TruGreen Landcare L.L.C. v. Telfair Community Association, Inc.

Filing 42

OPINION AND ORDER denying 15 Motion for Reconsideration and Motion to Transfer.(Signed by Judge Melinda Harmon) Parties notified.(rvazquez)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
TRUGREEN LANDCARE, L.L.C.,
Plaintiff,
VS.
TELFAIR COMMUNITY ASSOCIATION,
INC.,
Defendant.

§
§
§
§
§
§
§
§
§
§
§

CIVIL ACTION H-12-514

OPINION AND ORDER
Pending before the Court in the above referenced diversity
action

is

Defendant

Telfair

Community

Association,

Inc.’s

(“Telfair’s”) motion to reconsider the Court’s order (#13) denying
its earlier motion to transfer venue pursuant to a venue selection
clause

in

the

parties’

Grounds

Maintenance

Contract,1

and

to

dismiss this action (instrument #15).
The venue selection clause in dispute provides that “parties
stipulate and agree that venue for any action brought hereunder
shall property [sic] lie in the state and federal courts situated
in Fort Bend County, Texas.”
contends

that

venue

selection

#15, Ex. A, ¶ 8.12.
clauses

similar

to

Defendant
this

one

(“situated in Fort Bend County, Texas”) in counties that lack a
federal district court operate as a waiver of federal venue.
Collin County v. Siemens Bus. Servs., Inc., 250 Fed. Appx. 45, 52
1

Exhibit A to #15.
Telfair’s answer (#4).

The motion to transfer was included in

(5th Cir. 2007)(when exclusive forum is a county that does not have
a federal courthouse, the parties to the forum selection clause
have waived their rights to seek redress in federal courts).

In

accord Yakin v. Tyler Hill Corp., 566 F.3d 72, 76 (2d Cir.
2009)(holding that when forum selection clause names a county
without a federal court as the exclusive forum, the parties have
waived their right to federal court), cert. denied, 558 U.S. 947
(2009); Global Satellite Communication v. Starmill U.K. Ltd., 378
F.3d 1269 (11th Cir. 2004)(holding that parties waived their rights
to bring suit in federal court when they selected a county without
a federal courthouse as the exclusive venue).

Telfair asks the

Court to dismiss the claims against it for improper venue under
Federal Rule of Civil Procedure 12(b)(3) or, alternatively, to
reconsider its denial of the motion to transfer and order the case
transferred to a state district court in Fort Bend County, Texas
under 28 U.S.C. 1406(a) because the venue selection clause prevents
filing in federal court.
Plaintiff TruGreen Landcare L.L.C., a resident of Fort Bend
County, Texas, responds first that this Court correctly held that
“because the contract contemplates federal court as a proper venue
for disputes between Plaintiff and Defendant and because Fort Bend
County, Texas is within the Southern District of Texas, this Court
is the appropriate federal court for disputes arising in Fort Bend
County.”

#13.

Second, it argues that the venue selection clause

is permissive, not mandatory, because it does not contain such

words as “exclusive,” “sole,” or “only” and is distinguishable from
Collin County, 250 Fed. Appx. 45, on that basis.

A clause is

permissive if it authorizes filing in a designated forum but does
not foreclose other fora.

Breakbulk Transp., Inc. v. M/V Renata,

Civ. A. No. H-07-2985, 2008 WL 1883790, *2 (S.D. Tex. Apr. 25,
2008)(“[A]

forum

selection

clause

providing

merely

that

a

particular court ‘shall have jurisdiction’ over the controversy has
been found to be permissive because it does not foreclose the
possibility that other courts may also have jurisdiction.”), citing
Caldas & Sons, Inc. v. Willingham, 17 F.3d 123, 127-28 (5th Cir.
1994), and Keaty v. Freeport Indonesia, Inc., 503 F.2d 955, 956-57
(5th Cir. 1974).

The forum selection clause in this case contains

none of the requisite “exclusivity language” nor provides that the
state courts in Fort Bend County are to be the exclusive venue.
Instead

it

expressly

contemplates

that

a

federal

venue

is

appropriate.
Venue

selection

selection clauses.

clauses

are

treated

similarly

to

forum

Alliance Health Group, LLC v. Bridging Health

Options, LLC, 553 F.3d 397, 399 (5th Cir. 2008).

Federal law

applies to determine whether a venue selection clause within a
contract is enforceable in diversity and federal question cases.
Id.

Under federal law, a forum selection clause is presumed valid

and a party seeking to set it aside must demonstrate that it is
unreasonable

under

the

circumstances,

i.e.,

“that

the

clause

results from fraud or overreaching, that it violates a strong

public policy, or that the enforcement of the clause deprives the
plaintiff of his day in court.”

M/S Bremen v. Zapata Off-shore

Co., 407 U.S. 1, 9, 12-13, 15, 18 (1972).
“[W]hen a forum selection clause sets exclusive venue in a
county in which no federal court is located, the clause cannot
reasonably be interpreted to include a federal district court
located in another county even though the designated county is
within the district or division served by the federal court.”
Paolino v. Argyll Equities, L.L.C., No. SA-05-0342-XR, 2005 WL
2147931, * (W.D. Tex. Aug. 31, 2005), aff’d, 211 Fed. Appx. 317 (5th
Cir. Dec. 28, 2006).

The key issue here is whether the venue

selection clause is mandatory (sometimes called “exclusive”) or
permissive.

Aerus LLC v. Pro Team, Inc., No. Civ. A. 304CV1985M,

2005 WL 1131093, *4 (N.D. Tex. May 9, 2005). “‘Where the agreement
contains clear language showing that jurisdiction is appropriate
only in a designated forum, the clause is mandatory.’”

Id.,

quoting Von Graffenreid v. Craig, 246 F. Supp. 2d 553, 560 (N.D.
Tex. 1997)(citing Excell, Inc. v. Sterling Boiler & Mech., Inc.,
106 F.3d 318, 321 (10th Cir. 1997)); Docksider, Ltd. v. Sea Tech,
Ltd., 875 F.2d 762, 763-64 (9th Cir. 1989); and First Nat’l of N.
Am., LLC v. Peavy, No. 3-02-CV-0033-R, 2002 WL 449582, *1 (N.D.
Tex. Mar. 21, 2002).

“A party’s consent to jurisdiction in one

forum does not necessarily waive its right to have an action heard
in another.

For a forum selection clause to be exclusive, it must

go

establishing

beyond

that

a

particular

forum

will

have

jurisdiction and must clearly demonstrate the parties’ intent to
make that jurisdiction exclusive.”

City of New Orleans, 376 F.3d

at 504, citing Keaty v. Freeport Indonesia, Inc., 503 F.3d 955 (5th
Cir. 1974).

“A permissive forum selection clause authorizes

jurisdiction

in

a

particular

litigation elsewhere.”

forum,

but

does

not

prohibit

Aerus, 2005 WL 1131093, *4, citing Peavy,

2002 WL 449582, at *1.
The venue selection clause at issue uses the mandatory word
“shall,” not the permissive word “may.”

Group Contractors, LLC v.

Kizziah Const., Inc., Civ. A. No. 09-693, 2010 WL 1274386, *4 (M.D.
La. Apr. 1, 2010).

Although “shall” is “generally mandatory,”

despite the presence of the word, the forum or venue selection
clause may be permissive.
clause

stating

applicable,”
certain

.

that

Caldas & Sons, 17 F.3d at 127 (In a

“[t]he

laws

and

courts

of

Zurich

are

the Fifth Circuit concluded that”[t]he only thing
.

.

is

that

the

parties

jurisdiction of the Zurich courts.

consented

to

personal

Beyond that, however, the

language does not clearly indicate that the parties intended to
declare Zurich to be the exclusive forum for the adjudication of
disputes arising out of the contract.”), citing Keaty, 503 F.2d at
957 (regarding forum selection clause stating, “This agreement
shall be . . .

enforceable according to the law of the State of

New York and the parties submit to the jurisdiction of the courts
of New York,” holding that despite the presence of the word
“shall,” the clause was permissive), and Hunt Wesson Foods, Inc. v.

Supreme Oil Co., 817 F.2d 75 (9th Cir. 1987)(in a forum selection
clause stating, “The courts of California, County of Orange, shall
have jurisdiction over the parties in any action at law relating to
the subject matter or the interpretation of the subject matter of
this contract,” the Ninth Circuit found that the only thing certain
is that the Orange County courts have personal jurisdiction). “For
a forum selection clause to be exclusive, it must go beyond
establishing that a particular forum will have jurisdiction and
must

clearly

jurisdiction

demonstrate
exclusive.”

the
City

parties’
of

New

intent
Orleans

to
v.

make

that

Municipal

Administrative Services, Inc., 376 F.3d 501, 504 (5th Cir. 2004).
The venue clause in dispute here says in essence that venue is
proper in Fort Bend County and shows that the parties consented to
venue in Fort Bend County, but it does not state that Fort Bend
County is the exclusive or only place or that venue is improper in
other counties or districts, although any proper forum must satisfy
28 U.S.C. § 1391(b).2

2

Thus Collin County does not apply.

Section 1391(b), the general venue statute, provides that

a civil action may be brought in–
(1) a judicial district in which any defendant resides,
if all defendants are residents of the State in which the
district is located;
(2) a judicial district in which a substantial part of
the events or omissions giving rise to the claim
occurred, or a substantial part of property that is the
subject of the action is situated; or
(3) if there is no district in which an action may
otherwise be brought as provided in this section, any

Because the Court finds that the venue selection clause here
is permissive, that the Southern District of Texas includes Fort
Bend County and is a proper venue under 28 U.S.C. § 1391(b), and
thus that venue in this Court is proper, the Court
ORDERS that Telfair’s motion to reconsider and to dismiss is
DENIED.

Because there is no federal forum in Fort Bend County,

because § 1406 does not allow transfer to a non-federal forum,3 and
because venue is proper here, Telfair’s motion to transfer under §
1406 (#15) is also DENIED.
SIGNED at Houston, Texas, this

14th

day of

May , 2013.

___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE

judicial district in which any defendant is subject to
the court’s personal jurisdiction with respect to such
action.
Here
the sole defendant, Telfair, is a resident of Fort Bend
County, Texas, located in the Southern District of Texas, and the
contract was for landscaping services to be performed in Fort Bend
County.
3

“Sections 1404 and 1406 only allow for transfer within the
federal system.” Chandler Management Corp. v. First Specialty Ins.
Corp., 2013 WL 395577, *2 (N.D. Tex. Jan. 31, 2013), citing In re
Atlantic Marine Constr. Co., Inc., 701 F.3d 736, 740 (5th Cir.
2012).