High Rev Motorsports LLC v. Yang Ming Marine Transport Corporation et al

Filing 17

MEMORANDUM OPINION AND ORDER granting 12 Motion to Dismiss. (Ordered by Senior Judge A. Joe Fish on 2/19/2013) (skt)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

HIGH REV MOTORSPORTS, L.L.C.,
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Plaintiff,
VS.
YANG MING MARINE TRANSPORT
CORPORATION, ET AL.,
Defendants.

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CIVIL ACTION NO.
3:12-CV-3684-G

MEMORANDUM OPINION AND ORDER
Before the court is the motion to dismiss of the defendant Continental Agency
Incorporated (“CAI”). For the following reasons, the motion is granted.
I. BACKGROUND
A. Procedural Background
On July 20, 2012, High Rev Motorsports, L.L.C. (“High Rev”) filed a petition
against Yang Ming Marine Transport Corporation and CAI (the “defendants”) in the
134th Judicial District Court of Dallas County, Texas, alleging breach of contract,
breach of fiduciary duty, conversion, and tortious interference with contractual
relations. See Notice of Removal, Exhibit 2, Plaintiff’s Original Petition ¶¶ 16-24

(docket entry 1-2). The defendants removed the case to this court on September 10,
2012. See Notice of Removal. On October 1, 2012, CAI filed this motion to dismiss
for lack of personal jurisdiction, insufficient process, insufficient service of process,
and improper venue. See Defendant Continental Agency Incorporated’s Motion to
Dismiss Pursuant to Rule 12(b)(2)(3)(4)&(5) (“Motion”) (docket entry 12).
B. Factual Background
On October 3, 2010, High Rev entered an agreement with CAI entitled “U.S.
Customs Power of Attorney” (the “POA”), whereby High Rev appointed CAI as High
Rev’s customs broker and agent in the United States. See Appendix to Brief in
Support of Defendant Continental Agency Incorporated’s Motion to Dismiss
(“Appendix”) at 17 (docket entry 14). The POA states that High Rev “acknowledges
receipt of [CAI] Terms and Conditions of Service governing all transactions between
the parties.” Appendix at 15. Paragraph 21 of the terms and conditions of service
provides:
21. Governing Law; Consent to Jurisdiction and Venue.
These terms and conditions of service and the relationship
of the parties shall be construed according to the laws of
the State of California, without giving consideration to
principles of conflict of law. Customer [High Rev] and
Company [CAI] (a) irrevocably consent to the jurisdiction
of the United States District Court and the State courts of
California; (b) agree that any action relating to the services
performed by Company, shall only be brought in said
courts. . .
Appendix at 17.
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II. ANALYSIS
A. Forum-Selection Clause
1. Applicability of the Forum-Selection Clause
CAI argues that the forum-selection clause is mandatory and that High Rev’s
original state court petition clearly shows that the instant action “relates to”1 the
services it performed for High Rev under the POA. See Brief in Support of Defendant
Continental Agency Incorporated’s Motion to Dismiss Pursuant to Rule
12(b)(2)(3)(4)&(5) at 4 ¶¶ 9-10 (docket entry 13). CAI thus contends the POA’s
forum-selection clause is applicable to this action. The court agrees that the language
of the POA’s forum-selection clause is mandatory and that it is clear that the claims
in this action relate to the services CAI performed under the POA with High Rev.
The POA states that “any action . . . shall only be brought . . .” See Appendix at 17.
It is thus mandatory. High Rev brings claims for (1) breaches of the terms of the
POA; (2) breaches of fiduciary duties that existed because of the agency relationship
the POA created;2 and (3) conversion and tortious interference that arose out of

1

Clauses that extend to all disputes that “relate to” or “are connected
with” the contract are construed broadly. Pennzoil Exploration and Production Company
v. Ramco Energy Limited, 139 F.3d 1061, 1067 (5th Cir. 1998); MaxEn Capital, LLC v.
Sutherland, 2009 WL 936895, at *6 (S.D. Tex. Apr. 3, 2009).
2

See, e.g., Haynsworth v. The Corporation, 121 F.3d 956, 959, 961, 970
(5th Cir. 1997) (finding that a broadly worded forum-selection clause encompassed a
breach-of-fiduciary-duty claim), cert. denied, 523 U.S. 1072 (1998).
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actions the POA required CAI to undertake.3 See Notice of Removal, Exhibit 2,
Plaintiff’s Original Petition ¶¶ 9, 16-24. Every claim High Rev presses in the instant
action thus “relates to” the services CAI performed under the POA. The forumselection clause in the POA therefore applies to this action.
2. Enforceability of the Forum-Selection Clause
In a diversity case such as this one, federal law governs the enforceability of
forum-selection clauses. Stewart Organization, Inc. v. Ricoh Corporation, 487 U.S. 22,
32 (1988); Ginter ex rel. Ballard v. Belcher, Prendergrast & Laporte, 536 F.3d 439, 441
(5th Cir. 2008). Under federal law, forum-selection clauses are prima facie valid and
carry a “strong presumption of enforceability.” Haynsworth, 121 F.3d at 966; see also
Ginter, 536 F.3d at 441. A party who seeks to overcome that presumption must carry
the heavy burden of demonstrating that enforcement of the clause would be
unreasonable under the circumstances. Mitsui & Company (USA), Inc. v. Mira M/V,
111 F.3d 33, 35 (5th Cir. 1997), citing M/S Bremen v. Zapata Off-Shore Company, 407
U.S. 1, 10 (1972); see also Calix-Chacon v. Global International Marine, Inc., 493 F.3d
507, 513 (5th Cir. 2007) (“‘[A] valid forum selection clause is given controlling
weight in all but the most exceptional cases.’” (quoting Stewart, 487 U.S. at 33)
3

Pinnacle Interior Elements, Limited v. Panalpina, Inc., 2010 WL 445927, at
*5 (N.D. Tex. Feb. 9, 2010) (Fish, J.) (finding that a broadly worded forum-selection
clause covered claims for fraudulent inducement and negligent misrepresentation,
because “neither [claim] could be maintained if there were no contract between the
parties”), citing Collin County v. Siemens Business Services, Inc., 250 Fed. Appx. 45, 47,
49-50 (5th Cir. 2007).
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(Kennedy, J., concurring)). Enforcement of a forum-selection clause is unreasonable
under the circumstances only if (1) “the incorporation of the forum selection clause
into the agreement was the product of fraud or overreaching;” (2) litigation in the
selected forum would be gravely inconvenient; (3) the “fundamental unfairness of the
chosen law” would deprive the plaintiff of a remedy; or (4) enforcing the clause would
violate a strong public policy. Haynsworth, 121 F.3d at 963, citing Carnival Cruise
Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991), and M/S Bremen, 407 U.S. at 12-13,
15, 18.
High Rev did not file a response to CAI’s motion to dismiss, so High Rev has
given the court no reason to believe that enforcement of the clause would be
unreasonable under the circumstances. The court will thus enforce the
(presumptively valid) forum selection clause.
3. Transfer vs. Dismissal
The remaining question is how the forum-selection clause should be enforced.
The defendant has moved for dismissal under FED. R. CIV. P. 12(b)(3). Motion at 2.
Neither party has requested, in the alternative, that the court transfer this case under
either 28 U.S.C. § 1406(a) or § 1404(a). “The district court has broad discretion in
deciding whether to order a transfer” or to order dismissal, especially where neither
party has moved for transfer. Caldwell v. Palmetto State Savings Bank of South Carolina,
811 F.2d 916, 919 (5th Cir. 1987) (per curiam); see also McClintock v. School Board of

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East Feliciana Parish, 299 Fed. Appx. 363, 365 (5th Cir. 2008) (“We review a district
court’s dismissal of a complaint for . . . improper venue under Rule 12(b)(3) . . . for
abuse of discretion.”).
Courts are guided in the exercise of their discretion by the type of forum
designated in the forum-selection clause. When a forum-selection clause designates a
state-court forum, an arbitral forum, or a forum in a foreign country, the proper
remedy is dismissal. International Software Systems, Inc. v. Amplicon, Inc., 77 F.3d 112,
113-15 (5th Cir.1996) (state-court forum); Lim v. Offshore Specialty Fabricators, Inc.,
404 F.3d 898, 900 (5th Cir.), cert. denied, 546 U.S. 826 (2005) (arbitral forum); M/S
Bremen, 407 U.S. at 2 (foreign forum).
By contrast, when a forum-selection clause designates a federal-court forum,
most district courts in this circuit have concluded that the proper way to enforce the
forum-selection clause is via transfer under § 1404(a). See, e.g., Southeastern Consulting
Group, Inc. v. Maximus, Inc., 387 F.Supp.2d 681, 683-84 (S.D. Miss. 2005); see also
Ellington Credit Fund, Limited v. Select Portfolio Servicing, Inc., 2007 WL 3256210, at *4
(W.D. Tex. Nov. 2, 2007) (collecting cases).
Where, as here, a forum-selection clause allows suit to be brought in either the
state or the federal courts of a different forum, the district courts in this circuit have
arrived at conflicting decisions about how best to enforce the clause. Compare, e.g.,
Abramson v. America Online, Inc., 393 F.Supp.2d 438, 440, 443 (N.D. Tex. 2005)

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(Lynn, J.) (ordering transfer where the forum-selection clause designated “the courts
of Virginia”), with VarTec Telecom, Inc. v. BCE Inc., 2003 WL 22364302, at *6 (N.D.
Tex. Oct. 9, 2003) (Lynn, J.) (initially ordering dismissal where the forum-selection
clause allowed litigation or arbitration only in the District of Columbia but then
granting unopposed motion to transfer to the District of Columbia). Although
Abramson is an exception, in most cases where courts have granted a motion to
transfer based on a forum-selection clause that selected either the state or the federal
courts of a different forum, the forum-selection clause was worded so that there was
only one possible transferee federal court. See, e.g., Southeastern Consulting Group, 387
F.Supp.2d at 682, 686 (granting a motion to transfer based on a forum-selection
clause that designated the “state and U.S. Federal courts for Fairfax County,
Virginia”); LaFargue v. Union Pacific Railroad, 154 F.Supp.2d 1001, 1002-03 (S.D.
Tex.2001) (granting a motion to transfer based on a forum-selection clause that
designated “the courts of the State of Nebraska,” which has only one federal district);
see also Wal-Mart Stores, Inc. v. Qore, Inc., 2007 WL 2769835, at *1-3 (N.D. Miss.
Sept. 20, 2007) (refusing to order dismissal under Rule 12(b)(3) but granting leave to
re-file a motion for transfer under § 1404 where the forum-selection clause allowed an
action to be brought “only in the federal or state courts for Benton County,
Arkansas”); Dorsey v. Northern Life Insurance Company, 2004 WL 2496214, at *1, *1011 (E.D. La. Nov. 5, 2004) (denying a motion to dismiss under Rule 12(b)(3) and

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ordering further briefing on the plaintiff's motion to transfer venue under § 1404(a)
where the forum-selection clause mandated venue in “any court sitting in King
County, Washington”).
Here, the court opts to exercise its discretion to dismiss this action for two
reasons. First, neither party has sought transfer, even in the alternative. The court is
unaware of any case in which a court has ordered transfer in the absence of a request
from either party. The court is not inclined to award relief that the parties have not
requested. Second, the forum-selection clause at issue here states only that venue in
the federal courts would be proper in “the United States District Court . . . of
California.” See Appendix at 17. California is home to four different federal judicial
districts. 28 U.S.C. § 84. In the absence of guidance from the parties, the court
declines to impose its own judgment as to the particular state or federal court forum
in which this litigation should proceed. Accord D.B. Incorporated v. National
Administrative Solutions Corporation, 2004 WL 865842, at *2 (N.D. Tex. Apr. 21,
2004) (Buchmeyer, J.) (concluding that “dismissal for improper venue,
unaccompanied by a motion to transfer venue, is proper when a forum selection
clause provides for venue” in “the federal or state courts located in Ohio,” which is
home to two federal judicial districts), citing VarTec Telecom, 2003 WL 22364302, at
*6.

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B. Process and Service of Process
Given the court’s conclusion that the forum-selection clause is enforceable and,
therefore, dismissal is proper, the court need not address the defendant’s personal
jurisdiction arguments.
III. CONCLUSION
For the reasons stated above, the defendant’s motion to dismiss is GRANTED.
The plaintiff’s claims against the defendant Continental Agency Incorporated are
DISMISSED without prejudice to being refiled in a state or federal court in
California.
SO ORDERED.

February 19, 2013.

___________________________________
A. JOE FISH
Senior United States District Judge

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