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May 19, 2017

This week the Texas Supreme Court issued 4 opinions and 0 grants. One opinion is of particular interest.

In Pinto Technology Ventures L.P. et al. v. Jeffery Sheldon and Andras Konya, M.D., Ph.D, the Court addressed forum-selection clauses in the context of shareholder agreements. Specifically, the Court explored (1) how parties are bound in shareholder agreements to these clauses as signatories or nonsignatories and (2) whether statutory and common-law tort claims based on facts predicated on the existence or the agreement’s terms must be litigated in the contractually designated forum.

In this case two shareholders brought a claim alleging that their shares in the corporation had been diluted intentionally by the Defendants. The Defendants invoked a forum selection clause in the 2010 Amended and Restated Shareholders Agreement to which one Plaintiff was a signatory but the other was not.

The trial court upheld the forum selection clause; however, a split appellate court reversed finding that the clause was inapplicable because the rights and obligations implicated by the shareholders’ claims arose from common law rather than the 2010 Amended and Restated Shareholders Agreement.

The Texas Supreme Court reversed the court of appeals’ judgment clarifying that the factual allegations, rather than the legal theories pursued, are the factors to be considered in determining whether a dispute arose out of an agreement for the purposes of determining whether a forum-selection clause applies.

Applying this standard, the Court held that the shareholders’ claims arose from the 2010 Amended and Restated Shareholders Agreement “because (1) the existence or terms of the agreement are operative facts in the litigation and (2) ‘but for’ that agreement the shareholders would not be aggrieved.”

The Bassett Firm