In what appears to be a case of first impression, the Dallas Court of Appeals has held that a nonresident party who filed a lawsuit in Texas and litigated the matter to summary judgment waived its reliance on the common law doctrine of forum non conveniens.
The case, James Scott Munro, Audrey Perez, and Intrinsic Capital Corp. v. Amandip Jagpal, Harpreet Hayer, and Walter Paris (No. 05-21-00125; filed June 9, 2023) has an extensive procedural history, but the facts may be summarized as follows. The case arose from a dispute over the ownership and control of Intrinsic, the holding company for Cannabis Science, Inc., a California company which conducts research and develops cannabis-containing products. Munro and Perez, residents of Canada, claimed 100% ownership and sought to sell Intrinsic’s Cannabis Science shares, for which they retained a consulting company based on Colorado and the Plano-based transfer agent (STC). When plaintiffs Jagpal, Hayer, and Paris, residents of British Columbia, heard about it, they filed suit in British Columbia to stop the transfer on the basis that Munro held the shares as their trustee. For some reason, plaintiffs then filed another lawsuit in Collin County, where the transfer agent STC was located. In the Collin County lawsuit, plaintiffs alleged fraud, breach of contract, breach of fiduciary duty, conspiracy, conversion, tortious interference, and aiding and abetting. They obtained a TRO and expedited discovery. Defendants subsequently filed special appearances, which did not stop the trial court from signing a temporary injunction blocking the shares transfer.
The Collin County case then proceeded along more or less standard lines for the next few years. The parties conducted discovery, designated experts, filed amended pleadings with new causes of action, and motions for traditional and no evidence summary judgment. In the meantime, two plaintiffs, Hayer and Paris, died, and their counsel withdrew from the case. Soon thereafter the trial court granted defendants’ summary judgment motion, decreeing that they owned 100% of Intrinsic and that plaintiffs were liable to defendants for slander of title. The court further dissolved the temporary injunction, which had been in place for more than two years. More than a year later, Paris’s estate filed a motion to dismiss the remainder of the case based on the common law doctrine of forum non conveniens because the only Texas connection to the case, STC, was no longer involved in the litigation (they nonsuited STC) and that the remaining parties all resided in Canada. The trial court granted the motion. Munro and Perez appealed.
In an opinion by Justice Molberg, the court of appeals reversed and remanded. The court’s analysis commenced with a discussion of the common law doctrine, the Gulf Oil private and public factors, and the principle that “[T]he doctrine of forum non conveniens should be applied with caution, exceptionally, and only for good reasons” (citation omitted). The court then turned to the question of when a motion to dismiss should be made. Citing a 1962 SCOTX opinion, the general rule appears to be that “the question must be raised at a time and in a manner that will give the parties an opportunity to present evidence regarding the circumstances that are relevant to a determination of whether jurisdiction should or not raised” (Flaiz v. Moore, 359 S.W.2d 872, 875 (Tex. 1962)). SCOTX looked to New York law, which “treat[s] the plea of forum non conveniens almost as jurisdictional” and “allow[s] it to be raised ‘even after the case has gone to trial, and that the court may raise the objection on its own motion at any time, even on appeal.” SCOTX declined to go that far, rejecting at least the proposition that forum non conveniens could “be raised for the first time on appeal or by an appellate court on its own motion.” Based on this ruling, the Tyler Court of Appeals held in 1996 that the issue “may be raised any time before trial” (citation omitted).
The court then turned to § 71.051, CPRC, the statutory forum non conveniens provision first enacted in 1993 in response to the Dow Chemical Co. v. Alfaro case. Reciting the factors a court must determine in deciding a motion to dismiss and the statutory requirement that such a motion “is timely if it is filed not later than 180 days after the time required for filing a motion to transfer venue,” the court opined that even though the statute only applies in wrongful death and personal injury claims, it nevertheless “has ‘deep roots in the common law,’ and thus helps inform our understanding of the common law doctrine of forum non conveniens at issue here” (citations omitted). Unable to find any cases addressing “a plaintiff’s waiver of forum non conveniens, but assuming the doctrine’s applicability in these circumstances, we find instructive the standard that, in other contexts, ‘substantial invocation of the litigation process by amount to waiver” (citing Crosstex Energy Services, L.P. v. Pro Plus, Inc., 430 S.W.3d 384, 394 (Tex. 2014).
The cases cited by the court involved primarily waiver of contractual arbitration or forum selection clauses, but the court was persuaded that the principle of waiver for “intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right” should apply in the forum non conveniens context. As “a supervening venue provision… that goes to process rather than substantive rights” (quoting Am. Dredging Co. v. Miller, 114 S.Ct.981,988 (1994)), the court observed, forum non conveniens is “subject to waiver if not properly raised. Though when it comes to arbitration, a party initiating a lawsuit is one factor among others to be considered in determining waiver, we think filing suit must weigh much more heavily in the forum non conveniens context.” Simply put, “filing a lawsuit in a particular forum is necessarily inconsistent with a subsequent claim the forum is inconvenient” (emphasis added). The court cited support for its ruling from courts in California and New York, as well as federal appellate courts, pointing out further that, like a nonsuit, a forum non conveniens motion “cannot nullify the defendant’s claims against the plaintiff, and vice versa” (citation omitted). Plaintiffs thus waived reliance on the doctrine “with intentional conduct inconsistent with such a claim” (i.e., engaging in protracted litigation with dispositive motions over at least three years before raising the forum issue).
We haven’t seen a forum non conveniens decision for a good while, so this one is worth reading not only for novelty’s sake but for its analysis not only for the current state of the doctrine of forum non conveniens, but for its well-considered discussion of waiver as a matter of first impression in Texas law.
