Logicorp Mex. SA de CV v. Andrade

• Decision Date: 26 January 2023
• Docket Number: 13-21-00243-CV
• Parties: LOGICORP MEXICO SA DE CV,Appellant, v. JORGE ANDRADE,Appellee.
• Court: Texas Court of Appeals

LOGICORP MEXICO SA DE CV,Appellant,
v.
JORGE ANDRADE,Appellee.

No. 13-21-00243-CV

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

January 26, 2023

On appeal from the 332nd District Court of Hidalgo County, Texas.

Before Chief Justice Contreras and Justices Benavides and Tijerina

MEMORANDUM OPINION

DORI CONTRERAS CHIEF JUSTICE

We handed down our memorandum opinion and judgment in this cause on December 1, 2022. On January 10, 2023, appellee Jorge Andrade filed a "First Amended Motion for Rehearing." We hereby deny the amended motion for rehearing; however, we withdraw our memorandum opinion and judgment of December 1, 2022, and substitute the following memorandum opinion and accompanying judgment in their place.

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In this complex business dispute, appellant Logicorp Mexico SA de CV (Logicorp) argues the trial court erred by granting a motion to dismiss filed by Andrade pursuant to a contractual forum selection clause. By three issues, Logicorp asserts: (1) the court erred in concluding the clause applies to its claims against Andrade; (2) Andrade waived enforcement of the clause; and (3) enforcement of the clause would be unreasonable and unjust because the selected forum-Monterrey, Nuevo Leon, Mexico-is seriously inconvenient for trial. Because we find that Andrade waived enforcement of the clause by his litigation conduct, we reverse and remand.

I. Background

Andrade, a dual citizen of Mexico and the United States, co-founded Logicorp, a freight hauling company, in Mexico in 2005. He owned a fifty percent interest in the firm. Through his solely-owned company J Double A Holding, LLC (JDA), Andrade also owned three American affiliates of Logicorp (collectively Logicorp US). In 2017, Andrade decided to sell sixty-one percent of his shares in JDA and Logicorp U.S. to a private equity firm, but the purchaser needed to borrow the funds necessary to complete the purchase. To facilitate the sale, Andrade executed a "Debt Subordination Agreement" on behalf of himself and Logicorp, providing in part that JDA and Logicorp U.S. would not pay Logicorp's accounts payable until the purchase money loans were paid in full.

In 2018, Logicorp and Lean Cargo Transportation, LLC (LCT), a freight hauling concern based in McAllen, sued Logicorp U.S. in the 332nd District Court, arguing that they are owed $5.5 million under various trucking contracts with Logicorp US. Logicorp U.S. counterclaimed against Logicorp, and Logicorp U.S. and JDA filed a third-party claim against Andrade for fraud and breach of contract. In its counterclaim, Logicorp U.S. argued

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that, pursuant to the subordination agreement, Logicorp is "not entitled to payment of any debt owed to it by [JDA] or [Logicorp US] at this time." In their third-party claim, Logicorp U.S. and JDA argued that Andrade (1) fraudulently represented that he had authority to bind Logicorp to the subordination agreement, and (2) breached a separate agreement that he would cause Logicorp to provide carrier services only to Logicorp U.S. and JDA.

Logicorp and LCT then filed a supplemental petition as to Andrade, alleging fraud, breach of contract, and other causes of action. Specifically, Logicorp and LCT argued that Andrade made "material misrepresentations to [them] of continued business and payment" and falsely represented to the private equity firm that the debt owed to Logicorp and LCT "would in large part be subordinated." They further argued, as Logicorp U.S. and JDA did, that Andrade "did not have the authority to subordinate [Logicorp US]'s debt to [Logicorp and LCT]."

On November 12, 2019, counsel for LCT, Logicorp Mexico, and Andrade signed an "Agreed Docket Control Order" setting the cause for trial on June 15, 2020. In May of 2020, the parties filed a "Joint Motion for Continuance" noting that they have not been able to conduct discovery due to the COVID-19 pandemic. The trial court granted the motion, and it later signed a "First Amended Agreed Docket Control Order" re-setting trial for February 8, 2021, and a "Second Amended Agreed Docket Control Order" re-setting trial for September 20, 2021.

On August 18, 2020, Andrade moved to dismiss Logicorp's claims against him based on a forum selection clause contained within Logicorp's by-laws, which are in Spanish and were adopted at the time of the company's founding in accordance with Mexican law. According to a certified translation attached to the motion to dismiss, the

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forum selection clause states: "ARTICLE 6.- FORUM:- The Corporation and its Shareholders expressly submit to the jurisdiction of the competent Courts of the city of Monterrey, Nuevo Leon, in case of conflict or controversy between one and others, waiving any forum that may favor them due to their domicile." The motion also included an affidavit in which Andrade averred, among other things, that when Logicorp was founded, "all parties intended for any and all disputes between [Logicorp] and its shareholders to be decided exclusively in the courts of Monterrey, Nuevo Leon, Mexico according to Mexican law."

Logicorp filed a response in which it argued: (1) the forum selection clause does not apply to its claims against Andrade; (2) Andrade waived enforcement of the clause by substantially invoking the judicial process in Texas to Logicorp's prejudice; (3) enforcement would be unreasonable because Mexico is a seriously inconvenient forum; (4) Logicorp's claims against Andrade do not "intrinsically arise out of the agreement containing" the forum selection clause; and (5) Logicorp's by-laws allow its "Sole Administrator" to unilaterally waive the forum selection clause, thereby allowing the company to sue in an alternative forum.

After a hearing on November 23, 2020, the trial court granted Andrade's motion to dismiss and severed the dismissed claims.^[1] This appeal followed.

II. Forum Selection Clauses

We review the trial court's decision whether to enforce a forum selection clause for an abuse of discretion, deferring to the court's factual determinations if they are supported

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by the evidence, but reviewing legal determinations de novo. In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding). As there were no findings of fact or conclusions of law here, we infer that the trial court made all fact findings that have support in the record and are necessary to uphold the ruling. See Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007).

Contractual forum selection clauses are generally enforceable in Texas. In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016) (orig. proceeding); see In re AIU Ins., 148 S.W.3d 109, 112 (Tex. 2004). The party seeking to enforce a contractual forum selection provision has the initial burden of establishing that the parties entered into an agreement to an exclusive forum and that the agreement applies to the claims involved. HMT Tank Serv. LLC v. Am. Tank & Vessel, Inc., 565 S.W.3d 799, 805 (Tex. App.-Houston [14th Dist.] 2018, no pet.); Young v. Valt.X Holdings, Inc., 336 S.W.3d 258, 262 (Tex. App.-Austin 2010, pet. dism'd). If the party seeking enforcement establishes these prerequisites, the burden then shifts to the party opposing enforcement to make a "strong showing" overcoming the prima facie validity of the forum selection clause. HMT Tank Serv., 565 S.W.3d at 805; Young, 336 S.W.3d at 262. "The burden of proof is heavy for the party challenging enforcement." In re ADM Inv'r Servs., Inc., 304 S.W.3d 371, 375 (Tex. 2010) (orig. proceeding); see In re AIU Ins., 148 S.W.3d at 113; Young, 336 S.W.3d at 262.

Under this framework, a forum selection clause must be enforced unless the party opposing enforcement of the clause shows "clear evidence that (1) enforcement would be unreasonable or unjust, (2) the clause is invalid for reasons of fraud or overreaching, (3) enforcement would contravene a strong public policy of the forum where the suit was

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brought, or (4) the selected forum would be seriously inconvenient for trial." In re Nationwide, 494 S.W.3d at 712 (citing In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 231- 32 (Tex. 2008) (per curiam)). "Absent these circumstances, a trial court should enforce a mandatory forum-selection clause by granting a motion to dismiss." Id.

III. Discussion

The parties do not dispute that Article 6 of Logicorp's by-laws constitutes an enforceable agreement to litigate at least some claims between Logicorp and Andrade in Mexico.^[2] Instead, Logicorp argues the forum selection clause: (1) does not apply to the particular claims at issue in this case; (2) was unilaterally waived by Logicorp's "Sole Administrator" pursuant to authority granted elsewhere in the by-laws; (3) was waived by Andrade by his participation in litigation in Texas; and (4) should not apply because Mexico is a seriously inconvenient forum.

A. Applicability of Clause

Logicorp contends by part of its first issue that the specific claims it raised against Andrade fall outside of the scope of the forum selection clause. It notes that, though the clause states the parties agreed to submit to the jurisdiction of Monterrey courts "in case of conflict or controversy between one and others," it does not state that it applies to "any" or "all" such controversies; moreover, it does not limit its applicability to claims which "arise from" or "relate to" the by-laws or management of the corporation. According to

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Logicorp, then, the "commonsense construction" of the clause is that it "applies only to claims that would not exist but for the Bylaws' terms, i.e., that the Bylaws are an element of the cause of action." Logicorp then argues that its claims against Andrade are wholly unrelated to the by-laws-instead, its "pivotal claim" is that Andrade "committed fraud independent of his position as shareholder"-and therefore, the forum selection clause contained in...