In an opinion strongly supportive of freedom to contract and holding parties to a contract to their bargain, the Dallas Court of Appeals has reversed a trial court order granting special appearances and motions to dismiss in favor of Louisiana defendants who reneged on a contract with a Texas contractor.
Stellar Restoration Services, LLC v. Charles F. McLallen a/k/a Charles McLallen III and Gymnastics Elite Training Center, LLC (No. 05-20-00570-CV) arose fron a contract dispute between a roofing contractor located in Collin County and a gymnastics facility located in Sulphur, Lousiana. The disputed contract, executed by a representative of the contractor and the owner of the facility, gave the contractor the exclusive right to repair the hail-damaged roof of the facility. After commencing performance, the contractor discovered that the facility had hired another entity to repair the roof. The contractor sued for breach of contract in Collin County, the forum specified in the agreement. The defendants, the owner and the facility, filed special appearances and motions to dismiss. They argued that they had not consented to personal jurisdiction in Texas and that, in any event, a Louisiana statute prohibited enforcement of the forum selection clause. The trial court granted the defendants’ special appearances and dismissed the case. The contractor appealed.
The court of appeals affirmed the trial court’s dismissal of the contractor’s claims against the owner but reversed as to the facility. As a preliminary matter, the court of appeals rejected defendants’ argument that they did not realize they had signed a binding agreement to fix the roof. “Texas law is well settled,” stated the court, “that parties to an agreement are obligated ‘to protect themselves by reading what they sign’ (citations omitted). It cannot be the courts’ role to protect parties from their own agreements” (citations omitted). The court then turned to whether the owner McLallen was bound by the contract. Here it determined that because McLallen signed the contract only in a representative capacity, he was not so bound and is not subject to the contract’s forum-selection clause. The trial court thus properly granted his special appearance and motion to dismiss for lack of personal jurisdiction.
With respect to the facility, however, the court of appeals reached a different conclusion. The contractor argued that the facility consented to jurisdiction when it signed the contract, which included the forum-selection clause. Observing that forum-selection clauses are “generally enforceable in Texas,” the court of appeals noted tht a “trial court abuses its discretion if it refuses to enforce a forum-selection clause unless the party opposing enforcement clearly shows that (1) the clause is invalid for reasons of fraud or overreaching, (2) enforcement would be unreasonable or unjust, (3) enforcement would contravene a strong public policy of the forum where the suit was brought, or (4) the selected forum would be seriously inconvenient for trial” (citations omitted). The court rejected the defendant’s claim that it signed the agreement as a result of fraud or overreaching, citing the lack of evidence of either. Had the defendant read the agreement he signed, the court reiterated, that might be one thing, but here he chose not to, which vitiates any alleged reliance on a misrepresentation (even if there had been one). “A party to a written agreement may not justifiably rely on an oral misrepresentation regarding that agreement’s unambiguous terms,” the court added. “And absent justifiable reliance, there can be no fraud.” Similarly, the court found no evidence that the contract was illusory or not freely negotiated. The court concluded that the defendant had consented to personal jurisdiction in Texas.
Finally, the court brushed aside the defendant’s reliance on a Louisiana statute that purports to bar the enforcement of forum-selection or choice-of-law provision in construction contracts with Louisiana residents that do not select Louisiana or Louisiana law. Referring to the four-part test for determining whether to enforce a forum-selection clause, the court that “Texas’s strong public policy in favor of freedom of contract weighs in favor of” enforcement (citations omitted). Lousiana’s public policy was irrelevant to the analysis because the test is whether enforcement would contravene the selected forum state’s public policy, which in this case is Texas. Similarly, the Louisiana statute’s bar on applying foreign law to a Louisiana resident does not apply here. Relying on the Restatement (Second) of Conflict of Laws, § 187(2), the court found that because the contractor was a Texas resident and compliance with the contract, including payments, would be conducted in Texas, a substantial relationship existed between the parties, the contract, and the selected forum. Their choice of law was thus reasonable and will not be second-guessed by the court. It thus reversed the trial court’s order as to the defendant facility and remanded for further proceedings.
When the Dallas Court of Appeals issues an opinion that we find troubling, we point that out, but is equally important for us to report on the cases that we think this court got right. This one falls into the latter category.
