Court Opinion

ID: 4029039
Source: CourtListenerOpinion
Date Created: 2016-08-27 08:52:25.373275+00
Date Added: 2024-06-11T14:50:20.235630
License: Public Domain

NO. 12-16-00126-CV

                             IN THE COURT OF APPEALS

                TWELFTH COURT OF APPEALS DISTRICT

                                         TYLER, TEXAS

IN RE: RANDY RUTTER,                                   §
ERIC JOINER, AND
ERIC JOINER WHOLESALE, LLC,                            §       ORIGINAL PROCEEDING
RELATORS
                                                       §

                                      MEMORANDUM OPINION
        By petition for writ of mandamus, Randy Rutter, Eric Joiner, and Eric Joiner Wholesale,
LLC (Relators) challenge the trial court’s order denying their motion to dismiss.1 The real
parties in interest are John and Beth Anne Miller. We deny the petition.

                                               BACKGROUND
        The Millers purchased a vehicle at an auction. Mecum Auction, Inc. conducted the
auction, and Relators owned the vehicle. The Millers received representations that they were
purchasing a 1970 Chevrolet Chevelle LS6 automobile.
        After taking possession of the vehicle, the Millers suspected that they had been misled
regarding certain aspects of the vehicle. The Millers sued Mecum Auction and Relators, alleging
violation of the Deceptive Trade Practices Act through the breach of the implied warranty of
merchantability, fraud, negligence, negligent misrepresentation, and breach of express and
implied warranties.
        Mecum Auction filed a motion to dismiss the Millers’ claims against it because Mecum
Auction and the Millers had entered into a contract that contained a forum selection clause.
Relators filed an answer to the Millers’ claims in which they contended that they were third party
beneficiaries to the contract between Mecum Auction and the Millers. Thus, they contended, the

        1
         The respondent is the Honorable Carter Tarrance, Judge of the 392nd Judicial District Court, Henderson
County, Texas.
forum selection clause applied to the Millers’ claims against them as well. The Millers filed a
response to Mecum Auction’s motion to dismiss, and Relators filed a motion for joinder in
Mecum Auction’s motion. Mecum Auction then filed an amended motion to dismiss.
       The trial court instructed Relators to provide additional briefing on the issue of the
applicability of the forum selection clause to claims against nonsignatories to the contract.
Relators responded that direct benefits estoppel required all of the Millers’ claims to be
dismissed. The trial court granted Mecum Auction’s motion to dismiss, but denied Relators’
motion to dismiss. This original proceeding followed.

                                  AVAILABILITY OF MANDAMUS
       Ordinarily, mandamus will issue only to correct a clear abuse of discretion where there is
no adequate remedy by appeal. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex.
2005) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992) (orig.
proceeding). When a trial court refuses to enforce a valid forum selection clause, there is no
adequate appellate remedy. In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 231 (Tex. 2008)
(orig. proceeding). Thus, when reviewing a trial court’s denial of a motion to dismiss based on a
forum selection clause, our focus is whether the trial court clearly abused its discretion.
       To determine whether the trial court clearly abused its discretion, we consider whether
the challenged ruling or order was one compelled by the facts and circumstances or was
arbitrary, unreasonable, or reached without reference to any guiding rules or principles. In re
Huag, 175 S.W.3d 449, 451 (Tex. App.—Houston [1st Dist.] 2005, orig. proceeding). A clear
failure by the trial court to analyze or apply the law correctly will constitute an abuse of
discretion. Walker, 827 S.W.2d at 840.

                                   DIRECT BENEFITS ESTOPPEL
       Relators contend that the trial court abused its discretion by denying their motion to
dismiss. They argue that direct benefits estoppel required the trial court to dismiss all of the
Millers’ claims against them pursuant to the forum selection clause contained in the contract
between Mecum Auction and the Millers.

                                                  2
Applicable Law
       Generally, a forum selection clause must be enforced. In re AIU Ins. Co., 148 S.W.3d
109, 111-12 (Tex. 2004) (orig. proceeding). Under certain limited circumstances, a nonsignatory
to the contract may enforce a forum selection clause against the claims brought by a signatory.
Smith v. Kenda Capital, LLC, 451 S.W.3d 453, 458 (Tex. App.—Houston [14th Dist.] 2014, no
pet.). One such circumstance is when direct benefits estoppel applies. Id. Texas courts first
applied direct benefits estoppel to arbitration clauses in contracts. See In re Kellogg Brown &
Root, Inc., 166 S.W.3d 732, 739 (Tex. 2005) (orig. proceeding). Arbitration clauses are a
specific type of forum selection clause, and thus, direct benefits estoppel can be applied to other
forum selection clauses as well. Smith, 451 S.W.3d at 457.
       A claim seeks a direct benefit from a contract if liability under the claim “arises solely
from the contract or must be determined by reference to it.” In re Weekley Homes, L.P., 180
S.W.3d 127, 132 (Tex. 2005) (orig. proceeding). By contrast, a claim does not seek a direct
benefit from a contract if liability under the claim “arises from general obligations imposed by
state law, including statutes, torts and other common law duties, or federal law.” In re Morgan
Stanley & Co., Inc., 293 S.W.3d 182, 184 n.2 (Tex. 2009) (orig. proceeding); see also Weekley
Homes, 180 S.W.3d at 132 (recognizing that arbitration clause could not be applied against a
nonsignatory when liability arises from general legal obligations).
Analysis
       Relators contend that the Millers’ claims are based entirely upon representations made
about the Chevelle during the auction. We agree with Relators’ assertion, but we do not read
direct benefits estoppel to reach so far as to require dismissal of the Millers’ claims based solely
on this fact. Although the conduct of which the Millers complain occurred at the auction, the
Millers’ claims arise from general obligations imposed by state law, rather than from any
obligations imposed by Mecum Auction and the Millers’ contract. See id.
       We recently addressed an assertion of direct benefits estoppel with regard to an
arbitration clause. See Vines v. Durrett, No. 12-14-00258-CV, 2015 WL 9591525 (Tex. App.—
Tyler July 1, 2016, pet. denied) (mem. op.). In that case, we recognized that the plaintiff’s claim
that the defendant defrauded him alleged the breach of a common law duty, not a duty arising
under the contractual agreement containing the arbitration clause. Id. at *3. Accordingly, the
plaintiff's suit did not rely on any terms of the agreement, hinge on any rights arising from the

                                                 3
agreement, or seek to enforce any duty created by the agreement.                   Id.   Under those
circumstances, we concluded that direct benefits estoppel does not apply. Id.
         Because the Millers’ claims in this case likewise do not rely on any terms of the
agreement, hinge on any rights arising from the agreement, or seek to enforce any duty created
by the agreement, the trial court did not abuse its discretion when it determined that direct
benefits estoppel did not apply. See id.

                                      POLICY REASONS FOR DISMISSAL
         Relators further contend that two policy reasons required the trial court to dismiss the
Millers’ claims. However, we have reviewed the mandamus record, and we see no indication
that Relators made these policy arguments to the trial court.
         Texas Rule of Appellate Procedure 33.1 provides that as a prerequisite to presenting a
complaint for appellate review, the record must show that the complaint was made to the trial
court. TEX. R. APP. P. 33.1(a)(1)(A). This rule of error preservation applies to mandamus
proceedings. See In re E. Tex. Med. Ctr. Athens, 154 S.W.3d 933, 937 (Tex. App.—Tyler
2005, orig. proceeding); see also In re Bank of Am., No. 01-02-00867-CV, 2003 WL 22310800,
at *2 (Tex. App.—Houston [1st Dist.] Oct. 9, 2003, orig. proceeding). Accordingly, we do not
address Relators’ policy arguments.

                                                  DISPOSITION
         Because direct estoppel does not apply, the trial court did not abuse its discretion in
denying Relators’ motion to dismiss.              Accordingly, we deny Relators’ petition for writ of
mandamus.

                                                                      BRIAN HOYLE
                                                                         Justice
Opinion delivered August 24, 2016.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

                                                   (PUBLISH)

                                                          4
                                 COURT OF APPEALS

     TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

                                         JUDGMENT

                                         AUGUST 24, 2016

                                       NO. 12-16-00126-CV

                          RANDY RUTTER, ERIC JOINER, AND
                           ERIC JOINER WHOLESALE, LLC
                                      Relators
                                         V.
                             HON. CARTER TARRANCE,
                                     Respondent

                              Appeal from the 392nd District Court
                   of Henderson County, Texas (Tr.Ct.No. CV15-0244-392)

                     ON THIS DAY came to be heard the petition for writ of mandamus filed
by RANDY RUTTER, ERIC JOINER, AND ERIC JOINER WHOLESALE, LLC, who are
the relators in Cause No. CV15-0244-392, pending on the docket of the 392nd Judicial District
Court of Henderson County, Texas. Said petition for writ of mandamus having been filed herein
on April 27, 2016, and the same having been duly considered, because it is the opinion of this
Court that a writ of mandamus should not issue, it is therefore CONSIDERED, ADJUDGED and
ORDERED that the said petition for writ of mandamus be, and the same is, hereby DENIED.
                  Brian Hoyle, Justice.
                  Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.