With the February 28 orders list, the Texas Supreme Court issued one opinion. It also granted rehearing in a petition that had previously been denied.
Opinion
“Major transaction” venue clauses
IN RE MARK FISHER AND REECE BOUDREAUX, No. 12-0163
Texas Civil Practice and Remedies Code §15.020 gives special weight to contractual choice-of-forum clauses when the transaction size exceeds $1 million.
This dispute emerges from a failed limited partnership. One of the limited partners brought suit against other participants in the venture, but not the entity itself (which was in bankruptcy). The plaintiff below (Richey) sued Fisher and Boudreaux in Wise County for a variety of claims including defamation, common-law fraud, breach of fiduciary duty, and securities violations. The defendants sought mandamus relief, either to obtain dismissal of the claims on standing grounds or a transfer to Tarrant County, the venue selected by the contract.
Standing and Jurisdiction
The Court first held that outright dismissal of Richey’s claims was inappropriate because his allegations suggested he was “personally aggrieved” enough to proceed. Among other examples, the opinion noted allegations that Richey had contributed $1 million that the other limited partners failed to make and that he was personally defamed.
The Court also rejected the argument that Richey’s claims were jurisdictionally barred because they should have been filed against Nighthawk itself, which is in federal bankruptcy court. The opinion explained that whether the claims here “should have been brought against another party … is not a question of jurisdiction requiring dismissal, but is a question of liability.”
Transfer to Tarrant County
The Court then examined where the claims should be heard. The contract for the transaction that led to this lawsuit included a forum-selection clause, and the overall transaction size exceeded the $1 million threshold.
Richey argued that his claims were insufficiently related to the contract containing the provision, both because his tort claims did not “arise from” the sale contract and because the partnership agreement creating some of the duties contained no such clause.
In determining if Richey’s claims fell within the major-transaction statute, the Court borrowed its analysis for forum-selection clauses more generally — what it calls a “a common-sense examination of the substance of the claims.” Here, the Court concluded that the tort theories were “in substance” trying to recover for damages flowing from the contract containing the clause.
The Court also rejected the argument that the statute governing defamation venue — under which suit “can only be maintained” in the county of the plaintiff’s residence (Wise County) — trumps the major-transaction statute. The Court concluded that, although a plaintiff generally has his choice among the various “mandatory” venue statutes when they conflict, here the Legislature intended for the major-transaction statute to control over other conflicting provisions, making Tarrant County the only permisible venue.
Rehearing Grant
The Court originally denied review of this petition last August. The motion for rehearing argued that the issue about Texas covenants not to compete presented here is entangled with the issue in another pending case, Exxon Mobil Corporation v. William T. Drennen, III, No. 12-0621 . The Court heard oral argument in Drennen last November, and that case remains pending.
With these orders, the Court has granted rehearing of the petition and reinstated it to the docket, but it has not yet requested full briefing. The Court will, presumably, reevaluate the situation once it announces a judgment in Drennen.