In In re Mark Fisher and Reese Boudreaux, the Texas Supreme Court held that a contractual venue agreement was enforceable and overrode the statutory venue requirements for the plaintiff’s claims, including tort claims. The Supreme Court had not previously addressed these issues. This is an important holding to both transactional and litigation attorneys, given the frequent use of choice-of-venue provisions in parties’ agreements.
In May 2007, Richey sold his interests in Richey Oil to Nighthawk via a Stock Purchase Agreement, a Goodwill Agreement, and a $6.5 million promissory note. Each contained a venue-selection clause designating Tarrant County as the venue for state court actions. Richey became an investor in the new company along with two other investors. After disputes arose, Richey sued the other investors in separate lawsuits in Wise County, where Richey resided, and Richey asserted several claims for defamation, breach of fiduciary duty, common law and statutory fraud, violations of the Texas Securities Act, negligent misrepresentation, and interference with prospective business relations. The defendants moved to dismiss the lawsuits or to transfer venue to Tarrant County, which the trial court denied.
The Texas Supreme Court granted mandamus relief, holding that the trial court had erred in refusing to enforce the venue-selection clauses in the parties’ agreements. The Court examined section 15.020 of the Texas Civil Practices & Remedies Code applicable to “major transactions,” which provides that an action may not be brought in a county if the party bringing the action has agreed in writing that an action arising from the transaction may not be brought in that county or that it must be brought in another county. See TEX. CIV. PRAC. & REM. CODE ANN. § 15.020.
The Court first rejected Richey’s argument that his claims did not “arise from” the purchase of Richey Oil, applying a “common sense” examination of the allegations established by the Court in two earlier opinions. See In re Lisa Laser USA, Inc., 310 S.W.3d 880, 883 (Tex. 2010) (per curiam); In re Int’l Profit Assocs., 274 S.W.3d 672 (Tex. 2009) (per curiam). The Court determined that in substance, Richey was seeking to recover the $6.5 million owed to him under the Note and for actions flowing directly from the acquisition and actions anticipated to flow from it. The Court clarified that section 15.020 does not require that an action arise out of a specific agreement, but rather it applies to an action “arising from a major transaction.” Richey’s claim based on an unpaid note “arose” out of that major transaction and regardless of whether Richey signed that note or whether his claim specifically “arose” out of that note.
Second, the Court rejected Richey’s argument that the venue-selection provision was permissive rather than mandatory. Where the phrase “non-exclusive jurisdiction” is in a venue-selection clause that also includes language reflecting intent that the venue choice is mandatory, the non-exclusive language does not necessarily control over the mandatory language.
Finally, the Court rejected Richey’s argument that venue was proper in Wise County under section 15.017 of the Texas Civil Practice & Remedies Code, the venue provision requiring suits for libel and slander to be brought in the county in which the plaintiff resided at the time the cause of action accrued. While venue may be proper in multiple counties under different mandatory venue statutes, section 15.020’s application to any action arising from a major transaction “notwithstanding any other provision of this title” indicates that the Legislature intended for it to control over other mandatory venue provisions.