In Re International Profit Associates, Inc.
52 Tex. Sup. Ct. J. 852, 286 S.W.3d 921, 2009 Tex. LEXIS 391 (2009)
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Rule of Law:
The party challenging a forum-selection clause bears the heavy burden of proving its invalidity, and the party seeking enforcement is not required to prove that the clause was specifically shown to the opposing party at the time of signing.
Facts:
- Riddell Plumbing, Inc. (Riddell) hired International Profit Associates, Inc. (IPA) for business consulting services.
- Riddell's representative, Scott Riddell, signed a four-page contract for these services.
- The first page of the contract contained a forum-selection clause requiring all disputes to be litigated in Lake County, Illinois.
- The signature page, page four, included a clause stating, "This document, 4 pages in total, constitutes the entire agreement for services..."
- Each of the three pages that Scott Riddell acknowledged seeing and endorsing were labeled "2 of 4," "3 of 4," and "4 of 4."
- Scott Riddell later claimed that IPA never showed him the first page of the contract containing the forum-selection clause.
- Riddell became dissatisfied with IPA's services, leading to a dispute between the parties.
Procedural Posture:
- Riddell Plumbing, Inc. filed suit against International Profit Associates, Inc. in a trial court in Dallas County, Texas.
- IPA filed a motion to dismiss based on the contract's forum-selection clause.
- The trial court denied IPA's motion to dismiss, finding that IPA failed to carry its burden of proving the clause was presented to Riddell.
- The trial court subsequently denied IPA's motion for reconsideration.
- IPA, as relator, petitioned the intermediate court of appeals for a writ of mandamus to compel dismissal, which the court denied without explanation.
- IPA then petitioned the Supreme Court of Texas for a writ of mandamus.
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Issue:
Does the party seeking to enforce a forum-selection clause bear the burden of proving it specifically showed the clause to the opposing party who signed the contract?
Opinions:
Majority - Per Curiam
No. The trial court abused its discretion by placing the burden of proof on IPA, the party seeking to enforce the forum-selection clause. The established rule is that forum-selection clauses are generally enforceable, and the party challenging the clause bears a heavy burden to prove its invalidity. A party who signs a contract is presumed to know its contents, and the duty to read the contract rests with the signatory. In this case, the contract provided clear notice that it consisted of four pages, as the signature page stated it was "4 pages in total" and other pages were numbered accordingly. This put Riddell on notice that a page was missing, and the failure to inquire about it does not constitute fraud or overreaching on IPA's part. Merely failing to direct a party's attention to a specific clause is insufficient as a matter of law to invalidate it.
Analysis:
This decision reinforces the strong presumption in Texas law favoring the enforcement of forum-selection clauses and clarifies the allocation of burdens between the parties. It underscores the legal principle that a signatory has a duty to read and is bound by a contract's terms, even if they claim ignorance of a specific provision. The ruling makes it significantly more difficult for a party to evade a forum-selection clause by claiming they were not shown the specific term, thereby promoting contractual certainty and predictability in commercial litigation. Future litigants challenging such clauses must provide affirmative evidence of fraud, unreasonableness, or other established defenses, rather than simply pointing to the other party's failure to highlight the clause.
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