Opinion
No. 05-08-01556-CV
Opinion issued July 23, 2010.
On Appeal from the 14th Judicial District Court, Dallas County, Texas, Trial Court Cause No. 05-12471-A.
Before Justices MORRIS, MOSELEY, and FITZGERALD.
MEMORANDUM OPINION
The trial court dismissed this case based on a forum-selection clause. Appellants argue that the trial court abused its discretion because they demonstrated that requiring them to litigate their claims in the selected forum would be unreasonable and would effectively deprive them of their day in court. We find no abuse of discretion and affirm.
I. Background
Roly Poly Franchise Systems, L.L.C. is a restaurant franchisor. Appellants are parties who entered into franchise agreements, guaranties, or both with Roly Poly. The other appellees (the "Summers-Wood parties") are parties that allegedly entered a separate Master Development Agreement with Roly Poly whereby they agreed to develop and service Roly Poly franchises in Texas. Appellants allege that the Summers-Wood parties acted as Roly Poly's agents.
This suit began in December 2005 when some of appellants sued appellees on several theories such as breach of contract and violations of the Texas Deceptive Trade Practices-Consumer Protection Act. The gist of their petition was that appellees induced them to purchase Roly Poly franchises through misrepresentations about how successful the franchises would be, among other things. In a subsequent first amended petition, the rest of appellants joined the suit as plaintiff-intervenors.
Roly Poly filed a plea in abatement as part of its original answer, contending that its franchise agreements with appellants contained an enforceable clause selecting Georgia as the exclusive forum for their claims. After appellants filed their first amended petition, Roly Poly filed a first amended answer and a motion to dismiss the intervenors' claims, based again on the forum-selection clauses in the intervenors' franchise agreements. Plaintiffs and plaintiff-intervenors filed separate but similar responses to Roly Poly's plea in abatement and motion to dismiss. Both sides filed evidence in support of their positions on the enforceability of the forum-selection clauses.
The trial judge held a nonevidentiary hearing on Roly Poly's plea in abatement and motion to dismiss appellants' claims. A few days later, the judge signed an order in which she found that the forum-selection clauses in the franchise agreements were valid and enforceable. She also found that Roly Poly's co-defendants were "transactional participants." She dismissed the entire case without prejudice.
II. Analysis
A. Applicable law
"Forum-selection clauses are generally enforceable, and a party attempting to show that such a clause should not be enforced bears a heavy burden." In re Int'l Profit Assocs., Inc., 274 S.W.3d 672, 675 (Tex. 2009) (per curiam). The trial court must enforce a forum-selection clause unless the party opposing enforcement clearly shows that (1) enforcement would be unreasonable and unjust, (2) the clause is invalid for such reasons as fraud or overreaching, (3) enforcement would contravene a strong public policy of this state, or (4) the selected forum would be seriously inconvenient for trial. In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 231-32 (Tex. 2008) (per curiam); see also In re Automated Collection Techs., Inc., 156 S.W.3d 557, 559 (Tex. 2004) (per curiam); In re AIU Ins. Co., 148 S.W.3d 109, 112 (Tex. 2004). "When inconvenience in litigating in the chosen forum is foreseeable at the time of contracting, the challenger must show that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court." In re ADM Investor Servs., Inc., 304 S.W.3d 371, 375 (Tex. 2010) (internal quotations and citation omitted).
We review a trial court's decision regarding the validity and enforcement of a forum-selection clause under an abuse-of-discretion standard of review. CNOOC Se. Asia Ltd. v. Paladin Resources (Sunda) Ltd., 222 S.W.3d 889, 894 (Tex. App.-Dallas 2007, pet. denied); My Café- CCC, Ltd. v. LunchStop, Inc., 107 S.W.3d 860, 864 (Tex. App.-Dallas 2003, no pet.). "With respect to factual matters, a trial court abuses its discretion if, under the record, it reasonably could have reached only one decision and it failed to do so. However, because a trial court has no discretion in determining what the law is or applying the law to the facts, a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion." Moroch v. Collins, 174 S.W.3d 849, 864-65 (Tex. App.-Dallas 2005, pet. denied) (citations omitted).
B. Application of the law to the facts
In their sole issue on appeal, appellants contend that the forum-selection clauses in their contracts with Roly Poly are unenforceable because enforcement would be unreasonable and unjust on the particular facts of this case. They contend that enforcement will deprive them of their day in court for all practical purposes, and that the trial court abused its discretion by dismissing the case. They do not dispute that their claims are covered by the forum-selection clauses in their contracts with Roly Poly, so we need not quote those clauses or analyze their scope. We inquire only whether the trial court erred in enforcing them.
Appellants' argument depends on the following additional facts, which appellants supported with evidence filed in the trial court. In June 2005, Roly Poly sued the Summers-Wood parties in federal district court in Georgia. Roly Poly sued them for breaching the Master Development Agreement, among other claims. In March 2006, the federal court dismissed Roly Poly's action, ruling that (1) the forum-selection clause found in Roly Poly's franchise agreements was not incorporated into the Master Development Agreement, and (2) Georgia lacked personal jurisdiction over the Summers-Wood parties.
Based on this factual foundation, appellants erect the following argument. They assert, without citation to authority, that they "are entitled to a day in court in which both Roly Poly and the Summers-Wood Defendants are parties." Next, they contend that the Georgia federal court's holding that Georgia lacks personal jurisdiction over the Summers-Wood parties is res judicata, thereby precluding Roly Poly from contending that the Summers-Wood parties are amenable to jurisdiction in Georgia. From this, they conclude that "the courts in Georgia cannot gain jurisdiction over all of the necessary parties" because of the Summers-Wood parties' personal-jurisdiction defense. Because this violates their asserted entitlement to sue Roly Poly and the Summers-Wood parties in a single lawsuit, they conclude that they have made out a compelling case that enforcement of the forum-selection clauses in their contracts with Roly Poly would be unreasonable and unjust.
We reject appellants' argument. First, appellants' contention that they would be unable to hale the Summers-Wood parties into court in Georgia is speculation. They were not parties to Roly Poly's federal lawsuit in Georgia against the Summers-Wood parties, and they have not shown that they would be bound by the judgment in that case if they were to sue the Summers-Wood parties in Georgia. See Pleming v. Universal-Rundle Corp., 142 F.3d 1354, 1356, 1359 (11th Cir. 1998) (judgment is generally binding on parties to judgment). Moreover, as Roly Poly points out, the prior Georgia lawsuit against the Summers-Wood parties was based on the Master Development Agreement, which does not contain a forum-selection clause. Appellants' claims are based in part on the franchise agreements, which do contain forum-selection clauses. Although the Summers-Wood parties are not parties to the franchise agreements, the trial court in this case found that they were "transactional participants" in those agreements and thus subject to the forum-selection clauses therein. See Accelerated Christian Educ., Inc. v. Oracle Corp., 925 S.W.2d 66, 75 (Tex. App.-Dallas 1996, no writ) ("[A] valid forum selection clause governs all transaction participants, regardless of whether the participants were actual signatories to the contract."), overruled in part on other grounds by In re Tyco Elecs. Power Sys., Inc., No. 05-04-01808-CV, 2005 WL 237232, at *4 (Tex. App.-Dallas Feb. 2, 2005, orig. proceeding [mand. denied]) (mem. op.). Appellants' contention that they will be unable to hale the Summers-Wood parties into court in Georgia on the claims they assert in this case is mere speculation. The trial court did not abuse its discretion by rejecting appellants' argument. We reject appellants' argument for an additional reason. Even assuming that appellants are correct and Georgia courts will decline to exercise jurisdiction over the Summers-Wood parties, we are not convinced that the hardship of having to sue Roly Poly in Georgia and the Summers-Wood parties elsewhere is so severe as to make it unreasonable and unjust to enforce the forum-selection clauses. The Texas Supreme Court rejected a similar claim in the ADM case. In that case, the plaintiff sued two defendants, one of whom invoked a forum-selection clause that designated Illinois as the forum for litigation related to the contract. In re ADM Investor Servs., Inc., 304 S.W.3d at 373. The trial court denied defendant ADM's motion to dismiss, observing that it would be unreasonable to force the plaintiff to sue the two defendants in different states. Id. The supreme court rejected the trial court's reasoning and granted mandamus relief to enforce the clause. The court specifically declined to recognize a right to sue multiple defendants in the same forum. See id. at 375 ("The mere existence of another defendant does not compel joint litigation, even if the claims arise out of the same nucleus of facts.") It may be more difficult and expensive to sue different defendants in different states, and it may, as appellants argue, give the defendants a tactical advantage in the form of an "empty-chair" defense. But we cannot conclude that the trial court acted unreasonably or arbitrarily by ruling that these difficulties are not so grave as to practically deprive appellants of their day in court.
III. Conclusion
For the foregoing reasons, we affirm the judgment of the trial court.