Court Opinion

ID: 35661
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:31:20+00
Date Added: 2024-06-11T17:14:42.614655
License: Public Domain

United States Court of Appeals
                                                                                          Fifth Circuit
                                                                                        F I L E D
                      IN THE UNITED STATES COURT OF APPEALS
                                                                                          July 21, 2004
                               FOR THE FIFTH CIRCUIT
                                                                                    Charles R. Fulbruge III
                                  __________________________                                Clerk
                                         No. 03-10890
                                  __________________________

GP PLASTICS CORP.,

                                                                                 Plaintiff - Appellee,

versus

INTERBORO PACKAGING CORP.,

                                                                              Defendant - Appellant.

                 ___________________________________________________

                         Appeal from the United States District Court
                             for the Northern District of Texas
                                   (No. 3:02-CV-822-R)
                 ___________________________________________________

Before HIGGINBOTHAM, DENNIS, and CLEMENT, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:*

         Appellee GP Plastics Corp. (“GP Plastics”) sued Appellant Interboro Packaging Corp.

(“Interboro”) for breach of contract in Texas state court. Interboro removed to federal district court

on diversity grounds. Citing the parties’ forum-selection agreement, the district court remanded the

         *
        Pursuant to 5th Cir. R. 47.5, this Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5th Cir. R.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.

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action to state court. We AFFIRM the judgment of the district court, holding that the complaint

invokes a forum-selection clause constituting a valid waiver of Interboro’s removal rights.

                                I. FACTS AND PROCEEDINGS

       GP Plastics manufactures plastic bags. Interboro purchases plastic bags and resells them to

third parties. On February 16, 2000, pursuant to a written sales-purchase contract, GP Plastics

agreed t o manufacture for one year all plastic bags that Interboro sold in Texas. The contract

contained the following forum-selection clause:

       The state or federal court of N.Y. selected by Distributor shall have jurisdiction over
       any complaint or counterclaim brought by Distributor against Manufacturer. Venue
       in such cases shall be in the N.Y. state court located in Distributors [sic] county or
       N.Y. federal court closest to Distributor’s N.Y. business address. The state or federal
       court of Texas selected by Manufacturer shall have jurisdiction over any complaint
       or counterclaim brought by [M]anufacturer against Distributors. Venue in such cases
       shall be the Texas State Court located in Manufacturers [sic] county or the Texas
       federal court closest to Manufacturer’s Texas business address.

       One year later, GP Plastics sued Interboro for breach of contract in Florida state court,

asserting that Interboro failed to remit full payment on certain invoices. Citing the parties’ forum-

selection agreement, Interboro moved for a change of venue. GP Plastics opposed the motion,

arguing that, inter alia, its complaint did not invoke the forum-selection clause. The Florida court

made a preliminary ruling that the forum-selection clause was mandatory rather than permissive, and

scheduled an evidentiary hearing to determine, inter alia, whether it was invoked by GP Plastics’s

complaint.

       Before the evidentiary hearing, however, GP Plastics dismissed its Florida lawsuit and sued

Interboro in Texas state court, alleging breach of contract and seeking declaratory relief.1 Although

       1
           Interboro later sued GP Plastics in New York federal district court.

                                                  2
the Texas and the Florida lawsuits involved many of the same invoices, the Texas complaint omitted

several claims, and asserted various new ones.

       Interboro removed the Texas action to the Southern District of Texas based on diversity

jurisdiction. GP Plastics then moved to remand, arguing that the contract’s forum-selection clause

constituted a waiver o f Interboro’s right of removal. After a hearing, the magistrate judge

recommended that the matter be remanded to Texas state court. Over Interboro’s objection, the

district court adopted the magistrate’s report and recommendation, and granted GP Plastics’s motion

to remand. Interboro timely appeals.

                                 II. STANDARD OF REVIEW

       We review de novo a dist rict court’s determination that a forum-selection clause waived a

party’s right to remove. McDermott Int’l v. Lloyds Underwriters of London, 944 F.2d 1199, 1204

(5th Cir. 1991) (“We review the district court’s interpretation of the policy de novo.”); Foster v.

Chesapeake Ins. Co., Ltd., 933 F.2d 1207, 1216 (3d Cir. 1991) (“The district court, engaging in

contractual construction over which we exercise plenary review, determined that the legal effect of

the clause was to waive Chesapeake’s right to remove.”) (internal citations omitted).

                                         III. ANALYSIS

       Interboro contends that the district court’s remand order was erroneous because (1) GP

Plastics’s complaint does not legitimately invoke the contract’s forum-selection clause, (2) the clause

does not constitute a waiver of Interboro’s removal rights, and (3) GP Plastics waived its contractual

right to choose a forum.2

       2
         This Court has jurisdiction to review contractual remand orders. In Waters v. Browning-
Ferris Industries, Inc., 252 F.3d 796, 797 (5th Cir. 2001), we stated:

                                                  3
A.     GP Plastics’s complaint invokes the forum-selection clause

(1)    Judicial Estoppel

       As an initial matter, both parties contend that the arguments advanced during the Florida

litigation judicially estop the other from contesting this issue.3 Judicial estoppel “prevents a party

from asserting a position in a legal proceeding that is contrary to a position previously taken in the

same or some earlier proceeding.” Ergo Science, Inc. v. Martin, 73 F.3d 595, 600 (5th Cir. 1996).

This Court requires that (1) the position of the party to be estopped be clearly inconsistent with its

previous position, and that (2) the party convinced the court originally hearing the matter to accept

that previous position. Aherns v. Perot Sys. Corp., 205 F.3d 831, 833 (5th Cir. 2000). The second

prong is satisfied when a court has “necessarily accepted and relied on” a party’s position in making

a determination. Id. at 836. The previous court’s acceptance of a party’s argument could be “either

as a preliminary matter or as part of a final disposition.” In re Coastal Plains, 179 F.3d 197, 206 (5th

Cir. 1999).

       Judicial estoppel does not apply here for two reasons. First, the Florida lawsuit involved

different claims than those raised in this action. As a result, GP Plastics’s prior argument that its

       Remand orders are frequently not the subject of appellate review because district
       courts frequently remand under 28 U.S.C. § 1447(c) for lack of subject matter
       jurisdiction. When a district court remands a suit relying on a contractual forum-
       selection clause, that decision is not based on lack of subject matter jurisdiction
       and is therefore outside of the statutory prohibition on our appellate review.
       McDermott Int’l, Inc. v. Lloyd’s Underwriters, 944 F.2d 1199, 1201 (5th Cir.
       1991). Contractual remand orders are reviewable by direct appeal. Id. at 1204.

See also Dixon v. TSE Int’l, 330 F.3d 396, 398 (5th Cir. 2003) (“We have jurisdiction to entertain
this appeal of a contractual remand order.”).
       3
       In the Florida action, Interboro—not GP Plastics—sought to invoke the forum-selection
agreement.

                                                   4
Florida lawsuit did not invoke the forum-selection clause, and Interboro’s argument that it did, are

not “clearly inconsistent” with their current arguments. Second, the Florida court did not expressly

decide whether GP Plastics’s complaint invoked the forum-selection clause, but instead scheduled

an evidentiary hearing to determine this issue. Because GP Plastics dismissed its lawsuit prior to the

evidentiary hearing, neither party can show that the other convinced the Florida court to accept its

previous position. For these reasons, judicial estoppel does not bar either party from advancing its

current arguments as to whether GP Plastics’s claims invoke the forum-selection clause.

(2)     GP Plastics’s complaint

        Interboro acknowledges that GP Plastics’s complaint raises claims related to transactions

governed by the contract. It nonetheless argues that these claims cannot invoke the forum-selection

clause because they are “illegitimate,” “frivolous,” and “were literally invented as part of GP Plastics’s

consistent effort to engage in forum-selection shopping.”4 As a result, Interboro argues that the

district court erred when it refused to pierce the pleadings and evaluate the validity of each claim.5

We disagree.

        The parties’ forum-selection agreement provides that the state or federal court of Texas

selected by GP Plastics shall have jurisdiction over “any complaint or counterclaim” brought by GP

Plastics against Interboro. A plain reading of this language indicates that the clause is triggered by

        4
          Interboro explains that “[i]f GP Plastics’s exercise in blatant forum shopping is allowed
to stand, the resolution of the declaratory judgment action will ultimately deny Interboro its
contractual right to litigate its affirmative claims in New York.”
        5
          The district court stated that it “is not free to relieve Interboro of its contractual waiver
of jurisdiction and venue” in Texas court. The magistrate declined to perform a factual review
because it would “involve a fact intensive inquiry, which necessarily would entail merits
discovery.”

                                                    5
nothing more than the mere filing of a civil action by GP Plastics against Interboro. We conclude that

the dist rict court’s refusal to conduct a merits-based review of GP Plastics’s complaint was not

erroneous because it followed the unambiguous meaning of the parties’ forum-selection clause. See

generally Snapper, Inc. v. Redan, 171 F.3d 1249, 1258 (11th Cir. 1999) (stati ng that “a remand

based on a forum-select ion clause depends on an adjudication of the meaning of the clause”).

B.        The forum-selection clause constitutes a waiver of Interboro’s removal rights

          Interboro next contends that the remand order is improper because the forum-selection clause

does not constitute a waiver of Interboro’s right of removal. “A party to a contract may waive a right

of removal provided the provision of the contract makes clear that the other party to the contract has

the ‘right to choose the forum’ in which any dispute will be heard.” Waters v. Browning-Ferris

Indus., Inc., 252 F.3d 796, 797 (5th Cir. 2001) (quoting City of Rose City v. Nutmeg Ins. Co., 931
F.2d 13, 16 (5th Cir. 1991)). In Waters, this Court interpreted the following clause as a waiver of

removal rights:

          Company irrevocably (i) agrees that any such suit, action, or legal proceeding may be
          brought in the courts of [Texas] or the courts of the United States for [Texas], (ii)
          consents to the jurisdiction of each such court in any such suit, action or legal
          proceeding and (iii) waives any objection it may have to the laying of venue of any
          such suit, action or legal proceeding in any of such courts.
252 F.3d at 797. Waters reasons that “[a] reading of this provision leads this court to the inescapable

conclusion that the plaintiff negotiated with the defendant a clear right to establish ‘irrevocably’ the

place where his suit could be filed and heard.” Id. at 798. The Waters Court also made clear that a

waiver of removal rights need not include explicit words such as “waiver of rights of removal.” Id.

at 797.

                                                   6
        Interboro contends that “[n]othing in the [forum-selection] clause unambiguously states that

Interboro has waived its right to remove the case to federal court.” As stated above, a waiver of

removal rights need not be explicitly stated; rather, the clause need only “make clear” that one of the

parties has the “right to choose” the forum. Waters, 252 F.3d at 797.

        The contract’s forum-selection clause meets this standard. It provides that “the state or

federal court of Texas selected by” GP Plastics shall have jurisdiction to hear any of its complaints

or counterclaims. If, as contended by Interboro, the parties simply intended to grant GP Plastics the

right to file lawsuits in the most geo graphically-convenient forum, the clause would have simply

provided that “the state and federal courts of Texas shall have jurisdiction.” Because the clause goes

further, and provides that GP Plastics can “select” either the “state or federal court,” we conclude that

it, like the provision in Waters, constitutes a valid waiver of Interboro’s removal rights.

C.      GP Plastics did not waive its contractual right to choose a forum

        Interboro lastly contends that GP Plastics waived its contractual right to select the Texas

forum when it sought to recover similar damages in an alternative forum. Under Texas law, the

elements of waiver are (1) an existing right, benefit, or advantage; (2) actual or constructive

knowledge of its existence; and (3) actual intent to relinquish that right. Two Thirty Nine Joint

Venture v. Joe, 60 S.W.3d 896, 904 (Tex. App.—Dallas 2001, pet. denied). GP Plastics, in response

to an interrogatory in a related New York lawsuit, stated that it planned to seek an offset in the New

York litigation for those damages caused by the breaches of contract alleged in this dispute. At the

time GP Plastics completed this interrogatory, however, it had already exercised its right to enforce

                                                   7
the forum-selection clause by filing its lawsuit in Texas and filing its motion for remand.6 Because

we are unpersuaded that GP Plastics demonstrated an intent to relinquish a right that it had already

exercised, Interboro’s claim that GP Plastics waived its contractual right to select a forum is meritless.

                                         IV. CONCLUSION

        The district court did not err by ordering GP Plastics’s action remanded to state court. GP

Plastics’s complaint invoked a forum-selection clause that constituted a valid waiver of Interboro’s

right of removal, and GP Plastics did not waive its contractual right to choose a forum. For these

reasons, the judgment of the district court is AFFIRMED.

        6
        GP Plastics filed its motion to remand the Texas lawsuit in July 2002. GP Plastics
submitted its interrogatory answers in the New York action in January 2003.

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