Opinion issued August 23, 2012

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-09-00022-CV

———————————

DAVID STEAKLEY, MARVIN STEAKLEY, DARRELL KAINER, ALAN 

PETERS, GLEN M. BOUDREAUX, AND TIM S. LEONARD, Appellants

V.

ROUND ONE INVESTMENTS, L.P., SOMETIMES DOING BUSINESS AS 

ROUND ONE INVESTMENTS I, L.P., ROUND ONE INVESTMENTS, 

LLC, SOMETIMES DOING BUSINESS AS ROI INVESTMENTS, LLC, 

INTELLIGENT DATA DELIVERY CORP., VIDYAH, INC., JOHN S. 

ROBISON, AND C. WILLIAM FOWLER, Appellees

On Appeal from the 151st District Court

Harris County, Texas

Trial Court Case No. 2007-45337
2

MEMORANDUM OPINION

Appellants David Steakley, Marvin Steakley, Darrell Kainer, Alan Peters, 

Glen M. Boudreaux, and Tim S. Leonard (“Buyers”) appeal from an order

dismissing their case without prejudice based upon a contractual forum-selection 

clause. We conclude that the Buyers’ claims are not within the scope of the forumselection clause. Accordingly, we reverse and remand for further proceedings. 

Background

The Buyers are individuals who claim that they were misled into investing in 

Intelligent Data Delivery Corporation (“IDDC”). They filed suit against the 

appellees, who include IDDC and interrelated businesses, along with individuals 

involved in the governance and management of these businesses. Round One 

Investments, L.L.C. (“ROI”) is the general partner of Round One Investments, 

L.P., a venture capital firm that owned more than 10% of IDDC. ROI provided 

information to the Buyers in connection with their investments in IDDC. 

In their original petition, the Buyers alleged that they each executed separate 

subscription agreements for the purchase of stock in IDDC. Each subscription 

agreement included a California choice-of-law provision and specified that the 

agreement “may be amended only by a writing executed by the Company and the 

Subscriber.” The subscription agreement did not include a venue- or forumselection clause.
3

Subsequently, the Buyers were asked to sign nondisclosure agreements. The 

form of the nondisclosure agreement provided, in its entirety:

Round One Investments, L.L.C.

NONDISCLOSURE AGREEMENT

In connection with a proposed business relationship, Round 

One Investments, L.L.C. (“ROI”) has disclosed or may disclose to you 

valuable business or other information relating to ROI, its investors 

and/or its proposed transactions and/or has provided you or may 

provide you with documentation or other materials (“Proprietary 

Information”). In consideration of any disclosure of Proprietary 

Information and any negotiations concerning the proposed business 

relationship, the undersigned agrees as follows:

1. You acknowledge that any business or technical information 

relating to ROI and/or its investors and/or its proposed transactions 

and/or any documentation or other materials provided to you shall be 

deemed “Proprietary Information” and subject to the terms of this 

Agreement, unless otherwise agreed upon in writing by ROI.

2. You will hold in confidence and not use or disclose, directly or 

indirectly, any Proprietary Information except information you can 

document which (a) is in, or becomes part of, the public domain 

through no fault of yours, or (b) was properly disclosed to you by 

another person without restriction. In addition, you will not copy, 

alter, modify, or distribute any Proprietary Information. The 

foregoing does not grant you a license in or to any Proprietary 

Information. You acknowledge and agree that, as between you and 

ROI, all Proprietary Information and all copies thereof are owned 

solely by ROI.

3. If you decide not to proceed with the proposed business 

relationship or if asked to by ROI, you will immediately cease all use 

of and return all Proprietary Information and all copies and extracts to 

ROI.

4. You will immediately notify ROI of any unauthorized release 

of Proprietary Information. You understand that this Nondisclosure 
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Agreement does not obligate ROI to disclose any information to you, 

or negotiate or enter into any agreement or relationship with you.

5. You acknowledge and agree that due to the nature of the 

Proprietary Information, there can be no adequate remedy at law for 

any breach of your obligations hereunder, that any such breach may 

allow you or third parties to compete unfairly with ROI resulting in 

irreparable harm to ROI and, therefore that upon any such breach or 

threat thereof, ROI shall be entitled to injunctions and other 

appropriate equitable relief in addition to whatever remedies it may 

have at law. In addition, if ROI prevails in any legal dispute 

hereunder it shall be entitled to collect from you its reasonable 

attorneys’ fees and expenses.

6. You acknowledge and agree that for a period of three (3) years 

from the date this Nondisclosure Agreement is accepted, you will 

maintain all Proprietary Information in confidence and will refrain 

from using any such Proprietary Information for any purpose, unless 

so authorized by ROI.

7. This Nondisclosure Agreement shall be governed and construed 

under the laws of the State of California and the United States without 

regard to conflict of laws provisions thereof. The sole jurisdiction and 

venue for actions related to the subject matter hereof shall be 

California state and U.S. federal courts having within their jurisdiction 

the location of ROI’s principal place of business. You consent to the 

jurisdiction of such courts.

The nondisclosure agreement thus required the Buyers to keep Proprietary 

Information confidential, to return copies of Proprietary Information to ROI if the 

parties chose not to proceed with the proposed business relationship, and to notify 

ROI of an unauthorized release of Proprietary Information. The agreement 

established that these obligations would exist for three years, that no remedy at law 

would be adequate in the event of a breach, and that ROI would be entitled to 
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injunctive relief, equitable relief, attorney’s fees, and expenses in the event of a 

breach. As pertinent to this appeal, a forum-selection clause required that “actions 

related to the subject matter” of the nondisclosure agreement must be brought in a 

California court.

The Buyers’ lawsuit is premised upon the allegation that they invested in 

IDDC based on representations that the company would soon be acquired by 

Vidyah, an affiliate of the Knowledge Universe group, a successful business 

venture that owned many well-known educational brands, including LeapFrog and 

Kindercare. The Buyers allege that the appellees made representations that Vidyah 

would purchase IDDC by means of a stock issuance and, shortly thereafter, Vidyah 

would have an initial public offering, giving the Buyers a speedy cash profit.

Vidyah purchased IDDC by issuing shares of Vidyah stock to the IDDC 

shareholders, but Vidyah did not have an initial public offering. The Buyers sued, 

alleging that the appellees “persuaded [them] to purchase IDDC stock by providing 

false, misleading, and incomplete information concerning the profitability of 

Vidyah, the structure of a relationship with Vidyah to achieve liquidity[,] . . . and 

by promising a forthcoming initial public offering of Vidyah stock.” The Buyers 

also alleged that the appellees’ failure to disclose pertinent facts rendered their 

representations materially misleading.
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The Buyers brought two causes of action for statutory fraud in a transaction 

involving stock in a corporation, alleging that the appellees made false 

representations of material fact and made false promises. See TEX. BUS. & COM.

CODE ANN. § 27.01 (West 2009). They also alleged fraud based on violations of the 

Texas Securities Act. See generally TEX. REV. CIV. STAT. ANN. arts. 581-1 to 581-

43 (West 2010 & Supp. 2011). The appellees answered and moved to dismiss, 

relying on the forum-selection clause of the nondisclosure agreements. The trial 

court granted the motion to dismiss, and the Buyers appealed.

On appeal, the Buyers contend that the trial court erred by granting the 

motion to dismiss. They argue that the forum-selection clause does not apply 

because (1) the alleged fraud occurred before the parties signed the nondisclosure 

agreements, (2) the underlying claims are not for breach of the nondisclosure 

agreements, (3) the sale of stock was made pursuant to a separate agreement and 

the parties to the two agreements are not identical, (4) a forum-selection clause 

does not deprive Texas courts of jurisdiction over claims arising under the Texas 

Securities Act, and (5) Section 33L of the Texas Securities Act voids application of 

an exclusive forum-selection clause.1

 

1

 In their notice of appeal, the Buyers also appealed from the trial court’s 

order sustaining John S. Robison’s special appearance and dismissing the 

Buyers’ claims against him for want of jurisdiction. Pursuant to a 

bankruptcy discharge, the Buyers have moved to dismiss their appeal as to 

Robison only. See 11 U.S.C. § 727(b). No party has opposed the motion to 
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Analysis

“A motion to dismiss is the proper procedural mechanism for enforcing a 

forum-selection clause that a party to the agreement has violated in filing suit.” 

Phoenix Network Techs. (Europe) Ltd. v. Neon Sys., Inc., 177 S.W.3d 605, 610 

(Tex. App.—Houston [1st Dist.] 2005, no pet.). On appeal, we review the 

enforcement of a forum-selection clause for an abuse of discretion. Id. “However, 

to the extent that our review involves contractual interpretation of a forumselection clause—a legal matter—the standard of review is de novo.” Id.2

 

“When a party seeks to enforce a mandatory forum-selection clause, a court 

must determine whether the claims in question fall within the scope of that clause.” 

 

dismiss. Further, the Buyers have not included in their briefing any 

argument pertinent to the trial court’s order sustaining Robison’s special 

appearance. Accordingly, the motion to dismiss their appeal from the order 

sustaining Robison’s special appearance is granted.

2 Although the nondisclosure agreement specifies that it “shall be governed 

and construed under the laws of the State of California and the United States 

without regard to conflict of laws provisions thereof,” no party has provided 

us any arguments based upon California law or otherwise suggested that the 

contract would be interpreted differently under the laws of California and 

Texas. Accordingly, like the parties have done, we will analyze the 

nondisclosure agreement in accordance with well-established principles of 

contract interpretation under Texas law. Cf. In re Lisa Laser USA, Inc., 310 

S.W.3d 880, 884–86 (Tex. 2010) (per curiam) (relying on well-established 

principles of contract interpretation under Texas law to determine whether 

forum-selection clause applied to dispute, despite choice-of-law provision 

specifying California law); In re AdvancePCS Health L.P., 172 S.W.3d 603, 

606 (Tex. 2005) (per curiam) (holding that in the absence of conflicting 

laws, “there can be no harm in applying Texas law”).
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Deep Water Slender Wells, Ltd. v. Shell Int’l Exploration & Prod., Inc., 234 

S.W.3d 679, 687–88 (Tex. App.—Houston [14th Dist.] 2007, pet. denied); see In 

re Lisa Laser USA, Inc., 310 S.W.3d 880, 884–86 (Tex. 2010) (considering 

whether Texas lawsuit fell within scope of forum-selection clause). To do so, the 

court makes a “common-sense examination of the claims and the forum-selection 

clause to determine if the clause covers the claims.” In re Int’l Profit Assocs., Inc., 

274 S.W.3d 672, 677 (Tex. 2009). In construing a forum-selection clause, our 

primary goal is to give effect to the parties’ intent as expressed in their written 

agreement. Phoenix Network Techs., 177 S.W.3d at 615; see Frost Nat’l Bank v. 

L & F Distribs., Ltd., 165 S.W.3d 310, 311–12 (Tex. 2005). Contract terms are 

given their plain, ordinary, and generally accepted meanings, and contracts are to 

be construed as a whole in an effort to harmonize and give effect to all provisions 

of the contract. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex.

2005). If the forum-selection clause is susceptible of only one reasonable 

meaning, then it is not ambiguous, and the court may not consider parol evidence. 

Id.; see Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).

The forum-selection clause at issue states that it applies to “actions related to 

the subject matter” of the nondisclosure agreement. Broadly stated, the subject 

matter of the nondisclosure agreement is the protection and nondisclosure of 

information that the parties have deemed to be proprietary, as well as remedies for 
9

a breach of the agreement. The Buyers were the recipients of proprietary 

information, and the terms of the agreement imposed restrictions on the Buyers’ 

use of that information. The agreement also created rights in favor of ROI as the 

provider of information to enforce the restrictions. The appellees argue that the 

nondisclosure agreement “govern[ed] the terms of their investment relationship” 

because, by the agreement’s terms, it “relate[d] to ‘business or other information 

relating to ROI, its investors and/or its proposed transactions . . . .’” The 

nondisclosure agreement was concerned with the use of “Proprietary Information,” 

and that term was defined in the agreement to embrace “business or technical 

information relating to ROI,” including information relating to “its investors” and 

“its proposed transactions.” But no common-sense reading of the nondisclosure 

agreement permits a conclusion that the subject matter of the agreement is the 

“investment relationship” itself, such that the forum-selection clause would 

effectively apply to other disputes arising from the parties’ transactions, including 

the Buyers’ claims for breaches of duties existing independently of the specific 

agreement about the treatment of proprietary information. 

The Buyers’ claims are for statutory fraud in a stock transaction and for 

violations of the Texas Securities Act. See TEX. BUS. & COM. CODE ANN. § 27.01. 

The duties implicated by these claims are established by the law applicable to the 

subscription agreements; they do not relate to the rights and obligations created by 
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the nondisclosure agreement. See In re Int’l Profit Assocs., 274 S.W.3d at 677 

(“determining whether a contract or some other general legal obligation establishes 

the duty at issue and dictates whether the claims are such as to be covered by the 

contractual forum-selection clause should be according to a common-sense 

examination of the substance of the claims made”). We conclude that the forumselection clause in the nondisclosure agreements does not apply to the Buyers’ 

claims, and we hold that the trial court erred by granting the appellees’ motion to 

dismiss. We sustain the Buyers’ second issue, which is dispositive of this appeal.

Conclusion

We reverse the judgment of the trial court dismissing the Buyers’ case based 

on the forum-selection clause and remand for further proceedings.

Michael Massengale

Justice 

Panel consists of Justices Bland, Massengale, and Brown.