In re International Profit Associates, Inc.

• Decision Date: 09 January 2009
• Docket Number: No. 08-0238.,08-0238.
• Citation: 274 S.W.3d 672
• Parties: In re INTERNATIONAL PROFIT ASSOCIATES, INC.; International Tax Advisors, Inc.; and IPA Advisory and Intermediary Services, LLC, Relators.
• Court: Texas Supreme Court

274 S.W.3d 672

In re INTERNATIONAL PROFIT ASSOCIATES, INC.; International Tax Advisors, Inc.; and IPA Advisory and Intermediary Services, LLC, Relators.

No. 08-0238.

Supreme Court of Texas.

January 9, 2009.

J. Ken Nunley, Chad Michael Upham, Kelly Putney Rogers, Nunley Jolley Cluck Aelvoet, LLP, Boerne, TX, for Realators.

Raymond L. Thomas, Rebecca Vela, Tracy Lynn Altman Spillman, Kittleman, Thomas & Gonzalez, P.L.L.C., McAllen, TX, for Real Party in Interest.

PER CURIAM.

In this original proceeding, we consider whether the trial court abused its discretion by refusing to enforce forum-selection clauses. We conclude that it did and grant relief.

In March 2004, McAllen Tropicpak, Inc. entered into separate contracts with International Profit Associates, Inc., IPA Advisory and Intermediary Services, LLC, and International Tax Advisors, Inc. (collectively "IPA"), three related management and tax consulting firms. The contracts called for IPA to provide Tropicpak with (1) general business consulting services, (2) business operations and financial assessment services, and (3) tax consulting services. Each agreement is two pages in length and contains the following clause just above the signature line in one contract and a few lines above the signature line in the others: "It is agreed that exclusive jurisdiction and venue shall vest in the Nineteenth Judicial District of Lake County, Illinois, Illinois law applying."

After execution of the agreements, according to Tropicpak, IPA made business recommendations, including that Tropicpak hire David Salinas to help increase sales. Tropicpak hired Salinas, who allegedly embezzled large sums of money from the company. Tropicpak sued Salinas, IPA employee James Gibson, and IPA in Hidalgo County. The allegations as to IPA were that it negligently provided professional services, committed fraud and/or fraudulent inducement, made negligent misrepresentations, and breached its duty of good faith and fair dealing. IPA answered and on January 6, 2006 filed a motion to dismiss based upon the forum-selection clauses. A hearing was held on May 2, 2006, but the trial court failed to rule on the motion until after a second hearing in May 2007. The trial court denied IPA's motion, but the written order erroneously referred to IPA's motion as a "motion to compel" and was dated May 29, 2006, instead of May 29, 2007. After various attempts by IPA to obtain entry of a correct order through the summer and fall, the trial court signed a corrected order dated October 23, 2007. IPA obtained a copy of the corrected order by fax in December 2007.

IPA sought a writ of mandamus from the court of appeals, complaining that the trial court abused its discretion in denying the motion to dismiss. The court of appeals denied relief. 274 S.W.3d 696.

In this Court, IPA again argues that the trial court abused its discretion by not enforcing the forum-selection clauses. Tropicpak responds that IPA waived its right to mandamus relief because it delayed asserting its rights, and that even if IPA did not waive its right to seek mandamus relief, the trial court did not abuse its discretion in denying the motion because (1) the clauses are unenforceable as they are ambiguous in general, and in the alternative, the clauses are ambiguous as to whether Tropicpak's tort claims are within the scope of the clauses; (2) IPA procured the clauses through overreaching or fraud; (3) the interest of Tropicpak's witnesses and the public favor litigating this case in Texas; and (4) enforcement of the clauses would effectively deprive Tropicpak of its day in court.

Forum-selection clauses are generally enforceable, and a party attempting to show that such a clause should not be enforced bears a heavy burden. In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 232 (Tex.2008) (per curiam) (citing In re AIU Ins. Co., 148 S.W.3d 109, 113 (Tex.2004)). A trial court abuses its discretion if it refuses to enforce a forum-selection clause unless the party opposing enforcement clearly shows that (1) the clause is invalid for reasons of fraud or overreaching, (2) enforcement would be unreasonable or unjust, (3) enforcement would contravene a strong public policy of the forum where the suit was brought, or (4) the selected forum would be seriously inconvenient for trial. Id. at 231-32; AIU, 148 S.W.3d at 112; see also M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15-17, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). Mandamus relief is available to enforce forum-selection agreements because there is no adequate remedy by appeal when a trial court abuses its discretion by refusing to enforce a valid forum-selection clause that covers the dispute. Lyon, 257 S.W.3d at 231; see also AIU, 148 S.W.3d at 115-20.

In asserting that IPA waived its right to seek mandamus by not diligently pursuing such relief, Tropicpak focuses on three time periods. The first is the time between January 9, 2006 when IPA filed its motion to dismiss and May 2, 2006 when the trial court first heard the motion. The second is the period of almost eight months between May 29, 2007 when the trial court signed the erroneous order on IPA's motion to dismiss, and January 22, 2008 when IPA filed its mandamus petition with the court of appeals. The third is the period of thirty-eight days between the time the court of appeals denied relief and the filing of IPA's petition seeking relief from this Court.

Although mandamus is not an equitable remedy, its issuance is controlled largely by equitable principles. In re Users Sys. Servs., Inc., 22 S.W.3d 331, 337 (Tex.1999); Rivercenter Assocs. v. Rivera, 858 S.W.2d 366, 367 (Tex.1993). One such principle is that "equity aids the diligent and not those who slumber on their rights." Rivercenter, 858 S.W.2d at 367 (quoting Callahan v. Giles, 137 Tex. 571, 155 S.W.2d 793, 795 (1941)). Thus, delaying the filing of a petition for mandamus relief may waive the right to mandamus unless the relator can justify the delay. Id. at 367-68.

Tropicpak relies on Rivercenter, 858 S.W.2d at 367, where mandamus was denied to a party who delayed seeking mandamus relief for over four months, showed no diligent pursuit of its rights, and provided no justification for the delay. Here, Tropicpak claims that the gap of almost four months between the filing of IPA's motion to dismiss and its being heard bars equitable relief. However, Tropicpak does not reference any actions by IPA during the gap that indicate IPA lacked interest in or did not intend to press its motion to dismiss. IPA, on the other hand, references separate written requests for a hearing that it made in February and March. A hearing on the motion to dismiss was originally set for April 3, 2006 but was continued without objection to May 2, 2006, when the first hearing actually took place. The record shows that IPA timely pursued a hearing on its motion to dismiss and provided justification for the four-month delay. See id.

As to the second period of time Tropicpak references, on May 29, 2007, the trial court signed an order that erroneously referenced a motion to compel and was incorrectly dated May 29, 2006. Tropicpak furnished the incorrect order to the trial court. When IPA received the order, it contacted Tropicpak, who indicated that it had no objection to presenting the trial court with a revised order. IPA faxed a proposed revised order to Tropicpak on July 30, 2007. IPA received no response from Tropicpak, and on October 1, 2007, IPA filed a motion to enter a corrected order. Tropicpak then agreed to the corrected order, and the trial court signed a revised order on October 23, 2007. IPA asserts, without contest by Tropicpak, that despite repeated requests by IPA and assurances from the trial court that IPA would receive the corrected copy in the mail, the trial court failed to provide IPA with a copy until it was faxed on December 5, 2007. IPA filed its petition with the court of appeals on January 22, 2008, and the court of appeals denied the petition on February 21, 2008. IPA then filed its petition for relief in this Court on March 31, 2008.

IPA's actions following entry of the May 29, 2007 order do not indicate the type of delay that forfeits a party's right to mandamus relief. IPA could have been more diligent in its efforts to have a corrected order entered, but Tropicpak does not claim that IPA took any actions inconsistent with pressing its motion to dismiss or seeking mandamus relief, and it was the errors and delays of the trial court and Tropicpak that hindered IPA's ability to initiate mandamus proceedings. Nor was delay in filing for mandamus relief from the court of appeals from December 5, 2007, when it received a copy of the corrected order, until January 22, 2008 unreasonable. Neither was the thirty-eight day time period between the court of appeals' denial of mandamus relief and IPA's filing in this Court such an unreasonable time under this record as to waive IPA's right to seek equitable relief. Based on the explanations provided by IPA and the record presented, we conclude that IPA did not "slumber on its rights" to the extent it waived its right to seek mandamus relief. In re SCI Tex. Funeral Servs., Inc., 236 S.W.3d 759, 761 (Tex.2007) (per curiam).

Moving to the merits of IPA's petition, we first address Tropicpak's arguments as to ambiguity. Tropicpak urges that the forum-selection clauses do not mention "litigation," do not mention what, if anything, is to be brought in the Nineteenth Judicial District Court of Lake County, Illinois, and are so vague and ambiguous on their face they should not be enforced. In the alternative, Tropicpak argues that the clauses are ambiguous as to the scope of claims they cover and do not clearly govern the various tort claims Tropicpak asserts. We disagree with both arguments.

A contract is ambiguous when it is susceptible to more than one reasonable interpretation. Frost Nat'l Bank v. L & F Distribs., Ltd., ...