Marshall et al v. MarOpCo Inc et al

Filing 50

ORDER TO TRANSFER CASE to USDC ND/TX- Dallas Division; granting 14 MOTION to Transfer Case to U.S. District Court for the Northern District of Texas. (Signed by Judge Alfred H Bennett) Parties notified.(gclair, 4)[Transferred from Texas Southern on 11/17/2016.]

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PRESTON MARSHALL, et al,
Plaintiffs,

November 17, 2016
David J. Bradley, Clerk

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VS.

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MAROPCO, INC., et al,

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CIVIL ACTION NO. 4:16-CV-2731

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Defendants.

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ORDER

Before the Court is Plaintiffs Preston Marshall and Rusk Capital Management, LLC's
(collectively, "Plaintiffs") Motion to Remand (Doc. #8), Plaintiffs' Motion to File Amended
Complaint (Doc. #9), Defendant MarOpCo, Inc.'s ("M<liiOpCo") Response to Plaintiffs' Motion
to Amend (Doc. #21), MarOpCo's Response to Plaintiffs' Motion to Remand (Doc. #23),
Defendants E. Pierce Marshall, Jr. ("Pierce") and Trof, Inc.'s ("Trof'') Joinder in MarOpCo's
Responses (Docs. #24, 25), and Plaintiffs' Reply (Docs. #27, 28). Additionally, before the Court
is Defendant Trof's Motion to Transfer Case (Doc. #14), Defendants Pierce and MarOpCo's
Joinder (Docs. #17, 19), Plaintiffs' Responses (Doc. #35, 36), and Defendants' Replies (Doc.
#42, 43, 44). Each side argues that the Court should decide their motion first.

I.

Background

This dispute arises from the termination of Preston Marshall's ("Preston") employment
by Defendant MarOpCo, Inc. As part of his employment with MarOpCo, Preston signed a
mandatory forum-selection clause. That clause states:
In the event litigation is necessary, such legal action shall be commenced only in
a federal court located in Dallas, Texas or if federal court shall not have
jurisdiction for whatever reason then in a state district court located in Dallas,
Texas. Any litigation commenced other than in a federal court located in Dallas,
Texas shall be subject to being dismissed, stayed or having venue transferred to a

federal court located in Dallas, Texas at the option of the party not commencing
said litigation.
Doc. #14, Ex. A. This litigation was originally filed in the
County, Texas on June 22, 2015 against MarOpCo.

1

lith

Judicial District Court of Harris

Plaintiffs added Defendants E. Pierce

Marshall, Jr., Edwin K. Hunter, and Hunter, Hunter & Sonnier, LLC in the Third Amended
Petition, and Defendant Trof, Inc in the Fifth Amended Petition. On August 12, 2016, through
the Sixth Amended Petition, Plaintiffs for the first time added a federal claim against all
defendants-Computer Fraud and Abuse Act, 18 U.S.C. § 1030.

On September 9, 2016,

MarOpCo removed this case to federal court with the consent of all Defendants (Docs. #1, 3, 4,

On September 21, 2016, Defendant Trof filed a Motion to Transfer Venue (Doc. #14).
Defendants Pierce and MarOpCo joined in that Motion (Docs. #17, 19). Plaintiffs responded
urging: (1) MarOpCo waived enforcement of the forum clause; (2) Rusk Capital Management,
LLC ("Rusk") is a non-signatory, and, therefore, the clause cannot be enforced against them; (3)
the Defendants, with the exception of MarOpCo, are non-signatories and, therefore, cannot
enforce the clause; (4) the claims asserted against Trof, Pierce, and the Hunter Parties, and
majority of the claims asserted against MarOpCo, are nqt governed by the forum selection clause

1

Plaintiffs' argument that enforcement of the forum selection provision has been waived is not
legally justified. The Defendants had no right under the Texas venue statutes to enforce the
clause's alternative forum of state court in Dallas. See TEX. Crv. PRAC. AND REM. CoDE§
15.020 (a)-(b). Accordingly, Defendants' first opportunity to enforce the forum selection clause
occurred when Plaintiffs added a federal claim making the case removable.
2
Plaintiffs' argument that removal was improper because Defendants Edwin K. Hunter and
Hunter, Hunter & Sonnier, LLC's (collectively the "Hunter Parties") consent to removal was
invalid lacks merit. The Hunter Parties' consent states, "Subject to their pending appeal on the
denial of their special appearances ... [we] consent to removal." Doc. #8 at 9. The Court has not
found, nor has the Plaintiffs identified, any legal authority reflecting that such an addition to a
consent to removal makes it invalid. Accordingly, as far as the Court is concerned, this case was
properly removed to Federal Court.
2

because as written the clause only covers claims arising "under" the agreement; (5) since most of
the claims are not covered by the clause, to avoid splintered litigation, none of the claims or
defendants should be transferred under the forum selection clause; and (6) regardless, Plaintiffs'
Motion to Amend and Motion to Remand should be decided before Defendants' Motion to
Transfer Venue.

II.

Order of Motions
Defendants Pierce, MarOpCo, and Trof (collectively, "Moving Defendants") 3 argue that

the Court should rule on their Motion to Transfer Venue before reaching Plaintiffs' Motion to
Amend or their Motion to Remand-this Court agrees. When parties negotiate for a particular
forum and place it within their contract, the contracted forum should, except in the most
exceptional cases, decide the entire case, not just pieces of the litigation. Tex. Source Group, Inc.
v. CCH, Inc., 967 F. Supp. 234, 235 n.l (S.D. Tex 1997) (deciding a forum-clause motion to
transfer before a motion for leave to amend a complaint, stating "judicial integrity dictates that
the court to whom the case is transferred should have the opportunity to deal with the case in its
entirety, not pieces of the case carved off by another court."). Whether the Plaintiffs are allowed
to amend their complaint to remove their only federal claim is an important decision in the case
as it may dictate whether the case proceeds in federal or state court. Accordingly, if transfer is
proper, the contracted forum should decide whether to allow the amendment and this Court will
not substitute its discretion for the contracted forum's discretion.
As to Plaintiffs' Motion to Remand, the Court acknowledges that typically a court would
decide its own jurisdiction before a motion to transfer venue.

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However, as the Moving

The Hunter Parties have not joined in the Motion to Transfer Venue as they are challenging
person jurisdiction, and are currently pursuing an appeal ofthe denial oftheir special appearance
in state court. As such, this Court will view the Hunter Parties as neutral on the Motion.
3

Defendants point out, it is clear under the operative complaint that the Court has, at least in part,
subject matter jurisdiction. 4 The real question of jurisdiction presents itself if the Court allows
the Plaintiffs to amend their complaint to drop their sole federal claim. Accordingly, as the
Motion to Amend can only be decided after a determination of whether transfer is appropriate,
the Court must also decide the Motion to Transfer before Plaintiffs' Motion to Remand.

III.

Motion to Transfer Venue
A. Analysis
i. Scope of the Forum-Selection Clause
"Not only does '[f]ederallaw govern the determination of whether an enforceable forum

selection clause exists' but federal law also controls whether [Plaintiffs'] lawsuit falls within the
scope of the forum selection clause." Ondova Ltd. Co. v. Manila Industries, Inc., 513 F.Supp.2d
762,772 (N.D.Tex. June 16, 2007) (quotingAerus LLCv. Pro Team, Inc., 2005 WL 1131093, at
*1 (N.D.Tex. May 9, 2005) and citing Jones v. GNC Franchising, Inc., 211 F.3d 495, 497 (9th
Cir.2000) ("federal law governs the analysis of the effect and scope of forum selection
clauses.")). Importantly, "[t]he scope of a forum selection clause is not limited solely to claims
for breach of the contract that contains it." MaxEn Capital, LLC v. Sutherland, No. H-08-3590,
2009 WL 936895, at *6 (S.D. Tex. April3, 2009). This Court should "look to the language of the
parties' contracts to determine which causes of action are governed by the forum selection
clauses." Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216,222 (5th Cir.1998).
Generally, "[c]lauses that extend to all disputes that 'relate to' or 'are connected with' the
contract are construed broadly, while clauses that cover disputes 'arising out of' or over 'the
implementation and interpretation of the contract' are construed narrowly." Pinnacle Interior
4

The petition, as removed, asserted a Federal Computer Fraud & Abuse Act claim against all
Defendants.
4

Elements, Ltd. v. Panalpina, No. 3:09-CV-0430-G, 2010 WL 445927, at *5 (N.D.Tex. Feb. 9,
2010) (quoting 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)). Therefore, "[w]hether a forum selection clause encompasses other
claims depends principally on how broadly the clauses are worded." MaxEn Capital, LLC, 2009
WL 936895, at *6.
The language of the forum selection clause under consideration does not limit itself to
only claims "arising out of' the contract.

Instead, the clause simply states that the forum

selection clause will apply "in the event litigation is necessary." As no limitation was contracted
into the clause by the parties, this Court will not insert one. As such, since litigation has been
initiated by one signatory against another signatory, the forum selection clause applies to the
entire case. 5

ii. Motion to Transfer Venue

"For the convenience of parties and witnesses, in the interest of justice, a district court
may transfer any civil action to any other district or division where it might have been brought or
to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). "Because
the overarching consideration under§ 1404(a) is whether a transfer would promote the interest of

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This Court does not find merit in Rusk's argument that they were not a signatory to the
contract, and, therefore, the forum selection clause cannot be enforced as to them. Rusk seeks
several forms of relief under the employment agreement, including seeking attorney's fees under
said agreement. This allows enforcement of the clause against them. Vloeibare Pret Ltd. V.
Lloyd's Register N Am., Inc., 606 Fed. Appx 782, 784 (5th Cir. 2015) (enforcing a forum clause
against a non-signatory plaintiff that asserted claims "that must be determined by reference to
that contract"). Further, the Forum Selection Clause, as laid out above, clearly applies to the
entire litigation, including claims brought by Rusk-Rusk chose to bring its claims alongside
Preston, accordingly, Rusk chose to be subject to the Forum Selection Clause.
5

justice, a valid forum-selection clause should be given controlling weight in all but the most
exceptional cases." Atl. Marine, 134 S.Ct. at 581.
In this case, Plaintiffs have not identified, nor has this Court found, any exceptional
circumstances to justify not giving the forum-selection clauses controlling weight, as dictated by
the Supreme Court. All of Plaintiffs' arguments center around how a state court forum would be
more appropriate, but, as laid out above, consideration of Plaintiffs Motion to Remand is
inappropriate at this time. Accordingly, as the forum selection clause in this case covers the
entire litigation, the entire case is transferred pursuant to the contract entered into by Preston and
Defendant MarOpCo. 6

IV.

Conclusion
The Moving Defendants' Motion to Transfer Venue is GRANTED.

This case

IS

transferred to the Dallas Division of the Northern District of Texas for resolution.
It is so ORDERED.

NOV 1 7 2016
Date
United States District Ju

6

Should a non-signatory dislike the application ofthe forum selection clause in this case,
particularly the Hunter Parties if their appeal disputing personal jurisdiction fails, they should
move to sever the claims against them and transfer the severed portion of the case back to this
Court. However, under the broad language in the forum selection clause, any litigation between
the signatories of the contract must proceed in the contracted forum-even if that litigation
concerns non-signatories. A plaintiff cannot simply avoid a forum selection clause by adding
non-signatories to the contract in the litigation.
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