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Supreme Court of Texas
February 28, 2017, Argued; May 19, 2017, Opinion Delivered
[*432] Subject to public-policy constraints, forum-selection clauses are generally enforceable in Texas.1 Though enforceability is not the concern it once was,2 courts are frequently confronted with disagreements about the specific claims encompassed and the extent to which nonsignatories may resist or enforce such clauses. In determining these matters, common principles of contract and agency law3 and the parties' chosen language are the fulcrum of our inquiry because forum-selection clauses are creatures of contract and we must give effect to the parties' intent as expressed in the four corners of the document.4
Here, certain minority shareholders filed suit alleging dilution of equity interests and the defendants responded, in part, by invoking a forum-selection clause designating Delaware as the proper forum for "any dispute arising out of" a shareholders agreement. The parties ask us to decide (1) which parties are bound to the forum-selection clause as signatories or nonsignatories to the shareholders agreement and (2) whether statutory and common-law tort claims that are factually predicated on the existence or terms of that agreement [**3] must be litigated in the contractually designated forum. The trial court granted the defendants' motion to dismiss, but a divided court of appeals reversed, holding the forum-selection clause does not control because the shareholders' extracontractual claims do not allege noncompliance or interference with any rights or obligations derived from the shareholders agreement.5
[*433] ] While "the party who brings a suit is master to decide what law he will rely on,"6 whether a forum-selection clause applies depends on the factual allegations undergirding the party's claims rather than the legal causes of action asserted.7 Focusing on the factual allegations in this case rather than the legal theories the minority shareholders elected to pursue, we hold that the shareholders' statutory and common-law tort claims evidence a "dispute arising out of" the shareholders agreement because (1) the existence or terms of the agreement are operative facts in the litigation and (2) "but for" that agreement the shareholders would not be aggrieved.8 Our holding today is faithful to the parties' chosen contractual language, avoids "slavish adherence to a contract/tort distinction,"9 and prevents litigants from avoiding [**4] a forum-selection clause with "artful pleading."10 We further hold the shareholders are bound by the forum-selection clause as signatories to the shareholders agreement, except with respect to their claims against the nonsignatory defendants. We therefore reverse the court of appeals' judgment, render judgment dismissing the minority shareholders' claims in part, and remand the case to the trial court for further proceedings in part.
I. Factual and Procedural Background
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
526 S.W.3d 428 *; 2017 Tex. LEXIS 465 **; 60 Tex. Sup. J. 1015; 2017 WL 2200357
PINTO TECHNOLOGY VENTURES, L.P.; PINTO TV ANNEX FUND, L.P.; PTV SCIENCES II, L.P.; RIVERVEST VENTURE FUND I, L.P.; RIVERVEST VENTURE FUND II, L.P.; RIVERVEST VENTURE II (OHIO), L.P.; BAY CITY CAPITAL FUND IV, L.P.; BAY CITY CAPITAL FUND IV CO-INVESTMENT FUND, L.P.; CHRIS OWENS; BILL BURKE; REESE TERRY; AND CRAIG WALKER, PETITIONERS, v. JEFFERY SHELDON AND ANDRAS KONYA, M.D., PH.D., RESPONDENTS
Subsequent History: Motion for rehearing on petition for review denied by Pinto Tech. Ventures L.P. v. Sheldon, 2017 Tex. LEXIS 872 (Tex., Sept. 22, 2017)
Prior History: [**1] ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS.
Sheldon v. Pinto Tech. Ventures, L.P., 477 S.W.3d 411, 2015 Tex. App. LEXIS 9566 (Tex. App. Houston 14th Dist., Sept. 10, 2015)
shareholders, forum-selection, parties, nonsignatories, contractual, designating, tort claim, dilution, signatories, clauses, courts, shareholder agreement, financing, but-for, operative fact, common-law, rights, allegations, stock, preemptive right, provisions, disputes, venue, factual allegations, trial court, arbitration, obligations, concerted, terms, court of appeals
Business & Corporate Compliance, Contracts Law, Contract Conditions & Provisions, Forum Selection Clauses, Civil Procedure, Parties, Capacity of Parties, Contracts Law, Estoppel, Equitable Estoppel, Elements of Equitable Estoppel, Torts, Elements, Causation, Causation in Fact, Contract Interpretation, Intent, Third Parties, Preliminary Considerations, Venue