Court Opinion

ID: 47776
Source: CourtListenerOpinion
Date Created: 2010-04-25 23:29:29+00
Date Added: 2024-06-11T17:18:08.190215
License: Public Domain

United States Court of Appeals
                                                            Fifth Circuit
              IN THE UNITED STATES COURT OF APPEALS F I L E D
                      FOR THE FIFTH CIRCUIT
                                                  December 28, 2006

                                                  Charles R. Fulbruge III
                             No. 05-51314                 Clerk

ARGYLL EQUITIES LLC

               Plaintiff - Appellee

     v.

LOUIS D PAOLINO, JR

               Defendant - Appellant

                        Consolidated with
                           No. 05-51587

LOUIS D PAOLINO, JR

               Plaintiff - Appellant
     v.

ARGYLL EQUITIES LLC, ET AL

               Defendants

ARGYLL EQUITIES LLC

               Defendant - Appellee

           Appeals from the United States District Court
          for the Western District of Texas, San Antonio
                          No. 5:05-CV-450

Before KING, GARZA, and OWEN, Circuit Judges.

                                  1
PER CURIAM:*

     In this consolidated appeal, appellant Louis Paolino, Jr.

challenges the district court’s determination that a forum

selection clause in a loan agreement between Paolino and appellee

Argyll Equities LLC (“Argyll”) renders venue in this case proper

only in a state court that holds proceedings in Kendall County,

Texas.1   The clause provides, in relevant part:

           Borrower hereby consents to the exclusive
           jurisdiction of the courts sitting in Kendall
           County, Texas, United States of America, as
           well as to the jurisdiction of all courts from
           which an appeal may be taken from the
           aforesaid courts, for the purpose of any suit,
           action or other proceeding by any party to
           this Agreement, arising out of or related in
           any way to this Agreement.    Borrower hereby
           irrevocably and unconditionally waives any
           defense of an inconvenient forum to the

     *
       Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
     1
        The underlying claims concern a dispute over Argyll’s
sale of stock that Paolino had pledged to Argyll as collateral
for a loan. Paolino sued Argyll in the 216th District Court of
Kendall County, Texas, for breach of contract, fraud, and other
claims arising from the allegedly wrongful stock sale. Paolino
then voluntarily non-suited the action and brought suit (here,
appeal no. 05-51587) against Argyll and additional defendants in
the United States District Court for the Western District of
Texas, San Antonio Division, raising the same claims and added
charges. Shortly thereafter, Argyll sued Paolino in the Kendall
County Court at Law seeking a declaratory judgment that it acted
within its rights in selling the stock. Paolino removed Argyll’s
suit (here, appeal no. 05-51314) to the same federal district
court in which his action was pending.
     The district court dismissed Paolino’s claims against the
other defendants on jurisdictional grounds. After initially
appealing the dismissal, Paolino moved to dismiss all parties to
the appeal other than Argyll, and the motion was granted.

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          maintenance of any action or proceeding in any
          such court, any objection to venue with
          respect to any such action or proceeding and
          any right of jurisdiction on account of the
          place of residence or domicile of any party
          thereto.

Private Collateralized Loan Agreement, Apr. 15, 2004, § 8.14.

     Relying on City of New Orleans v. Municipal Administrative

Services, Inc., 376 F.3d 501 (5th Cir. 2004), the district court

held that the parties’ use of the phrase “exclusive jurisdiction”

and Paolino’s “irrevocabl[e] and unconditional[] waive[r]” of any

venue objections went beyond merely permitting venue in “courts

sitting in Kendall County,” instead making such venue mandatory.

Further, the court concluded that the San Antonio Division of the

United States District Court for the Western District of Texas

does not include courts “sitting in” Kendall County because it

holds proceedings in San Antonio, which is in Bexar County.

     We agree.   As this court held in City of New Orleans,

               For a contractual clause to prevent a
          party from exercising its right to removal,
          the clause must give a “clear and unequivocal”
          waiver of that right. McDermott Int'l, Inc.
          v. Lloyds Underwriters, 944 F.2d 1199 (5th
          Cir. 1991); Waters v. Browning-Ferris Indus.,
          Inc., 252 F.3d 796 (5th Cir. 2001). A party
          may waive its rights by explicitly stating
          that it is doing so, by allowing the other
          party the right to choose venue, or by
          establishing an exclusive venue within the
          contract.

               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
          beyond establishing that a particular forum

                                 3
          will have jurisdiction and must clearly
          demonstrate the parties' intent to make that
          jurisdiction exclusive.    Keaty v. Freeport
          Indonesia, Inc., 503 F.2d 955 (5th Cir. 1974).
          It is important to distinguish between
          jurisdiction and venue when interpreting such
          clauses.   Although it is not necessary for
          such a clause to use the word “venue” or
          “forum,” it must do more than establish that
          one forum will have jurisdiction.

376 F.3d at 504.

     Unlike the permissive forum selection clause in City of New

Orleans, in which the defendant merely “consent[ed] and

yield[ed]” to state court jurisdiction, it is difficult to

imagine how the clause in this case could more “clearly

demonstrate the parties’ intent to make . . . jurisdiction

exclusive,” id., than by providing for “the exclusive

jurisdiction of the courts sitting in Kendall County, Texas.”

Contrary to Paolino’s contention that the clause only explicitly

provides for exclusive jurisdiction and not exclusive venue, the

former dictates the latter, as submission to the exclusive

jurisdiction of one set of courts necessarily excludes venue in

all other courts.

     Further, the district court properly concluded that it is

not a court “sitting in Kendall County.”    Black’s Law Dictionary

defines “sit,” when used with respect to a court, as meaning “to

hold proceedings,” BLACK’S LAW DICTIONARY 1391-92 (7th ed. 1999),

and the San Antonio Division of the United States District Court

for the Western District of Texas holds proceedings in Bexar

                                 4
County, not Kendall County.2   Cf. Dixon v. TSE Int’l Inc., 330

F.3d 396, 398 (5th Cir. 2003) (relying on Black’s Law Dictionary

to hold that the word “of” in a contract’s reference to “[t]he

Courts of Texas” excluded federal courts).   As Paolino points

out, Black’s does refer to a court sitting as “[a] court

session,” id. at 1392, but the context of the forum selection

clause does not use the word “sitting” in this manner; even if it

did, the district court’s session is not in Kendall County.      It

matters not that 28 U.S.C. § 141(a) allows special sessions of

the district court to be held anywhere in the district;3 for

purposes of the forum selection clause at issue here, the

district court “sits” where it regularly holds court, not in the

     2
        Paolino’s claim that the court’s interpretation should be
informed by Argyll’s reference to “all Federal and State Courts
sitting in Kendall County” in another, unrelated contract with a
separate party is without legal basis. Under Texas law,
“[c]ourts interpreting unambiguous contracts are confined to the
four corners of the document, and cannot look to extrinsic
evidence to create an ambiguity.” Tex. v. Am. Tobacco Co., 463
F.3d 399, 407 (5th Cir. 2006); see also Private Collateralized
Loan Agreement, Apr. 15, 2004, § 8.14 (“This Agreement shall be
governed by and construed in accordance with the laws of the
State of Texas . . . applicable to the contracts between
residents of Texas that are to be wholly performed within such
state.”).
     3
         28 U.S.C. § 141(a) provides:

           (1) Special sessions of the district court may
           be held at such places in the district as the
           nature of the business may require, and upon
           such notice as the court orders.
           (2) Any business may be transacted at a
           special session which might be transacted at a
           regular session.

                                 5
potentially infinite number of places in the Western District of

Texas where it could hold a special session.

     Because the forum selection clause unambiguously establishes

that the underlying claims are subject to the exclusive

jurisdiction of “courts sitting in Kendall County,” and the

district court does not meet that description, the court properly

dismissed Paolino’s suit (here, appeal no. 05-51587) and remanded

Argyll’s suit (here, appeal no. 05-51314) to the County Court at

Law in Kendall County, Texas.

     AFFIRMED.   The costs in both appeals shall be borne by

Paolino.

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