in Re Mark Fisher and Reece Boudreaux
2014 Tex. LEXIS 379, 433 S.W.3d 523, 57 Tex. Sup. Ct. J. 504 (2014)
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Rule of Law:
Under Texas Civil Practice and Remedies Code § 15.020, a mandatory forum selection clause in a 'major transaction' (one involving over $1 million) must be enforced for all claims, including torts, that arise from the transaction. This statutory provision controls over any other conflicting venue statutes.
Facts:
- Mike Richey sold his company, Richey Oilfield Construction, Inc., to Nighthawk Oilfield Services, Ltd. for $33 million, a transaction in which Mark Fisher and Reece Boudreaux were executives.
- The acquisition involved several agreements, including a Goodwill Agreement and a Promissory Note, which each contained a forum selection clause designating Tarrant County, Texas, as the venue for state court actions.
- As part of the deal, Richey remained president of his former company and became a limited partner in Nighthawk.
- After the acquisition, Nighthawk made a $20 million 'special distribution' to its partners, which Richey alleged impaired the company's financial stability.
- At Fisher's request, Richey later provided Nighthawk with $1 million, which Richey understood to be a loan but Fisher claimed was a capital contribution that was never repaid.
- Richey was authorized to pay company vendors from a Nighthawk bank account, but several checks he wrote were rejected for insufficient funds.
- Richey alleged that Fisher falsely told the payees of the returned checks that Richey was responsible for the insufficient funds, which damaged Richey's personal and professional reputation.
- Shortly after these events, Nighthawk and Richey Oil filed for bankruptcy.
Procedural Posture:
- Mike Richey sued Mark Fisher and Reece Boudreaux in state trial court in Wise County, Texas.
- Fisher and Boudreaux filed a motion to transfer venue to Tarrant County based on the forum selection clauses in the acquisition agreements.
- The Wise County trial court denied the motion to transfer venue.
- Fisher and Boudreaux (as Relators) sought a writ of mandamus from the intermediate court of appeals (Fort Worth Court of Appeals) to compel the trial court to transfer the case.
- The court of appeals denied mandamus relief.
- The Relators then petitioned the Supreme Court of Texas for a writ of mandamus.
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Issue:
Does a trial court abuse its discretion by refusing to enforce a mandatory forum selection clause contained in agreements for a 'major transaction' under Texas Civil Practice and Remedies Code § 15.020, even when the plaintiff's claims sound in tort and another mandatory venue statute would otherwise apply?
Opinions:
Majority - Justice Johnson
Yes, the trial court abused its discretion by refusing to enforce the mandatory forum selection clause. The court held that the sale of Richey's company was a 'major transaction' under § 15.020, triggering the statute's mandatory venue provision. Using a 'common-sense' analysis, the court determined that Richey's tort claims for fraud, breach of fiduciary duty, and defamation 'arise from' the major transaction because they would not exist but for the acquisition agreements and the resulting relationship between the parties; his claims substantively sought to recover the benefit of his bargain, such as payment on the promissory note. The court interpreted the forum selection clause as mandatory, reasoning that the language 'agrees not to bring any proceeding... in any other court' was a clear command that was not rendered permissive by other language consenting to 'non-exclusive jurisdiction' in Tarrant County. Finally, the court concluded that § 15.020's opening phrase, 'Notwithstanding any other provision of this title,' demonstrates a legislative intent for it to override other venue statutes, including the one for defamation claims upon which Richey relied.
Analysis:
This decision significantly strengthens the enforceability of forum selection clauses in large commercial contracts in Texas by clarifying the broad scope of the 'major transaction' venue statute, § 15.020. By adopting a 'common-sense' or 'but-for' test to determine if tort claims 'arise from' a contract, the court makes it more difficult for plaintiffs to plead around such clauses by labeling their claims as torts rather than contract breaches. The ruling provides businesses with greater certainty that bargained-for venue provisions in high-value deals will be upheld, thereby reducing forum shopping and increasing predictability in litigation.
