Home -> Law Blog Directory -> New Law Blogs Blogs -> Supreme Court of Texas Blog

New Law Blogs

: Supreme Court of Texas Blog

Forum-selection clause in favor of foreign parent company; SCOTX formally accepts Ninth Circuit?s certified question [orders of Apr. 16, 2010]

By Don Cruse

With today’s orders list, the Texas Supreme Court issued five opinions — four of which relate to the long-running dispute over the Kenedy ranching fortune.

I’ll have a separate post about the Kenedy cases.¹

Certified question accepted. (Yes, it’s about Texas insurance law.)

Patrick O. Ojo, Attorney, on Behalf of Himself and All Others Similarly Situated v. Farmers Group, Inc.; Fire Underwriters Association; Fire Insurance Exchange; Farmers Underwriters Association; Farmers Insurance Exchange, No. 10-0245 (docket).

I wrote last weekend about the Ninth Circuit certifying a question about how Texas insurance law applies to allegedly discriminatory effects in how insurers use credit in underwriting decisions.

With today’s orders, the Texas Supreme Court formally accepted that invitation and indicated that it will hear oral arguments (likely this fall).

Forum-selection clause enforced.

In re Lisa Laser USA, Inc. and Lisa Laser Products, oHG, No. 09-0557 (details) (per curiam) (Hecht, J., not sitting)

In addition to Kenedy, the other case resolved today was In re Lisa Laser, a dispute over whether a forum-selection clause was broad enough to also protect the foreign parent company of the U.S. subsidiary. (It was.)

Background

HealthTronics entered into a sales and distribution agreement with Lisa Laser USA to sell products manufactured by the parent German corporation Lisa Laser Products, oHG. (The opinion shortens these names to “Lisa USA” and “Lisa Germany”.) The distribution agreement gave HealthTronics a right of first refusal to distribute new, related products.

With the standard sales terms was a clause choosing California (the home of Lisa USA) as the forum for any disputes arising from the agreement.

HealthTronics filed suit in Travis County, Texas against both Lisa USA and Lisa Germany arguing that it had breached its obligation to give HealthTronics a right of first refusal.

Because this was an integrated contract and was central to these tort claims, the forum-selection clause applied

HealthTronics argued that the forum-selection clause did not apply because it related only to the sales terms, not to the other obligations under the agreement. Consistent with that narrower scope, HealthTronics argued that this clause only apply to sales made by Lisa USA, not to other obligations imposed on Lisa Germany.

The Texas Supreme Court walked through the documents and concluded that it really represented one, integrated agreement — not smaller agreements that could make sense on their own. The Court acknowledged that tort claims can sometimes fall outside the reach of a forum-selection clause, but it explained these claims were ultimately based on contract — not from some independent tort duty that might have existed apart from the contract duties.

HealthTronics seeks to enforce obligations of the contract in this lawsuit. A plaintiff “cannot both have his contract and defeat it too.” In re Weekley Homes, L.P., 180 S.W.3d 127, 135 (Tex. 2005). In other words, HealthTronics cannot claim that Lisa Germany has obligations to HealthTronics under the Distribution Agreement and simultaneously claim that the forum-selection clause does not apply to those claims

Accordingly, the Court granted mandamus relief.

1. For those keeping track, the new reigning “oldest case pending after argument” is Solar Applications Engineering, Inc. v. T.A. Operating Corporation, No. 06-0243 (docket

Full post as published by Supreme Court of Texas Blog on April 16, 2010 (boomark / email).