21 Intern. Holdings, Inc. v. Westinghouse Elec. Corp.

• Decision Date: 05 May 1993
• Docket Number: No. 04-92-00543-CV,04-92-00543-CV
• Citation: 856 S.W.2d 479
• Parties: '21' INTERNATIONAL HOLDINGS, INC., and '21' International, Inc., Appellants, v. WESTINGHOUSE ELECTRIC CORPORATION, Knoll International, Inc., and Price Waterhouse, Appellees.
• Court: Texas Court of Appeals

Page 479

856 S.W.2d 479

'21' INTERNATIONAL HOLDINGS, INC., and '21' International Inc., Appellants, v. WESTINGHOUSE ELECTRIC CORPORATION, Knoll International Inc., and Price Waterhouse, Appellees.

No. 04-92-00543-CV.

Court of Appeals of Texas San Antonio.

May 5, 1993.

Rehearing Denied June 22, 1993.

Stephen D. Susman, Barry C. Barnett, Thomas A. Adams, IV, Susman Godfrey, L.L.P., Dallas, Julio A. Garcia, Laredo, Richard G. Morales, Jr., Mark D. Willett, Person, Whitworth, Ramos, Borchers & Morales, Laredo, L. Wayne Scott, St. Mary's School of Law, San Antonio, Jorge A. Ramirez, Eric J. Mayer, Susman Godfrey, L.L.P., Houston, for appellants.

James K. Jones, Jr., Alicia C. Finley, Mann & Jones, Laredo, Emily Nicklin, Frank Cicero, Kirkland & Ellis, Chicago, IL, Stephen A. Radin, Dennis J. Block, Weil, Gotshal & Manges, New York City, Charles C. Murray, Morris Atlas, Kristen G. Clark, Atlas & Hall, L.L.P., McAllen, Carlos David Castillon, Freeman & Castillon, Laredo, for appellees.

Before PEEPLES, BIERY and GARCIA, JJ.

OPINION

BIERY, Justice.

'21' International Holdings, Inc., and '21' International, Inc. ('21' International) filed suit against Westinghouse Electric Corporation (Westinghouse), Knoll International, Inc. (Knoll) and Price Waterhouse in Webb County, Texas. The defendants included in their answers motions to dismiss under the doctrine of forum non conveniens and motions for transfer of venue to Dallas County. The trial court denied the motions to transfer venue, but granted the motions to dismiss under the doctrine of forum non conveniens. '21' International appeals the dismissal order and, by way of cross-point, Westinghouse, Knoll and Price Waterhouse appeal the denial of their motions to transfer venue. Appellees also argue alternatively that this appeal should be dismissed or stayed pending the outcome of identical litigation in New York filed after the Texas suit. We reverse and remand.

This action arose out of an Asset Purchase Agreement under which Westinghouse and Knoll agreed to sell '21' International $115 million of Westinghouse common stock in return for substantially all of the assets of a furniture business. As the agreement required, Westinghouse filed with the Securities and Exchange Commission a "registration statement" covering the stock it had agreed to sell. The registration named Price Waterhouse, an accounting firm, as experts in auditing and accounting and included Price Waterhouse's certification of certain Westinghouse financial statements. '21' International claims the registration statement also contained material misrepresentations, in violation of federal and state law, which caused '21' International to sustain a loss of approximately $45 million.

The narrow issue in this appeal is whether the doctrine of forum non conveniens applies. ¹ Appellants contend the Texas Legislature abolished the doctrine of forum non conveniens in cases involving foreign corporations which have permits to conduct business in Texas pursuant to the predecessor statutory provisions to articles 8.02 and 2.02(A) of the Texas Business Corporation Act.

To support their contention, appellants rely upon H. Rouw Co. v. Railway Exp. Agency, 154 S.W.2d 143 (Tex.Civ.App.--El Paso 1941, writ ref'd). In Rouw, an Arkansas corporation having a permit to do business in Texas brought an action against Railway Express Agency, a Delaware corporation also having a permit to do business in Texas. Id. at 144. H. Rouw Company filed the lawsuit in Hidalgo County, Texas, seeking damages for injury to seven shipments of strawberries. Id. at 143. None of the shipments originated in Texas, and none passed through any part of Texas. ² Railway Express Agency moved for dismissal on forum non conveniens grounds, and the trial court granted the motion. ³ The court of appeals reversed, citing the predecessor statutory provisions to articles 8.02 and 2.02(A) of the Texas Business Corporation Act:

The statute ... expressly confers upon foreign corporations doing business under a permit all the rights and privileges of a domestic corporation. In the absence of any other provision this alone would be sufficient to bestow the right to bring, maintain and prosecute to final conclusion this suit. [The statute] expressly confers the power, "To maintain and defend judicial proceedings." No argument is needed to establish the right of a domestic corporation to maintain a suit such as this against either another domestic corporation or one doing business under a permit. Any other rule would be intolerable.

....

The District Court, under the law, has jurisdiction of this case. The statutes ... made the exercise of that jurisdiction obligatory.

H. Rouw Co., 154 S.W.2d at 145, 146 (emphasis added). The court so held despite its recognition of the potential impact of its decision:

We are not unaware of the practical results that may follow a precedent or law that permits a foreign corporation with a permit to do business to come indiscriminately and at will and bring its suits against another similarly situated regardless of where the cause of action arose. It is an invitation to all to come for reasons of convenience or for advantages, real or imaginary, and is calculated to constitute Texas a "Reno," and make slower the already too slow process of securing the adjudication of legal rights and the settlement of legal controversies between litigants who have no choice, but must resort to Texas courts. We are fearful it may result in many instances of forcing our citizens to wait in the corridors while foreign causes of actions are disposed of. The situation, if harmful, is one for the Legislature. The court is powerless to correct it.

Id. at 145. (emphasis added).

The Rouw court remanded the case for a trial on the merits, and the Texas Supreme Court refused to issue a writ of error. In doing so, the supreme court "determined that the judgment of the Court of Civil Appeals [was] correct and the principles of law declared in the opinion [were] correctly determined." Continental Oil Co. v. P.P.G. Indus., 504 S.W.2d 616, 620 (Tex.Civ.App.--Houston [1st Dist.] 1973, writ ref'd n.r.e.) (following Rouw ). ⁴

Texas appellate courts have continued to apply the Rouw holding. In Continental Oil Co., 504 S.W.2d at 620, the Houston Court of Appeals stated:

We consider that the court in Rouw held that a foreign corporation having a permit to do business in Texas has a statutory right to sue in the Texas courts another foreign corporation having a permit to do business in Texas, and that such courts have no discretion to exercise in the matter of retaining the jurisdiction acquired, and are required to try such a case just as such courts would be required to try a case brought against a Texas corporation by another Texas corporation....

(emphasis added); see also Leroy La Salle, Recent Cases and Statutes, Conflict of Laws-Jurisdiction-The Doctrine of Forum Non Conveniens, 20 TEX.L.REV. 609, 611-12 (1942) (discussing pre-Rouw holdings construing state statutes as "making the exercise of jurisdiction in certain cases mandatory"). Further, in Forcum-Dean Co. v. Missouri Pac. R.R. 341 S.W.2d 464, 466 (Tex.Civ.App.--San Antonio 1960, writ dism'd), this court recognized Rouw's holding that foreign corporations with permits to do business in Texas have the "absolute right to bring and maintain suits in the courts of this state." ⁵

The parties agree the statutory basis of Rouw remains virtually unchanged. In Rouw, 154 S.W.2d at 145, the court was construing article 1320 § 2, then applied to foreign corporations by virtue of article 1532 of the Texas Civil Statutes. Repealed by Act of May 25, 1961, 57th Leg., R.S., ch. 229 § 1, 1961 Tex.Gen.Laws 458, 458, 451. Article 1532 provided:

Such corporations, on obtaining such permit, shall have and enjoy all the rights and privileges conferred by the laws of this State on corporations organized under the laws of this State.

Article 1320 § 2 provided:

Every private corporation as such has power:

(2) To maintain and defend judicial proceedings.

These provisions were carried forward into the Texas Business Corporation Act (the Act). Article 2.02(A)(2) of the Act states:

A. [E]ach corporation shall have power:

(2) To sue and be sued, complain and defend, in its corporate name.

TEX.BUS.CORP.ACT ANN. art. 2.02(A)(2) (Vernon Supp.1993).

Article 8.02(A) of the Act provides:

A foreign corporation which shall have received a certificate of authority under this Act shall ... enjoy the same, but no greater rights and privileges as a domestic corporation organized for the purposes set forth in the application pursuant to which such certificate of authority is issued....

Id. art. 8.02(A). As explained in Continental Oil Co.,

While the language found in these sections of the Texas Business [Corporation Act] differs somewhat from that of the statutes superseded, these changes cannot be considered to have weakened the authority of Rouw. The court based its decision on the fact that the foreign corporation doing business under a permit had "all the rights and privileges of a domestic corporation." The court also pointed out in Rouw that the defendant was also a corporation with a permit "enjoying, in the language of the statute, all the rights and privileges of a domestic corporation."

504 S.W.2d at 620 (citing Rouw ).

Appellees claim the argument that the doctrine of forum non conveniens has been statutorily abolished ignores the "no greater rights" language of article 8.02:

Article 8.02 of the Texas Business Corporation Act does provide a properly licensed foreign corporation with the same rights and privileges as a similarly situated domestic corporation. That same provision, however, also dictates that the rights granted such a foreign entity shall be "no greater " than the rights granted to domestic corporations. Thus, while a properly licensed foreign corporation has a right to sue and be sued...