In re Texas Ass'n of School Boards, Inc., 03-1151.

• Decision Date: 13 May 2005
• Docket Number: No. 03-1151.,03-1151.
• Citation: 169 S.W.3d 653
• Parties: In re TEXAS ASSOCIATION OF SCHOOL BOARDS, INC. and Texas Association of School Boards Risk Management Fund, Relators.
• Court: Texas Supreme Court

Page 653

169 S.W.3d 653

In re TEXAS ASSOCIATION OF SCHOOL BOARDS, INC. and Texas Association of School Boards Risk Management Fund, Relators.

No. 03-1151.

Supreme Court of Texas.

Argued September 30, 2004.

Decided May 13, 2005.

Rehearing Denied September 16, 2005.

Bruce Edwin Ramage, Dale Jefferson, Levon G. Hovnatanian, Robin I. Krumme, Christopher W. Martin, Dale Jefferson, Martin Disiere Jefferson & Wisdom, L.L.P., Houston, Francisco Enriquez, Law Offices of Frank Enriquez, McAllen, TX, for Relators.

Mark C. Brodeur, Brodeur & Evans, P.L.L.C., Charles Lee Barrera, Barrera & Barrera, Alice, and Roland L. Leon, Stephen Jeffrey Chapman, Barker Leon Fancher & Matthys, LLP., Corpus Christi, TX, for Real Party.

Justice OWEN delivered the opinion of the Court.

In this mandamus proceeding, the Texas Association of School Boards, Inc. and the Texas Association of School Boards Risk Management Fund seek to have a suit against them transferred from Duval County to Travis County based on a contractual choice of venue provision in a risk coverage agreement that is similar to an insurance contract. They assert that the agreement is a "major transaction" within the meaning of section 15.020 of the Civil Practice and Remedies Code.¹ Section 15.020 is a mandatory venue provision. If there is a written agreement that suit arising from a "major transaction" may be brought in a particular county, suit must be brought in that county.² A "major transaction" is "a transaction evidenced by a written agreement under which a person pays or receives, or is obligated to pay or entitled to receive, consideration with an aggregate stated value equal to or greater than $1 million."³ The relators agreed to provide more than $17 million in risk coverage at a cost of $41,973 per year. The trial court declined to enforce the parties' venue agreement without stating its reasons, and the court of appeals denied mandamus relief.⁴ We likewise deny mandamus relief. The mandatory venue provision in section 15.020 is inapplicable because the coverage agreement is not a "major transaction."⁵

I

The Texas Association of School Boards Risk Management Fund (the Fund) is a nonprofit, statewide administrative agency consisting of cooperating public school districts in Texas. The Fund offers self-funded liability coverage plans to education-based political subdivisions. The Texas Association of School Boards (TASB) is the Fund's servicing contractor and provides services including the investigation and handling of property loss claims.

In October 2000, Benavides Independent School District (BISD) and the Fund entered into an "Interlocal Participation Agreement" under which the Fund agreed to provide vehicle and general liability coverage as well as coverage for certain casualty losses to property in return for an annual contribution from BISD. The term of the agreement was for one year, automatically renewable for two successive one-year terms, with the coverage and contribution amounts adjusted annually.

The coverage was renewed for the first renewal term, and during that term, coverage for potential losses or liabilities was in excess of $17,000,000 for an annual contribution of $41,973.⁶ In their briefing in this Court, the parties have segregated the annual amount paid for coverage of up to $15,309,822 for casualty loss to buildings, personal property, and auxiliary structures — $33,069 — from the annual amount paid for all other coverage — $8,904.

This suit arises from BISD's claim for indemnity under the parties' agreement for water damage and other alleged physical losses to every building in its school district, totaling more than $17 million. TASB denied the claim, and BISD appealed to the Fund's Board of Trustees, which affirmed the denial. BISD then sued the Fund and TASB in Duval County, asserting claims for breach of contract, declaratory relief, deceptive trade practices, unconscionable conduct, negligence, gross negligence, and breach of an alleged duty of good faith and fair dealing. BISD subsequently joined two other defendants, alleging negligence against Roofology Consultants Corp., which provided roofing consultation to BISD for some of the buildings at issue, and alleging tortious interference and civil conspiracy against Pro-Staff Adjusting Services, which investigated BISD's claims on behalf of the Fund and TASB.

The Fund and TASB filed a motion to transfer venue to Travis County based on a venue provision in the coverage agreement, which states "[t]his agreement shall be governed by and construed in accordance with the laws of the State of Texas, and venue shall lie in Travis County, Texas unless otherwise mandated by law." The Fund and TASB contend that venue is mandatory in Travis County pursuant to section 15.020 of the Texas Civil Practice and Remedies Code because, they assert, the agreement with BISD is a "major transaction." That term is defined in section 15.020:

"major transaction" means a transaction evidenced by a written agreement under which a person pays or receives, or is obligated to pay or entitled to receive, consideration with an aggregate stated value equal to or greater than $1 million . . . [not including] a transaction entered into primarily for personal, family, or household purposes, or to settle a personal injury or wrongful death claim, without regard to the aggregate value.⁷

The Fund and TASB contend that the aggregate stated value of the consideration for the coverage agreement is BISD's annual contribution plus the coverage limits under the agreement, which would exceed section 15.020's $1 million threshold. BISD counters that the consideration is only BISD's $33,069 annual contribution for property casualty loss coverage. Alternatively, BISD asserts that (1) the choice of venue provision is unenforceable because the coverage agreement is unconscionable,⁸ (2) its claim is for damage to real property and therefore venue in Duval County is mandatory under section 15.011,⁹ or (3) if both sections 15.020 and 15.011 are mandatory, BISD's choice of venue must be given effect.

The trial court denied the Fund and TASB's motion to transfer venue without stating its reasons, and the court of appeals summarily denied the Fund and TASB's petition for writ of mandamus.¹⁰ Because our conclusion that section 15.020 does not apply to the coverage agreement is dispositive of the request for mandamus relief, we do not reach the other issues raised by the parties.

II

If a trial court erroneously denies enforcement of a mandatory venue provision, mandamus relief is available without the necessity of showing an inadequate appellate remedy.¹¹ Because trial courts have no discretion in determining the legal principles controlling their rulings or in applying the law to the facts, our focus in this case is whether the trial court failed to correctly apply section 15.020.¹²

Construction of section 15.020 is an issue of first impression for this Court. That section provides in its entirety:

§ 15.020. Major Transactions: Specification of Venue by Agreement

(a) In this section, "major transaction" means a transaction evidenced by a written agreement under which a person pays or receives, or is obligated to pay or entitled to receive, consideration with an aggregate stated value equal to or greater than $1 million. The term does not include a transaction entered into primarily for personal, family, or household purposes, or to settle a personal injury or wrongful death claim, without regard to the aggregate value.

(b) An action arising from a major transaction shall be brought in a county if the party against whom the action is brought has agreed in writing that a suit arising from the transaction may be brought in that county.

(c) Notwithstanding any other provision of this title, an action arising from a major transaction may not be brought in a county if:

(1) the party bringing the action has agreed in writing that an action arising from the transaction may not be brought in that county, and the action may be brought in another county of this state or in another jurisdiction; or

(2) the party bringing the action has agreed in writing that an action arising from the transaction must be brought in another county of this state or in another jurisdiction, and the action may be brought in that other county, under this section or otherwise, or in that other jurisdiction.

(d) This section does not apply to an action if:

(1) the agreement described by this section was unconscionable at the time that it was made;

(2) the agreement regarding venue is voidable under Section 35.52, Business & Commerce Code; or

(3) venue is established under a statute of this state other than this title.

(e) This section does not affect venue and jurisdiction in an action arising from a transaction that is not a major transaction.¹³

The principal dispute in this case is what constitutes the "aggregate stated value" of the "consideration" "which a person pays or receives, or is obligated to pay or entitled to receive" under the parties' agreement.¹⁴ We have examined the legislative history, and it is silent as to what the Legislature intended on this score. However, the legal concept of "consideration" is well-established, although difficult to distill into a short, concise definition that fits all formations of contracts.¹⁵

What is clear is that the consideration for an agreement like the one between the Fund and BISD is an exchange of promises.¹⁶ The Fund promised to pay any claims that were covered, up to the coverage limits, if, as, and when they occurred during the specified term. BISD promised to pay $41,973 for this coverage. Although the parties have looked only at the contribution for property damage coverage, which was $33,069, the statute contemplates that the "aggregate" stated value of the consideration a person pays or is obligated to pay is the determinant amount. The aggregate amount BISD agreed to pay...