In re First Specialty Ins. Corp.
| Decision Date | 22 May 2020 |
| Docket Number | NUMBER 13-20-00122-CV |
| Court | Court of Appeals of Texas |
| Parties | IN RE FIRST SPECIALTY INSURANCE CORPORATION |
On Petition for Writ of Mandamus.
MEMORANDUM OPINIONBefore Justices Benavides, Hinojosa, and Tijerina
1
Relator First Specialty Insurance Corporation (First Specialty) filed a petition for writ of mandamus in the above cause on February 28, 2020. Through this original proceeding, First Specialty contends that the trial court2 erred in refusing to dismiss theunderlying lawsuit based on a forum-selection clause contained in its insurance policy. We conditionally grant the petition for writ of mandamus.
On August 27, 2019, Gregory-Portland Independent School District (GPISD) brought suit against multiple insurance companies, including First Specialty, alleging that it sustained extensive damage to its properties due to Hurricane Harvey in August 2017, but the insurers failed to properly compensate it pursuant to the relevant insurance policies. GPISD alleged that it sustained more than $10,000,000 in property damage, but the insurers valued its damages at only $840,000.
In its original petition, which is the live pleading at issue, GPISD sued Axis Surplus Insurance Company (Axis), Westchester Surplus Lines Ins. Co. (Westchester), Velocity Risk Under Writers, LLC (Velocity), United Specialty Ins. Co. (United), Interstate Fire & Casualty Company (Interstate), Underwriters at Lloyd's London f/k/a Certain Underwriters at Lloyd's London (Underwriters), Rockhill Insurance Co. (Rockhill), RSUI Indemnity Co. (RSUI), and First Specialty for declaratory judgment, breach of contract, and violations of the Texas Insurance Code. GPISD's petition asserted that Axis, Westchester, Velocity, United, Interstate, Underwriters, and Rockhill participated in GPISD's primary $10,000,000 layer of coverage under the insurance policies "through a contractual allocation of the risk." GPISD asserted that Rockhill, RSUI, and First Specialty provided insurance coverage in excess of the primary layer. GPISD alleged that the wind and water damages to its property, specifically, losses caused by Hurricane Harvey, were covered by the insurance policies issued by the insurers named in its suit.
On October 7, 2019, First Specialty filed a motion to dismiss GPISD's complaint against it on forum non conveniens grounds. According to First Specialty's motion to dismiss, a forum-selection clause in its insurance contract specifically required that any dispute against First Specialty "be exclusively brought in New York State Court and be governed by New York Law." First Specialty attached a copy of the relevant insurance policy, which includes the following forum-selection clause in an endorsement:
On December 10, 2019, GPISD filed a response to First Specialty's Motion to Dismiss. It argued:
First Specialty is not entitled to dismissal based on the endorsement because (1) Plaintiff did [not] agree to enter a contract containing the Applicable Law and Court Jurisdiction Endorsement, (2) Plaintiff did not receive the First Specialty policy until after the Hurricane Harvey loss made the subject of this lawsuit, and (3) the endorsement is an attempt to circumvent the public policy principles inherent in the insurance law of the State of Texas. Considering the foregoing, the interest of justice is notserved by litigating this case in New York, and Defendant's Motion to Dismiss should be denied.
GPISD alleged that its insurance agent summarized GPISD's total insurance coverage, only identified Axis as the lead primary insurance carrier, and did not inform GPISD that its coverage plan included several insurance policies issued by multiple carriers. GPISD specifically asserted that it was unaware it was being insured by First Specialty.
In support of its response, GPISD filed the affidavit of Brigitte Clark, the Chief Financial Officer of GPISD, who testified that she had conducted "a diligent search" of GPISD's records and it had "no record of the receipt of the policies of insurance issued to [it] by [First Specialty]" during the relevant period of time. GPISD also included the declaration of Tracie G. Conner, an employee of GPISD's counsel, who stated that she had requested "documentation that full copies of the policies of insurance issued to [GPISD] by [First Specialty]" for the relevant time periods "were mailed to, or otherwise provided to, [GPISD]," but she had not received the requested documentation.
The trial court held a non-evidentiary hearing on First Specialty's motion to dismiss on December 17, 2019. On February 5, 2020, the trial court signed an order denying First Specialty's motion to dismiss. The order states that "[t]he [c]ourt specifically rules that enforcing the forum-selection clause and requiring [GPISD] to litigate this matter in the state of New York is unconscionable and significantly inconvenient, and is contrary to [the] public policy of the state of Texas."
This original proceeding ensued. First Specialty raises two issues contending that: (1) the trial court abused its discretion by denying First Specialty's motion to dismiss because the forum-selection clause was exclusive and mandatory; and (2) mandamus is available to review this abuse of discretion. This Court granted First Specialty's requestfor temporary relief and ordered the trial court proceedings to be stayed. See TEX. R. APP. P. 52.10. We further requested that GPISD, or any others whose interest would be directly affected by the relief sought, file a response to the petition for writ of mandamus. See id. R. 52.2, 52.4, 52.8.
On March 12, 2020, GPISD filed a response to the petition for writ of mandamus. First Specialty and GPISD also provided the Court with a substantial amount of supplemental briefing: on March 19, 2020, First Specialty filed a reply to GPISD's response; on March 26, 2020, GPISD filed a sur-reply; and finally, on April 14, 2020, First Specialty filed a brief in response to GPISD's sur-reply. None of the other parties to the underlying lawsuit filed a response to First Specialty's petition for writ of mandamus.
Mandamus is an extraordinary remedy issued at the discretion of the court. In re Garza, 544 S.W.3d 836, 840 (Tex. 2018) (orig. proceeding) (per curiam). To obtain relief by writ of mandamus, a relator must establish that an underlying order is void or is a clear abuse of discretion and there is no adequate appellate remedy. In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016) (orig. proceeding); see In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992) (orig. proceeding).
An abuse of discretion occurs when a trial court's ruling is arbitrary and unreasonable or is made without regard for guiding legal principles or supporting evidence. In re Nationwide Ins. Co. of Am., 494 S.W.3d at 712; Ford Motor Co. v. Garcia, 363 S.W.3d 573, 578 (Tex. 2012). We determine the adequacy of an appellate remedy by balancing the benefits of mandamus review against the detriments. In re Essex Ins.Co., 450 S.W.3d 524, 528 (Tex. 2014) (orig. proceeding) (per curiam); In re Prudential Ins. Co. of Am., 148 S.W.3d at 136.
The Texas Supreme Court has repeatedly held that mandamus relief is available to enforce a forum-selection clause in a contract. See, e.g., In re Fisher, 433 S.W.3d 523, 535 (Tex. 2014) (orig. proceeding); In re Lisa Laser USA, Inc., 310 S.W.3d 880, 883 (Tex. 2010) (orig. proceeding) (per curiam); In re Laibe Corp., 307 S.W.3d 314, 316 (Tex. 2010) (orig. proceeding) (per curiam); In re ADM Inv'r Servs., Inc., 304 S.W.3d 371, 374 (Tex. 2010) (orig. proceeding); In re Int'l Profit Assocs., 274 S.W.3d 672, 674 (Tex. 2009) (orig. proceeding) (per curiam); In re AIU Ins. Co., 148 S.W.3d 109, 115-19 (Tex. 2004) (orig. proceeding). A trial court abuses its discretion when it fails to properly interpret or apply a forum-selection clause. In re Lisa Laser USA, Inc., 310 S.W.3d at 883; In re Laibe Corp., 307 S.W.3d at 316. Further, "an appellate remedy is inadequate when a trial court improperly refuses to enforce a forum-selection clause because allowing the trial to go forward will vitiate and render illusory the subject matter of an appeal, i.e., trial in the proper forum." In re Lisa Laser USA, Inc., 310 S.W.3d at 883 (internal quotations omitted); In re Laibe Corp., 307 S.W.3d at 316; In re AIU Ins. Co., 148 S.W.3d at 115.
Forum-selection clauses are contractual arrangements whereby parties agree in advance to submit their disputes for resolution within a particular jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n.14 (1985); Pinto Tech. Ventures, L.P. v. Sheldon, 526 S.W.3d 428, 436 (Tex. 2017); RSR Corp. v. Siegmund, 309 S.W.3d 686, 700 (Tex. App.—Dallas 2010, no pet.); Phoenix Network Techs. (Eur.) Ltd. v. Neon Sys., Inc., 177 S.W.3d 605, 611 (Tex. App.—Houston [1st Dist.] 2005, no pet.). Theenforcement of valid forum-selection clauses, bargained for by the parties, protects the parties' ...
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