nonetheless, the Panel then once again focused on the irrelevant facts that
Creekstone SC I is a South Carolina entity and the underlying tort case occurred in
South Carolina:
However, one of the defendants in this case, Creekstone SC I, the only
defendant in the underlying action that is also a party to the judgment
rendered in the construction-defects suit, is a South Carolina entity,
and the insurance coverage dispute that is the focus of the underlying
action arose solely because of the defective condominium
construction that occurred in South Carolina. Creekstone Builders,
the Texas entity, is not a party to the construction-defects judgment
and therefore is not liable for that judgment. Thus, although this case
does involve a connection to Texas, it is more appropriately
characterized as a South Carolina controversy.
Id. at *8. Hence, the Panel concluded that South Carolina has more of a stake in
this contract-interpretation claim than Texas merely because the underlying tort
claim occurred in South Carolina. As stated above, this improperly emphasizes the
location of a separate and distinct tort lawsuit, with different issues and burdens,
and ignores the actual Texas connection to this Lawsuit, which include:
The service-of-process documents show that Appellees Creekstone Builders,
Nashville Creekstone, Everett Jackson, Creekstone SC I were served with
this Lawsuit in Texas and have all answered. CR 14–27.
The subject policies were procured by a broker located in Houston, Texas
and delivered to insureds located in Houston, Texas. RR 17–18; CR 120–
122, 139, 215, 286.
The policies expressly exclude coverage for South Carolina operations. CR
280, 350. The people of South Carolina have no reason to be jurors in a case
involving a policy issued in Texas that excludes South Carolina coverage. It
is more proper for the people of Texas to serve as jurors in this Lawsuit (if
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fact-issues exist that require jury resolution, which Appellees have not
demonstrated).
Accordingly, this declaratory judgment action is not “more appropriately
characterized as a South Carolina controversy,” but is a contract-interpretation
dispute involving insurance policies issued in Texas through a Texas broker to a
Texas entity.
Finally, the Panel stated:
Moreover, we note that an insurance coverage dispute is also pending
in South Carolina federal court, that the POA is a party to that action,
and that Crum & Forster, the defendant in that action, has not
contested jurisdiction in the South Carolina federal court. Thus, the
trial court’s decision to dismiss the underlying action promotes
judicial economy by reducing the multiplicity of suits related to the
same controversy.
Panel Op., 2015 WL 6488276, at *9. As already explained, the Panel provided no
analysis regarding why the judgment creditor’s absence from this Texas suit is
significant. Moreover, according to the Panel’s reasoning, a defendant can create a
situation favoring forum non conveniens dismissal simply by filing its own suit in
another state. The Panel’s analysis actually encourages multiplicity of suits and
gamesmanship by defendants seeking to inconvenience plaintiffs who have already
chosen Texas as a forum.
If Appellees really believed that Texas is an inconvenient forum, they would
have come forward with evidence that names witnesses located in South Carolina,
or identified documents that existed only in South Carolina, or identified the
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physical presence Creekstone SC I has in South Carolina that makes Texas a
difficult forum in which to resolve the contract dispute. Appellees did none of this
because Texas is not an inconvenient forum, and the Panel erred in affirming the
dismissal.
CONCLUSION AND PRAYER
In sum, the trial court abused its discretion in granting dismissal based on
forum non conveniens. In a concurrence from the Fourteenth Court of Appeals,
Justice Frost explained why a trial court cannot grant dismissal for forum non
conveniens when the movant does not present actual evidence favoring dismissal:
Forum non conveniens considerations allow the trial court to engage
in a discretionary balancing of factors in order to determine the most
appropriate forum for the litigation. A trial court’s balancing of the
factors must not be based on speculation or conjecture, but on
evidence in the record. Absent proof of inconvenience or additional
costs, there is no basis to conclude that maintenance of the action in
Texas would work a substantial injustice to the Vuongs or that the
balance of private interests of the parties and public interests of the
state tilts strongly in favor of a Georgia forum. The Vuongs have not
adduced evidence demonstrating that the Texas forum chosen by the
Truongs is so completely inappropriate and inconvenient that it would
be better to shut down the Texas litigation so that the parties can
litigate this dispute exclusively in the Georgia court.
Truong v. Vuong, 105 S.W.3d 312, 321 (Tex. App.—Houston [14th Dist.] 2003, no
pet.) (Frost, J., concurring). The same rationale applies here.
Accordingly, Crum & Forster respectfully requests that the Panel grant this
motion for rehearing, or alternatively the Court en banc grant this motion for
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reconsideration, withdraw the Panel opinion and judgment, and render judgment
reversing the trial court’s judgment dismissing this Lawsuit, and for any other
relief to which Crum & Forster is entitled, included costs of this appeal.
Respectfully submitted,
THOMPSON COE COUSINS & IRONS, LLP
By: /s/ Brian S. Martin
BRIAN S. MARTIN
Texas State Bar No. 13055350
E-Mail: bmartin@thompsoncoe.com
RODRIGO “DIEGO” GARCIA, JR.
Texas State Bar No. 00793778
E-Mail: dgarcia@thompsoncoe.com
CHRISTOPER H. AVERY
Texas State Bar No. 24069321
E-Mail: cavery@thompsoncoe.com
One Riverway, Suite 1400
Houston, Texas 77056-1988
(713) 403-8210 Telephone
(713) 403-8299 Facsimile
ATTORNEYS FOR APPELLANT
CRUM & FORSTER SPECIALTY
INSURANCE COMPANY
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CERTIFICATE OF COMPLIANCE
I certify that this Motion for Rehearing and Motion for En Banc
Reconsideration contains approximately 4,357 words, not including the parts
excluded by Tex. R. App. P. 9.4(i)(1). Accordingly, it complies with Rule
9.4(i)(2)(D).
/s/ Brian S. Martin
BRIAN S. MARTIN
CERTIFICATE OF SERVICE
I certify that on November 30, 2015, an electronic copy of this brief was
served on all counsel of record.
/s/ Brian S. Martin
BRIAN S. MARTIN
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