DISMISSAL BASED ON FORUM-SELECTION CLAUSE

CKH Family Limited Partnership v. MGD/CCP Acquisition, LLC
Dallas Court of Appeals, No. 05-12-00573-CV (October 14, 2013)
Justices O’Neill (Opinion), Francis, and Evans
The Court of Appeals affirmed a trial court’s dismissal of a case that arose from an investment in real property in Oregon, concluding a forum-selection clause in the parties’ operating agreement precluded suit in Texas. The Court rejected the plaintiffs’ arguments that the defendants had waived their challenge to venue, that a condition of the forum-selection clause had not been met, and that dismissal was improper as to a defendant who had not signed the agreement.

The parties’ operating agreement required that “any controversy or dispute arising out of this Agreement” be submitted to arbitration in Oregon. The agreement also provided that courts in Oregon would have exclusive jurisdiction “in any action on a claim arising out of, under or in connection with this Agreement . . . provided such claim is not required to be arbitrated.”

When the plaintiffs filed suit in Texas state court, the defendants responded with a special appearance. After the special appearance was overruled, the defendants moved to dismiss the case based on the Oregon forum-selection clause in the operating agreement. The trial court granted that motion.

On appeal, the plaintiffs challenged the dismissal on three grounds. First, they argued the defendants waived any challenge to venue because, once the special appearance was denied, the defendants generally appeared. The Court disagreed, citing its 2003 decision in My CafĂ©-CCC, Ltd. v. Lunchstop, Inc. for the proposition that a general appearance does not waive a party’s right to rely on a forum-selection clause. 

Second, the plaintiffs argued their claims did not fall within the forum-selection clause because the trial court never determined whether the claims were subject to arbitration, which was an express condition of the clause. The Court rejected this argument as well, noting that it was the plaintiffs who initiated a lawsuit rather than filing arbitration and concluding, in any event, “[i]t is clear the parties envisioned that all claims, whether brought before a court or an arbitration panel, must only be filed in Oregon.”

Finally, the plaintiffs argued that, because one of the defendants was not a signatory to the operating agreement, dismissal of the claims against him was improper. The Court held that a plaintiff cannot avoid a forum-selection clause merely by adding non-signatories to the lawsuit. In this case, because the plaintiffs’ claims against all defendants were substantially interdependent, the Court concluded the non-signatory defendant was entitled to rely on the forum-selection clause.

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