In re Prime Ins. Co.

• Decision Date: 16 October 2014
• Docket Number: NUMBER 13-14-00490-CV
• Parties: IN RE PRIME INSURANCE COMPANY
• Court: Texas Court of Appeals

IN RE PRIME INSURANCE COMPANY

NUMBER 13-14-00490-CV

COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI - EDINBURG

October 16, 2014

On Petition for Writ of Mandamus.

MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Perkes and Longoria

Memorandum Opinion by Chief Justice Valdez¹

RZQ, L.L.C., Hameed Quraishi, M.D., Rafath Quraishi, M.D., Aadam Quraishi, M.D., and Advanced Medical Imaging, L.L.C. (collectively "RZQ"), brought suit against Prime Insurance Company ("Prime") for negligence, breach of contract, violations of the Deceptive Trade Practices Act and the Texas Insurance Code, and breach of the duty of good faith and fair dealing in connection with Prime's handling of RZQ's commercialproperty insurance claim after RZQ's medical facility was damaged in a storm. Through this original proceeding, Prime seeks to compel the trial court² to grant its motion to dismiss the lawsuit based on a forum-selection clause contained in the commercial property insurance policy at issue. We conditionally grant the petition for writ of mandamus.

I. BACKGROUND

In May 2011, RZQ purchased commercial property insurance from Prime for a medical imaging facility located at 1200 South Second Street in McAllen, Texas. The Prime insurance coverage was purchased through insurance agent Felipe Farias of the Felipe Farias Insurance Agency. The insurance policy covered the period of time from May 27, 2011 to May 27, 2012. RZQ paid the total premium of $81,226.57 in May 2011. On June 22, 2011, a storm struck McAllen, Texas causing property damage and loss to the insured property. RZQ filed a claim with Prime for building and business personal property losses, including damage to an MRI machine, totaling more than one and a half million dollars. RZQ later added claims for business income losses consisting of lost referrals, lost revenue, and "labor costs for keeping employees" attributable to the non-functional MRI machine. Prime did not pay RZQ's claims.

On June 24, 2013, RZQ brought suit against Prime in the 389th District Court of Hidalgo County, Texas for claims related to coverage under the insurance policy. Specifically, RZQ alleged that Prime failed to adequately investigate the claim, provided an "inaccurate and low ball estimate" to pay for a damaged MRI machine, and failed to return RZQ's phone calls. On December 27, 2013, Prime filed a motion to dismiss thelawsuit based on a forum-selection clause in the insurance policy which required that suits under the policy be brought in the state of Utah. The forum-selection clause in the policy provides:

SECTION X - CONSENT TO EXCLUSIVE JURISDICTION

The Insured understands and acknowledges that the Insurer conducts its business activities, including the underwriting, risk management, and claims services within the State of Utah. The Insured represents and acknowledges that the Insured has purposefully directed its actions to procure the insurance services of the Insurer within the State of Utah and, for that purpose, will make continuous and systematic requests for the Insurer's services in the State of Utah. The Insured acknowledges that, by entering into this policy of insurance, the Insured is deemed to be transacting business within the State of Utah such that the courts of Utah may exercise jurisdiction over it regarding any issues arising out of this Policy. In addition, the Insured hereby understands and consents to the jurisdiction of the courts in the State of Utah and agrees that those courts shall be the exclusive forum for the resolution of any claims or disputes arising between the parties related to any insurance coverage issues and any payments due to the Insured under the Policy, unless both the Insurer and Insured agree otherwise in writing.

On January 27, 2014, Prime filed a supplemental motion to dismiss based on the forum-selection clause. On June 17, 2014, RZQ filed a response to Prime's motion to dismiss. The trial court held a hearing on Prime's motion to dismiss on June 18, 2014 and denied the motion to dismiss by written order issued that same day. Prime filed a motion for reconsideration. RZQ filed a response and a supplemental response to Prime's motion for reconsideration. The trial court held a hearing on Prime's motion for reconsideration on August 21, 2014 and denied the motion for reconsideration by written order that same day.

This original proceeding ensued. By one issue, Prime contends that the trial court committed a clear abuse of discretion in denying Prime's motion to dismiss.³ This Court requested and received a response to the petition for writ of mandamus from RZQ,⁴ and further received a reply thereto from Prime.

II. STANDARD OF REVIEW

To be entitled to the extraordinary relief of a writ of mandamus, the relator must show that the trial court abused its discretion and that there is no adequate remedy by appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding). The relator has the burden of establishing both prerequisites to mandamus relief, and this burden is a heavy one. In re CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003) (orig. proceeding). "A trial court has no discretion in applying the law to the facts or determining what the law is." In re Prudential Ins. Co. of Am., 148 S.W.3d at 135. We assess the adequacy of an appellate remedy by balancing the benefits of mandamus review against the detriments. In re State, 355 S.W.3d 611, 614-15 (Tex. 2011) (orig. proceeding); In re Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008) (orig. proceeding). In performing this balancing, we look at a number of factors, including whether mandamus review "will spare litigants and the public 'the time and money utterlywasted enduring eventual reversal of improperly conducted proceedings.'" In re State, 355 S.W.3d at 615 (quoting 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 Lisa Laser USA, Inc., 310 S.W.3d 880, 883 (Tex. 2010) (orig. proceeding); In re Laibe Corp., 307 S.W.3d 314, 316 (Tex. 2010) (orig. proceeding) (per curiam); In re ADM Investor Servs., Inc., 304 S.W.3d 371, 374 (Tex. 2010) (orig. proceeding); In re Int'l Profit Assocs., 286 S.W.3d 921, 922 (Tex. 2009) (orig. proceeding) (per curiam); In re Int'l Profit Assocs., 274 S.W.3d 672, 674 (Tex. 2009) (orig. proceeding) (per curiam); In re AutoNation, Inc., 228 S.W.3d 663, 665 (Tex. 2007) (orig. proceeding); 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," that is, trial in the proper forum. In re AIU Ins. Co., 148 S.W.3d at 115 (quoting Jack B. Anglin Co. v. Tipps, 842 S.W.2d at 269, 272 (Tex. 1992)); accord In re Laibe Corp., 307 S.W.3d at 316. Allowing a lawsuit to proceed in a forum other than that for which the parties contracted injects inefficiency into the judicial process by enabling forum-shopping, wasting judicial resources, delaying adjudication on the merits, and skewing settlement dynamics. In re Lisa Laser USA, Inc., 310 S.W.3d at 883; In re AutoNation, Inc., 228 S.W.3d at 667-68; In re AIU Ins. Co., 148 S.W.3d at 117.

III. FORUM-SELECTION CLAUSES

Forum-selection clauses are contractual arrangements whereby parties agree inadvance to submit their disputes for resolution within a particular jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n.14 (1985); 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.). The enforcement of valid forum-selection clauses, bargained for by the parties, protects the parties' "legitimate expectations" and furthers "the vital interests of the justice system," such as sparing litigants the time and expense of pretrial motions to determine the proper forum for disputes. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring); see Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 594 (1991); RSR Corp., 309 S.W.3d at 700; Phoenix Network Techs., 177 S.W.3d at 611.

The Texas Supreme Court has adopted the federal analysis of forum-selection clauses to determine their enforceability. Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 793 (Tex. 2005); In re Automated Collection Techs., Inc., 156 S.W.3d 557, 558-59 (Tex. 2004) (orig. proceeding) (per curiam); In re AIU Ins. Co., 148 S.W.3d at 111-14; Diamond Offshore (Bermuda), Ltd. v. Haaksman, 355 S.W.3d 842, 846 (Tex. App.—Houston [14th Dist.] 2011, pet. denied); see also In re Dingo Drilling, Inc., No. 14-13-00015-CV, 2013 WL 645206, at *2 (Tex. App.—Houston [14th Dist.] Feb. 21, 2013, orig. proceeding) (per curiam) (mem. op.). Under this analysis, forum-selection clauses are presumptively valid. In re Laibe Corp., 307 S.W.3d at 316; In re Int'l Profit Assocs., 274 S.W.3d at 680; Stokes Interest, G.P. v. Santo-Pietro, 343 S.W.3d 441, 444 (Tex. App.—El Paso 2010, no pet.). While there may be "extreme circumstances" that prevent the enforcement of forum-selection clauses, there is not "a bright-line test for avoiding enforcement of forum-selection clauses." In re ADM Investor Servs., 304 S.W.3d at 376 (following M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17 (1972)). A trial courtabuses its discretion in refusing to enforce a forum-selection clause unless the party opposing enforcement clearly shows: (1) enforcement would be unreasonable or unjust, (2) the clause is invalid...